10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

Amendment #1

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

For the quarterly period ended June 30, 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,” “smaller reporting company,” and “emerging growth 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 September 14, 2018, the registrant had 6,685,415 common shares outstanding.

EXPLANATORY NOTE

As previously disclosed in the Current Report on Form 8-K filed by Asta Funding, Inc. (“Asta” or the “Company”) with the Securities and Exchange Commission (the “SEC”) on January 18, 2018, the Board of Directors (the “Board”) of the Company, upon the recommendation of the Audit Committee of the Board (the “Audit Committee”), determined that the Company’s previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, and the interim periods contained therein, as well as the Company’s unaudited consolidated financial statements for the quarters ended December 31, 2016, March 31, 2017 and June 30, 2017, could no longer be relied upon. 

On September 17, 2018, the Company filed an Annual Report on Form 10-K/A (the “Form 10-K/A”) to amend and restate the Company’s previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, as well as the interim periods contained therein, and Quarterly Reports on Form 10-Q/A to amend and restate the Company’s previously issued financial statement for the quarters ended December 31, 2016 and March 31, 2017. The Company is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to amend and restate the Company’s previously issued financial statements contained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the “Non-Reliance Period”), which was originally filed with the SEC on August 9, 2017 (the “Original Form 10-Q”).

Prior period amounts have already been restated in the Company's Form 10-K/A and, accordingly have not been restated in this Amendment.

Restatement Background

On January 11, 2018, after discussions with the Audit Committee, management re-evaluated the Company's historical conclusion to consolidate Pegasus Funding, LLC (“Pegasus”). Management has determined that the Company lacked the requisite control to consolidate Pegasus in its historical periods in accordance with Accounting Standards Codification (“ASC”) 810 “Consolidation.” Management also determined that the Company's previous treatment for certain foreign currency matters under ASC 830 “Foreign Currency Matters” was not appropriate. As such, the Company has subsequently revised its investment in Pegasus to the equity method, including the underlying reserve methodology; and has adjusted its financial statements to reflect the proper accounting for certain foreign currency transactions. Additionally, the Company corrected the financial statements for additional known errors consisting of (i) the adjustment of various accruals, (ii) the fair value of structured settlements, (iii) accounting for unallocated payments, and (iv) the tax effects of the adjustments mentioned above.

The following errors were identified as part of the restatement. See Note 1 – Restatement of Financial Statements in the Company’s notes to financial statements for further detail.

1.	In connection with the Company determining it lacked the requisite control to consolidate Pegasus during the Non-Reliance Period, the Company has now accounted for its investment in Pegasus under the equity method in accordance with accounting principle generally accepted in the United States (“US GAAP”).
2.	The Company determined that it had not previously accounted for certain foreign currency gains/losses on intercompany balances and transactions in accordance with US GAAP. The Company improperly accounted for the foreign currency effect of certain transactions as if they were long-term investments by including the foreign currency effect in accumulated other comprehensive income instead of properly recording the effect as operating expenses as required under ASC 830.
3.	Prior to the sale of its structured settlement business, the Company purchased periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company did not reflect the quarterly increase in certain underlying benchmark interest rates used in determining fir value of the Company's structured settlements. The Company has elected to carry the structured settlements at fair value in accordance with the guidance of FASB ASC, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 822-10-50-28 through 50-22).

4.	The Company determined that it had not accounted for certain unallocated payments reported on its consolidated balance sheet properly.
5.	The Company discovered that it did not properly record an amortizable asset and related liability in conjunction with an asset purchase agreement entered into in June 2015 with a related party.
6.	The Company identified other transactions that had not been properly accounted for in the correct period and/or for improper amounts and/or improper accounts.
7.	The Company identified the personal injury claims asset balance of Pegasus was determined to be overstated.
8.	Some of the corrections noted above impacted earnings (loss) before taxes which, in turn, required a calculation of the tax impact.

2

Internal Control and Disclosure Controls Considerations

In connection with this restatement, our Chief Executive Officer and Chief Financial Officer determined that there were deficiencies in our internal control over financial reporting that constituted material weaknesses at March 31, 2017. Accordingly, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at June 30, 2017, as discussed in Item 4 of this Amendment.

Items Amended in This Amendment

For the convenience of the reader, this Amendment sets forth the Original Form 10-Q in its entirety, as amended and restated by the Restated Form 10-Q/A, and as further modified and adjusted to reflect the restatement described above. In addition to such changes, this Amendment also includes: (i) revisions in presentation for the discontinued operations of the Company’s structured settlement business, which was sold on December 13, 2017; and (ii) updates to the Company’s subsequent events disclosure included in Note 20 to the Consolidated Financial Statements (collectively with (i) above, the “Subsequent Events”).

In accordance with applicable SEC rules, this Amendment also includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, from our Chief Executive Officer and Chief Financial Officer, dated as of the filing date of this Amendment. Aside from the foregoing items, this Amendment has not modified the Original Form 10-Q other than to correct immaterial items and certain errors in the exhibit index, and the disclosures contained in this Amendment have not been updated to reflect events occurring subsequent to the date of the Original Form 10-Q, August 9, 2017, except as noted above with respect to Subsequent Events.

Accordingly, this Amendment amends and restates the following items of the Orginal Form 10-Q:

● Part I – Item 1. Financial Information

● Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

● Part I – Item 3. Quantitative and Qualitative Disclosures About Market Risk

● Part I – Item 4. Controls and Procedures

● Part II – Item 1A. Risk Factors

● Part II – Item 6. Exhibits

3

ASTA FUNDING, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q/A

Part I-FINANCIAL   INFORMATION	5
Item 1. Financial Statements	5
Consolidated Balance Sheets as of June 30, 2017 (restated) (unaudited) and September 30, 2016	5
Consolidated Statements of Operations for the three and nine months ended June 30, 2017 (restated)(unaudited) and 2016 (unaudited)	6
Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended June 30, 2017 (restated)(unaudited) and 2016 (unaudited)	7
Consolidated Statements of Stockholders’ Equity for the nine months ending June 30, 2017 (restated)(unaudited) and 2016 (unaudited)	8
Consolidated Statements of Cash Flows for the nine months ended June 30, 2017 (restated)(unaudited) and 2016 (unaudited)	9
Notes to Consolidated Financial Statements (restated) (unaudited)	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (restated)	47
Item 3. Quantitative and Qualitative Disclosures about Market Risk (restated)	60
Item 4. Controls and Procedures (restated)	60
Part II-OTHER INFORMATION	62
Item 1. Legal Proceedings	62
Item 1A. Risk Factors (restated)	62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3. Defaults Upon Senior Securities	62
Item 4. Mine Safety Disclosures	62
Item 5. Other Information	62
Item 6. Exhibits (restated)	63
Signatures	64

4

PART I. FINANCIAL INFORMATION

Item  1. Financial Statements

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 (rounded to the nearest thousands, except share data)

	(Unaudited)
	June 30, 2017 (restated)			September 30, 2016
ASSETS
Cash and cash equivalents	$	15,213,000		$	6,282,000
Restricted cash		10,000,000			10,000,000
Available for sale investments (at fair value)		5,500,000			56,763,000
Consumer receivables acquired for liquidation (at net realizable value)		9,210,000			13,427,000
Investment in personal injury claims		3,351,000			—
Other investments, net		—			3,590,000
Due from third party collection agencies and attorneys		1,357,000			1,050,000
Prepaid and income taxes receivable		6,736,000			714,000
Furniture and equipment, net		141,000			196,000
Equity method investment		48,533,000			48,582,000
Deferred income taxes		14,120,000			14,903,000
Goodwill		1,410,000			1,410,000
Other assets		3,408,000			6,585,000
Assets related to discontinued operations		93,692,000			91,506,000
Total assets	$	212,671,000		$	255,008,000
LIABILITIES
Line of credit	$	9,600,000		$	—
Other liabilities		5,249,000			3,987,000
Liabilities related to discontinued operations		78,629,000			69,238,000
Total liabilities		93,478,000			73,225,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none		—			—
Preferred stock, Series A Junior Participating, $.01 par value; authorized 30,000 shares; issued and outstanding — none		—			—
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,398,108 at June 30, 2017 and 13,336,508 at September 30, 2016; and outstanding 6,623,815 at June 30, 2017 and 11,876,224 at September 30, 2016		134,000			133,000
Additional paid-in capital		68,027,000			67,034,000
Retained earnings		117,949,000			126,738,000
Accumulated other comprehensive income		211,000			803,000
Treasury stock (at cost) 6,774,293 shares at June 30, 2017 and 1,460,284 shares at September 30, 2016		(67,128,000	)		(12,925,000	)
Total stockholders’ equity		119,193,000			181,783,000
Total liabilities and stockholders’ equity	$	212,671,000		$	255,008,000

See accompanying notes to consolidated financial statements

5

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

(rounded to the nearest thousands, except share data)

	Three Months Ended June 30, 2017 (restated)			Three Months Ended June 30, 2016			Nine Months Ended June 30, 2017 (restated)			Nine Months Ended June 30, 2016
Revenues:
Finance income, net	$	3,993,000		$	4,572,000		$	12,018,000		$	14,557,000
Personal injury claims income		241,000			—			251,000			—
Disability fee income		1,134,000			1,169,000			3,990,000			2,700,000
Total revenues		5,368,000			5,741,000			16,259,000			17,257,000
Other income (loss) - includes ($18,000) and ($32,000) during the three month periods ended June 30, 2017 and 2016, and ($1,011,000) and ($63,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive loss reclassification for securities sold		90,000			176,000			(126,000	)		1,176,000
		5,458,000			5,917,000			16,133,000			18,433,000
Expenses:
General and administrative		6,066,000			7,069,000			25,611,000			23,020,000
Interest		164,000			—			197,000			—
Impairment of consumer receivables		148,000			—			148,000			124,000
Earnings from equity method investment		(2,710,000	)		(6,193,000	)		(2,759,000	)		(8,020,000	)
		3,668,000			876,000			23,197,000			15,124,000
Income (loss) from continuing operations before income tax		1,790,000			5,041,000			(7,064,000	)		3,309,000
Income tax (benefit)/expense - includes tax expense/(benefit) of $7,000 and ($13,000) during the three month periods ended June 30, 2017 and 2016 and $404,000 and ($24,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities		219,000			1,752,000			(31,000	)		1,114,000
Net income (loss) from continuing operations		1,571,000			3,289,000			(7,033,000	)		2,195,000
Net income (loss) from discontinued operations, net of income tax		560,000			577,000			(1,756,000	)		1,404,000
Net income (loss)	$	2,131,000		$	3,866,000		$	(8,789,000	)	$	3,599,000
Net income (loss) per basic shares:
Continuing operations	$	0.24		$	0.27		$	(0.75	)	$	0.18
Discontinued operations		0.08			0.05			(0.19	)	$	0.12
	$	0.32		$	0.32		$	(0.94	)	$	0.30
Net income (loss) per diluted shares:
Continuing operations	$	0.23		$	0.26		$	(0.75	)	$	0.18
Discontinued operations		0.08			0.05			(0.19	)	$	0.11
	$	0.31		$	0.31		$	(0.94	)	$	0.29
Weighted average number of common shares outstanding:
Basic		6,577,784			11,897,139			9,389,864			12,023,156
Diluted		6,879,082			12,433,424			9,389,864			12,294,073

See accompanying notes to consolidated financial statements

6

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

June 30, 2017 and 2016

(Unaudited)

(rounded to the nearest thousands)

	Three Months Ended June 30, 2017 (restated)			Three Months Ended June 30, 2016			Nine Months Ended June 30, 2017 (restated)			Nine Months Ended June 30, 2016
Comprehensive income (loss) is as follows:
Net income (loss)	$	2,131,000		$	3,866,000		$	(8,789,000	)	$	3,599,000
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.		18,000			560,000			(17,000	)		1,046,000
Reclassification adjustments for securities sold, net of tax benefit of $7,000 and $13,000 during the three month periods ended June 30, 2017 and 2016, and $404,000 and $24,000 during the nine month periods ended June 30, 2017 and 2016, respectively.		(11,000	)		(19,000	)		(607,000	)		(39,000	)
Foreign currency translation, net of tax (expense)/benefit of ($23,000) and $15,000 during the three month periods ended June 30, 2017 and 2016, respectively, and ($21,000) and $25,000 during the nine month periods ended June 30, 2017 and 2016, respectively.		35,000			(63,000	)		32,000			(37,000	)
Other comprehensive income (loss)		42,000			478,000			(592,000	)		970,000
Total comprehensive income (loss)	$	2,173,000		$	4,344,000		$	(9,381,000	)	$	4,569,000

See accompanying notes to consolidated financial statements

7

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(rounded to the nearest thousands, except share data)

Nine months ended June 30, 2017 (restated):

	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, as previously reported		13,336,508		133,000		67,034,000		126,738,000			803,000			(12,925,000	)		—		181,783,000
Stock based compensation expense		—		—		38,000		—			—			—			—		38,000
Net (loss) income		—		—		—		(8,789,000	)		—			—			—		(8,789,000	)
Amount reclassified from other comprehensive (loss) income		—		—		—		—			(607,000	)		—			—		(607,000	)
Unrealized loss on marketable securities, net		—		—		—		—			(17,000	)		—			—		(17,000	)
Purchase of treasury stock		—		—		—		—			—			(54,203,000	)		—		(54,203,000	)
Foreign currency translation, net		—		—		—		—			32,000			—			—		32,000
Forgiveness of debt						552,000													552,000
Issuance of unrestricted stock		61,600		1,000		403,000		—			—			—			—		404,000
Balance, June 30, 2017, restated		13,398,108	$	134,000	$	68,027,000	$	117,949,000		$	211,000		$	(67,128,000	)		—	$	119,193,000

Nine months ended June 30, 2016:

	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	$	65,049,000		$	119,165,000	$	20,000		$	(1,751,000	)	$	793,000		$	183,407,000
Exercise of options		107,531		1,000		870,000														871,000
Stock based compensation expense		—		—		567,000			—		—			—			—			567,000
Restricted stock		5,000		—		—			—		—			—			—			—
Net income		—		—		—			3,599,000		—			—			—			3,599,000
Unrealized gain on marketable securities, net		—		—		—			—		1,046,000			—			—			1,046,000
Amount reclassified from other comprehensive (loss) income		—		—		—			—		(39,000	)		—			—			(39,000	)
Purchase of treasury stock		—		—		—			—		—			(11,174,000	)		—			(11,174,000	)
Foreign currency translation, net		—		—		—			—		(37,000	)		—			—			(37,000	)
Purchase of subsidiary shares from non-controlling interest		—		—		(903,000	)		—		—			—			(793,000	)		(1,696,000	)
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest		123,304		1,000		999,000			—		—			—			—			1,000,000
Balance, June 30, 2016		13,297,508	$	133,000	$	66,582,000		$	122,764,000	$	990,000		$	(12,925,000	)	$	—		$	177,544,000

See accompanying notes to consolidated financial statements

8

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(rounded to the nearest thousands)

	Nine Months Ended June 30, 2017 (restated)			Nine Months Ended June 30, 2016
Cash flows from operating activities :
Net (loss) income from continuing operations	$	(7,033,000	)	$	2,195,000
Net (loss) income from discontinued operations		(1,756,000	)		1,404,000
Net (loss) income	$	(8,789,000	)		3,599,000
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		75,000			353,000
Deferred income taxes		1,199,000			(78,000	)
Impairment of consumer receivables acquired for liquidation		148,000			124,000
Stock based compensation		81,000			567,000
Loss on sale of available-for-sale securities		1,011,000			63,000
Unrealized gain on other investments		—			(246,000	)
Unrealized foreign exchange loss on other investments		—			59,000
Reserve for loss on other investments		—			1,000,000
Loss on other investments		3,590,000			—
Forgiveness of debt		552,000			—
Operating lease adjustment		—			21,000
Earnings from equity method investment		(2,759,000	)		(6,193,000	)
Changes in:
Prepaid and income taxes receivable		(6,022,000	)		2,512,000
Due from third party collection agencies and attorneys		(320,000	)		376,000
Other assets		3,184,000			(2,444,000	)
Other liabilities		1,294,000			1,911,000
Net cash used in operating activities of discontinued operations		(3,041,000	)		(6,649,000	)
Net cash (used in) operating activities		(9,797,000	)		(5,025,000	)
Cash flows from investing activities:					,
Purchase of consumer receivables acquired for liquidation		(2,213,000	)		(6,936,000	)
Principal collected on receivables acquired for liquidation		6,324,000			7,384,000
Purchase of available-for-sale securities		(13,193,000	)		(11,704,000	)
Proceeds from sale of available-for-sale securities		62,406,000			16,302,000
Purchase of non-controlling interest		—			(800,000	)
Investments in personal injury claims – advances		(3,351,000	)		—
(Increase) decrease in equity method investment		2,808,000			1,826,000
Capital expenditures		(19,000	)		(120,000	)
Net cash provided by (used in) investing activities of discontinued operations		1,548,000			(6,756,000	)
Net cash provided by/(used in) investing activities		54,310,000			(804,000	)
Cash flows from financing activities:
Proceeds from exercise of stock options		—			872,000
Purchase of treasury stock		(54,203,000	)		(11,174,000	)
Borrowings from line of credit		9,600,000			—
Net cash provided by financing activities of discontinued operations		9,000,000			11,056,000
Net cash (used in) provided by financing activities		(35,603,000	)		754,000
Foreign currency effect on cash		(37,000	)		—
Net increase (decrease) in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations		8,873,000			(5,075,000	)
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations		58,000			(283,000	)
Net increase (decrease) in cash, cash equivalents and restricted cash		8,931,000			(5,358,000	)
Cash, cash equivalents and restricted cash at beginning of period		16,282,000			19,947,000
Cash, cash equivalents and restricted cash at end of period	$	25,213,000		$	14,589,000
Supplemental disclosure of cash flow information :
Cash paid for:
Interest	$	3,031,000		$	2,353,000
Taxes		6,046,000			—
Supplemental disclosure of non-cash flow investing activities :
Continued operations:
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest	$	—		$	1,000,000
Discontinued operations:
Issuance of unrestricted stock	$	404,000			—

See accompanying notes to consolidated financial statements

9

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements  

The following tables summarize the effects of the restatements on the specific items presented in the Company’s consolidated financial statements previously included in the Original Form 10-Q:

	Consolidated Balance Sheet
	June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
ASSETS
Cash and cash equivalents	$	15,315,000		$	(81,000	)	$	(21,000	)	(2)	$	15,213,000
Restricted cash		34,748,000			(24,748,000	)		—				10,000,000
Available for sale investments (at fair value)		5,500,000			—			—				5,500,000
Consumer receivables acquired for liquidation (at net realizable value)		9,118,000			—			92,000		(2)		9,210,000
Investment in personal injury claims, net		27,538,000			(24,187,000	)		—				3,351,000
Due from third party collection agencies and attorneys		1,367,000			—			(10,000	)	(2)		1,357,000
Prepaid and income taxes receivable		4,836,000			—			1,900,000		(8)		6,736,000
Furniture and equipment, net		141,000			—			—				141,000
Equity method investment		—			48,639,000			(106,000	)	(7)		48,533,000
Deferred income taxes		18,940,000			—			(4,820,000	)	(2)(8)		14,120,000
Goodwill		1,410,000			—			—				1,410,000
Other assets		3,576,000			(109,000	)		(59,000	)	(2)		3,408,000
Assets related to discontinued operations		93,723,000			—			(31,000	)	(5)(6)		93,692,000
Total assets	$	216,212,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000
LIABILITIES
Line of credit		9,600,000			—			—				9,600,000
Other liabilities		6,079,000			(755,000	)		(75,000	)	(2)		5,249,000
Liabilities related to discontinued operations		78,628,000			—			1,000		(5)		78,629,000
Total liabilities		94,307,000			(755,000	)		(74,000	)			93,478,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—				—
Common stock		134,000			—			—				134,000
Additional paid-in capital		67,467,000			—			560,000		(5)(6)		68,027,000
Retained earnings		122,669,000			—			(4,720,000	)	(2)(3)(4)(5)(6)(7)(8)		117,949,000
Accumulated other comprehensive income (loss)		(968,000	)		—			1,179,000		(2)		211,000
Treasury stock (at cost)		(67,128,000	)		—			—				(67,128,000	)
Non-controlling interest		(269,000	)		269,000			—				—
Total stockholders’ equity		121,905,000			269,000			(2,981,000	)			119,193,000
Total liabilities and stockholders’ equity	$	216,212 ,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000

10

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

	Consolidated Statement of Operations For the Three Months Ended June 30, 2017
	As Reported		De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	3,980,000	$	—		$	13,000		(2)	$	3,993,000
Personal injury claims income		5,569,000		(5,328,000	)		—				241,000
Disability fee income		1,134,000		—			—				1,134,000
Total revenues		10,683,000		(5,328,000	)		13,000				5,368,000
Other income		84,000		—			6,000		(2)		90,000
		10,767,000		(5,328,000	)		19,000				5,458,000
General and administrative		7,252,000		(1,679,000	)		493,000		(2)(6)		6,066,000
Interest		133,000		(2,000	)		33,000		(2)		164,000
Impairment of consumer receivables		148,000		—			—				148,000
Loss (earnings) from equity method investment		—		(2,917,000	)		207,000		(7)		(2,710,000	)
		7,533,000		(4,598,000	)		733,000				3,668,000
Income (loss) from continuing operations before income tax		3,234,000		(730,000	)		(714,000	)			1,790,000
Income tax (benefit)/expense		1,198,000		—			(979,000	)	(8)		219,000
Net income (loss) from continuing operations		2,036,000		(730,000	)		265,000				1,571,000
Income (loss) from discontinued operations, net of income tax		526,000		—			34,000		(5)		560,000
Less: net income attributable to non-controlling interests		730,000		(730,000	)		—				—
Net income attributable to Asta Funding, Inc.	$	1,832,000	$	—		$	299,000			$	2,131,000
Net income (loss) per basic shares:
Continuing operations	$	0.20								$	0.24
Discontinued operations		0.08									0.08
	$	0.28								$	0.32
Net income (loss) per diluted shares:
Continuing operations	$	0.19								$	0.23
Discontinued operations		0.08									0.08
	$	0.27								$	0.31

11

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

	Consolidated Statement of Operations For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	11,999,000		$	—		$	19,000		(2)	$	12,018,000
Personal injury claims income		10,017,000			(9,766,000	)		—				251,000
Disability fee income		3,990,000			—			—				3,990,000
Total revenues		26,006,000			(9,766,000	)		19,000				16,259,000
Other income		(74,000	)		—			(52,000	)	(2)		(126,000	)
		25,932,000			(9,766,000	)		(33,000	)			16,133,000
General and administrative		31,354,000			(6,052,000	)		309,000		(2)(6)		25,611,000
Interest		169,000			(6,000	)		34,000		(2)		197,000
Impairment of consumer receivables		148,000			—			—				148,000
Loss (earnings) from equity method investment		—			(2,966,000	)		207,000		(7)		(2,759,000	)
		31,671,000			(9,024,000	)		550,000				23,197,000
(Loss) income from continuing operations before income tax		(5,739,000	)		(742,000	)		(583,000	)			(7,064,000	)
Income tax (benefit)/expense		(2,170,000	)		—			2,139,000		(8)		(31,000	)
Net loss from continuing operations		(3,569,000	)		(742,000	)		(2,722,000	)			(7,033,000	)
Loss from discontinued operations, net of income tax		(1,083,000	)		—			(673,000	)	(3)(5)(8)		(1,756,000	)
Less: net income attributable to non-controlling interests		742,000			(742,000	)		—				—
Net loss attributable to Asta Funding, Inc.	$	(5,394,000	)	$	—		$	(3,395,000	)		$	(8,789,000	)
Net income (loss) per basic shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)
Net income (loss) per diluted shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)

12

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued) 

	Consolidated Statement of Comprehensive Income
	For the Three Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments			Restated
Comprehensive income (loss) is as follows:
Net income	$	1,832,000		$	—	$	299,000		$	2,131,000
Net unrealized securities (loss) gain, net of tax		18,000			—		—			18,000
Reclassification adjustments for securities sold, net of tax		(11,000	)		—		—			(11,000	)
Foreign currency translation, net of tax		(249,000	)		—		284,000	(2)		35,000
Other comprehensive (loss) income		(242,000	)		—		284,000			42,000
Total comprehensive income	$	1,590,000		$	—	$	583,000		$	2,173,000

	Consolidated Statement of Comprehensive Loss
	For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments				Restated
Comprehensive (loss) income is as follows:
Net loss	$	(5,394,000	)	$	—	$	(3,395,000	)		$	(8,789,000	)
Net unrealized securities (loss) gain, net of tax		(17,000	)		—		—				(17,000	)
Reclassification adjustments for securities sold, net of tax		(607,000	)		—		—				(607,000	)
Foreign currency translation, net of tax		(430,000	)		—		462,000		(2)(6)		32,000
Other comprehensive (loss) income		(1,054,000	)				462,000				(592,000	)
Total comprehensive loss	$	(6,448,000	)	$		$	(2,933,000	)		$	(9,381,000	)

13

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

	Consolidated Statement of Cash Flows For the Nine Months Ended June 30, 2017
	As Reported			Adjustments				Restated
Cash flows from operating activities:
Net loss from continuing operations	$	(4,311,000	)	$	(2,722,000	)		$	(7,033,000	)
Net loss from discontinued operations		(1,083,000	)		(673,000	)			(1,756,000	)
Net loss		(5,394,000	)		(3,395,000	)			(8,789,000	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and Amortization		154,000			(79,000	)			75,000
Deferred income taxes		(2,994,000	)		4,193,000		(2)(8)		1,199,000
Impairments of consumer receivables acquired for liquidation		148,000			—				148,000
Stock based compensation		81,000			—				81,000
Loss on sale of available-for-sale securities		1,011,000			—				1,011,000
Unrealized gain on other investments		3,590,000	)		—				3,590,000
Earnings from equity method investment		—			(2,759,000	)	(7)		(2,759,000	)
Forgiveness of debt		—			552,000		(5)		552,000
Changes in:
Prepaid and income taxes receivable		(3,956,000	)		(2,066,000	)	(5)(8)		(6,022,000	)
Due from third party collection agencies and attorneys		(362,000	)		42,000		(2)		(320,000	)
Other assets		3,050,000	)		134,000		(2)		3,184,000
Income tax payable		(252,000	)		252,000		(6)		—
Other liabilities		1,083,000			211,000		(2)		1,294,000
Non-controlling interest		742,000			(742,000	)	(1)		—
Net cash (used in) provided by operating activities of discontinued operations		(3,654,000	)		613,000		(5)(6)		(3,041,000	)
Net cash (used in) provided by operating activities		(6,753,000	)		(3,044,000	)			(9,797,000	)
Cash flows from investing activities:
Purchase of consumer receivables acquired for liquidation		(2,213,000	)		—				(2,213,000	)
Principal collected on receivables acquired for liquidation		6,618,000			(294,000	)	(2)		6,324,000
Purchase of available-for-sale securities		(13,193,000	)		—				(13,193,000	)
Proceeds from sales of available-for-sale securities		62,406,000			—				62,406,000
Decrease in equity method investment		—			2,808,000		(5)(6)		2,808,000
Investments in personal injury claims — advances		(14,624,000	)		11,273,000		(1)		(3,351,000	)
Investments in personal injury claims — receipts		35,375,000			(35,375,000	)	(1)		—
Capital expenditures		(19,000	)		—				(19,000	)
Net cash provided by investing activities related to discontinued operations		1,548,000			—				1,548,000
Net cash provided by (used in) investing activities		75,898,000			(21,588,000	)			54,310,000
Cash flows from financing activities:
Purchase of treasury stock		(54,203,000	)		—				(54,203,000	)
Distributions to non-controlling interest		(366,000	)		366,000		(1)		—
Borrowings from line of credit		9,600,000			—				9,600,000
Net cash provided by financing activities related to discontinued operations		9,000,000			—				9,000,000
Net cash (used in) provided by financing activities		(35,969,000	)		366,000				(35,603,000	)
Foreign currency effect on cash		—			(37,000	)	(2)		(37,000	)
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations		33,176,000			(24,303,000	)			8,873,000
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations		58,000			—				58,000
Net increase (decrease) in cash, cash equivalents and restricted cash		33,234,000			(24,303,000	)	(1)(2)(4)(5)(6)(7)(8)		8,931,000
Cash, cash equivalents and restricted cash at beginning of period		16,829,000			(547,000	)			16,282,000
Cash, cash equivalents and restricted cash at end of period	$	50,063,000		$	(24,850,000	)		$	25,213,000

14

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

As previously disclosed in the Current Report on Form 8-K filed by Asta Funding, Inc. (“Asta” or the “Company”) with the Securities and Exchange Commission (the “SEC”) on January 18, 2018, the Board of Directors (the “Board”) of the Company, upon the recommendation of the Audit Committee of the Board (the “Audit Committee”), determined that the Company’s previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, and the interim periods contained therein, as well as the Company’s unaudited consolidated financial statements for the quarters ended December 31, 2016, March 31, 2017 and June 30, 2017, could no longer be relied upon. 

On September 17, 2018, the Company filed an Annual Report on Form 10-K/A (the “Form 10-K/A”) to amend and restate the Company’s previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, as well as the interim periods contained therein, and Quarterly Reports on Form 10-Q/A to amend and restate the Company’s previously issued financial statements for the quarters ended December 31, 2016 and March 31, 2017. The Company is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to amend and restate the Company’s previously issued financial statements contained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the “Non-Reliance Period”), which was originally filed with the SEC on August 9, 2017 (the “Original Form 10-Q”).

Prior period amounts have already been restated in the Company's Form 10-K/A and, accordingly have not been restated in this Amendment.

Restatement Background

On January 11, 2018, after discussions with the Audit Committee, management re-evaluated the Company's historical conclusion to consolidate Pegasus Funding, LLC (“Pegasus”). Management has determined that the Company lacked the requisite control to consolidate Pegasus in its historical periods in accordance with Accounting Standards Codification (“ASC”) 810 “Consolidation.” Management also determined that the Company's previous treatment for certain foreign currency matters under ASC 830 “Foreign Currency Matters” was not appropriate. As such, the Company has subsequently revised its investment in Pegasus to the equity method, including the underlying reserve methodology; and has adjusted its financial statements to reflect the proper accounting for certain foreign currency transactions. Additionally, the Company corrected the financial statements for additional known errors consisting of (i) the adjustment of various accruals, (ii) the fair value of structured settlements, (iii) accounting for unallocated payments, and (iv) the tax effects of the adjustments mentioned above.

The “As Reported” amounts in the tables above represent the amounts reported in the Restated Form 10-Q/A, adjusted in its presentation for the discontinued operations of the Company's wholly-owned subsidiary CBC Settlement Funding, LLC (“CBC”), which was sold on December 13, 2017 (see Note 8 – Discontinued Operations and Note 20 – Subsequent events).

 The following errors were identified as part of the restatement:

1.	In connection with the Company determining it lacked the requisite control to consolidate Pegasus during the Non-Reliance Period, the Company has now accounted for its investment in Pegasus under the equity method in accordance with US GAAP. On the Company’s June 30, 2017 consolidated balance sheet, this resulted in (i) a decrease in cash and restricted cash of $24,829,000; (ii) a decrease in the investment in personal injury claims of $24,187,000; (iii) a decrease in other assets of $109,000; (iv) a decrease in other liabilities of $755,000; and (v) a decrease in non-controlling interest of $269,000, offset by a corresponding increase in the equity method investment of $48,639,000.
	On the Company’s consolidated statement of operations, this resulted in (i) a decrease in total revenues of $5,328,000; (ii) a decrease in expenses of $1,681,000; (iii) a decrease in the income attributable to the non-controlling interest of $730,000; and (iv) a decrease in earnings from equity method investment of $2,917,000 the three months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.
	On the Company’s consolidated statement of operations, this resulted in (i) a decrease in total revenues of $9,766,000; (ii) a decrease in expenses of $6,058,000; (iii) a decrease in the income attributable to the non-controlling interest of $742,000; and (iv) a decrease in earnings from equity method investment of $2,966,000 the nine months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.
2.	The Company determined that it had not previously accounted for certain foreign currency gains/losses on intercompany balances and transactions in accordance with US GAAP. The Company improperly accounted for the foreign currency effect of certain transactions as if they were long-term investments by including the foreign currency effect in accumulated other comprehensive income instead of properly recording the effect as operating expenses as required under ASC 830.

15

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of $13,000, an increase in other income of $6,000, an increase in general and administrative expenses of $493,000 and an increase in interest expense of $33,000 for the three months ended June 30, 2017.

The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of $19,000, a decrease in other income of $52,000, and an increase in general and administrative expenses of $580,000, and an increase in interest expense of $34,000 for the nine months ended June 30, 2017.

The correction of foreign currency transaction on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Cash and cash equivalents		$3,000		$(24,000)		$(21,000)
Consumer receivables acquired for liquidation		(245,000)		337,000		92,000
Due from third party collection agencies and attorneys		45,000		(55,000)		(10,000)
Deferred income taxes		(722,000)		(472,000)		(1,194,000)
Other assets		(33,000)		(26,000)		(59,000)
Other liabilities		(18,000)		(57,000)		(75,000)
Accumulated other comprehensive loss		718,000		461,000		1,179,000
Retained earnings		(1,653,000)		(645,000)		(2,298,000)

3.	Prior to the sale of its structured settlement business, the Company purchased periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company has elected to carry the structured settlements at fair value in accordance with the guidance of FASB ASC, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 822-10-50-28 through 50-22).
	As previously disclosed in the Restated Form 10-Q/A, the Company did not reflect the quarterly increase in certain underlying benchmark interest rates used in determining fair value of the Company’s structured settlements for the quarter ended December 31, 2016 which resulted in a decrease in the fair value of the Company's structured settlements of approximately $2.6 million (reflected in assets related to discontinued operations in this restated consolidated balance sheet) with an associated increase in prepaid income taxes and deferred tax assets of approximately $1.0 million (reflected in the loss from discontinued operations in this consolidated statement of operations).
	In connection with the Company’s filing of the Form 10-K/A, the Company adjusted the fair value of its structured settlements to reflect the appropriate benchmark interest rates at September 30, 2016, which resulted in an decrease in net loss attributable to discontinued operations and an increase in assets related to discontinued operations of $727,000.  As this increase in fair value was originally recorded during the three month period ended December 31, 2016, this Amendment includes an increase in both the retained earnings and the net loss attributable to discontinued operations of $727,000 as of and for the nine months ended June 30, 2017.
4.	The Company determined that it had not accounted for certain unallocated payments reported on its consolidated balance sheet properly during the Non-Reliance Period. The correction of this error resulted in a decrease to consumer receivables acquired for liquidation of $648,000 and retained earnings of $648,000 as of September 30, 2016 and is therefore included in the net adjustment to retained earnings as of June 30, 2017.
5.	The Company discovered that it did not properly record an amortizable asset and related liability in conjunction with an asset purchase agreement entered into in June 2015 with a related party. The correction of this error resulted in a decrease in income from discontinued operations of $34,000 and $153,000 for the three and nine months ended June 30, 2017.

16

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 1— Restatement of Financial Statements (continued)

The correction of these errors on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Assets related to discontinued operations		$307,000		$(383,000)		$(76,000)
Liabilities related to discontinued operations		756,000		(755,000)		1,000
Retained earnings		(442,000)		(155,000)		(597,000)
Additional paid in capital		-		552,000		552,000

6.	The Company identified other transactions that had not been properly accounted for in the correct period and/or for improper amounts and/or improper accounts. The adjustments of these errors were immaterial on an individual basis. The correction of these errors resulted in decreased general and administrative expense of $0 and $271,000 for the three and nine months ended June 30, 2017.
	The correction of these errors on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Other liabilities		$269,000		$(269,000)		$ —
Retained earnings		(137,000)		270,000		133,000
Assets related to discontinued operations		45,000		-		45,000
Additional paid in capital		8,000		-		8,000

7.	The Company identified the personal injury claims asset balance of Pegasus was determined to be overstated at March 31, 2017 by $400,000. The correction of this error resulted in a decrease in earnings from the equity investment in Pegasus and income from continuing operations of $0 and $320,000 for the three and nine months ended June 30, 2017. Additionally, the equity investment was increased $101,000 to reflect the impact of the related accruals in the Form 10-K/A. During the three and nine months ended June 30, 2017, earnings from equity method investment decreased by $207,000 for a reduction in personal injury claims in Pegasus.
8.	Some of the corrections noted above impacted earnings (loss) before taxes which, in turn, required a calculation of the tax impact. The net impact to the Company’s consolidated balance sheet was an (i) increase to prepaid and income taxes receivable of $1,900,000; and (ii) decrease to deferred tax assets of $3,627,000.
	On the Company’s consolidated statement of operations, there was (i) a net (decrease) to income tax expense of $979,000; and (ii) a decrease to income tax benefit from discontinued operations of $93,000 for the three months ended June 30, 2017.
	On the Company’s consolidated statement of operations, there was (i) a net increase to income tax expense of $2,139,000; and (ii) an increase to income tax benefit from discontinued operations of $207,000 for the nine months ended June 30, 2017.

All of the following notes to consolidated financial statements have been revised to reflect the effects of the above mentioned restatements.

17

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 2—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”), Palisades Acquisition XIX, LLC (“Palisades XIX”), Palisades Acquisition XXIII, LLC (“Palisades XIX”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), EMIRIC, LLC (“EMIRIC”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), Five Star Veterans Disability, LLC (“Five Star”), Simia Capital, LLC (“Simia”) and other subsidiaries, which are not all wholly owned (the “Company,” “we” or “us”), is engaged in several business segments in the financial services industry including funding of personal injury claims, through our 80% owned, 50% controlled equity investment in Pegasus Funding, LLC (“Pegasus”) and our wholly owned subsidiary Simia, social security and disability advocacy through our wholly owned subsidiaries GAR Disability Advocates and Five Star 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 receivable business in 1994. Recently, our effort has been in the international areas (mainly South America), as we have curtailed our active purchasing of consumer receivables in the United States. 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

Simia and our equity method investment in Pegasus conducts their business solely in the United States. These companies obtain their business from external brokers and internal sales professionals soliciting individuals with personal injury claims. Business is also obtained from their websites and through attorneys.

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.

Discontinued Operations

US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reported as discontinued operations in the consolidated financial statements if the sale or disposition represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.

On December 13, 2017, the Company sold all of the issued and outstanding equity capital of CBC, its wholly owned subsidiary engaging in structured settlements. As a result of this sale all prior periods presented in the Company’s consolidated financial statements will account for CBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets and liabilities related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for all periods presented. See Note 8 - Discontinued operations in the Company’s notes to the consolidated financial statements.

Basis of Presentation 

The consolidated balance sheet as of June 30, 2017, the consolidated statements of operations for the three and nine month periods ended June 30, 2017 and 2016, the consolidated statements of comprehensive (loss) income for the three and nine month periods ended June 30, 2017 and 2016, the consolidated statements of stockholders’ equity as of and for the nine months ended June 30, 2017 and 2016, and the consolidated statements of cash flows for the nine month periods ended June 30, 2017 and 2016, are unaudited. The September 30, 2016 financial information included in this Amendment was derived from our audited financial statements included in our Form 10-K/A. In the opinion of management, all adjustments necessary to present fairly our financial position at June 30, 2017, the results of operations for the three and nine month periods ended June 30, 2017 and 2016 and cash flows for the nine month periods ended June 30, 2017 and 2016 have been made. The results of operations for the three and nine month periods ended June 30, 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 Form 10-K/A filed with the Securities and Exchange Commission.

The consolidated financial statements are prepared in accordance with US GAAP and industry practices.

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

 Note 2—Business and Basis of Presentation (continued)

The preparation of financial statements in conformity with US 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.

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.

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 eleven banks at June 30, 2017 that exceeded the balance insured by the FDIC by approximately $9.8 million. Additionally, three foreign banks with an aggregate $2.2 million balances are not FDIC insured. There is a $10.0 million aggregate balance in a domestic bank that is also 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 7 – Non-Recourse Debt). The Company has an additional $0.5 million in restricted cash that is included in assets related to discontinued operations. The Company does not believe it is exposed to any significant credit risk due to concentration of cash.

Equity method investment

Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50% interest in voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's consolidated balance sheets and statements of operations, however, the Company's share of the earnings of the investee company is reflected as earnings and loss from equity method investment in the Company's consolidated statement of operations. The Company's carrying value in an equity method investee company is reflected on the Company's consolidated balance sheet, as equity method investment.

Pegasus is the Company's 50% controlled equity investment with Pegasus Legal Funding (“PLF”). Under the operating agreement, the Company and PLF, each maintain 50% voting rights of the entity, and the Company is 80% owned by Asta. Based on these shared voting rights with PLF, the Company lacks requisite control of Pegasus, and therefore accounts for its investment in Pegasus under the equity method of accounting.

Serlefin BPO&O Peru S.A.C. (“Serlefin Peru”) is the Company's 49% owned joint venture. The other 51% is owned by three individuals who share common ownership with Serlefin BPO&O Serlefin S.A. (“Serlefin”). Each owner maintains voting rights equivalent to their share ownership, and the 51% shareholders collectively manage the operations of the business. Based on the Company's ownership and voting rights, the Company lacks requisite control of Serlefin Peru, and therefore accounts for its investment in Serlefin Peru under the equity method of accounting.

Additionally, the Company and Serlefin jointly purchase international consumer debt portfolios under a purchase agreement. The Company and Serlefin purchase the portfolios on a pro-rata basis of 80% and 20%, respectively. The purchased portfolios are transferred to an administrative and payment trust, where the Company and Serlefin are trustees. Serlefin provides collection services to the trust, and receives a performance fee determined by the parties for each loan portfolio acquired. Serlefin received approximately $115,000 and $94,000 and $0.4 million and $0.2 million in performance fees for the three and nine months ended June 30, 2017 and 2016, respectively.

The carrying value of the investment in Serlefin Peru was $0.2 million as of June 30, 2017 and September 30, 2016. The Company has included the carrying value of this investment in other assets on its consolidated balance sheets. The cumulative net loss from our investment in Serlefin Peru through June, 2017 was approximately $0.1 million, and was not significant to the Company's consolidated statement of operations.

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 2—Business and Basis of Presentation (continued)

When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. There were no impairment losses recorded on our equity method investments for the three and nine month periods ended June 30, 2017 and 2016.

Personal Injury Claim Advances 

Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with third party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have not exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

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 $1.4 million from the purchase of VATIV. Additionally, the Company has goodwill of $1.4 million from the purchase of CBC, which is included under assets related to discontinued operations on the consolidated balance sheet.

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss or shareholders’ equity.

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. Given the changes in the Company's business management is continuing to assess this new standard and the impact it will have on 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. 

20

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 2—Business and Basis of Presentation (continued)

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. 

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash ("ASU 2016-18"), to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. The new guidance will only be applicable to amounts described by the Company as restricted cash. We adopted ASU 2016-18 on October 1, 2016, the effect of which was a change in presentation on our consolidated statement of cash flows, but not on our consolidated financial results.

In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step 2 from the goodwill impairment test. The amendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not believe this update will have a material impact on its consolidated financial statements.

Note 3—Available-for-Sale Investments

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

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2017	$	5,500,000	$	-	$	-		$	5,500,000
September 30, 2016	$	55,724,000	$	1,088,000	$	(49,000	)	$	56,763,000

The available-for-sale investments do not have any contractual maturities. The Company sold six investments during the nine months ended June 30, 2017, with a realized loss of $1,011,000. The Company received $177,000 in capital gains distributions during the nine months ended June 30, 2017. For the nine months ended June 30, 2016, the Company sold three investments with a realized loss of $63,000 and also received $47,000 in capital gains distributions during that period. The Company recorded an aggregate realized loss of $834,000 related to its available-for-sale securities for the first nine months ended June 30, 2017 compared to an aggregate realized loss of $16,000 for the nine month period ended June 30, 2016. The Company sold three investments during the three months ended June 30, 2017 with a realized loss of $18,000. For the three months ended June 30, 2016, the Company sold one investment with a realized loss of $32,000.  

21

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

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

At June 30, 2017, there was one investment without any recognized unrealized gain or loss. This security is considered to be an acceptable credit risk. Based on the evaluation of the available evidence, including recent changes in market rates and credit rating information, management believes if any decline in fair value for these instruments is temporary. In addition, management has the ability to hold this investment security for a period of time sufficient to allow for an anticipated recovery or maturity. Should the impairment of any security 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. 

22

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

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 June 30,
	2017			2016
Balance, beginning of period	$	11,590,000		$	16,440,000
Acquisitions of receivable portfolio		—			751,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,061,000	)		(7,286,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(1,000	)		(83,000	)
Impairment		(148,000	)		—
Effect of foreign currency translation		(163,000	)		92,000
Finance income recognized		3,993,000			4,571,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.9	%		62.0	%

	For the Nine Months Ended June 30,
	2017			2016
Balance, beginning of period	$	13,427,000		$	15,056,000
Acquisitions of receivable portfolio		2,213,000			6,936,000
Net cash collections from collection of consumer receivables acquired for liquidation		(18,148,000	)		(22,060,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(191,000	)		(83,000	)
Impairment		(148,000	)		(124,000	)
Effect of foreign currency translation		39,000			205,000
Finance income recognized		12,018,000			14,555,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.5	%		65.7	%

During the three and nine month periods ended June 30, 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 nine month periods ended June 30, 2016, the Company purchased $2.2 million and $123.2 million, respectively, of face value portfolios at a cost of $0.3 million and $6.5 million, respectively.

As of June 30, 2017, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $4.5 million and $3.3 million, respectively. The total amount of foreign consumer receivables acquired for liquidation was $7.8 million, or 84.8% of the total consumer receivables held of $9.2 million at June 30, 2017.

As of June 30, 2016, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $4.0 million and $4.0 million, respectively. The total amount of foreign consumer receivables acquired for liquidation was $8.0 million, or 55.2% of the total consumer receivables held of $14.5 million at June 30, 2016.

23

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 4— Consumer Receivables Acquired for Liquidation (continued)

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 nine month periods ended June 30, 2017 and 2016, respectively.

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2017		2016		2017		2016
Gross collections (1)	$	10,659,000	$	12,380,000		32,641,000		36,982,000
Commissions and fees (2)		4,597,000		5,011,000		14,302,000		14,839,000
Net collections	$	6,062,000	$	7,369,000	$	18,339,000	$	22,143,000

(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 are earned by third party collection agencies and attorneys, and include direct costs associated with the collection effort, generally court costs. In December 2007 an arrangement was consummated with one servicer who also received a 3% fee on gross collections received by the Company in connection with the related portfolio purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors in connection with this portfolio purchase.

Note 5—Litigation Funding

Equity Method Investment

On December 28, 2011, the Company entered into a joint venture, Pegasus Funding, LLC ("Pegasus") with Pegasus Legal Funding, LLC (“PLF”). The Company has an 80% non-controlling interest in the joint venture. 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 claims. Pegasus, earned $5.1 million and $9.8 million, $9.8 million and $14.8 million in interest and fees during the three and nine months ended June 30, 2017 and 2016, respectively. The Company had a net invested balance in personal injury claims of $48.5 million and $48.6 million on June 30, 2017 and September 30, 2016, respectively.

Equity method investments as of June 30, 2017 and September 30, 2016 are as follows:

	June 30, 2017					September 30, 2016
	Carrying Value		Ownership Percentage			Carrying Value		Ownership Percentage
Pegasus Funding, LLC	$	48,533,000		80	%	$	48,582,000		80	%

The carrying value of the Company's equity investment at June 30, 2017 was $48,533,000, a decrease of $49,000 over the prior year's carrying value of $48,582,000. The decrease in carrying value was attributed to the Company's equity earnings of $2,759,000 for the nine months ended June 30, 2017, less loan repayments made to Asta which are classified on the balance sheet as due to Asta of $2,808,000 for the nine months ended June 30, 2017.

The carrying value of the Company's equity investment at September 30, 2016 was $48,582,000, an increase of $7,831,000 over the prior year's carrying value of $40,751,000. The increase in carrying value was attributed to the Company's current year equity earnings of $10,551,000, less loan repayments made to Asta which are classified on its balance sheet as due to Asta of $2,720,000 during fiscal 2016.

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, 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 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. 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. 

24

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 5—Litigation Funding (continued)

Equity Method Investment (continued)

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. See Note 20 - Subsequent Events. 

The results of operations and financial position of the Company’s equity investment in Pegasus are summarized below:

	Condensed Statement of Operations Information
	Three months ended
	June 30, 2017		June 30, 2016
Personal injury claims income	$	5,068,000	$	9,838,000
Operating expenses		1,680,000		2,096,000
Income from operations	$	3,388,000	$	7,742,000
Earnings from equity investment	$	2,710,000	$	6,193,000

	Condensed Statement of Operations Information
	Nine months ended
	June 30, 2017		June 30, 2016
Personal injury claims income	$	9,507,000	$	14,769,000
Operating expenses		6,058,000		4,744,000
Income from operations	$	3,449,000	$	10,025,000
Company’s equity income from operations	$	2,759,000	$	8,020,000

	Condensed Balance Sheet Information
	June 30, 2017			September 30, 2016
Cash	$	24,829,000	(1)	$	539,000
Investment in personal injury claims		23,927,000			48,289,000
Other assets		109,000			188,000
Total assets	$	48,865,000		$	49,016,000
Due to Asta	$	31,596,000		$	34,404,000
Other liabilities		628,000			1,053,000
Equity		16,641,000			13,559,000
Total liabilities and equity	$	48,865,000		$	49,016,000

(1) Included in current assets is $24.7 million in restricted cash. The restriction has been put in place during the Company’s arbitration with PLF, see Note 20 – Subsequent Events.

25

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 5—Litigation Funding (continued)

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. In 2012, 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 second quarter of fiscal 2017. As of June 30, 2017, the Company’s investment in cases through BPCM was approximately $1.7 million. There was no income recognized for the nine months ended June 30, 2017 and 2016 and the Company recorded bad debt expense of $0.7 million during the three months ended June 30, 2017.

Note 6—Furniture & Equipment 

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

	June 30,		September 30,
	2017		2016
Furniture	$	273,000	$	273,000
Equipment		242,000		235,000
Software		1,363,000		1,350,000
		1,878,000		1,858,000
Less accumulated depreciation and amortization		1,737,000		1,662,000
Balance, end of period	$	141,000	$	196,000

Note 7—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 $2,901,000 included a voluntary prepayment of $1,866,000 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 June 30, 2017, the Company recorded a liability to BMO of approximately $164,000, which has been recorded in other liabilities in the Company’s consolidated balance sheet. The funds were subsequently remitted to BMO on July 10, 2017. The liability to BMO is recorded when actual collections are received.

26

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 7—Non Recourse Debt (continued)

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 June 30, 2017. On August 2, 2017 the $9.6 million line of credit expired and the Company satisfied the debt with cash that was held in deposit as collateral with the bank.

Note 8—Discontinued Operations

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 13 – 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 has been appointed CEO/General Counsel effective January 1, 2017.

On December 13, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement) with CBC Holdings LLC, a Delaware limited liability company (the “Buyer”). Under the Purchase Agreement, the Company sold all of the issued and outstanding equity capital of CBC for an aggregate purchase price of approximately $10.5 million. Of the aggregate purchase price, approximately $4.49 million was paid in cash, and $5.75 million was paid under a promissory note at an annual interest rate of 7% to be paid quarterly to the Company and secured by a first priority security interest in and lien on such Buyer’s affiliates’ rights to certain servicing fees. The remaining amount of the aggregate purchase price was paid as reimbursement of certain invoices of CBC. The Company subsequently recognized a loss of approximately $1.9 million on the above sale of CBC as of September 30, 2017.

As a result of this sale all prior periods presented in the Company's consolidated financial statements will account for CBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for all periods presented.

As of June 30, 2017, the components of the Company designated as discontinued operations had assets and liabilities of $93.8 million and $78.6 million, respectively. As of September 30, 2016, the components of the Company designated as discontinued operations had assets and liabilities of $91.6 million and $69.2 million respectively. For the three and nine months ended June 30, 2017 and 2016, the Company designated as discontinued operations reported a income (loss), net of income taxes of $0.6 million and $0.6 million, and ($1.8) million and $1.4 million, respectively.

27

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 8—Discontinued Operations (continued)

The following table presents the operating results, for the three and nine months ended June 30, 2017 and 2016, for the components of the Company designated as discontinued operations:

	Three months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	7,531,000		$	1,422,000
Interest income on structured settlements		1,923,000			1,765,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,101,000			3,187,000
Other income		14,000			46,000
		4,115,000			3,233,000
Expenses:
General and administrative expenses		2,156,000			1,406,000
Interest expense		990,000			833,000
		3,146,000			2,239,000
Income from discontinued operations before income tax		969,000			994,000
Income tax expense from discontinued operations		409,000			417,000
Income from discontinued operations, net of income tax	$	560,000		$	577,000

	Nine months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	4,511,000		$	4,586,000
Interest income on structured settlements		5,765,000			4,473,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,923,000			9,059,000
Other income		44,000			46,000
		4,967,000			9,105,000
Expenses:
General and administrative expenses		5,152,000			4,157,000
Interest expense		2,871,000			2,349,000
		8,023,000			6,506,000
(Loss) income from discontinued operations before income tax		(3,056,000	)		2,599,000
Income tax (benefit) expense from discontinued operations		(1,300,000	)		1,091,000
(Loss) income from discontinued operations before non-controlling interest		(1,756,000	)		1,508,000
Non-controlling interest		—			104,000
(Loss) income from discontinued operations, net of income tax	$	(1,756,000	)	$	1,404,000

CBC purchased 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. 

28

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 8—Discontinued Operations (continued)

The major components of assets and liabilities related to discontinued operations are summarized below :

	June 30, 2017			September 30, 2016
Cash and cash equivalents	$	1,256,000	(1)	$	1,198,000
Restricted cash		499,000			499,000
Structured settlements		88,268,000			86,091,000
Furniture and equipment, net		37,000			47,000
Goodwill		1,405,000			1,405,000
Other assets		2,227,000			2,266,000
Total assets related to discontinued operations	$	93,692,000		$	91,506,000
Other debt - CBC		76,435,000			67,435,000
Other liabilities		2,194,000			1,803,000
Total liabilities related to discontinued operations	$	78,629,000		$	69,238,000

(1) Cash balance with one bank at June 30, 2017 that exceeded the balance insured by the FDIC by approximately $0.8 million.

Structured Settlements

Prior to the sale of CBC, CBC purchased 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 $4.5 million of unrealized gains recognized in the nine month period ended June 30, 2017, approximately $5.9 million is due to day one gains on new structured settlements financed during the period, $0.1 million gain due to a change in the discount rate, offset by a decrease of $1.5 million in realized gains recognized as realized interest income on structured settlements during the period. There were no other changes in assumptions during the period. 

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 a portion of the Company’s life contingent asset portfolio included in the Company’s structured settlements to the Assignee for a purchase price of $7.7 million. The Company realized a loss from the sale of $5.4 million for the three months and nine months ended June 30, 2017.

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 June 30, 2017.

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

	June 30, 2017			September 30, 2016
Maturity (1) (2)	$	135,132,000		$	133,059,000
Unearned income		(46,864,000	)		(46,968,000	)
Structured settlements, net	$	88,268,000		$	86,091,000

(1)	The maturity value represents the aggregate unpaid principal balance at June 30, 2017 and September 30, 2016.
(2)	There are no amounts of structured settlements that are past due, or in nonaccrual status at June 30, 2017 and September 30, 2016.

29

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 8—Discontinued Operations (continued)

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

	Interest Rate			June 30, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)		8.75	%	$	1,716,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		7.25	%		3,947,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		7.125	%		3,907,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		5.39	%		17,765,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		5.07	%		13,780,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		4.85	%		13,259,000		13,705,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until January 2069 (3)		5.0	%		17,761,000		—
$25,000,000 revolving line of credit (3)		4.1	%		4,300,000		10,154,000
Encumbered structured settlements					76,435,000		67,435,000
Structured settlements not encumbered					11,833,000		18,656,000
Total structured settlements				$	88,268,000	$	86,091,000

At June 30, 2017, the expected cash flows of structured settlements based on maturity value are as follows:

September 30, 2017 (3 months)	$	2,679,000
September 30, 2018		9,020,000
September 30, 2019		9,312,000
September 30, 2020		8,989,000
September 30, 2021		9,474,000
Thereafter		95,658,000
Total	$	135,132,000

The Company assumed $25.9 million of debt related to the CBC acquisition 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. On July 27, 2017 CBC entered into the Eleventh Amendment, extending the credit line maturity date to June 30, 2019.

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 completed its seventh private placement, through its subsidiary, BBR VII, and issued approximately $18.3 million of fixed rate asset-backed notes with a yield of 5.0%. 

As of June 30, 2017, the remaining debt amounted to $76.4 million, which consisted of $4.3 million drawdown from a line of credit from an institutional source and $72.1 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 fair value of this debt approximates its carrying value.

30

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 9—Commitments and Contingencies

Employment Agreement 

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. 

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 an aggregate amount up to 15% of the profit of the business of Simia (the “Business”) for each fiscal year in which the Business achieves an internal rate of return of at least 18%. In the event that the Business is sold to a third party solely for cash consideration during Mr. Preece’s employment period, he will be eligible to receive a cash or non-cash sale 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. 

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 June 30, 2017 and deemed that the $2.3 million reserve remains sufficient. See Note 20 - Subsequent Events.

31

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)  

Note 9—Commitments and Contingencies (continued)

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 June 30, 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. See Note 20 - Subsequent Events.

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. We are not involved in any other material litigation in which we are a defendant.

Note 10—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. Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with third party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have not exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

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

The Company recognizes revenue for GAR Disability Advocates and Five Star Veterans when disability claimants cases close with the social security administration and the applicable fees are collected.

32

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 10—Income Recognition, Impairments, and Commissions and Fees (continued)

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 $3.4 million 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.  

Note 11—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 continued and discontinued operations for the three and nine months ended June 30, 2017 was 12.2% and 0.4%, respectively, compared to 34.8% and 33.7% in the same periods of the prior year. The effective rate for fiscal 2017 differed from the U.S. federal statutory rate of 35% 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 and 2015 fiscal years is currently under examination by the Internal Revenue Service. The Company does not have any uncertain tax positions.

Note 12—Net Income (Loss) 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.

33

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 12—Net Income (Loss) per Share (continued) 

The following table presents the computation of basic and diluted per share data for the three months ended June 30, 2017 and 2016 (rounded to the nearest thousands, except share data):

	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
	Net Income		Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	1,571,000		6,577,784	$	0.24		$	3,289,000		11,897,139	$	0.27
Net (loss) income from discontinued operations		560,000		6,577,784		0.08			577,000		11,897,139		0.05
	$	2,131,000			$	0.32		$	3,866,000			$	0.32
Effect of Dilutive Stock				301,298		(0.01	)				536,285		(0.01	)
Diluted	$	2,131,000		6,879,082	$	0.31		$	3,866,000		12,433,424	$	0.31

The following table presents the computation of basic and diluted per share data for the nine months ended June 30, 2017 and 2016 (rounded to the nearest thousands, except share data):

	Nine Months Ended June, 2017								Nine Months Ended June 30, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	(7,033,000	)		9,389,864	$	(0.75	)	$	2,195,000		12,023,156	$	0.18
Net (loss) income from discontinued operations		(1,756,000	)		9,389,864		(0.19	)		1,404,000		12,023,156		0.12
	$	(8,789,000	)				(0.94	)		3,599,000			$	0.30
Effect of Dilutive Stock					—		—					270,917		(0.01	)
Diluted	$	(8,789,000	)		9,389,864	$	(0.94	)	$	3,599,000		12,294,073	$	0.29

For the three months ended June 30, 2017, 942,067 options at a weighted average exercise price of $8.15 were not included in the diluted earnings per share calculation as they were antidilutive.

For the three months ended June 30, 2016, 56,007 options at a weighted average exercise price of $12.55 were not included in the diluted earnings per share calculation as they were antidilutive

For the nine months ended June 30, 2016, 186,082 options at a weighted average exercise price of $10.88 were not included in the diluted earnings per share calculation as they were antidilutive.

 Note 13—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:

34

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 13—Stock Based Compensation (continued)

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 8 – Discontinued Operations). 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.

On June 8, 2017, the Compensation Committee granted 56,600 stock options to an officer and employees of the Company, of which 10,000 options vested immediately, 10,000 options vest on January 1, 2018, 10,000 options vest on January 1, 2019 and the remaining 26,600 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	1.86	%
Expected term (years)	5.97
Expected volatility	26.27	%
Forfeiture rate	3.49	%
Dividend yield	0.00	%

Note 14—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 540,800 shares, an award of 245,625 shares of restricted stock, and has cancelled 67,868 options, leaving 1,281,443 shares available as of June 30, 2017. As of June 30, 2017, approximately 88 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 may 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.

35

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 14—Stock Option Plans (continued)

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:

	Nine Months Ended June 30,
	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		56,600			6.55		67,100			7.93
Options exercised		—			—		(107,531	)		8.11
Options forfeited/cancelled		(53,800	)		14.01		(8,300	)		8.14
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

	Three Months Ended June 30,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		896,867		$	8.14		1,094,867		$	8.45
Options granted		56,600			6.55		—			—
Options exercised		—			—		(100,032	)		8.24
Options forfeited/cancelled		(1,000	)		7.93		—			—
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

The following table summarizes information about the 2012 Plan, 2002 Plan, and the Equity Compensation Plan outstanding options as of June 30, 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	–	$4.3000		3,800		1.8		2.95		3,800	$	2.95
$5.7501	–	$8.6250		824,167		5.1		7.86		738,895		7.94
$8.6251	–	$11.5000		124,500		5.6		9.40		124,500		9.40
				952,467		5.1		8.05		867,195	$	8.13

36

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 14—Stock Option Plans (continued)

Summary of the Plans (continued)

The Company recognized $38,000 and $30,000 of compensation expense related to the stock option grants during the nine and three month periods ended June 30, 2017, respectively. The Company recognized $453,000 and $126,000 of compensation expense related to the stock option grants during the nine and three month periods ended June 30, 2016, respectively. As of June 30, 2017, there was $132,000 of unrecognized compensation cost related to stock option awards. The weighted average period over which such costs are expected to be recognized is 2.0 years.

The intrinsic value of the outstanding and exercisable options as of June 30, 2017 was approximately $287,000 and $208,000, respectively. The weighted average remaining contractual life of exercisable options is 4.7 years. There were no options exercised during the nine and three month periods ended June 30, 2017. The fair value of the stock options that vested during the nine and three month periods ended June 30, 2017 was approximately $734,000 and $81,000, respectively. The fair value of the stock options that vested during the nine and three month periods ended June 30, 2016 was approximately $1,368,000 and $120,000, respectively. There fair value of the options granted during the nine and three month periods ended June 30, 2017 was $371,000 for both periods. The fair value of the options granted during the nine and three month periods ended June 30, 2016 was approximately $709,000 and $0, respectively.

The following table summarizes information about restricted stock transactions:

	Nine Months Ended June 30,
	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		—		—		128,304			7.89
Vested		—		—		(39,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		133,304		$	7.92

	Three Months Ended June 30,
	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		—	$	—		138,304		$	7.92
Awards granted		—		—		—			—
Vested		—		—		(5,000	)		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		133,304		$	7.92

The Company did not recognize any compensation expense related to the restricted stock awards during both the nine and three month periods ended June 30, 2017, respectively. The Company recognized $114,000 and $13,000 of compensation expense related to the restricted stock awards during the nine and three month periods ended June 30, 2016, respectively. As of June 30, 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 nine months of fiscal year 2016, all of which were granted to a non-officer employee. The fair value of the awards vested during the nine month periods ended June 30, 2017 and 2016 was $0 and $326,000 respectively. 

The Company recognized an aggregate total of $38,000 and $30,000 in compensation expense for the nine and three month periods ended June 30, 2017, respectively, for the stock options and restricted stock grants. The Company recognized an aggregate total of $567,000 and $139,000 in compensation expense for the nine and three month periods ended June 30, 2016, respectively, for the stock options and restricted stock grants. As of June 30, 2017, there was a total of $132,000 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.

37

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 15—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 June 30, 2017, there were no such restrictions. No dividends were declared during the three and nine month periods ended June 30, 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.  

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 had 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. 

38

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 15—Stockholders’ Equity (continued)

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 represent 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.

As of December 31, 2016 and for the three months ended December 31, 2015 and 2016, through February 14, 2017, 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. Effective on February 15, 2017, the date Mangrove tendered its shares, they were no longer deemed to be a related party.

39

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 15—Stockholders’ Equity (continued)

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. The Company concluded any value associated with the Right given to shareholders as a dividend is deemed deminimus.

Note 16—Fair Value of Financial Measurements and Disclosures 

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 June 30, 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. 

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.

40

 ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 16—Fair Value of Financial Measurements and Disclosures (continued)

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

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash equivalents (Level 1)	$	2,864,000	$	2,864,000	$	923,000	$	923,000
Available-for-sale investments (Level 1)		5,500,000		5,500,000		56,764,000		56,764,000
Other investments, net (Level 1)		—		—		3,590,000		3,590,000
Consumer receivables acquired for liquidation (Level 3)		9,210,000		41,488,000		13,427,000		47,233,000

The following assets have been reclassified to discontinued operations as of June 30, 2017 and September 30, 2016:

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial asset
Structured settlements (Level 3)		88,268,000		88,268,000		86,091,000		86,091,000

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 equivalents – The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The carrying amount of cash equivalents 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. 

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).  

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.  

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 nine month period ended June 30, 2017. The Company had no Level 2 or Level 3 available-for-sale investments during the first nine months of fiscal year 2017.  

The following table sets forth the Company’s quantitative information about its Level 3 fair value measurements as of June 30, 2017 (which are reclassified in the consolidated financial statements as assets related to discontinued operations):

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	88,268,000	Discounted cash flow	Discount rate		4.71%	–	6.05%

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.

41

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 16—Fair Value of Financial Measurements and Disclosures (continued)

The changes in financial instruments at fair value using significant unobservable inputs (Level 3) during the nine months ended June 30, 2017 were as follows:

	Structured Settlement
Balance at September 30, 2016	$	86,091,000
Fair value adjustment		(433,000	)
Total gains and losses included in earnings		(842,000	)
Changes in allowance		242,000
Purchases		13,363,000
Sales		(7,727,000	)
Interest accreted		4,760,000
Payments received		(7,186,000	)
Total	$	88,268,000

Realized and unrealized gains and losses on structured settlements included in earnings in the accompanying consolidated statements of operations for the nine months ended June 30, 2017 are reported in the following revenue categories:

The amount of total gains for the nine months period included in earnings attributable to the change in unrealized gains relating to assets held at June 30, 2017	$	4,511,000
Realized loss relating to assets sold during the nine months ended June 30, 2017	$	(5,353,000	)
Total losses included in the nine months ended June 30, 2017	$	(842,000	)

Note 17—Segment Reporting

The Company operates through strategic business units that are aggregated into three reportable segments: consumer receivables, personal injury claims, and GAR Disability Advocates. The three 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 (Equity Method of Investment)   – Pegasus Funding, LLC, purchases interests in personal injury 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. Effective January 2017, Simia 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. Simia's activity for the three and nine months ended June 30, 2017 is included in this segment, along with that of the Company's equity investment in Pegasus.

• Social Security benefit advocacy – 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.

42

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 17—Segment Reporting (continued)

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, other assets, and assets related to discontinued operations.

The following table shows results by reporting segment for the three and nine month periods ended June 30, 2017 and 2016.

(Dollars in millions)	Consumer Receivables		GAR Disability Advocates			Personal Injury Claims Including Equity Investment (2)		Corporate (3)				Total
Three Months Ended June 30,
2017:
Revenues	$	4.0	$	1.1		$	0.3	$	—			$	5.4.4
Other income		—		—			—		—				0.1
Segment profit (loss)		2.9		0.0			2.6		(3.7	)			1.8
2016:
Revenues		4.6		1.2			—		—				5.8
Other income		—		—			—		0.2				0.2
Segment profit (loss)		4.2		(1.8	)		6.2		(3.6	)			5.0
Nine Months Ended June 30,
2017:
Revenues	$	12.0	$	4.0		$	0.3	$	—			$	16.3.4
Other income		—		—			—		(0.1	)			(0.1	)
Segment profit (loss)		9.7		(1.4	)		2.3		(17.7	)			(7.1	)
Segment Assets(1)		19.6		3.3			52.9		136.9		(4)		212.7
2016:
Revenues		14.6		2.7			—		—				17.3
Other income		—		—			—		1.2				1.2
Segment profit (loss)		10.7		(6.3	)		8.0		(9.1	)			3.3
Segment Assets(1)	19.2			1.5			45.1		180.8		(4)		246.6

The Company does not have any intersegment revenue transactions.

(1)	Includes other amounts in other line items on the consolidated balance sheet.
(2)	The  Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has included its pro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment.
(3)	Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.
(4)	Included in Corporate are approximately $93.7 million and $84.8 million of assets related to discontinued operations as of June 30, 2017 and 2016, respectively.

43

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 18—Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of:

	Nine Months Ended June 30, 2017								Year Ended 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		$	179,000	$	803,000		$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.		—			32,000		32,000			—			(46,000	)		(46,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $404,000 and ($529,000) at June 30 2017, and September 30, 2016, respectively.		(607,000	)		—		(607,000	)		868,000			—			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 and $24,000 at June 30 2017, and September 30, 2016, respectively.		(17,000	)		—		(17,000	)		(39,000	)		—			(39,000	)
Net current-period other comprehensive (loss) income		(624,000	)		32,000		(592,000	)		829,000			(46,000	)	$	783,000
Ending balance	$	—		$	211,000	$	211,000		$	624,000		$	179,000		$	803,000

44

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 18—Accumulated Other Comprehensive (Loss) Income (continued)

	Nine Months Ended June 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $25,000 during the nine month period ended June 30, 2016.		-			(37,000	)		(37,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($695,000) during the nine month period ended June 30, 2016.		1,046,000			-			1,046,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $24,000 during the nine month period ended June 30, 2016.		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		1,007,000			(37,000	)		970,000
Ending balance	$	802,000		$	188,000		$	990,000

Note 19—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 includes, 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 three and nine months ended June 30, 2017 and 2016, the Company paid $20,000 and $60,000, respectively, to Piccolo for such services. There were no amounts due to Piccolo at June 30, 2017 and September 30, 2016.

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.  For the three and nine months ended June 30, 2017 and 2016, Pegasus paid ALP $33,000 and $100,000, respectively.

In June 2015, CBC entered into an asset purchase agreement with Fortress Funding, LLC (“Fortress”) to acquire an interest in certain tangible and intangible assets of Fortress, which included customer lists, equipment and other intellectual property. In consideration for these assets CBC agreed to pay Fortress $0.5 million, as well as up to an additional $1.2 million based on conversion of customers from the acquired lists obtained in the transaction. Fortress is owned by Michelle Silverman, the wife of Ryan Silverman, who in connection with the agreement was offered employment as General Counsel of CBC. Effective January 2017, Silverman was appointed as CEO, and currently serves as the CEO/General Counsel of CBC.

For the three and nine months ended June 30, 2017, the Company paid Fortress $49,000 and $0.2 million, and for the three and nine months ended June 30, 2016, $32,000 and $0.2 million, respectively. As of June 30, 2017 and September 30, 2016, the Company had a liability due to Fortress of $0.0 million and $0.8 million, respectively.

In June 2017, CBC reached an agreement with Fortress; to settle the remaining $0.6 million owed under the agreement, which included any future amounts that could have been paid under the agreement in exchange for shares of Asta's common stock. Under the settlement agreement the Company issued Fortress 55,000 unrestricted shares of the Company's common stock as a complete release of any future obligations under the agreement. In conjunction with this transaction the Company recognized a charge to expense of $0.4 million for the three months and nine months ended June 30, 2017, which represents the market price of the shares at the date of issuance. The Company did not recognize a gain on the settlement of this obligation.

45

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 20—Subsequent Events

Simia

Effective November 11, 2016, the Company entered into a five year employment agreement with Mr. Preece that 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. See Note 5 - Litigation Funding.

As of July 17, 2017, Mr. Preece was no longer employed as Chief Executive Officer of Simia. On an interim basis Gary Stern, Chairman, Chief Executive Officer and President of the Company, will undertake the responsibilities of Simia’s Chief Executive Officer. No amounts were paid for any severance or bonus under his contract. 

Pegasus

The Company filed for arbitration with the American Arbitration Association ("AAA") against Pegasus in April 2017 for breaches in the Operating and Term Sheet. On April 18, 2017, the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitration panel is confirmed and can review the case. As of June 30, 2017 there was approximately $24.7 million in cash that was restrained under the Emergent Award, and is classified as restricted on the Company's consolidated balance sheet. The Company has as equity method investment in Pegasus. See Note 5 - Litigation Funding.

On July 17, 2017, an arbitration panel was confirmed, and a hearing date was scheduled for August 25, 2017 on the Company's motion to have PLF removed from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company in accordance with the Operating and Liquidation Agreements.

On January 12, 2018, the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by and among the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo & Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into the Purchase Agreement.

Additionally, on January 12, 2018, ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding, Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with Pegasus Legal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests of Pegasus Funding, LLC (“Pegasus”), which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregate purchase price of $1,800,000. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability company interests of Pegasus.

As a result of the purchase of the Seller’s 20% interest in Pegasus on January 12, 2018 under the Purchase Agreement, beginning with the quarter ended March 31, 2018, the Company will consolidate the financial statements of Pegasus. The Company currently accounts for its investment in Pegasus under the equity method of accounting. See Note 5 - Litigation Funding.

Legal Matters

A competitor of the Company's former subsidiary CBC alleged that CBC had unlawfully purchased certain of the competitor's trade secrets and customer lists from intermediaries who allegedly arranged and/or paid for said materials from the competitor.  CBC denied any wrongdoing and disclaimed liability.  The parties settled the matter for a payment by the Company of $0.5 million on or about November 22, 2017, in exchange for a complete release. 

On November 24, 2017, the Company paid $0.8 million as a settlement in conjunction with the lawsuit filed against the Company in Montana state court alleging, fraud and abuse of process arising from the Company's business relationship with an entity that finances divorce proceedings. See Note 9 - Commitments and Contingencies.

On January 23, 2018, the Company paid $2.3 million as a global settlement in conjunction with the punitive class action complaint filed against the Company, and one of its third-party law firm servicers. This payment represented the Company's portion of the total settlement of $4.6 million, which was split with the third-party law firm. See Note 9 - Commitments and Contingencies.

Special Dividend

On February 5, 2018, the Board of Directors of the Company declared a special cash dividend in the amount of $5.30 per share with respect to its Common Stock, payable on February 28, 2018 to holders of record of the Company’s Common Stock at the close of business on February 16, 2018, with an ex-dividend date of March 1, 2018. The aggregate payment to shareholders was approximately $35 million.

IRS Examination

The Company's amended federal tax return for the years ended September 30, 2014 and 2015 is currently being audited by the Internal Revenue Service.

46

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (Restated)

Note 20—Subsequent Events  (Continued)

US Tax Reform 

 On December 22, 2017 the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces the Federal statutory corporate income tax rate from 35% to 21%. This rate reduction is expected to have a significant impact on our provisions for income taxes for periods beginning after September 30, 2017, including a one-time impact resulting from the revaluation of our deferred tax assets and liabilities to reflect the new lower rate. While we have not yet determined the net amount of the revaluation, we expect that it will be a significant component of our income tax provision for the first quarter of fiscal 2018.

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

Caution Regarding Forward Looking Statements

This Amendment 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 Amendment, 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, the restatement of previously issued financial statements, the identified material weaknesses in our internal control over financial reporting and our ability to remediate those weaknesses, 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 Form 10-K/A, and Item 1A of this Amendment.

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.

47

Overview

All management discussion and analysis has been revised to reflect the restatements discussed in Note 1 – Restatement of Financial Statements in the Company’s notes to consolidated financial statements.

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”), EMIRIC, LLC (“EMIRIC”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), 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 funding of personal injury claims, through our 50% controlled, 80% owned equity investment in Pegasus Funding, LLC (“Pegasus”), social security and disability advocates 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 will not fund any new advances after December 28, 2016. Simia is operated by a new management team, with significant experience in the personal injury funding business.

On December 13, 2017, we sold all of our issued and outstanding equity capital in CBC, our wholly owned subsidiary engaging in structured settlements. As a result of this sale, all prior periods presented in our consolidated financial statements will account for CBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising our structured settlement business to assets and liabilities related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for all periods presented. See Note 8 - Discontinued Operations in the notes to our consolidated financial statements. 

The Company operates principally in the United States in three reportable business segments: consumer receivables (domesticated foreign), personal injury claims and social security benefit advocacy. The Company previously operated a fourth segment when it engaged in the structured settlements business through CBC prior to its sale on December 13, 2017.   

Financial Information About Operating Segments

The Company operates through strategic business units that are aggregated into three reportable segments consisting 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 charged off and semi-performing receivables, primarily in the international marketplace. 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 (Equity Method Investment)   – Pegasus Funding, LLC, purchases interests in personal injury 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. Effective January 2017, Simia 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. Simia's activity for the three and nine months ended June 30, 2017 is included in this segment, along with that of the Company's equity investment in Pegasus. 

48

• 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.

The consumer receivables segment and the social security benefit advocacy segment each accounted for 10% or more of consolidated net revenue for the three and nine month periods ended June 30, 2017 and 2016. Pegasus is accounted for under the equity method within the personal injury claims segment. The following table summarizes total revenues by percentage from the three lines of business for the three and nine month periods ended June 30, 2017 and 2016:

	Three Months Ended June 30,
	2017			2016
Finance income (consumer receivables)		74.4	%		79.6	%
Personal injury claims		4.5	%		—	%
Social Security benefit advocacy		21.1	%		20.4	%
Total revenues		100.0	%		100.0	%

	Nine Months Ended June 30,
	2017			2016
Finance income (consumer receivables)		73.9	%		84.4	%
Personal injury claims		1.5	%		—	%
Social Security benefit advocacy		24.6	%		15.6	%
Total revenues		100.0	%		100.0	%

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

Information about the results of each of the Company’s reportable segments for the three and nine month periods ended June 30, 2017 and 2016, reconciled to the Company’s consolidated results, are set forth below. Separate segment MD&A is not provided, as segment revenue corresponds to the revenue presented in the Company's consolidated statement of operations, and material expense items are not allocable to any specific segment. 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, available-for-sale securities, property and equipment, goodwill, deferred taxes, other assets and assets related to discontinued operations.

49

The following table shows results by reporting segment for the three and nine month periods ended June 30, 2017 and 2016.

(Dollars in millions)	Consumer Receivables		GAR Disability Advocates			Personal Injury Claims and (Equity Investment) (2)		Corporate (3)				Total
Three Months Ended June 30, 3303030December 31,
2017:
Revenues	$	4.0	$	1.1		$	0.3	$	—			$	5.4.4
Other income		—		—			—		—				0.1
Segment profit (loss)		2.9		—			2.6		(3.7	)			1.8
2016:
Revenues		4.6		1.2			—		—				5.8
Other income		—		—			—		0.2				0.2
Segment profit (loss)		4.2		(1.8	)		6.2		(3.6	)			5.0
Nine Months Ended June 30,
2017:
Revenues	$	12.0	$	4.0		$	0.3	$	—			$	16.3.4
Other income		—		—			—		(0.1	)			(0.1	)
Segment profit (loss)		9.7		(1.4	)		2.3		(17.7	)			(7.1	)
Segment Assets(1)	19.6			3.3			52.9		136.9		(4)		212.7
2016:
Revenues		14.6		2.7			—		—				17.3
Other income		—		—			—		1.2				1.2
Segment profit (loss)		10.7		(6.3	)		8.0		(9.1	)			3.3
Segment Assets(1)	19.2			1.5			45.1		180.8		(4)		246.6

 The Company does not have any intersegment revenue transactions.

(1)	Includes other amounts in other line items on the consolidated balance sheet.
(2)	The  Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has included its pro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment.
(3)	Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.
(4)	Included in Corporate are approximately $93.7 million and $84.8 million of assets related to discontinued operations as of June 30, 2017 and 2016, respectively.

Consumer Receivables  

The consumer receivable portfolios generally consist of one or more of the following types of consumer receivables (domestic and foreign): 

• 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.  

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Currently, we have been purchasing receivables in the international market 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.

Litigation Funding Business 

In 2011, the Company purchased an 80% interest, 50% controlled in Pegasus. “PLF”, an unrelated third party, holds the other 20% interest. The Company accounts for this investment under the equity method of accounting. See Note 5 - Equity Method Investment. 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 will provide 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 are 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 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 and governs the terms relating to the liquidation of the existing Pegasus portfolio. 

Pursuant to the Term Sheet, the parties 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. 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 PLF. As of June 30, 2017, the carrying value of its equity investment in Pegasus was approximately $48.5 million.

 On May 8, 2012, the Company announced the formation of EMIRIC , a wholly owned subsidiary of the Company. EMIRIC 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 us. 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 June 30, 2017, BPCM has invested $1.7 million, net of reserve charges, in cases managed by this Venture. 

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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. At December 31, 2016, the balance in the revolving line of credit was approximately $1.5 million. 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.

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 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. Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with third party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have not exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

Prior to our sale of CBC, CBC purchased 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 and Five Star when disability claimants cases close with the social security administration and the applicable 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 

Nine Months Ended June 30, 2017, Compared to the Nine Months Ended June 30, 2016 

Finance income. For the nine months ended June 30, 2017, finance income decreased $2.6 million or 17.4% to $12.0 million from $14.6 million for the nine months ended June 30, 2016. During the nine months ended June 30, 2017, the Company purchased $35.0 million of face value portfolios at a cost of $2.2 million. During the first nine months of fiscal year 2016, the Company purchased $123.2 million of face value portfolios at a cost of $6.5 million. Net collections for the nine months ended June 30, 2017 decreased 17.2% to $18.3 million from $22.1 million for the same prior year period. During the first nine months of fiscal year 2017, gross collections decreased 11.7% or $4.4 million to $32.6 million from $37.0 million for the nine months ended June 30, 2016. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $0.5 million, or 3.6%, to $14.3 million for the current fiscal nine month period from $14.8 million for the nine months ended June 30, 2016. Commissions and fees amounted to 43.8% of gross collections for the nine month period ended June 30, 2017, compared to 40.1% in the same period of the prior year, resulting from higher percentage of commissionable collections in the prior year period. 

Personal injury claims income. For the nine months ended June 30, 2017, personal injury claims income was $0.2 million, as Simia, the Company's new wholly owned subsidiary, just commenced operations at the end of calendar 2016. Previously, the Company funded personal injury claim advances through Pegasus, its 80% owned joint venture; which is accounted for under the equity method of accounting.

Social security benefit advocacy fee income. For the nine months ended June 30, 2017, disability fee income increased $1.3 million, or 47.8%, to $4.0 million as compared to $2.7 million for the nine months ended June 30, 2016, due to the increase in the number of disability claimants cases that the Company was able to close with the United States Social Security Administration during the current period.  

Earnings (loss) from equity method investee. Earnings from equity method investee decreased $5.2 million, or 65.6%, to earnings of $2.8 million for the nine months ended June 30, 2017 from earnings of $8 million for the nine months ended June 30, 2016, due to reduced interest income and bad debt write downs on personal injury claimant advances.

Other income (loss). The following table summarizes other income (loss) for the nine months ended June 30, 2017 and 2016:

	For the nine months ended June 30,
	2017			2016
Interest and dividend income	$	733,000		$	934,000
Realized loss		(833,000	)		(16,000	)
Other		(26,000	)		258,000
	$	(126,000	)	$	1,176,000

General and administrative expenses. For the nine months ended June 30, 2017, general and administrative expense increased $2.6 million, or 11.3 %, to $25.6 million from $23.0 million for the nine months ended June 30, 2016, primarily due to an increase in professional fees of $3.1 million, loss of $3.4 million in other investment, unfavorable foreign exchange loss of $0.6 million, partially offset by the reduction in litigation settlement costs of $2.0 million, reduction in GAR Disability Advocates office salaries of $1.4 million and advertising expense of $1.1 million. 

Interest expense. For the nine months ended June 30, 2017, interest expense increased $0.2 million to $0.2 million as compared to $0 million for the nine months ended June 30, 2016. The increased expense is a result of the interest expense related to the Bank Hapoalim line of credit.

Segment profit – Consumer Receivables. For the nine months ended June 30, 2017, segment profit decreased $1.0 million to $9.7 million from $10.7 million for the nine months ended June 30, 2016, primarily due to lower revenues of $2.6 million and higher collection costs of $0.4 million partially offset by the reduction in litigation settlement costs of $2.0 million. 

Segment profit – Personal Injury Claims. For the nine months ended June 30, 2017, segment profit was $2.3 million as compared to segment profit of $8.0 million for the nine months ended June 30, 2016. The decrease is primarily attributable to increased bad debt expense of $2.3 million, and lower interest earned on personal injury claim advances.

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Discontinued Operations. Structured settlement income of $4.9 million includes $4.5 million of unrealized gain and $5.8 million of interest income and a loss on sale of structured settlements $5.4 for the nine months ended June 30, 2017. Structured settlement income of $9.1 million included $4.6 million of unrealized gains and $4.5 million of interest income for the nine months ended June 30, 2016. This decrease in income is primarily the result from the loss on sale of a portion of CBC’s life contingent annuities portfolio. Unrealized losses on structured settlements is comprised of both unrealized losses 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 $4.5 million of unrealized gain recognized for the nine months ended June 30, 2017, approximately $5.9 million is due to day one gains on new structured settlements financed during the period, $0.8 million gain due to a change in the discount rate, offset by a decrease of $1.5 million in realized gains recognized as realized interest income on structured settlements and a reduction in fair value of $0.7 million during the period. There were no other changes in assumptions during the period.  All of the revenue associated with CBC is recorded in income (loss) from discontinued operations in the Company's consolidated statements of operations.

Segment loss – GAR Disability Advocates. For the nine months ended June 30, 2017, segment loss was $1.4 million as compared to a $6.3 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 $1.3 million and the reduction in general and administrative expenses of $3.6 million

Income tax (benefit) expense. For the nine months ended June 30, 2017, income tax benefit for continuing and discontinued operations, consisting of federal and state income taxes, was $1.3 million, as compared to an income tax expense for continuing and discontinued operations, consisting of federal and state income taxes, of $2.2 million for the nine months ended June 30, 2016, resulting from a decrease in the taxable loss in the current period.

Loss (income) from continuing operations. As a result of the above, the Company had a net loss from continuing operations for the nine months ended June 30, 2017 of $7.0 million compared to $2.2 million net income from continuing operations for the nine months ended June 30, 2016.

Loss (income) from discontinued operations. As a result of the above, the Company had a net loss from discontinued operations for the nine months ended June 30, 2017 of $1.8 million compared to $1.4 million of net income from discontinued operations for the nine months ended June 30, 2016.

Net loss (income). As a result of the above, the Company had a net loss for the nine months ended June 30, 2017 of $8.8 million compared to $3.6 million net income for the nine months ended June 30, 2016.

Three Months Ended June 30, 2017, Compared to the Three Months Ended June 30, 2016

Finance income. For the three months ended June 30, 2017, finance income decreased $0.6 million or 12.7% to $4.0 million from $4.6 million for the three months ended June 30, 2016. During the three months ended June 30, 2017, the Company did not purchase any portfolios. During the three months ended June 30, 2016, the Company purchased $2.2 million in face value of new foreign portfolios purchased in Peru and Colombia at a cost of $0.3 million. Net collections for the three months ended June 30, 2017, decreased 17.7% to $6.1 million from $7.4 million for the three months ended June 30, 2016. During the third quarter of fiscal year 2017, gross collections decreased 13.9% or $1.7 million to $10.7 million from $12.4 million for the three months ended June 30, 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 June 30, 2017 from $5.0 million for the three months ended June 30, 2016. Commissions and fees amounted to 43.1% of gross collections for the three months ended June 30, 2017, compared to 40.5% for the three months ended June 30, 2016, resulting from higher percentage of commissionable collections in the current period. 

Personal injury claims income. For the three months ended June 30, 2017, personal injury claims income was $0.2 million, as Simia, the Company's new wholly owned subsidiary, just commenced operations at the end of calendar 2016. Previously, the Company funded personal injury claim advances through Pegasus, its 80% owned joint venture; which is accounted for under the equity method of accounting.

Social security benefit advocacy fee income. For the three months ended June 30, 2017, disability fee income decreased $0.1 million to $1.1 million as compared to $1.2 million for the three months ended June 30, 2016, due to the comparable number of disability claimants cases that the Company was able to close with the United States Social Security Administration during the current and prior period. 

Earnings (loss) from equity method investee. Earnings from equity method investee decreased $3.5 million, or 56.2%, to earnings of $2.7 million for the three months ended June 30, 2017 from earnings of $6.2 million for the three months ended June 30, 2016, due to reduced interest income and bad debt write downs on personal injury claimant advances.

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Other income (loss). The following table summarizes other income (loss) for the three months ended June 30, 2017 and 2016:

	For the three months ended June 30,
	2017			2016
Interest and dividend income	$	61,000		$	312,000
Realized loss		(18,000	)		(32,000	)
Other		47,000			(104,000	)
	$	90,000		$	176,000

General and administrative expenses. For the three months ended June 30, 2017, general and administrative expense decreased $1.0 million, or 14.2 %, to $6.1 million from $7.1 million for the three months ended June 30, 2016, primarily attributable to a reduction in GAR Disability expenses for advertising and payroll costs .

Interest expense. For the three months ended June 30, 2017, interest expense increased $0.2 million to $0.2 million as compared to $0 million for the nine months ended June 30, 2016. The increased expense is a result of the interest expense related to the Bank Hapoalim line of credit. 

Segment profit – Consumer Receivables. For the three months ended June 30, 2017, segment profit decreased $1.3 million to $2.9 million as compared to $4.2 million for the three months ended June 30, 2016, primarily due to a decrease in revenue of $0.6 million, impairment charges of approximately $0.2 million and foreign exchange loss of approximately $0.5 million. 

Segment profit– Personal Injury Claims. For the three months ended June 30, 2017, segment profit was $2.6 million as compared to $6.2 million profit for the three months ended June 30, 2016. The decrease is primarily attributable to reduced interest earned and bad debt write downs on personal injury claimant advances.

Segment loss – GAR Disability Advocates. For the three months ended June 30, 2017, segment loss was $0.0 million as compared to a $1.8 million loss for the same period in the prior year. This reduced loss in the current fiscal year is primarily the result a of reduction in general and administrative expenses of $1.8 million.

Discontinued Operations. Structured settlement income of $4.1 million includes $7.5 million of unrealized gains and $1.9 million of interest income offset by a loss of $5.3 million on the sale of CBC’s life contingent annuities portfolio for the three months ended June 30, 2017. Structured settlement income of $3.2 million included $1.4 million of unrealized gains and $1.8 million of interest income for the three months ended June 30, 2016. This decrease in income is the result of a loss on sale of CBC’s life contingent annuities portfolio during this period. Unrealized losses on structured settlements is comprised of both unrealized losses 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 $7.5 million of unrealized losses recognized for the three months ended June 30, 2017, approximately $1.6 million is due to day one gains on new structured settlements financed during the period, offset by a decrease of $5.4 million in unrealized losses recognized as loss on sale of structured settlements and a $0.5 million gain due to a change in the discount rate during the period. There were no other changes in assumptions during the period.  All of the revenue associated with CBC is recorded in income (loss) from discontinued operations in the Company's consolidated statements of operations.

Income tax (benefit) expense. For the three months ended June 30, 2017, income tax expense for continuing and discontinued operations, consisting of federal and state income taxes, was $0.6 million, as compared to an income tax expense for continuing and discontinued operations, consisting of federal and state income taxes, of $2.2 million for the three months ended June 30, 2016, resulting from a decrease in the taxable income in the current period.

Income from continuing operations. As a result of the above, the Company had a net income from continuing operations for the three months ended June 30, 2017 of $1.6 million compared to $3.3 million net income from continuing operations for the three months ended June 30, 2016.

Income from discontinued operations. As a result of the above, the Company had a net income from discontinued operations for the three months ended June 30, 2017 of $0.6 million compared to $0.6 million of net income from discontinued operations for the three months ended June 30, 2016.

Net income. As a result of the above, the Company had a net income for the three months ended June 30, 2017 of $2.1 million compared to $3.9 million net income for the three months ended June 30, 2016.

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.

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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 June 30, 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 June 30, 2017. There is a $10.0 million 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 June 30, 2017. On August 2, 2017, the Bank Hapoalim $9.6 million line of credit expired and the Company satisfied the debt with cash that was held in deposit as collateral with the bank.

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.

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.

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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 during the nine months ended June 30, 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. 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, with Asta Funding, Inc. receiving 80% and PLF receiving 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.

The Company filed for arbitration with the American Arbitration Association ("AAA") against Pegasus in April 2017 for breaches in the Operating and Liquidation Agreements. On April 18, 2017, the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitration panel is confirmed and can review the case. As of June 30, 2017 there was approximately $24.7 million in cash that was restrained under the Emergent Award, and is classified as restricted on the Company's consolidated balance sheet.

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On July 17, 2017, an arbitration panel was confirmed, and a hearing date has been scheduled for August 25, 2017 on the Company's motion to have PLF removed from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company in accordance with the Operating and Term Agreements. 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.

Additionally, on January 12, 2018, ASFI , a subsidiary of the Company, entered into a Membership Interest Purchase Agreement with PLF. Under the Purchase Agreement, ASFI bought the Seller’s ownership interests of Pegasus, which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregate purchase price of $1,800,000. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability company interests of Pegasus.

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 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 of fiscal 2017 with a charge to general and administrative expenses.

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 June 30, 2017, CBC had structured settlements valued at $88.3 million and debt of $76.4 million, consisting of a $4.3 million line of credit and an aggregate of $72.1million of non-recourse notes. 

 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 realized a loss from the sale of $5.3 million for the three months ended June 30, 2017.

Cash Flow

As of June 30, 2017, our cash and cash equivalents, including restricted cash increased $8.9 million to $25.2 million from $16.3 million at September 30, 2016. The Company had $10 million in cash and cash equivalents that have been classified as restricted at June 30, 2017.

Net cash used in operating activities was $9.8 million during the nine months ended June 30, 2017 compared to $5.0 million used in operating activities during the nine months ended June 30, 2016. Net cash provided by investing activities was $54.3 million during the nine month period ended June 30, 2017 compared to $0.8 million used in investing activities during the nine months ended June 30, 2016. The increase was primarily attributed to the net proceeds realized from the sale of available for sale securities, less purchases of available for sale securities of $49.2 million in the current year. Net cash used in financing activities was $35.6 million during the nine months ended June 30, 2017, as compared to cash provided by financing activities of $0.8 million during the nine months ended June 30, 2016. The increase in net cash in financing activities in the current period is primarily the result of treasury stock purchase in conjunction with the Company’s self-tender of $54.2 million offset by $9.6 million in borrowings from Bank Hapoalim and $9.0 million in cash provided by discontinued operations.

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, 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.

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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.

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 June 30, 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.

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. Given the changes in the Company's business management is continuing to assess this new standard and the impact it will have on 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.  

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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.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash ("ASU 2016-18"), to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. The new guidance will only be applicable to amounts described by the Company as restricted cash. We adopted ASU 2016-18 on October 1, 2016, the effect of which was a change in presentation on our consolidated statement of cash flows, but not on our consolidated financial results.

In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step 2 from the goodwill impairment test. The amendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not believe this update will have a material impact on its consolidated financial statements.

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 June 30, 2017, the debt associated with our acquisition of CBC, had a balance of approximately $76.4 million, consisting of $4.3 million through a line of credit, at a rate of LIBOR plus 3%, with a floor of 4.1%, from a financial institution, and $72.1 million of notes at varying rates, from 4.85% to 8.75%, issued by CBC’s subsidiaries. At June 30, 2017, the LIBOR rate was 1.22389%. 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 (4.22389 %) 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. The Company sold CBC on December 13, 2017, and presents the entity as a discontinued operation in its consolidated financial statements. We do not currently invest in derivative financial or commodity instruments.  

Item 4. Controls and Procedures (restated)

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 on June 30, 2017 due to the material weaknesses described below:

1.     The Company lacked a process to review key inputs into the period end valuation using underlying benchmark interest rates in determining fair value of the Company’s structured settlements. The material weakness was first reported by the Company in its Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter ended December 31, 2016, which was filed with the SEC on May 26, 2017, and was also identified as a material weakness in connection with the preparation of this Amendment.

Planned Remedial Actions:

● Since the original determination regarding this material weakness, the Company retained and intends to continue to retain third-party specialists to perform independent valuations of its assets and liabilities, when warranted, particularly with respect to, those assets and liabilities which involve specific complex or intricate valuation techniques, and/or are outside the Company's traditional business model.

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● The Company plans on hiring additional personnel with financial reporting experience to supplement its existing accounting/finance department. Additionally, management will develop and train accounting/finance personnel in the use of formalized checklists, to identify key inputs associated with period end valuations.

2.     The Company did not maintain effective internal controls over financial reporting disclosures specifically associated with concentrations, foreign transactions, significant entities and related party transactions. The material weaknesses related to financial reporting disclosures associated with significant and related party transactions at the subsidiary level, were first reported by the Company in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, which was filed with the SEC on May 26, 2017, and was also identified as a material weakness in connection with the preparation of this Amendment.

Planned Remedial Actions:

● The Company has retained and intends to continue to retain the services of outside consultants, with relevant accounting experience, skills and knowledge, working under the supervision and direction of the Company’s management, to supplement the Company’s existing accounting personnel.

● The Company plans to develop policies, procedures, and controls for the specific areas identified in this material weakness. The Company will also hire additional accounting and finance personnel with significant accounting and SEC reporting experience to join its finance team to ensure consistent application of these accounting principles and adherence to the Company’s newly adopted policies, procedures, and controls. The Company plans to review the current financial controls to assess if additional management review controls are necessary and work with all finance personnel to establish the appropriate documentation criteria for the existing controls including evidence of review, timeliness and variance thresholds.

● The Company plans to have the Disclosure Committee, which now meets on a quarterly basis, meet more frequently throughout the year to assure that our SEC filings and other public disclosures are complete, accurate, and otherwise comply with applicable accounting principles and regulations. The Company’s Disclosure Committee reports to our Chief Executive Officer with oversight provided by our Audit Committee, and includes individuals knowledgeable about, among other things, SEC rules and regulations, financial reporting, and internal control matters. The Company will also document a formal disclosure policy and procedures to govern the work of the Disclosure Committee.

● Since the original determination regarding the material weakness associated with significant and related party transactions at the subsidiary level, the Company has installed contract management software to manage all of its contracts and associated obligations under those contracts. Management from each department has been trained on the software, and all contracts require approvals of designated managers and the accounting department prior to execution. All contracts are reviewed by accounting personnel with requisite experience in identifying complex accounting transactional and disclosure issues,

3.     The Company did not maintain effective internal controls over regulatory compliance; specifically the Company did not have an effective whistleblower hotline or a formalized Foreign Corrupt Practices Act Policy.

Planned Remedial Actions:

● While the Company has implemented a whistleblower hotline it believes will be effective, management will develop a formalized plan to test the independent system on a regular basis to ensure regulatory compliance.

● The Company will formalize its Foreign Corrupt Practices Act Policy, and will ensure all employees are trained on, and adhere to the policy.

4.     The Company lacks a formal policy to assess the adequacy of the design and operating effectiveness of controls related to certain of the Company’s subsidiaries, third party service providers and third party advocates.

Planned Remedial Actions:

● The Company will increase the frequency of onsite inspections of third party servicers and advocates throughout the year, utilizing existing accounting/finance personnel familiar with the specific accounting processes involved at each location.

● The Company will provide training to accounting personnel at subsidiary locations, and will develop detailed checklist and processes that can be used, and reviewed by management during period ends. Additionally, management will routinely visit subsidiary locations to ensure that the processes and guidelines developed are being strictly adhered to.

 5.     The Company did not maintain effective internal controls over accounting for complex transactions specifically associated with equity method investments.

Planned Remedial Actions:

● The Company plans to develop policies, procedures, and controls to ensure the proper accounting for complex technical issues are identified, researched and brought to management's attention. The Company will also ensure that the appropriate personnel are appropriately trained on new and existing accounting pronouncements, Company policies, procedures, and controls.

6.     The Company did not maintain effective internal controls over accounting for foreign transactions specifically associated with accounting for transaction and translation adjustments, unallocated payments and cutoff.

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Planned Remedial Actions:

● The Company plans to develop and implement improved policies, procedures, processes and controls, as well as, conduct trainings to ensure the proper accounting for foreign currency matters in accordance with ASC 830, Foreign Currency Matters

● The Company plans to utilize an accounting system to ensure that all transactions are systematically re-measured and translated at the applicable foreign currency exchange rate and the associated gain or loss is appropriately recognized in earnings.

● The Company plans to appropriately reconcile the AOCI account, in a timely manner. To ensure that the proper amounts are being recorded in the Company's financial statements.

As a result of these misstatements and omitted disclosures, the Company concluded there were material weaknesses in the Company’s internal control over financial reporting. Management, under the supervision of the Audit Committee, will develop a comprehensive remediation plan, including a detailed plan and timetable for implementation, and will report regularly to the Audit Committee regarding the status of the implementation activities. 

b. Changes in Internal Controls over Financial Reporting.  

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, re-evaluated our internal control over financial reporting to determine whether any changes occurring during the third quarter of fiscal year 2017 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting, and have concluded that there have been no changes that occurred during such quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 (restated)

For a discussion of our potential risks and uncertainties, see the information previously disclosed in Part I, Item 1A. “Risk Factors” in our Form 10-K/A. There have been no material changes to the risk factors disclosed in our Form 10-K/A. 

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
	None

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Item  6.	Exhibits
	(a) Exhibits.

2.1	Term Sheet, dated November 8, 2016, by and among Asta Funding, Inc., ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed November 15, 2016).
3.1	Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Quarterly Report on Form 10-Q filed August 9, 2016).
3.2	Certificate of Amendment to Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1(a) to Asta Funding, Inc.’s Quarterly Report on Form 10-QSB filed May 15, 2002).
3.3	Certificate of Designation of Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed August 24, 2012).
3.4	Certificate of Elimination of the Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
3.5	Certificate of Designation of Series A Junior Participating Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.2 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
3.6	Amended and Restated By-laws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.3 to Asta Funding, Inc.’s Quarterly Report on Form 10-Q filed August 9, 2016).
3.7	Amendment to Amended and Restated By-laws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 9, 2017).
4.1	Rights Agreement, dated May 5, 2017, by and between Asta Funding, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
10.1	Assignment Agreement, dated April 28, 2017, by and between CBC Settlement Funding, LLC and the other party thereto (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 4, 2017).
31.1*	Certification of Gary Stern, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Bruce R. Foster, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Gary Stern, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Bruce R. Foster, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted 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.

*         Filed herewith.

**       This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.

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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: September 17, 2018	By:	/s/ Gary Stern
		Gary Stern, President, Chief Executive Officer
		(Principal Executive Officer)
Date: September 17, 2018	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
2.1	Term Sheet, dated November 8, 2016, by and among Asta Funding, Inc., ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed November 15, 2016).
3.1	Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Quarterly Report on Form 10-Q filed August 9, 2016).
3.2	Certificate of Amendment to Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1(a) to Asta Funding, Inc.’s Quarterly Report on Form 10-QSB filed May 15, 2002).
3.3	Certificate of Designation of Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed August 24, 2012).
3.4	Certificate of Elimination of the Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
3.5	Certificate of Designation of Series A Junior Participating Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.2 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
3.6	Amended and Restated By-laws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.3 to Asta Funding, Inc.’s Quarterly Report on Form 10-Q filed August 9, 2016).
3.7	Amendment to Amended and Restated By-laws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 9, 2017).
4.1	Rights Agreement, dated May 5, 2017, by and between Asta Funding, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 5, 2017).
10.1	Assignment Agreement, dated April 28, 2017, by and between CBC Settlement Funding, LLC and the other party thereto (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 4, 2017).
31.1*	Certification of Gary Stern, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Bruce R. Foster, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Gary Stern, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Bruce R. Foster, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted 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.

*         Filed herewith.

**       This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.

65

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/A 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: September 17, 2018

/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/A 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.

Dated: September 17, 2018 

/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/A for the quarter ended June 30, 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: September 17, 2018

/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/A for the quarter ended June 30, 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: September 17, 2018

/s/ Bruce R. Foster

Bruce R. Foster

Chief Financial Officer and Chief Accounting Officer

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2017	Aug. 14, 2018
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)		6,685,415
Document Type	10-Q/A
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	true
Amendment Description	As previously disclosed in the Current Report on Form 8-K filed by Asta Funding, Inc. ("Asta" or the "Company") with the Securities and Exchange Commission (the "SEC") on January 18, 2018, the Board of Directors (the "Board") of the Company, upon the recommendation of the Audit Committee of the Board (the "Audit Committee"), determined that the Company's previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, and the interim periods contained therein, as well as the Company's unaudited consolidated financial statements for the quarters ended December 31, 2016, March 31, 2017 and June 30, 2017, could no longer be relied upon. On September 17, 2018, the Company filed an Annual Report on Form 10-K/A (the "Form 10-K/A") to amend and restate the Company's previously issued financial statements for each of the years ended September 30, 2016, 2015 and 2014, as well as the interim periods contained therein, and Quarterly Reports on Form 10-Q/A to amend and restate the Company's previously issued financial statement for the quarters ended December 31, 2016 and March 31, 2017. The Company is filing this Amendment No. 1 on Form 10-Q/A (this "Amendment") to amend and restate the Company's previously issued financial statements contained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the "Non-Reliance Period"), which was originally filed with the SEC on August 9, 2017 (the "Original Form 10-Q"). Prior period amounts have already been restated in the Company's Form 10-K/A and, accordingly have not been restated in this Amendment.

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
ASSETS
Cash and cash equivalents	$ 15,213,000	$ 6,282,000
Restricted cash	10,000,000	10,000,000
Available for sale investments (at fair value)	5,500,000	56,763,000
Consumer receivables acquired for liquidation (at net realizable value)	9,210,000	13,427,000
Investment in personal injury claims	3,351,000
Other investments, net		3,590,000
Due from third party collection agencies and attorneys	1,357,000	1,050,000
Prepaid and income taxes receivable	6,736,000	714,000
Furniture and equipment, net	141,000	196,000
Equity method investment	48,533,000	48,582,000
Deferred income taxes	14,120,000	14,903,000
Goodwill	1,410,000	1,410,000
Other assets	3,408,000	6,585,000
Assets related to discontinued operations	93,692,000	91,506,000
Total assets	212,671,000	255,008,000
LIABILITIES
Line of credit	9,600,000
Other liabilities	5,249,000	3,987,000
Liabilities related to discontinued operations	78,629,000	69,238,000
Total liabilities	93,478,000	73,225,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,398,108 at June 30, 2017 and 13,336,508 at September 30, 2016; and outstanding 6,623,815 at June 30, 2017 and 11,876,224 at September 30, 2016	134,000	133,000
Additional paid-in capital	68,027,000	67,034,000
Retained earnings	117,949,000	126,738,000
Accumulated other comprehensive income	211,000	803,000
Treasury stock (at cost) 6,774,293 shares at June 30, 2017 and 1,460,284 shares at September 30, 2016	(67,128,000)	(12,925,000)
Total stockholders’ equity	119,193,000	181,783,000
Total liabilities and stockholders’ equity	212,671,000	255,008,000
Series A Junior Participating Preferred Stock [Member]
STOCKHOLDERS’ EQUITY
Preferred stock

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2017	Sep. 30, 2016
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)	13,398,108	13,336,508
Common stock, outstanding (in shares)	6,623,815	11,876,224
Treasury stock, shares (in shares)	6,774,293	1,460,284
Series A Junior Participating Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	30,000	30,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues:
Finance income, net	$ 3,993,000	$ 4,572,000	$ 12,018,000	$ 14,557,000
Personal injury claims income	241,000		251,000
Disability fee income	1,134,000	1,169,000	3,990,000	2,700,000
Total revenues	5,368,000	5,741,000	16,259,000	17,257,000
Other income (loss) - includes ($18,000) and ($32,000) during the three month periods ended June 30, 2017 and 2016, and ($1,011,000) and ($63,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive loss reclassification for securities sold	90,000	176,000	(126,000)	1,176,000
	5,458,000	5,917,000	16,133,000	18,433,000
Expenses:
General and administrative	6,066,000	7,069,000	25,611,000	23,020,000
Interest	164,000		197,000
Impairment of consumer receivables	148,000		148,000	124,000
Earnings from equity method investment	(2,710,000)	(6,193,000)	(2,759,000)	(6,193,000)
	3,668,000	876,000	23,197,000	15,124,000
Income (loss) from continuing operations before income tax	1,790,000	5,041,000	(7,064,000)	3,309,000
Income tax (benefit)/expense - includes tax expense/(benefit) of $7,000 and ($13,000) during the three month periods ended June 30, 2017 and 2016 and $404,000 and ($24,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities	219,000	1,752,000	(31,000)	1,114,000
Net income (loss) from continuing operations	1,571,000	3,289,000	(7,033,000)	2,195,000
Net income (loss) from discontinued operations, net of income tax	560,000	577,000	(1,756,000)	1,404,000
Net income (loss)	$ 2,131,000	$ 3,866,000	$ (8,789,000)	$ 3,599,000
Net income (loss) per basic shares:
Continuing operations (in dollars per share)	$ 0.24	$ 0.27	$ (0.75)	$ 0.18
Discontinued operations (in dollars per share)	0.08	0.05	(0.19)	0.12
(in dollars per share)	0.32	0.32	(0.94)	0.30
Net income (loss) per diluted shares:
Continuing operations (in dollars per share)	0.23	0.26	(0.75)	0.18
Discontinued operations (in dollars per share)	0.08	0.05	(0.19)	0.11
(in dollars per share)	$ 0.31	$ 0.31	$ (0.94)	$ 0.29
Weighted average number of common shares outstanding:
Basic (in shares)	6,577,784	11,897,139	9,389,864	12,023,156
Diluted (in shares)	6,879,082	12,433,424	9,389,864	12,294,073

XML

Consolidated Statements of Operations (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Reclassification for unrealized net gain (loss) on available for sale securities	$ (18,000)	$ (32,000)	$ (1,011,000)	$ (63,000)
Income tax (benefit) expense	$ 7,000	$ (13,000)	$ 404,000	$ (24,000)

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Comprehensive income (loss) is as follows:
Net income (loss)	$ 2,131,000	$ 3,866,000	$ (8,789,000)	$ 3,599,000
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.	18,000	560,000	(17,000)	1,046,000
Reclassification adjustments for securities sold, net of tax benefit of $7,000 and $13,000 during the three month periods ended June 30, 2017 and 2016, and $404,000 and $24,000 during the nine month periods ended June 30, 2017 and 2016, respectively.	(11,000)	(19,000)	(607,000)	(39,000)
Foreign currency translation, net of tax (expense)/benefit of ($23,000) and $15,000 during the three month periods ended June 30, 2017 and 2016, respectively, and ($21,000) and $25,000 during the nine month periods ended June 30, 2017 and 2016, respectively.	35,000	(63,000)	32,000	(37,000)
Other comprehensive income (loss)	42,000	478,000	(592,000)	970,000
Total comprehensive income (loss)	$ 2,173,000	$ 4,344,000	$ (9,381,000)	$ 4,569,000

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Unrealized gain (loss) on marketable securities, tax	$ (12,000)	$ (364,000)	$ 404,000	$ (695,000)
Reclassification adjustments for securities, tax (expense) benefit	7,000	13,000	404,000	24,000
Foreign currency translation, tax benefit	$ (23,000)	$ 15,000	$ (21,000)	$ 25,000

XML

Consolidated Statements 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, September 30, 2016, as previously reported (in shares) at Sep. 30, 2015	13,061,673
Balance, September 30, 2016, as previously reported at Sep. 30, 2015	$ 131,000	$ 65,049,000	$ 119,165,000	$ 20,000	$ (1,751,000)	$ 793,000	$ 183,407,000
Stock based compensation expense		567,000					567,000
Net (loss) income			3,599,000				3,599,000
Amount reclassified from other comprehensive (loss) income				(39,000)			(39,000)
Unrealized gain (loss) on marketable securities, net				1,046,000			1,046,000
Purchase of treasury stock					(11,174,000)		(11,174,000)
Foreign currency translation, net				(37,000)			(37,000)
Balance (in shares) at Jun. 30, 2016	13,297,508
Balance at Jun. 30, 2016	$ 133,000	66,582,000	122,764,000	990,000	(12,925,000)		$ 177,544,000
Exercise of options (in shares)	107,531						107,531
Exercise of options	$ 1,000	870,000					$ 871,000
Restricted stock (in shares)	5,000
Purchase of subsidiary shares from non-controlling interest		(903,000)				(793,000)	(1,696,000)
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
Balance, September 30, 2016, as previously reported (in shares) at Sep. 30, 2016	13,336,508
Balance, September 30, 2016, as previously reported at Sep. 30, 2016	$ 133,000	67,034,000	126,738,000	803,000	(12,925,000)		181,783,000
Stock based compensation expense		38,000					38,000
Net (loss) income			(8,789,000)				(8,789,000)
Amount reclassified from other comprehensive (loss) income				(607,000)			(607,000)
Unrealized gain (loss) on marketable securities, net				(17,000)			(17,000)
Purchase of treasury stock					(54,203,000)		(54,203,000)
Foreign currency translation, net				32,000			32,000
Forgiveness of debt		552,000					552,000
Issuance of unrestricted stock (in shares)	61,600
Issuance of unrestricted stock	$ 1,000	403,000					404,000
Balance (in shares) at Jun. 30, 2017	13,398,108
Balance at Jun. 30, 2017	$ 134,000	$ 68,027,000	$ 117,949,000	$ 211,000	$ (67,128,000)		$ 119,193,000
Exercise of options (in shares)							0

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities :
Net (loss) income from continuing operations	$ (7,033,000)	$ 2,195,000
Net income (loss) from discontinued operations, net of income tax	(1,756,000)	1,404,000
Net income (loss)	(8,789,000)	3,599,000
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	75,000	353,000
Deferred income taxes	1,199,000	(78,000)
Impairment of consumer receivables	148,000	124,000
Stock based compensation	81,000	567,000
Loss on sale of available-for-sale securities	1,011,000	63,000
Unrealized gain on other investments		(246,000)
Unrealized foreign exchange loss on other investments		59,000
Reserve for loss on other investments		1,000,000
Loss on other investments	3,590,000
Forgiveness of debt	552,000
Operating lease adjustment		21,000
Earnings from equity method investment	(2,759,000)	(6,193,000)
Changes in:
Prepaid and income taxes receivable	(6,022,000)	2,512,000
Due from third party collection agencies and attorneys	(320,000)	376,000
Other assets	3,184,000	(2,444,000)
Other liabilities	1,294,000	1,911,000
Net cash used in operating activities of discontinued operations	(3,041,000)	(6,649,000)
Net cash (used in) operating activities	(9,797,000)	(5,025,000)
Cash flows from investing activities:
Purchase of consumer receivables acquired for liquidation	(2,213,000)	(6,936,000)
Principal collected on receivables acquired for liquidation	6,324,000	7,384,000
Purchase of available-for-sale securities	(13,193,000)	(11,704,000)
Proceeds from sale of available-for-sale securities	62,406,000	16,302,000
Purchase of non-controlling interest		(800,000)
Investments in personal injury claims – advances	(3,351,000)
(Increase) decrease in equity method investment	2,808,000	1,826,000
Capital expenditures	(19,000)	(120,000)
Net cash provided by (used in) investing activities of discontinued operations	1,548,000	(6,756,000)
Net cash provided by/(used in) investing activities	54,310,000	(804,000)
Cash flows from financing activities:
Proceeds from exercise of stock options		872,000
Purchase of treasury stock	(54,203,000)	(11,174,000)
Borrowings from line of credit	9,600,000
Net cash provided by financing activities of discontinued operations	9,000,000	11,056,000
Net cash (used in) provided by financing activities	(35,603,000)	754,000
Foreign currency effect on cash	(37,000)
Net increase (decrease) in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations	8,873,000	(5,075,000)
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations	58,000	(283,000)
Net increase (decrease) in cash, cash equivalents and restricted cash	8,931,000	(5,358,000)
Cash, cash equivalents and restricted cash at beginning of period	16,282,000	19,947,000
Cash, cash equivalents and restricted cash at end of period	25,213,000	14,589,000
Supplemental disclosure of cash flow information:
Interest	3,031,000	2,353,000
Taxes	6,046,000
Restricted Stock [Member]
Supplemental disclosure of non-cash flow investing activities :
Issuance of stock		1,000,000
Issuance of stock		1,000,000
Unrestricted Stock [Member]
Supplemental disclosure of non-cash flow investing activities :
Issuance of stock	404,000
Issuance of stock	$ 404,000

XML

Note 1 - Restatement of Financial Statements

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

Note

1—

Restatement of Financial Statements

 

The following tables summarize the effects of the restatements on the specific items presented in the Company’s consolidated financial statements previously included in the Original Form

10

-Q:

	Consolidated Balance Sheet
	June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
ASSETS
Cash and cash equivalents	$	15,315,000		$	(81,000	)	$	(21,000	)	(2)	$	15,213,000
Restricted cash		34,748,000			(24,748,000	)		—				10,000,000
Available for sale investments (at fair value)		5,500,000			—			—				5,500,000
Consumer receivables acquired for liquidation (at net realizable value)		9,118,000			—			92,000		(2)		9,210,000
Investment in personal injury claims, net		27,538,000			(24,187,000	)		—				3,351,000
Due from third party collection agencies and attorneys		1,367,000			—			(10,000	)	(2)		1,357,000
Prepaid and income taxes receivable		4,836,000			—			1,900,000		(5)(8)		6,736,000
Furniture and equipment, net		141,000			—			—				141,000
Equity method investment		—			48,639,000			(106,000	)	(7)		48,533,000
Deferred income taxes		18,940,000			—			(4,820,000	)	(2)(8)		14,120,000
Goodwill		1,410,000			—			—				1,410,000
Other assets		3,576,000			(109,000	)		(59,000	)	(2)		3,408,000
Assets related to discontinued operations		93,723,000			—			(31,000	)	(5)(6)		93,692,000
Total assets	$	216,212,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000
LIABILITIES
Line of credit		9,600,000			—			—				9,600,000
Other liabilities		6,079,000			(755,000	)		(75,000	)	(2)		5,249,000
Liabilities related to discontinued operations		78,628,000			—			1,000		(4)		78,629,000
Total liabilities		94,307,000			(755,000	)		(74,000	)			93,478,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—				—
Common stock		134,000			—			—				134,000
Additional paid-in capital		67,467,000			—			560,000		(5)(6)		68,027,000
Retained earnings		122,669,000			—			(4,720,000	)	(2)(3)(4)(5)(6)(7)(8)		117,949,000
Accumulated other comprehensive income (loss)		(968,000	)		—			1,179,000		(2)		211,000
Treasury stock (at cost)		(67,128,000	)		—			—				(67,128,000	)
Non-controlling interest		(269,000	)		269,000			—				—
Total stockholders’ equity		121,905,000			269,000			(2,981,000	)			119,193,000
Total liabilities and stockholders’ equity	$	216,212 ,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000

	Consolidated Statement of Operations For the Three Months Ended June 30, 2017
	As Reported		De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	3,980,000	$	—		$	13,000		(2)	$	3,993,000
Personal injury claims income		5,569,000		(5,328,000	)		—				241,000
Disability fee income		1,134,000		—			—				1,134,000
Total revenues		10,683,000		(5,328,000	)		13,000				5,368,000
Other income		84,000		—			6,000		(2)		90,000
		10,767,000		(5,328,000	)		19,000				5,458,000
General and administrative		7,252,000		(1,679,000	)		493,000		(2)(6)		6,066,000
Interest		133,000		(2,000	)		33,000		(2)		164,000
Impairment of consumer receivables		148,000		—			—				148,000
Loss (earnings) from equity method investment		—		(2,917,000	)		207,000		(7)		(2,710,000	)
		7,533,000		(4,598,000	)		733,000				3,668,000
Income (loss) from continuing operations before income tax		3,234,000		(730,000	)		(714,000	)			1,790,000
Income tax (benefit)/expense		1,198,000		—			(979,000	)	(8)		219,000
Net income (loss) from continuing operations		2,036,000		(730,000	)		265,000				1,571,000
Income (loss) from discontinued operations, net of income tax		526,000		—			34,000		(3)(5)(8)		560,000
Less: net income attributable to non-controlling interests		730,000		(730,000	)		—				—
Net income attributable to Asta Funding, Inc.	$	1,832,000	$	—		$	299,000			$	2,131,000
Net income (loss) per basic shares:
Continuing operations	$	0.20								$	0.24
Discontinued operations		0.08									0.08
	$	0.28								$	0.32
Net income (loss) per diluted shares:
Continuing operations	$	0.19								$	0.23
Discontinued operations		0.08									0.08
	$	0.27								$	0.31

	Consolidated Statement of Operations For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	11,999,000		$	—		$	19,000		(2)	$	12,018,000
Personal injury claims income		10,017,000			(9,766,000	)		—				251,000
Disability fee income		3,990,000			—			—				3,990,000
Total revenues		26,006,000			(9,766,000	)		19,000				16,259,000
Other income		(74,000	)		—			(52,000	)	(2)		(126,000	)
		25,932,000			(9,766,000	)		(33,000	)			16,133,000
General and administrative		31,354,000			(6,052,000	)		309,000		(2)(6)		25,611,000
Interest		169,000			(6,000	)		34,000		(2)		197,000
Impairment of consumer receivables		148,000			—			—				148,000
Loss (earnings) from equity method investment		—			(2,966,000	)		207,000		(7)		(2,759,000	)
		31,671,000			(9,024,000	)		550,000				23,197,000
(Loss) income from continuing operations before income tax		(5,739,000	)		(742,000	)		(583,000	)			(7,064,000	)
Income tax (benefit)/expense		(2,170,000	)		—			2,139,000		(8)		(31,000	)
Net loss from continuing operations		(3,569,000	)		(742,000	)		(2,722,000	)			(7,033,000	)
Loss from discontinued operations, net of income tax		(1,083,000	)		—			(673,000	)	(3)(5)(8)		(1,756,000	)
Less: net income attributable to non-controlling interests		742,000			(742,000	)		—				—
Net loss attributable to Asta Funding, Inc.	$	(5,394,000	)	$	—		$	(3,395,000	)		$	(8,789,000	)
Net income (loss) per basic shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)
Net income (loss) per diluted shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)

	Consolidated Statement of Comprehensive Income
	For the Three Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments			Restated
Comprehensive income (loss) is as follows:
Net income	$	1,832,000		$	—	$	299,000		$	2,131,000
Net unrealized securities (loss) gain, net of tax		18,000			—		—			18,000
Reclassification adjustments for securities sold, net of tax		(11,000	)		—		—			(11,000	)
Foreign currency translation, net of tax		(249,000	)		—		284,000	(2)		35,000
Other comprehensive (loss) income		(242,000	)		—		284,000			42,000
Total comprehensive income	$	1,590,000		$	—	$	583,000		$	2,173,000

	Consolidated Statement of Comprehensive Loss
	For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments				Restated
Comprehensive (loss) income is as follows:
Net loss	$	(5,394,000	)	$	—	$	(3,395,000	)		$	(8,789,000	)
Net unrealized securities (loss) gain, net of tax		(17,000	)		—		—				(17,000	)
Reclassification adjustments for securities sold, net of tax		(607,000	)		—		—				(607,000	)
Foreign currency translation, net of tax		(430,000	)		—		462,000		(2)(6)		32,000
Other comprehensive (loss) income		(1,054,000	)				462,000				(592,000	)
Total comprehensive loss	$	(6,448,000	)	$		$	(2,933,000	)		$	(9,381,000	)

	Consolidated Statement of Cash Flows For the Nine Months Ended June 30, 2017
	As Reported			Adjustments				Restated
Cash flows from operating activities:
Net loss from continuing operations	$	(4,311,000	)	$	(2,722,000	)		$	(7,033,000	)
Net loss from discontinued operations		(1,083,000	)		(673,000	)			(1,756,000	)
Net loss		(5,394,000	)		(3,395,000	)			(8,789,000	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and Amortization		154,000			(79,000	)			75,000
Deferred income taxes		(2,994,000	)		4,193,000		(2)(8)		1,199,000
Impairments of consumer receivables acquired for liquidation		148,000			—				148,000
Stock based compensation		81,000			—				81,000
Loss on sale of available-for-sale securities		1,011,000			—				1,011,000
Unrealized gain on other investments		3,590,000	)		—				3,590,000
Earnings from equity method investment		—			(2,759,000	)	(7)		(2,759,000	)
Forgiveness of debt		—			552,000		(5)		552,000
Changes in:
Prepaid and income taxes receivable		(3,956,000	)		(2,066,000	)	(5)(8)		(6,022,000	)
Due from third party collection agencies and attorneys		(362,000	)		42,000		(2)		(320,000	)
Other assets		3,050,000	)		134,000		(2)		3,184,000
Income tax payable		(252,000	)		252,000		(6)		—
Other liabilities		1,083,000			211,000		(2)		1,294,000
Non-controlling interest		742,000			(742,000	)	(1)		—
Net cash (used in) provided by operating activities of discontinued operations		(3,654,000	)		613,000		(5)(6)		(3,041,000	)
Net cash (used in) provided by operating activities		(6,753,000	)		(3,044,000	)			(9,797,000	)
Cash flows from investing activities:
Purchase of consumer receivables acquired for liquidation		(2,213,000	)		—				(2,213,000	)
Principal collected on receivables acquired for liquidation		6,618,000			(294,000	)	(2)		6,324,000
Purchase of available-for-sale securities		(13,193,000	)		—				(13,193,000	)
Proceeds from sales of available-for-sale securities		62,406,000			—				62,406,000
Decrease in equity method investment		—			2,808,000		(5)(6)		2,808,000
Investments in personal injury claims — advances		(14,624,000	)		11,273,000		(1)		(3,351,000	)
Investments in personal injury claims — receipts		35,375,000			(35,375,000	)	(1)		—
Capital expenditures		(19,000	)		—				(19,000	)
Net cash provided by investing activities related to discontinued operations		1,548,000			—				1,548,000
Net cash provided by (used in) investing activities		75,898,000			(21,588,000	)			54,310,000
Cash flows from financing activities:
Purchase of treasury stock		(54,203,000	)		—				(54,203,000	)
Distributions to non-controlling interest		(366,000	)		366,000		(1)		—
Borrowings from line of credit		9,600,000			—				9,600,000
Net cash provided by financing activities related to discontinued operations		9,000,000			—				9,000,000
Net cash (used in) provided by financing activities		(35,969,000	)		366,000				(35,603,000	)
Foreign currency effect on cash		—			(37,000	)	(2)		(37,000	)
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations		33,176,000			(24,303,000	)			8,873,000
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations		58,000			—				58,000
Net increase ( decrease ) in cash , cash equivalents and restricted cash		33,234,000			(24,303,000	)	(1)(2)(4)(5)(6)(7)(8)		8,931,000
Cash, cash equivalents and restricted cash at beginning of period		16,829,000			(547,000	)			16,282,000
Cash , cash equivalents and restricted cash at end of period	$	50,063,000		$	(24,850,000	)		$	25,213,000

As previously disclosed in the Current Report on Form 

8

-K filed by Asta Funding, Inc. (“Asta” or the “Company”) with the Securities and Exchange Commission (the “SEC”) on

January 18, 2018,

the Board of Directors (the “Board”) of the Company, upon the recommendation of the Audit Committee of the Board (the “Audit Committee”), determined that the Company’s previously issued financial statements for each of the years ended

September 30, 2016,

2015

and

2014,

and the interim periods contained therein, as well as the Company’s unaudited consolidated financial statements for the quarters ended

December 31, 2016,

March 31, 2017

and

June 30, 2017,

could

no

longer be relied upon. 

On

September 17, 2018,

the Company filed an Annual Report on Form

10

-K/A (the “Form

10

-K/A”) to amend and restate the Company’s previously issued financial statements for each of the years ended

September 30, 2016,

2015

and

2014,

as well as the interim periods contained therein, and Quarterly Reports on Form

10

-Q/A to amend and restate the Company’s previously issued financial statements for the quarters ended

December 31, 

2016

and

March 31, 2017.

The Company is filing this Amendment

No.

1

on Form

10

-Q/A (this “Amendment”) to amend and restate the Company’s previously issued financial statements contained in its Quarterly Report on Form

10

-Q for the quarter ended

June 30, 2017 (

the “Non-Reliance Period”), which was originally filed with the SEC on

August 9, 2017 (

the “Original Form

10

-Q”).

Prior period amounts have already been restated in the Company's Form

10

-K/A and, accordingly have

not

been restated in this Amendment.

Restatement Background

On

January 11, 2018,

after discussions with the Audit Committee, management re-evaluated the Company's historical conclusion to consolidate Pegasus Funding, LLC (“Pegasus”). Management has determined that the Company lacked the requisite control to consolidate Pegasus in its historical periods in accordance with Accounting Standards Codification (“ASC”)

810

“

Consolidation

.” Management also determined that the Company's previous treatment for certain foreign currency matters under ASC

830

“

Foreign Currency Matters

” was

not

appropriate. As such, the Company has subsequently revised its investment in Pegasus to the equity method, including the underlying reserve methodology; and has adjusted its financial statements to reflect the proper accounting for certain foreign currency transactions. Additionally, the Company corrected the financial statements for additional known errors consisting of (i) the adjustment of various accruals, (ii) the fair value of structured settlements, (iii) accounting for unallocated payments, and (iv) the tax effects of the adjustments mentioned above.

The “As Reported” amounts in the tables above represent the amounts reported in the Restated Form

10

-Q/A, adjusted in its presentation for the discontinued operations of the Company's wholly-owned subsidiary CBC Settlement Funding, LLC (“CBC”), which was sold on

December 13, 2017 (

see Note

8

– Discontinued Operations and Note

20

– Subsequent events).

 The following errors were identified as part of the restatement:

1.	In connection with the Company determining it lacked the requisite control to consolidate Pegasus during the Non-Reliance Period, the Company has now accounted for its investment in Pegasus under the equity method in accordance with US GAAP. On the Company’s June 30, 2017 consolidated balance sheet, this resulted in (i) a decrease in cash and restricted cash of $24,829,000; (ii) a decrease in the investment in personal injury claims of $24,187,000; (iii) a decrease in other assets of $109,000; (iv) a decrease in other liabilities of $755,000; and (v) a decrease in non-controlling interest of $269,000, offset by a corresponding increase in the equity method investment of $48,639,000.
	On the Company’s consolidated statement of operations, this resulted in (i) a decrease in total revenues of $5,328,000; (ii) a decrease in expenses of $1,681,000; (iii) a decrease in the income attributable to the non-controlling interest of $730,000; and (iv) a decrease in earnings from equity method investment of $2,917,000 the three months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.
	On the Company’s consolidated statement of operations, this resulted in (i) a decrease in total revenues of $9,766,000; (ii) a decrease in expenses of $6,058,000; (iii) a decrease in the income attributable to the non-controlling interest of $742,000; and (iv) a decrease in earnings from equity method investment of $2,966,000 the nine months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.
2.	The Company determined that it had not previously accounted for certain foreign currency gains/losses on intercompany balances and transactions in accordance with US GAAP. The Company improperly accounted for the foreign currency effect of certain transactions as if they were long-term investments by including the foreign currency effect in accumulated other comprehensive income instead of properly recording the effect as operating expenses as required under ASC 830.

The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of

$13,000,

an increase in other income of

$6,000,

an increase in general and administrative expenses of

$493,000

and an increase in interest expense of

$34,000

for the

three

months ended

June 30, 2017.

The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of

$19,000,

a decrease in other income of

$52,000,

and an increase in general and administrative expenses of

$580,000,

and an increase in interest expense of

$34,000

for the

nine

months ended

June 30, 2017.

The correction of foreign currency transaction on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Cash and cash equivalents		$3,000		$(24,000)		$(21,000)
Consumer receivables acquired for liquidation		(245,000)		337,000		92,000
Due from third party collection agencies and attorneys		45,000		(55,000)		(10,000)
Deferred income taxes		(722,000)		(472,000)		(1,194,000)
Other assets		(33,000)		(26,000)		(59,000)
Other liabilities		(18,000)		(57,000)		(75,000)
Accumulated other comprehensive loss		718,000		461,000		1,179,000
Retained earnings		(1,653,000)		(645,000)		(2,298,000)

3.	Prior to the sale of its structured settlement business, the Company purchased periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company has elected to carry the structured settlements at fair value in accordance with the guidance of FASB ASC, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 822 - 10 - 50 - 28 through 50 - 22 ).
	As previously disclosed in the Restated Form 10 -Q/A, the Company did not reflect the quarterly increase in certain underlying benchmark interest rates used in determining fair value of the Company’s structured settlements for the quarter ended December 31, 2016 which resulted in a decrease in the fair value of the Company's structured settlements of approximately $2.6 million (reflected in assets related to discontinued operations in this restated consolidated balance sheet) with an associated increase in prepaid income taxes and deferred tax assets of approximately $1.0 million (reflected in the loss from discontinued operations in this consolidated statement of operations).
	In connection with the Company’s filing of the Form 10 -K/A, on September 17, 2018, the Company adjusted the fair value of its structured settlements to reflect the appropriate benchmark interest rates at September 30, 2016, which resulted in an decrease in net loss attributable to discontinued operations and an increase in assets related to discontinued operations of $727,000.   As this increase in fair value was originally recorded during the three month period ended December 31, 2016, this Amendment includes an increase in both the retained earnings and the net loss attributable to discontinued operations of $727,000 as of and for the nine months ended June 30, 2017.
4.	The Company determined that it had not accounted for certain unallocated payments reported on its consolidated balance sheet properly during the Non-Reliance Period. The correction of this error resulted in a decrease to consumer receivables acquired for liquidation of $648,000 and retained earnings of $648,000 as of September 30, 2016 and is therefore included in the net adjustment to retained earnings as of June 30, 2017.
5.	The Company discovered that it did not properly record an amortizable asset and related liability in conjunction with an asset purchase agreement entered into in June 2015 with a related party. The correction of this error resulted in a decrease in income from discontinued operations of $34,000 and $153,000 for the three and nine months ended June 30, 2017.

The correction of these errors on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Assets related to discontinued operations		$307,000		$(357,000)		$(50,000)
Liabilities related to discontinued operations		756,000		(756,000)		—
Retained earnings		(442,000)		(155,000)		(597,000)
Additional paid in capital		-		552,000		552,000

6.	The Company identified other transactions that had not been properly accounted for in the correct period and/or for improper amounts and/or improper accounts. The adjustments of these errors were immaterial on an individual basis. The correction of these errors resulted in decreased general and administrative expense of $0 and $271,000 for the three and nine months ended June 30, 2017.
	The correction of these errors on the consolidated balance sheet are as follows:

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Other liabilities		$269,000		$(269,000)		$ —
Retained earnings		(137,000)		270,000		133,000
Assets related to discontinued operations		45,000		-		45,000
Additional paid in capital		8,000		-		8,000

7.	The Company identified the personal injury claims asset balance of Pegasus was determined to be overstated at March 31, 2017 by $400,000. The correction of this error resulted in a decrease in earnings from the equity investment in Pegasus and income from continuing operations of $0 and $320,000 for the three and nine months ended June 30, 2017. Additionally, the equity investment was increased $101,000 to reflect the impact of the related accruals in the Form 10 -K/A. During the three and nine months ended June 30, 2017, earnings from equity method investment decreased by $207,000 for a reduction in personal injury claims in Pegasus.
8.	Some of the corrections noted above impacted earnings (loss) before taxes which, in turn, required a calculation of the tax impact. The net impact to the Company’s consolidated balance sheet was an (i) increase to prepaid and income taxes receivable of $1,875,000; and (ii) decrease to deferred tax assets of $3,627,000.
	On the Company’s consolidated statement of operations, there was (i) a net (decrease) to income tax expense of ( $979,000 ); and (ii) a (decrease) to income tax benefit from discontinued operations of $( 93,000 ) for the three months ended June 30, 2017.
	On the Company’s consolidated statement of operations, there was (i) a net increase to income tax expense of $2,139,000; and (ii) an increase to income tax benefit from discontinued operations of $233,000 for the nine months ended June 30, 2017.

All of the following notes to consolidated financial statements have been revised to reflect the effects of the above mentioned restatements.

XML

Note 2 - Business and Basis of Presentation

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

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

Note

2—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”), Palisades Acquisition XIX, LLC (“Palisades XIX”), Palisades Acquisition XXIII, LLC (“Palisades XIX”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), EMIRIC, LLC (“EMIRIC”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), Five Star Veterans Disability, LLC (“Five Star”), Simia Capital, LLC (“Simia”) and other subsidiaries, which are

not

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

80%

owned,

50%

controlled equity investment in Pegasus Funding, LLC (“Pegasus”) and our wholly owned subsidiary Simia, social security and disability advocacy through our wholly owned subsidiaries GAR Disability Advocates and Five Star 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 receivable business in

1994.

Recently, our effort has been in the international areas (mainly South America), as we have curtailed our active purchasing of consumer receivables in the United States. 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

Simia and our equity method investment in Pegasus conducts their business solely in the United States. These companies obtain their business from external brokers and internal sales professionals soliciting individuals with personal injury claims. Business is also obtained from their websites and through attorneys.

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.

Discontinued Operations

US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reported as discontinued operations in the consolidated financial statements if the sale or disposition represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.

On

December 13, 2017,

the Company sold all of the issued and outstanding equity capital of CBC, its wholly owned subsidiary engaging in structured settlements. As a result of this sale all prior periods presented in the Company’s consolidated financial statements will account for CBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets and liabilities related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for all periods presented. See Note

8

- Discontinued operations in the Company’s notes to the consolidated financial statements.

Basis of Presentation

 

The consolidated balance sheet as of

June 30, 2017,

the consolidated statements of operations for the

three

and

nine

month periods ended

June 30, 2017

and

2016,

the consolidated statements of comprehensive (loss) income for the

three

and

nine

month periods ended

June 30, 2017

and

2016,

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

nine

months ended

June 30, 2017

and

2016,

and the consolidated statements of cash flows for the

nine

month periods ended

June 30, 2017

and

2016,

are unaudited. The

September 

30,

2016

financial information included in this Amendment was derived from our audited financial statements included in our Form

10

-K/A. In the opinion of management, all adjustments necessary to present fairly our financial position at

June 30, 2017,

the results of operations for the

three

and

nine

month periods ended

June 30, 2017

and

2016

and cash flows for the

nine

month periods ended

June 30, 2017

and

2016

have been made. The results of operations for the

three

and

nine

month periods ended

June 30, 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 Form

10

-K/A filed with the Securities and Exchange Commission.

The consolidated financial statements are prepared in accordance with US GAAP and industry practices.

The preparation of financial statements in conformity with US 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.

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.

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

eleven

banks at

June 30, 2017

that exceeded the balance insured by the FDIC by approximately

$9.8

million. Additionally,

three

foreign banks with an aggregate

$2.2

million balances are

not

FDIC insured. There is a

$10.0

million aggregate balance in a domestic bank that is also

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

7

– Non-Recourse Debt). The Company has an additional

$0.5

million in restricted cash that is included in assets related to discontinued operations. The Company does

not

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

Equity method investment

Investee companies that are

not

consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or

not

the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a

20%

to

50%

interest in voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are

not

reflected within the Company's consolidated balance sheets and statements of operations, however, the Company's share of the earnings of the investee company is reflected as earnings and loss from equity method investment in the Company's consolidated statement of operations. The Company's carrying value in an equity method investee company is reflected on the Company's consolidated balance sheet, as equity method investment.

Pegasus is the Company's

50%

controlled equity investment with Pegasus Legal Funding (“PLF”). Under the operating agreement, the Company and PLF, each maintain

50%

voting rights of the entity, and the Company is

80%

owned by Asta. Based on these shared voting rights with PLF, the Company lacks requisite control of Pegasus, and therefore accounts for its investment in Pegasus under the equity method of accounting.

Serlefin BPO&O Peru S.A.C. (“Serlefin Peru”) is the Company's

49%

owned joint venture. The other

51%

is owned by

three

individuals who share common ownership with Serlefin BPO&O Serlefin S.A. (“Serlefin”). Each owner maintains voting rights equivalent to their share ownership, and the

51%

shareholders collectively manage the operations of the business. Based on the Company's ownership and voting rights, the Company lacks requisite control of Serlefin Peru, and therefore accounts for its investment in Serlefin Peru under the equity method of accounting.

Additionally, the Company and Serlefin jointly purchase international consumer debt portfolios under a purchase agreement. The Company and Serlefin purchase the portfolios on a pro-rata basis of

80%

and

20%,

respectively. The purchased portfolios are transferred to an administrative and payment trust, where the Company and Serlefin are trustees. Serlefin provides collection services to the trust, and receives a performance fee determined by the parties for each loan portfolio acquired. Serlefin received approximately

$115,000

and

$94,000

and

$0.4

million and

$0.2

million in performance fees for the

three

and

nine

months ended

June 30, 2017

and

2016,

respectively.

The carrying value of the investment in Serlefin Peru was

$0.2

million as of

June 30, 2017

and

September 30, 2016.

The Company has included the carrying value of this investment in other assets on its consolidated balance sheets. The cumulative net loss from our investment in Serlefin Peru through

June, 2017

was approximately

$0.1

million, and was

not

significant to the Company's consolidated statement of operations.

When the Company's carrying value in an equity method investee company is reduced to zero,

no

further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will

not

record its share of such income until it equals the amount of its share of losses

not

previously recognized. There were

no

impairment losses recorded on our equity method investments for the

three

and

nine

month periods ended 

June 30, 2017

and

2016.

Personal Injury Claim Advances

Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with

third

party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have

not

exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

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

$1.4

million from the purchase of VATIV. Additionally, the Company has goodwill of

$1.4

million from the purchase of CBC, which is included under assets related to discontinued operations on the consolidated balance sheet.

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had

no

effect on previously reported net loss or shareholders’ equity.

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. Given the changes in the Company's business management is continuing to assess this new standard and the impact it will have on 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. 

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Restricted Cash ("ASU

2016

-

18"

), to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will

not

be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. ASU

2016

-

18

does

not

provide a definition of restricted cash or restricted cash equivalents. The new guidance will only be applicable to amounts described by the Company as restricted cash. We adopted ASU

2016

-

18

on

October 1, 2016,

the effect of which was a change in presentation on our consolidated statement of cash flows, but

not

on our consolidated financial results.

In

January 2017,

the FASB issued ASU

2017

-

04

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment. The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step

2

from the goodwill impairment test. The amendments in this update are effective for annual periods beginning after

December 15, 2019,

and interim periods within those fiscal years. The Company does

not

believe this update will have a material impact on its consolidated financial statements.

XML

Note 3 - Available-for-sale Investments

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Available-for-sale Investments [Text Block]

Note

3—Available

-for-Sale Investments

Investments classified as available-for-sale at

June 30, 2017

and

September 

30,

2016,

consist of the following:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2017	$	5,500,000	$	-	$	-		$	5,500,000
September 30, 2016	$	55,724,000	$	1,088,000	$	(49,000	)	$	56,763,000

The available-for-sale investments do

not

have any contractual maturities. The Company sold

six

investments during the

nine

months ended

June 30, 2017,

with a realized loss of

$1,011,000.

The Company received

$177,000

in capital gains distributions during the

nine

months ended

June 30, 2017.

For the

nine

months ended

June 30, 2016,

the Company sold

three

investments with a realized loss of

$63,000

and also received

$47,000

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

$834,000

related to its available-for-sale securities for the

first

nine

months ended

June 30, 2017

compared to an aggregate realized loss of

$16,000

for the

nine

month period ended

June 30, 2016.

The Company sold

three

investments during the

three

months ended

June 30, 2017

with a realized loss of

$18,000.

For the

three

months ended

June 30, 2016,

the Company sold

one

investment with a realized loss of

$32,000.

  

At

June 30, 2017,

there was

one

investment without any recognized unrealized gain or loss. This security is considered to be an acceptable credit risk. Based on the evaluation of the available evidence, including recent changes in market rates and credit rating information, management believes if any decline in fair value for these instruments is temporary. In addition, management has the ability to hold this investment security for a period of time sufficient to allow for an anticipated recovery or maturity. Should the impairment of any security 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

9 Months Ended

Jun. 30, 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 June 30,
	2017			2016
Balance, beginning of period	$	11,590,000		$	16,440,000
Acquisitions of receivable portfolio		—			751,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,061,000	)		(7,286,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(1,000	)		(83,000	)
Impairment		(148,000	)		—
Effect of foreign currency translation		(163,000	)		92,000
Finance income recognized		3,993,000			4,571,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.9	%		62.0	%

	For the Nine Months Ended June 30,
	2017			2016
Balance, beginning of period	$	13,427,000		$	15,056,000
Acquisitions of receivable portfolio		2,213,000			6,936,000
Net cash collections from collection of consumer receivables acquired for liquidation		(18,148,000	)		(22,060,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(191,000	)		(83,000	)
Impairment		(148,000	)		(124,000	)
Effect of foreign currency translation		39,000			205,000
Finance income recognized		12,018,000			14,555,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.5	%		65.7	%

During the

three

and

nine

month periods ended

June 30, 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

nine

month periods ended

June 30, 2016,

the Company purchased

$2.2

million and

$123.2

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

$0.3

million and

$6.5

million, respectively.

As of

June 30, 2017,

the Company held consumer receivables acquired for liquidation from Peru and Colombia of

$4.5

million and

$3.3

million, respectively. The total amount of foreign consumer receivables acquired for liquidation was

$7.8

million, or

84.8%

of the total consumer receivables held of

$9.2

million at

June 30, 2017.

As of

June 30, 2016,

the Company held consumer receivables acquired for liquidation from Peru and Colombia of

$4.0

million and

$4.0

million, respectively. The total amount of foreign consumer receivables acquired for liquidation was

$8.0

million, or

55.2%

of the total consumer receivables held of

$14.5

million at

June 30, 2016.

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

nine

month periods ended

June 30, 2017

and

2016,

respectively.

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2017		2016		2017		2016
Gross collections (1)	$	10,659,000	$	12,380,000		32,641,000		36,982,000
Commissions and fees (2)		4,597,000		5,011,000		14,302,000		14,839,000
Net collections	$	6,062,000	$	7,369,000	$	18,339,000	$	22,143,000

( 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 are earned by third party collection agencies and attorneys, and include direct costs associated with the collection effort, generally court costs. In December 2007 an arrangement was consummated with one servicer who also received a 3% fee on gross collections received by the Company in connection with the related portfolio purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors in connection with this portfolio purchase.

XML

Note 5 - Litigation Funding

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Other Investments Disclosure [Text Block]

Note

5—Litigation

Funding

Equity Method Investment

On

December 

28,

2011,

the Company entered into a joint venture, Pegasus Funding, LLC ("Pegasus") with Pegasus Legal Funding, LLC (“PLF”). The Company has an

80%

non-controlling interest in the joint venture. 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 claims. Pegasus, earned

$5.1

million and

$9.8

million,

$9.8

million and

$14.8

million in interest and fees during the

three

and

nine

months ended

June 30, 2017

and

2016,

respectively. The Company had a net invested balance in personal injury claims of

$48.5

million and

$48.6

million on

June 30, 2017

and

September 

30,

2016,

respectively.

Equity method investments as of

June 30, 2017

and

September 30, 2016

are as follows:

	June 3 0 , 2017					September 30, 2016
	Carrying Value		Ownership Percentage			Carrying Value		Ownership Percentage
Pegasus Funding, LLC	$	48,533,000		80	%	$	48,582,000		80	%

The carrying value of the Company's equity investment at

June 30, 2017

was

$48,533,000,

a decrease of

$49,000

over the prior year's carrying value of

$48,582,000.

The decrease in carrying value was attributed to the Company's equity earnings of

$2,759,000

for the

nine

months ended

June 30, 2017,

less loan repayments made to Asta which are classified on the balance sheet as due to Asta of

$2,808,000

for the

nine

months ended

June 30, 2017.

The carrying value of the Company's equity investment at

September 30, 2016

was

$48,582,000,

an increase of

$7,831,000

over the prior year's carrying value of

$40,751,000.

The increase in carrying value was attributed to the Company's current year equity earnings of

$10,551,000,

less loan repayments made to Asta which are classified on its balance sheet as due to Asta of

$2,720,000

during fiscal

2016.

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, 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 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. 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. See Note

20

- Subsequent Events. 

The results of operations and financial position of the Company’s equity investment in Pegasus are summarized below:

	Condensed Statement of Operations Information
	Three months ended
	June 30 , 201 7		June 30 , 201 6
Personal injury claims income	$	5,068,000	$	9,838,000
Operating expenses		1,680,000		2,096,000
Income from operations	$	3,388,000	$	7,742,000
Earnings from equity investment	$	2,710,000	$	6,193,000

	Condensed Statement of Operations Information
	Nine months ended
	June 30, 2017		June 30, 2016
Personal injury claims income	$	9,507,000	$	14,769,000
Operating expenses		6,058,000		4,744,000
Income from operations	$	3,449,000	$	10,025,000
Company’s equity income from operations	$	2,759,000	$	8,020,000

	Condensed Balance Sheet Information
	June 30 , 201 7			September 30, 2016
Cash	$	24,829,000	(1)	$	539,000
Investment in personal injury claims		23,927,000			48,289,000
Other assets		109,000			188,000
Total assets	$	48,865,000		$	49,016,000
Due to Asta	$	31,596,000		$	34,404,000
Other liabilities		628,000			1,053,000
Equity		16,641,000			13,559,000
Total liabilities and equity	$	48,865,000		$	49,016,000

(

1

) Included in current assets is

$24.7

million in restricted cash. The restriction has been put in place during the Company’s arbitration with PLF, see Note

20

– Subsequent Events.

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. In

2012,

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

second

quarter of fiscal

2017.

As of

June 30, 2017,

the Company’s investment in cases through BPCM was approximately

$1.7

million. There was

no

income recognized for the

nine

months ended

June 30, 2017

and

2016

and the Company recorded bad debt expense of

$0.7

million during the

three

months ended

June 30, 2017.

XML

Note 6 - Furniture & Equipment

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

6—Furniture

 & Equipment

 

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

	June 30,		September 30,
	2017		2016
Furniture	$	273,000	$	273,000
Equipment		242,000		235,000
Software		1,363,000		1,350,000
		1,878,000		1,858,000
Less accumulated depreciation and amortization		1,737,000		1,662,000
Balance, end of period	$	141,000	$	196,000

XML

Note 7 - Non Recourse Debt

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

7—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

$2,901,000

included a voluntary prepayment of

$1,866,000

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

June 30, 2017,

the Company recorded a liability to BMO of approximately

$164,000,

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

July 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

June 30, 2017.

On

August 2, 2017

the

$9.6

million line of credit expired and the Company satisfied the debt with cash that was held in deposit as collateral with the bank.

XML

Note 8 - Discontinued Operations

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note

8—Discontinued

Operations

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 

13

– 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 has been appointed CEO/General Counsel effective

January 1, 2017.

On

December 13, 2017,

the Company entered into a Securities Purchase Agreement (the “Purchase Agreement) with CBC Holdings LLC, a Delaware limited liability company (the “Buyer”). Under the Purchase Agreement, the Company sold all of the issued and outstanding equity capital of CBC for an aggregate purchase price of approximately

$10.5

million. Of the aggregate purchase price, approximately

$4.49

million was paid in cash, and

$5.75

million was paid under a promissory note at an annual interest rate of

7%

to be paid quarterly to the Company and secured by a

first

priority security interest in and lien on such Buyer’s affiliates’ rights to certain servicing fees. The remaining amount of the aggregate purchase price was paid as reimbursement of certain invoices of CBC. The Company subsequently recognized a loss of approximately

$1.9

million on the above sale of CBC as of

September 30, 2017.

As a result of this sale all prior periods presented in the Company's consolidated financial statements will account for CBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for all periods presented.

As of

June 

30,

2017,

the components of the Company designated as discontinued operations had assets and liabilities of

$93.8

million and

$78.6

million, respectively. As of

September 30, 2016,

the components of the Company designated as discontinued operations had assets and liabilities of

$91.6

million and

$69.2

 million respectively. For the

three

and

nine

months ended

June 30, 2017

and

2016,

the Company designated as discontinued operations reported a income (loss), net of income taxes of

$0.6

million and

$0.6

million, and (

$1.8

) million and

$1.4

million, respectively.

The following table presents the operating results, for the 

three

and

nine

months ended

June 30, 2017 

and 

2016,

for the components of the Company designated as discontinued operations:

	Three months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	7,531,000		$	1,422,000
Interest income on structured settlements		1,923,000			1,765,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,101,000			3,187,000
Other income		14,000			46,000
		4,115,000			3,233,000
Expenses:
General and administrative expenses		2,156,000			1,406,000
Interest expense		990,000			833,000
		3,146,000			2,239,000
Income from discontinued operations before income tax		969,000			994,000
Income tax expense from discontinued operations		409,000			417,000
Income from discontinued operations, net of income tax	$	560,000		$	577,000

	Nine months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	4,511,000		$	4,586,000
Interest income on structured settlements		5,765,000,000			4,473,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,923,000			9,059,000
Other income		44,000			46,000
		4,967,000			9,105,000
Expenses:
General and administrative expenses		5,152,000			4,157,000
Interest expense		2,871,000			2,349,000
		8,023,000			6,506,000
(Loss) income from discontinued operations before income tax		(3,056,000	)		2,599,000
Income tax (benefit) expense from discontinued operations		(1,300,000	)		1,091,000
(Loss) income from discontinued operations before non-controlling interest		(1,756,000	)		1,508,000
Non-controlling interest		—			104,000
(Loss) income from discontinued operations, net of income tax	$	(1,756,000	)	$	1,404,000

CBC purchased 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. 

The major components of assets and liabilities related to discontinued operations are summarized below :

	June 30, 2017			September 30, 2016
Cash and cash equivalents	$	1,256,000	(1)	$	1,198,000
Restricted cash		499,000			499,000
Structured settlements		88,268,000			86,091,000
Furniture and equipment, net		37,000			47,000
Goodwill		1,405,000			1,405,000
Other assets		2,227,000			2,266,000
Total assets related to discontinued operations	$	93,692,000		$	91,506,000
Other debt - CBC		76,435,000			67,435,000
Other liabilities		2,194,000			1,803,000
Total liabilities related to discontinued operations	$	78,629,000		$	69,238,000

(

1

) Cash balance with

one

bank at

June 30, 2017

that exceeded the balance insured by the FDIC by approximately

$0.8

million.

Structured Settlements

Prior to the sale of CBC, CBC purchased 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

$4.5

million of unrealized gains recognized in the

nine

month period ended

June 30, 2017,

approximately

$5.9

million is due to day

one

gains on new structured settlements financed during the period,

$0.1

million gain due to a change in the discount rate, offset by a decrease of

$1.5

million in realized gains recognized as realized interest income on structured settlements during the period. There were

no

other changes in assumptions during the period. 

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 a portion of the Company’s life contingent asset portfolio included in the Company’s structured settlements to the Assignee for a purchase price of

$7.7

million. The Company realized a loss from the sale of

$5.4

million for the

three

months and

nine

months ended

June 30, 2017.

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

June 30, 2017.

Structured settlements consist of the following as of

June 30, 2017

and

September 

30,

2016:

	June 30, 2017			September 30, 2016
Maturity (1) (2)	$	135,132,000		$	133,059,000
Unearned income		(46,864,000	)		(46,968,000	)
Structured settlements, net	$	88,268,000		$	86,091,000

( 1 )	The maturity value represents the aggregate unpaid principal balance at June 30, 2017 and September  30, 2016.
( 2 )	There are no amounts of structured settlements that are past due, or in nonaccrual status at June 30, 2017 and September  30, 2016.

Encumbrances on structured settlements as of

June 30, 2017

and

September 

30,

2016

are as follows:

	Interest Rate			June 30, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)		8.75	%	$	1,716,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		7.25	%		3,947,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		7.125	%		3,907,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		5.39	%		17,765,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		5.07	%		13,780,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		4.85	%		13,259,000		13,705,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until January 2069 (3)		5.0	%		17,761,000		—
$25,000,000 revolving line of credit (3)		4.1	%		4,300,000		10,154,000
Encumbered structured settlements					76,435,000		67,435,000
Structured settlements not encumbered					11,833,000		18,656,000
Total structured settlements				$	88,268,000	$	86,091,000

At

June 30, 2017,

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

September 30, 2017 (3 months)	$	2,679,000
September 30, 2018		9,020,000
September 30, 2019		9,312,000
September 30, 2020		8,989,000
September 30, 2021		9,474,000
Thereafter		95,658,000
Total	$	135,132,000

The Company assumed

$25.9

million of debt related to the CBC acquisition 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.

On

July 27, 2017

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

June 30, 2019.

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 completed its

seventh

private placement, through its subsidiary, BBR VII, and issued approximately

$18.3

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

5.0%.

 

As of

June 30, 2017,

the remaining debt amounted to

$76.4

million, which consisted of

$4.3

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

$72.1

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 fair value of this debt approximates its carrying value.

XML

Note 9 - Commitments and Contingencies

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

9

—Commitments and Contingencies

Employment Agreement

 

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. 

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 an aggregate amount up to

15%

of the profit of the business of Simia (the “Business”) for each fiscal year in which the Business achieves an internal rate of return of at least

18%.

In the event that the Business is sold to a

third

party solely for cash consideration during Mr. Preece’s employment period, he will be eligible to receive a cash or non-cash sale 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. 

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

June 30, 2017

and deemed that the

$2.3

million reserve remains sufficient. See Note

20

- Subsequent Events.

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

June 30, 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. See Note

20

- Subsequent Events.

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. We are

not

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

XML

Note 10 - Income Recognition, Impairments, and Commissions and Fees

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

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

Note

1

0

—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. Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with

third

party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have

not

exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

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

The Company recognizes revenue for GAR Disability Advocates and Five Star Veterans when disability claimants cases close with the social security administration and the applicable 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

$3.4

million 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 11 - Income Taxes

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

1

1

—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 continued and discontinued operations for the

three

and

nine

months ended

June 30, 2017

was

12.2%

and

0.4%,

respectively, compared to

34.8%

and

33.7%

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

2017

differed from the U.S. federal statutory rate of

35%

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

and

2015

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

not

have any uncertain tax positions.

XML

Note 12 - Net Income (Loss) Per Share

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

1

2

—Net Income (Loss) 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

June 30, 2017

and

2016

(rounded to the nearest thousands, except share data):

	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
	Net Income		Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	1,571,000		6,577,784	$	0.24		$	3,289,000		11,897,139	$	0.27
Net (loss) income from discontinued operations		560,000		6,577,784		0.08			577,000		11,897,139		0.05
	$	2,131,000			$	0.32		$	3,866,000			$	0.32
Effect of Dilutive Stock				301,298		(0.01	)				536,285		(0.01	)
Diluted	$	2,131,000		6,879,082	$	0.31		$	3,866,000		12,433,424	$	0.31

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

nine

months ended

June 30, 2017

and

2016

(rounded to the nearest thousands, except share data):

	Nine Months Ended June, 2017								Nine Months Ended June 30, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	(7,033,000	)		9,389,864	$	(0.75	)	$	2,195,000		12,023,156	$	0.18
Net (loss) income from discontinued operations		(1,756,000	)		9,389,864		(0.19	)		1,404,000		12,023,156		0.12
	$	(8,789,000	)				(0.94	)		3,599,000			$	0.30
Effect of Dilutive Stock					—		—					270,917		(0.01	)
Diluted	$	(8,789,000	)		9,389,864	$	(0.94	)	$	3,599,000		12,294,073	$	0.29

For the

three

months ended

June 

30,

2017,

942,067

options at a weighted average exercise price of

$8.15

were

not

included in the diluted earnings per share calculation as they were antidilutive.

For the

three

months ended

June 

30,

2016,

56,007

options at a weighted average exercise price of

$12.55

were

not

included in the diluted earnings per share calculation as they were antidilutive

For the

nine

months ended

June 

30,

2016,

186,082

options at a weighted average exercise price of

$10.88

were

not

included in the diluted earnings per share calculation as they were antidilutive.

XML

Note 13 - Stock Based Compensation

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

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

 

Note

13

—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

8

– Discontinued Operations). 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.

On

June 

8,

2017,

the Compensation Committee granted

56,600

stock options to an officer and employees of the Company, of which

10,000

options vested immediately,

10,000

options vest on

January 1, 2018,

10,000

options vest on

January 1, 2019

and the remaining

26,600

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	1.86	%
Expected term (years)	5.97
Expected volatility	26.27	%
Forfeiture rate	3.49	%
Dividend yield	0.00	%

XML

Note 14 - Stock Option Plans

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Stock Option Plans [Text Block]

Note

14

—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

540,800

shares, an award of

245,625

shares of restricted stock, and has cancelled

67,868

options, leaving

1,281,443

shares available as of

June 30, 2017.

As of

June 30, 2017,

approximately

88

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

may

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:

	Nine Months Ended June 30,
	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		56,600			6.55		67,100			7.93
Options exercised		—			—		(107,531	)		8.11
Options forfeited/cancelled		(53,800	)		14.01		(8,300	)		8.14
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

	Three Months Ended June 30,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		896,867		$	8.14		1,094,867		$	8.45
Options granted		56,600			6.55		—			—
Options exercised		—			—		(100,032	)		8.24
Options forfeited/cancelled		(1,000	)		7.93		—			—
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

The following table summarizes information about the

2012

Plan,

2002

Plan, and the Equity Compensation Plan outstanding options as of

June 30, 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	–	$4.3000		3,800		1.8		2.95		3,800	$	2.95
$5.7501	–	$8.6250		824,167		5.1		7.86		738,895		7.94
$8.6251	–	$11.5000		124,500		5.6		9.40		124,500		9.40
				952,467		5.1		8.05		867,195	$	8.13

The Company recognized

$38,000

and

$30,000

of compensation expense related to the stock option grants during the

nine

and

three

month periods ended

June 30, 2017,

respectively. The Company recognized

$453,000

and

$126,000

of compensation expense related to the stock option grants during the

nine

and

three

month periods ended

June 30, 2016,

respectively. As of

June 30, 2017,

there was

$132,000

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

2.0

years.

The intrinsic value of the outstanding and exercisable options as of

June 30, 2017

was approximately

$287,000

and

$208,000,

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

4.7

years. There were

no

options exercised during the

nine

and

three

month periods ended

June 30, 2017.

The fair value of the stock options that vested during the

nine

and

three

month periods ended

June 30, 2017

was approximately

$734,000

and

$81,000,

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

nine

and

three

month periods ended

June 30, 2016

was approximately

$1,368,000

and

$120,000,

respectively. There fair value of the options granted during the

nine

and

three

month periods ended

June 30, 2017

was

$371,000

for both periods. The fair value of the options granted during the

nine

and

three

month periods ended

June 30, 2016

was approximately

$709,000

and

$0,

respectively.

The following table summarizes information about restricted stock transactions:

	Nine Months Ended June 30,
	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		—		—		128,304			7.89
Vested		—		—		(39,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		133,304		$	7.92

	Three Months Ended June 30,
	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		—	$	—		138,304		$	7.92
Awards granted		—		—		—			—
Vested		—		—		(5,000	)		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		133,304		$	7.92

The Company did

not

recognize any compensation expense related to the restricted stock awards during both the

nine

and

three

month periods ended

June 30, 2017,

respectively. The Company recognized

$114,000

and

$13,000

of compensation expense related to the restricted stock awards during the

nine

and

three

month periods ended

June 30, 2016,

respectively. As of

June 30, 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

nine

months of fiscal year

2016,

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

nine

month periods ended

June 30, 2017

and

2016

was

$0

and

$326,000

respectively. 

The Company recognized an aggregate total of

$38,000

and

$30,000

in compensation expense for the

nine

and

three

month periods ended

June 30, 2017,

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

$567,000

and

$139,000

in compensation expense for the

nine

and

three

month periods ended

June 30, 2016,

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

June 30, 2017,

there was a total of

$132,000

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 15 - Stockholders' Equity

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

15

—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

June 30, 2017,

there were

no

such restrictions.

No

dividends were declared during the

three

and

nine

month periods ended

June 30, 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.  

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 had 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. 

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Restated)

Note

15—Stockholders’

Equity

(

continued

)

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 represent 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.

As of

December 31, 2016

and for the

three

months ended

December 31, 2015

and

2016,

through

February 14, 2017,

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. Effective on

February 15, 2017,

the date Mangrove tendered its shares, they were

no

longer deemed to be a related party.

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Restated)

Note

15—Stockholders’

Equity

(

continued

)

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.

The Company concluded any value associated with the Right given to shareholders as a dividend is deemed deminimus.

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Note 16 - Fair Value of Financial Measurements and Disclosures

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

1

6

—Fair Value of Financial Measurements and Disclosures

 

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

June 30, 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. 

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:

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash equivalents (Level 1)	$	2,864,000	$	2,864,000	$	923,000	$	923,000
Available-for-sale investments (Level 1)		5,500,000		5,500,000		56,764,000		56,764,000
Other investments, net (Level 1)		—		—		3,590,000		3,590,000
Consumer receivables acquired for liquidation (Level 3)		9,210,000		41,488,000		13,427,000		47,233,000

The following assets have been reclassified to discontinued operations as of

June 30, 2017

and

September 30, 2016:

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial asset
Structured settlements (Level 3)		88,268,000		88,268,000		86,091,000		86,091,000

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 equivalents – The Company considers all highly liquid debt instruments purchased with an original maturity of

three

months or less to be cash equivalents. The carrying amount of cash equivalents 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. 

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).  

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.  

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

nine

month period ended

June 30, 2017.

The Company had

no

Level

2

or Level

3

available-for-sale investments during the

first

nine

months of fiscal year

2017.

  

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

3

fair value measurements as of

June 30, 2017 (

which are reclassified in the consolidated financial statements as assets related to discontinued operations):

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	88,268,000	Discounted cash flow	Discount rate		4.71%	–	6.05%

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 financial instruments at fair value using significant unobservable inputs (Level

3

) during the

nine

months ended

June 30, 2017

were as follows:

	Structured Settlement
Balance at September 30, 2016	$	86,091,000
Fair value adjustment		(433,000	)
Total gains and losses included in earnings		(842,000	)
Changes in allowance		242,000
Purchases		13,363,000
Sales		(7,727,000	)
Interest accreted		4,760,000
Payments received		(7,186,000	)
Total	$	88,268,000

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

nine

months ended

June 30, 2017

are reported in the following revenue categories:

The amount of total gains for the nine months period included in earnings attributable to the change in unrealized gains relating to assets held at June 30, 2017	$	4,511,000
Realized loss relating to assets sold during the nine months ended June 30, 2017	$	(5,353,000	)
Total losses included in the nine months ended June 30, 2017	$	(842,000	)

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Note 17 - Segment Reporting

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

17

—Segment Reporting

The Company operates through strategic business units that are aggregated into

three

reportable segments: consumer receivables, personal injury claims, and GAR Disability Advocates. The

three

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 (Equity Method of Investment)    – Pegasus Funding, LLC, purchases interests in personal injury 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. Effective January 2017, Simia 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. Simia's activity for the three and nine months ended June 30, 2017 is included in this segment, along with that of the Company's equity investment in Pegasus.

• Social Security benefit advocacy – 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, other assets, and assets related to discontinued operations.

The following table shows results by reporting segment for the

three

and

nine

month periods ended

June 30, 2017

and

2016.

(Dollars in millions)	Consumer Receivables		GAR Disability Advocates			Personal Injury Claims Including Equity Investment (2)		Corporate (3)				Total
Three Months Ended June 30,
2017:
Revenues	$	4.0	$	1.1		$	0.3	$	—			$	5.4.4
Other income		—		—			—		—				0.1
Segment profit (loss)		2.9		0.0			2.6		(3.7	)			1.8
2016:
Revenues		4.6		1.2			—		—				5.8
Other income		—		—			—		0.2				0.2
Segment profit (loss)		4.2		(1.8	)		6.2		(3.6	)			5.0
Nine Months Ended June 30,
2017:
Revenues	$	12.0	$	4.0		$	0.3	$	—			$	16.3.4
Other income		—		—			—		(0.1	)			(0.1	)
Segment profit (loss)		9.7		(1.4	)		2.3		(17.7	)			(7.1	)
Segment Assets(1)		19.6		3.3			52.9		136.9		(4)		212.7
2016:
Revenues		14.6		2.7			—		—				17.3
Other income		—		—			—		1.2				1.2
Segment profit (loss)		10.7		(6.3	)		8.0		(9.1	)			3.3
Segment Assets(1)	19.2			1.5			45.1		180.8		(4)		246.6

The Company does

not

have any intersegment revenue transactions.

( 1 )	Includes other amounts in other line items on the consolidated balance sheet.
( 2 )	The  Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has included its pro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment.
( 3 )	Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.
( 4 )	Included in Corporate are approximately $93.7 million and $84.8 million of assets related to discontinued operations as of June 30, 2017 and 2016, respectively.

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Note 18 - Accumulated Other Comprehensive (Loss) Income

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note

18

—Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of:

	Nine Months Ended June 30, 2017								Year Ended 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		$	179,000	$	803,000		$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.		—			32,000		32,000			—			(46,000	)		(46,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $404,000 and ($529,000) at June 30 2017, and September 30, 2016, respectively.		(607,000	)		—		(607,000	)		868,000			—			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 and $24,000 at June 30 2017, and September 30, 2016, respectively.		(17,000	)		—		(17,000	)		(39,000	)		—			(39,000	)
Net current-period other comprehensive (loss) income		(624,000	)		32,000		(592,000	)		829,000			(46,000	)	$	783,000
Ending balance	$	—		$	211,000	$	211,000		$	624,000		$	179,000		$	803,000

	Nine Months Ended June 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $25,000 during the nine month period ended June 30, 2016.		-			(37,000	)		(37,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($695,000) during the nine month period ended June 30, 2016.		1,046,000			-			1,046,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $24,000 during the nine month period ended June 30, 2016.		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		1,007,000			(37,000	)		970,000
Ending balance	$	802,000		$	188,000		$	990,000

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Note 19 - Related Party Transactions

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

19

—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 includes, 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

three

and

nine

months ended

June 30, 2017

and

2016,

the Company paid

$20,000

and

$60,000,

respectively, to Piccolo for such services. There were

no

amounts due to Piccolo at

June 30, 2017

and

September 30, 2016.

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.  For the

three

and

nine

months ended

June 30, 2017

and

2016,

Pegasus paid ALP

$33,000

and

$100,000,

respectively.

In

June 2015,

CBC entered into an asset purchase agreement with Fortress Funding, LLC (“Fortress”) to acquire an interest in certain tangible and intangible assets of Fortress, which included customer lists, equipment and other intellectual property. In consideration for these assets CBC agreed to pay Fortress

$0.5

million, as well as up to an additional

$1.2

million based on conversion of customers from the acquired lists obtained in the transaction. Fortress is owned by Michelle Silverman, the wife of Ryan Silverman, who in connection with the agreement was offered employment as General Counsel of CBC. Effective

January 2017,

Silverman was appointed as CEO, and currently serves as the CEO/General Counsel of CBC.

For the

three

and

nine

months ended

June 30, 2017,

the Company paid Fortress

$49,000

and

$0.2

million, and for the

three

and

nine

months ended

June 30, 2016,

$32,000

and

$0.2

million, respectively. As of

June 30, 2017

and

September 30, 2016,

the Company had a liability due to Fortress of

$0.0

million and

$0.8

million, respectively.

In

June 2017,

CBC reached an agreement with Fortress; to settle the remaining

$0.6

million owed under the agreement, which included any future amounts that could have been paid under the agreement in exchange for shares of Asta's common stock. Under the settlement agreement the Company issued Fortress

55,000

unrestricted shares of the Company's common stock as a complete release of any future obligations under the agreement. In conjunction with this transaction the Company recognized a charge to expense of

$0.4

million for the

three

months and

nine

months ended

June 30, 2017,

which represents the market price of the shares at the date of issuance. The Company did

not

recognize a gain on the settlement of this obligation.

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Note 20 - Subsequent Events

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

20—Subsequent

Events

Simia

Effective

November 11, 2016,

the Company entered into a

five

year employment agreement with Mr. Preece that

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. See Note

5

- Litigation Funding.

As of

July 17, 2017,

Mr. Preece was

no

longer employed as Chief Executive Officer of Simia. On an interim basis Gary Stern, Chairman, Chief Executive Officer and President of the Company, will undertake the responsibilities of Simia’s Chief Executive Officer.

No

amounts were paid for any severance or bonus under his contract. 

Pegasus

The Company filed for arbitration with the American Arbitration Association ("AAA") against Pegasus in

April 2017

for breaches in the Operating and Term Sheet. On

April 18, 2017,

the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitration panel is confirmed and can review the case. As of

June 30, 2017

there was approximately

$24.7

million in cash that was restrained under the Emergent Award, and is classified as restricted on the Company's consolidated balance sheet. The Company has as equity method investment in Pegasus. See Note

5

- Litigation Funding.

On

July 17, 2017,

an arbitration panel was confirmed, and a hearing date was scheduled for

August 25, 2017

on the Company's motion to have PLF removed from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company in accordance with the Operating and Liquidation Agreements.

On

January 12, 2018,

the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by and among the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo & Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into the Purchase Agreement.

Additionally, on

January 12, 2018,

ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding, Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with Pegasus Legal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests of Pegasus Funding, LLC (“Pegasus”), which was

20%

of the issued and outstanding limited liability company interests of Pegasus, for an aggregate purchase price of

$1,800,000.

As a result of the execution of the Purchase Agreement, ASFI became the owner of

100%

of the limited liability company interests of Pegasus.

As a result of the purchase of the Seller’s

20%

interest in Pegasus on

January 12, 2018

under the Purchase Agreement, beginning with the quarter ended

March 31, 2018,

the Company will consolidate the financial statements of Pegasus. The Company currently accounts for its investment in Pegasus under the equity method of accounting. See Note

5

- Litigation Funding.

Legal Matters

A competitor of the Company's former subsidiary CBC alleged that CBC had unlawfully purchased certain of the competitor's trade secrets and customer lists from intermediaries who allegedly arranged and/or paid for said materials from the competitor.  CBC denied any wrongdoing and disclaimed liability.  The parties settled the matter for a payment by the Company of

$0.5

million on or about

November 22, 2017,

in exchange for a complete release. 

On

November 24, 2017,

the Company paid

$0.8

million as a settlement in conjunction with the lawsuit filed against the Company in Montana state court alleging, fraud and abuse of process arising from the Company's business relationship with an entity that finances divorce proceedings. See Note

9

- Commitments and Contingencies.

On

January 23, 2018,

the Company paid

$2.3

million as a global settlement in conjunction with the punitive class action complaint filed against the Company, and

one

of its

third

-party law firm servicers. This payment represented the Company's portion of the total settlement of

$4.6

million, which was split with the

third

-party law firm. See Note

9

- Commitments and Contingencies.

Special Dividend

On

February 5, 2018,

the Board of Directors of the Company declared a special cash dividend in the amount of

$5.30

per share with respect to its Common Stock, payable on

February 28, 2018

to holders of record of the Company’s Common Stock at the close of business on

February 16, 2018,

with an ex-dividend date of

March 1, 2018.

The aggregate payment to shareholders was approximately

$35

million.

IRS Examination

The Company's amended federal tax return for the years ended

September 30, 2014

and

2015

is currently being audited by the Internal Revenue Service.

US Tax Reform

 

 On

December 22, 2017

the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces the Federal statutory corporate income tax rate from

35%

to

21%.

This rate reduction is expected to have a significant impact on our provisions for income taxes for periods beginning after

September 30, 2017,

including a

one

-time impact resulting from the revaluation of our deferred tax assets and liabilities to reflect the new lower rate. While we have

not

yet determined the net amount of the revaluation, we expect that it will be a significant component of our income tax provision for the

first

quarter of fiscal

2018.

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Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

 

The consolidated balance sheet as of

June 30, 2017,

the consolidated statements of operations for the

three

and

nine

month periods ended

June 30, 2017

and

2016,

the consolidated statements of comprehensive (loss) income for the

three

and

nine

month periods ended

June 30, 2017

and

2016,

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

nine

months ended

June 30, 2017

and

2016,

and the consolidated statements of cash flows for the

nine

month periods ended

June 30, 2017

and

2016,

are unaudited. The

September 

30,

2016

financial information included in this Amendment was derived from our audited financial statements included in our Form

10

-K/A. In the opinion of management, all adjustments necessary to present fairly our financial position at

June 30, 2017,

the results of operations for the

three

and

nine

month periods ended

June 30, 2017

and

2016

and cash flows for the

nine

month periods ended

June 30, 2017

and

2016

have been made. The results of operations for the

three

and

nine

month periods ended

June 30, 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 Form

10

-K/A filed with the Securities and Exchange Commission.

The consolidated financial statements are prepared in accordance with US GAAP and industry practices.

The preparation of financial statements in conformity with US 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.

Consolidation, Policy [Policy Text Block]

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.

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

eleven

banks at

June 30, 2017

that exceeded the balance insured by the FDIC by approximately

$9.8

million. Additionally,

three

foreign banks with an aggregate

$2.2

million balances are

not

FDIC insured. There is a

$10.0

million aggregate balance in a domestic bank that is also

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

7

– Non-Recourse Debt). The Company has an additional

$0.5

million in restricted cash that is included in assets related to discontinued operations. The Company does

not

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

Equity Method Investments [Policy Text Block]

Equity method investment

Investee companies that are

not

consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or

not

the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a

20%

to

50%

interest in voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are

not

reflected within the Company's consolidated balance sheets and statements of operations, however, the Company's share of the earnings of the investee company is reflected as earnings and loss from equity method investment in the Company's consolidated statement of operations. The Company's carrying value in an equity method investee company is reflected on the Company's consolidated balance sheet, as equity method investment.

Pegasus is the Company's

50%

controlled equity investment with Pegasus Legal Funding (“PLF”). Under the operating agreement, the Company and PLF, each maintain

50%

voting rights of the entity, and the Company is

80%

owned by Asta. Based on these shared voting rights with PLF, the Company lacks requisite control of Pegasus, and therefore accounts for its investment in Pegasus under the equity method of accounting.

Serlefin BPO&O Peru S.A.C. (“Serlefin Peru”) is the Company's

49%

owned joint venture. The other

51%

is owned by

three

individuals who share common ownership with Serlefin BPO&O Serlefin S.A. (“Serlefin”). Each owner maintains voting rights equivalent to their share ownership, and the

51%

shareholders collectively manage the operations of the business. Based on the Company's ownership and voting rights, the Company lacks requisite control of Serlefin Peru, and therefore accounts for its investment in Serlefin Peru under the equity method of accounting.

Additionally, the Company and Serlefin jointly purchase international consumer debt portfolios under a purchase agreement. The Company and Serlefin purchase the portfolios on a pro-rata basis of

80%

and

20%,

respectively. The purchased portfolios are transferred to an administrative and payment trust, where the Company and Serlefin are trustees. Serlefin provides collection services to the trust, and receives a performance fee determined by the parties for each loan portfolio acquired. Serlefin received approximately

$115,000

and

$94,000

and

$0.4

million and

$0.2

million in performance fees for the

three

and

nine

months ended

June 30, 2017

and

2016,

respectively.

The carrying value of the investment in Serlefin Peru was

$0.2

million as of

June 30, 2017

and

September 30, 2016.

The Company has included the carrying value of this investment in other assets on its consolidated balance sheets. The cumulative net loss from our investment in Serlefin Peru through

June, 2017

was approximately

$0.1

million, and was

not

significant to the Company's consolidated statement of operations.

When the Company's carrying value in an equity method investee company is reduced to zero,

no

further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will

not

record its share of such income until it equals the amount of its share of losses

not

previously recognized. There were

no

impairment losses recorded on our equity method investments for the

three

and

nine

month periods ended 

June 30, 2017

and

2016.

Personal Injury Claim Advances [Policy Text Block]

Personal Injury Claim Advances

Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case by case basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with

third

party research tools which monitor public filings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases are identified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely. For cases that have

not

exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates of the Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its fee income.

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

$1.4

million from the purchase of VATIV. Additionally, the Company has goodwill of

$1.4

million from the purchase of CBC, which is included under assets related to discontinued operations on the consolidated balance sheet.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had

no

effect on previously reported net loss or shareholders’ equity.

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. Given the changes in the Company's business management is continuing to assess this new standard and the impact it will have on 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. 

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Restricted Cash ("ASU

2016

-

18"

), to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will

not

be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. ASU

2016

-

18

does

not

provide a definition of restricted cash or restricted cash equivalents. The new guidance will only be applicable to amounts described by the Company as restricted cash. We adopted ASU

2016

-

18

on

October 1, 2016,

the effect of which was a change in presentation on our consolidated statement of cash flows, but

not

on our consolidated financial results.

In

January 2017,

the FASB issued ASU

2017

-

04

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment. The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step

2

from the goodwill impairment test. The amendments in this update are effective for annual periods beginning after

December 15, 2019,

and interim periods within those fiscal years. The Company does

not

believe this update will have a material impact on its consolidated financial statements.

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Note 1 - Restatement of Financial Statements (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	Consolidated Balance Sheet
	June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
ASSETS
Cash and cash equivalents	$	15,315,000		$	(81,000	)	$	(21,000	)	(2)	$	15,213,000
Restricted cash		34,748,000			(24,748,000	)		—				10,000,000
Available for sale investments (at fair value)		5,500,000			—			—				5,500,000
Consumer receivables acquired for liquidation (at net realizable value)		9,118,000			—			92,000		(2)		9,210,000
Investment in personal injury claims, net		27,538,000			(24,187,000	)		—				3,351,000
Due from third party collection agencies and attorneys		1,367,000			—			(10,000	)	(2)		1,357,000
Prepaid and income taxes receivable		4,836,000			—			1,900,000		(5)(8)		6,736,000
Furniture and equipment, net		141,000			—			—				141,000
Equity method investment		—			48,639,000			(106,000	)	(7)		48,533,000
Deferred income taxes		18,940,000			—			(4,820,000	)	(2)(8)		14,120,000
Goodwill		1,410,000			—			—				1,410,000
Other assets		3,576,000			(109,000	)		(59,000	)	(2)		3,408,000
Assets related to discontinued operations		93,723,000			—			(31,000	)	(5)(6)		93,692,000
Total assets	$	216,212,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000
LIABILITIES
Line of credit		9,600,000			—			—				9,600,000
Other liabilities		6,079,000			(755,000	)		(75,000	)	(2)		5,249,000
Liabilities related to discontinued operations		78,628,000			—			1,000		(4)		78,629,000
Total liabilities		94,307,000			(755,000	)		(74,000	)			93,478,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—				—
Common stock		134,000			—			—				134,000
Additional paid-in capital		67,467,000			—			560,000		(5)(6)		68,027,000
Retained earnings		122,669,000			—			(4,720,000	)	(2)(3)(4)(5)(6)(7)(8)		117,949,000
Accumulated other comprehensive income (loss)		(968,000	)		—			1,179,000		(2)		211,000
Treasury stock (at cost)		(67,128,000	)		—			—				(67,128,000	)
Non-controlling interest		(269,000	)		269,000			—				—
Total stockholders’ equity		121,905,000			269,000			(2,981,000	)			119,193,000
Total liabilities and stockholders’ equity	$	216,212 ,000		$	(486,000	)	$	(3,055,000	)		$	212,671,000

	Consolidated Statement of Operations For the Three Months Ended June 30, 2017
	As Reported		De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	3,980,000	$	—		$	13,000		(2)	$	3,993,000
Personal injury claims income		5,569,000		(5,328,000	)		—				241,000
Disability fee income		1,134,000		—			—				1,134,000
Total revenues		10,683,000		(5,328,000	)		13,000				5,368,000
Other income		84,000		—			6,000		(2)		90,000
		10,767,000		(5,328,000	)		19,000				5,458,000
General and administrative		7,252,000		(1,679,000	)		493,000		(2)(6)		6,066,000
Interest		133,000		(2,000	)		33,000		(2)		164,000
Impairment of consumer receivables		148,000		—			—				148,000
Loss (earnings) from equity method investment		—		(2,917,000	)		207,000		(7)		(2,710,000	)
		7,533,000		(4,598,000	)		733,000				3,668,000
Income (loss) from continuing operations before income tax		3,234,000		(730,000	)		(714,000	)			1,790,000
Income tax (benefit)/expense		1,198,000		—			(979,000	)	(8)		219,000
Net income (loss) from continuing operations		2,036,000		(730,000	)		265,000				1,571,000
Income (loss) from discontinued operations, net of income tax		526,000		—			34,000		(3)(5)(8)		560,000
Less: net income attributable to non-controlling interests		730,000		(730,000	)		—				—
Net income attributable to Asta Funding, Inc.	$	1,832,000	$	—		$	299,000			$	2,131,000
Net income (loss) per basic shares:
Continuing operations	$	0.20								$	0.24
Discontinued operations		0.08									0.08
	$	0.28								$	0.32
Net income (loss) per diluted shares:
Continuing operations	$	0.19								$	0.23
Discontinued operations		0.08									0.08
	$	0.27								$	0.31

	Consolidated Statement of Operations For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)			Adjustments				Restated
Revenues:
Finance income, net	$	11,999,000		$	—		$	19,000		(2)	$	12,018,000
Personal injury claims income		10,017,000			(9,766,000	)		—				251,000
Disability fee income		3,990,000			—			—				3,990,000
Total revenues		26,006,000			(9,766,000	)		19,000				16,259,000
Other income		(74,000	)		—			(52,000	)	(2)		(126,000	)
		25,932,000			(9,766,000	)		(33,000	)			16,133,000
General and administrative		31,354,000			(6,052,000	)		309,000		(2)(6)		25,611,000
Interest		169,000			(6,000	)		34,000		(2)		197,000
Impairment of consumer receivables		148,000			—			—				148,000
Loss (earnings) from equity method investment		—			(2,966,000	)		207,000		(7)		(2,759,000	)
		31,671,000			(9,024,000	)		550,000				23,197,000
(Loss) income from continuing operations before income tax		(5,739,000	)		(742,000	)		(583,000	)			(7,064,000	)
Income tax (benefit)/expense		(2,170,000	)		—			2,139,000		(8)		(31,000	)
Net loss from continuing operations		(3,569,000	)		(742,000	)		(2,722,000	)			(7,033,000	)
Loss from discontinued operations, net of income tax		(1,083,000	)		—			(673,000	)	(3)(5)(8)		(1,756,000	)
Less: net income attributable to non-controlling interests		742,000			(742,000	)		—				—
Net loss attributable to Asta Funding, Inc.	$	(5,394,000	)	$	—		$	(3,395,000	)		$	(8,789,000	)
Net income (loss) per basic shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)
Net income (loss) per diluted shares:
Continuing operations	$	(0.46	)								$	(0.75	)
Discontinued operations		(0.11	)									(0.19	)
	$	(0.57	)								$	(0.94	)

	Consolidated Statement of Comprehensive Income
	For the Three Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments			Restated
Comprehensive income (loss) is as follows:
Net income	$	1,832,000		$	—	$	299,000		$	2,131,000
Net unrealized securities (loss) gain, net of tax		18,000			—		—			18,000
Reclassification adjustments for securities sold, net of tax		(11,000	)		—		—			(11,000	)
Foreign currency translation, net of tax		(249,000	)		—		284,000	(2)		35,000
Other comprehensive (loss) income		(242,000	)		—		284,000			42,000
Total comprehensive income	$	1,590,000		$	—	$	583,000		$	2,173,000

	Consolidated Statement of Comprehensive Loss
	For the Nine Months Ended June 30, 2017
	As Reported			De-Consolidation of Pegasus (1)		Adjustments				Restated
Comprehensive (loss) income is as follows:
Net loss	$	(5,394,000	)	$	—	$	(3,395,000	)		$	(8,789,000	)
Net unrealized securities (loss) gain, net of tax		(17,000	)		—		—				(17,000	)
Reclassification adjustments for securities sold, net of tax		(607,000	)		—		—				(607,000	)
Foreign currency translation, net of tax		(430,000	)		—		462,000		(2)(6)		32,000
Other comprehensive (loss) income		(1,054,000	)				462,000				(592,000	)
Total comprehensive loss	$	(6,448,000	)	$		$	(2,933,000	)		$	(9,381,000	)

	Consolidated Statement of Cash Flows For the Nine Months Ended June 30, 2017
	As Reported			Adjustments				Restated
Cash flows from operating activities:
Net loss from continuing operations	$	(4,311,000	)	$	(2,722,000	)		$	(7,033,000	)
Net loss from discontinued operations		(1,083,000	)		(673,000	)			(1,756,000	)
Net loss		(5,394,000	)		(3,395,000	)			(8,789,000	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and Amortization		154,000			(79,000	)			75,000
Deferred income taxes		(2,994,000	)		4,193,000		(2)(8)		1,199,000
Impairments of consumer receivables acquired for liquidation		148,000			—				148,000
Stock based compensation		81,000			—				81,000
Loss on sale of available-for-sale securities		1,011,000			—				1,011,000
Unrealized gain on other investments		3,590,000	)		—				3,590,000
Earnings from equity method investment		—			(2,759,000	)	(7)		(2,759,000	)
Forgiveness of debt		—			552,000		(5)		552,000
Changes in:
Prepaid and income taxes receivable		(3,956,000	)		(2,066,000	)	(5)(8)		(6,022,000	)
Due from third party collection agencies and attorneys		(362,000	)		42,000		(2)		(320,000	)
Other assets		3,050,000	)		134,000		(2)		3,184,000
Income tax payable		(252,000	)		252,000		(6)		—
Other liabilities		1,083,000			211,000		(2)		1,294,000
Non-controlling interest		742,000			(742,000	)	(1)		—
Net cash (used in) provided by operating activities of discontinued operations		(3,654,000	)		613,000		(5)(6)		(3,041,000	)
Net cash (used in) provided by operating activities		(6,753,000	)		(3,044,000	)			(9,797,000	)
Cash flows from investing activities:
Purchase of consumer receivables acquired for liquidation		(2,213,000	)		—				(2,213,000	)
Principal collected on receivables acquired for liquidation		6,618,000			(294,000	)	(2)		6,324,000
Purchase of available-for-sale securities		(13,193,000	)		—				(13,193,000	)
Proceeds from sales of available-for-sale securities		62,406,000			—				62,406,000
Decrease in equity method investment		—			2,808,000		(5)(6)		2,808,000
Investments in personal injury claims — advances		(14,624,000	)		11,273,000		(1)		(3,351,000	)
Investments in personal injury claims — receipts		35,375,000			(35,375,000	)	(1)		—
Capital expenditures		(19,000	)		—				(19,000	)
Net cash provided by investing activities related to discontinued operations		1,548,000			—				1,548,000
Net cash provided by (used in) investing activities		75,898,000			(21,588,000	)			54,310,000
Cash flows from financing activities:
Purchase of treasury stock		(54,203,000	)		—				(54,203,000	)
Distributions to non-controlling interest		(366,000	)		366,000		(1)		—
Borrowings from line of credit		9,600,000			—				9,600,000
Net cash provided by financing activities related to discontinued operations		9,000,000			—				9,000,000
Net cash (used in) provided by financing activities		(35,969,000	)		366,000				(35,603,000	)
Foreign currency effect on cash		—			(37,000	)	(2)		(37,000	)
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations		33,176,000			(24,303,000	)			8,873,000
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations		58,000			—				58,000
Net increase ( decrease ) in cash , cash equivalents and restricted cash		33,234,000			(24,303,000	)	(1)(2)(4)(5)(6)(7)(8)		8,931,000
Cash, cash equivalents and restricted cash at beginning of period		16,829,000			(547,000	)			16,282,000
Cash , cash equivalents and restricted cash at end of period	$	50,063,000		$	(24,850,000	)		$	25,213,000

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Cash and cash equivalents		$3,000		$(24,000)		$(21,000)
Consumer receivables acquired for liquidation		(245,000)		337,000		92,000
Due from third party collection agencies and attorneys		45,000		(55,000)		(10,000)
Deferred income taxes		(722,000)		(472,000)		(1,194,000)
Other assets		(33,000)		(26,000)		(59,000)
Other liabilities		(18,000)		(57,000)		(75,000)
Accumulated other comprehensive loss		718,000		461,000		1,179,000
Retained earnings		(1,653,000)		(645,000)		(2,298,000)

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Assets related to discontinued operations		$307,000		$(357,000)		$(50,000)
Liabilities related to discontinued operations		756,000		(756,000)		—
Retained earnings		(442,000)		(155,000)		(597,000)
Additional paid in capital		-		552,000		552,000

Increase (decrease) in:	Impact from September 30, 2016 10K/A filing		Current period impact		Cumulative net impact
Other liabilities		$269,000		$(269,000)		$ —
Retained earnings		(137,000)		270,000		133,000
Assets related to discontinued operations		45,000		-		45,000
Additional paid in capital		8,000		-		8,000

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Note 3 - Available-for-sale Investments (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2017	$	5,500,000	$	-	$	-		$	5,500,000
September 30, 2016	$	55,724,000	$	1,088,000	$	(49,000	)	$	56,763,000

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Note 4 - Consumer Receivables Acquired for Liquidation (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Consumer Receivables after Liquidation [Table Text Block]

	For the Three Months Ended June 30,
	2017			2016
Balance, beginning of period	$	11,590,000		$	16,440,000
Acquisitions of receivable portfolio		—			751,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,061,000	)		(7,286,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(1,000	)		(83,000	)
Impairment		(148,000	)		—
Effect of foreign currency translation		(163,000	)		92,000
Finance income recognized		3,993,000			4,571,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.9	%		62.0	%

	For the Nine Months Ended June 30,
	2017			2016
Balance, beginning of period	$	13,427,000		$	15,056,000
Acquisitions of receivable portfolio		2,213,000			6,936,000
Net cash collections from collection of consumer receivables acquired for liquidation		(18,148,000	)		(22,060,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(191,000	)		(83,000	)
Impairment		(148,000	)		(124,000	)
Effect of foreign currency translation		39,000			205,000
Finance income recognized		12,018,000			14,555,000
Balance, end of period	$	9,210,000		$	14,485,000
Finance income as a percentage of collections		65.5	%		65.7	%

Schedule of Collections on Gross Basis [Table Text Block]

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2017		2016		2017		2016
Gross collections (1)	$	10,659,000	$	12,380,000		32,641,000		36,982,000
Commissions and fees (2)		4,597,000		5,011,000		14,302,000		14,839,000
Net collections	$	6,062,000	$	7,369,000	$	18,339,000	$	22,143,000

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Note 5 - Litigation Funding (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Equity Method Investments [Table Text Block]

	June 3 0 , 2017					September 30, 2016
	Carrying Value		Ownership Percentage			Carrying Value		Ownership Percentage
Pegasus Funding, LLC	$	48,533,000		80	%	$	48,582,000		80	%

Equity Method Investment, Summarized Financial Information [Table Text Block]

	Condensed Statement of Operations Information
	Three months ended
	June 30 , 201 7		June 30 , 201 6
Personal injury claims income	$	5,068,000	$	9,838,000
Operating expenses		1,680,000		2,096,000
Income from operations	$	3,388,000	$	7,742,000
Earnings from equity investment	$	2,710,000	$	6,193,000

	Condensed Statement of Operations Information
	Nine months ended
	June 30, 2017		June 30, 2016
Personal injury claims income	$	9,507,000	$	14,769,000
Operating expenses		6,058,000		4,744,000
Income from operations	$	3,449,000	$	10,025,000
Company’s equity income from operations	$	2,759,000	$	8,020,000

	Condensed Balance Sheet Information
	June 30 , 201 7			September 30, 2016
Cash	$	24,829,000	(1)	$	539,000
Investment in personal injury claims		23,927,000			48,289,000
Other assets		109,000			188,000
Total assets	$	48,865,000		$	49,016,000
Due to Asta	$	31,596,000		$	34,404,000
Other liabilities		628,000			1,053,000
Equity		16,641,000			13,559,000
Total liabilities and equity	$	48,865,000		$	49,016,000

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Note 6 - Furniture & Equipment (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30,		September 30,
	2017		2016
Furniture	$	273,000	$	273,000
Equipment		242,000		235,000
Software		1,363,000		1,350,000
		1,878,000		1,858,000
Less accumulated depreciation and amortization		1,737,000		1,662,000
Balance, end of period	$	141,000	$	196,000

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Note 8 - Discontinued Operations (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	Three months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	7,531,000		$	1,422,000
Interest income on structured settlements		1,923,000			1,765,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,101,000			3,187,000
Other income		14,000			46,000
		4,115,000			3,233,000
Expenses:
General and administrative expenses		2,156,000			1,406,000
Interest expense		990,000			833,000
		3,146,000			2,239,000
Income from discontinued operations before income tax		969,000			994,000
Income tax expense from discontinued operations		409,000			417,000
Income from discontinued operations, net of income tax	$	560,000		$	577,000

	Nine months ended
	June 30, 2017			June 30, 2016
Revenues:
Unrealized gain on structured settlements	$	4,511,000		$	4,586,000
Interest income on structured settlements		5,765,000,000			4,473,000
Loss on sale of structured settlements		(5,353,000	)		—
Total revenues		4,923,000			9,059,000
Other income		44,000			46,000
		4,967,000			9,105,000
Expenses:
General and administrative expenses		5,152,000			4,157,000
Interest expense		2,871,000			2,349,000
		8,023,000			6,506,000
(Loss) income from discontinued operations before income tax		(3,056,000	)		2,599,000
Income tax (benefit) expense from discontinued operations		(1,300,000	)		1,091,000
(Loss) income from discontinued operations before non-controlling interest		(1,756,000	)		1,508,000
Non-controlling interest		—			104,000
(Loss) income from discontinued operations, net of income tax	$	(1,756,000	)	$	1,404,000

	June 30, 2017			September 30, 2016
Cash and cash equivalents	$	1,256,000	(1)	$	1,198,000
Restricted cash		499,000			499,000
Structured settlements		88,268,000			86,091,000
Furniture and equipment, net		37,000			47,000
Goodwill		1,405,000			1,405,000
Other assets		2,227,000			2,266,000
Total assets related to discontinued operations	$	93,692,000		$	91,506,000
Other debt - CBC		76,435,000			67,435,000
Other liabilities		2,194,000			1,803,000
Total liabilities related to discontinued operations	$	78,629,000		$	69,238,000

Structured Settlements [Table Text Block]

	June 30, 2017			September 30, 2016
Maturity (1) (2)	$	135,132,000		$	133,059,000
Unearned income		(46,864,000	)		(46,968,000	)
Structured settlements, net	$	88,268,000		$	86,091,000

Schedule of Fair Value of Debt [Table Text Block]

	Interest Rate			June 30, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)		8.75	%	$	1,716,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		7.25	%		3,947,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		7.125	%		3,907,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		5.39	%		17,765,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		5.07	%		13,780,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		4.85	%		13,259,000		13,705,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until January 2069 (3)		5.0	%		17,761,000		—
$25,000,000 revolving line of credit (3)		4.1	%		4,300,000		10,154,000
Encumbered structured settlements					76,435,000		67,435,000
Structured settlements not encumbered					11,833,000		18,656,000
Total structured settlements				$	88,268,000	$	86,091,000

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

September 30, 2017 (3 months)	$	2,679,000
September 30, 2018		9,020,000
September 30, 2019		9,312,000
September 30, 2020		8,989,000
September 30, 2021		9,474,000
Thereafter		95,658,000
Total	$	135,132,000

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Note 12 - Net Income (Loss) Per Share (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
	Net Income		Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	1,571,000		6,577,784	$	0.24		$	3,289,000		11,897,139	$	0.27
Net (loss) income from discontinued operations		560,000		6,577,784		0.08			577,000		11,897,139		0.05
	$	2,131,000			$	0.32		$	3,866,000			$	0.32
Effect of Dilutive Stock				301,298		(0.01	)				536,285		(0.01	)
Diluted	$	2,131,000		6,879,082	$	0.31		$	3,866,000		12,433,424	$	0.31

	Nine Months Ended June, 2017								Nine Months Ended June 30, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Income		Weighted Average Shares		Per Share Amount
Net (loss) income from continuing operations	$	(7,033,000	)		9,389,864	$	(0.75	)	$	2,195,000		12,023,156	$	0.18
Net (loss) income from discontinued operations		(1,756,000	)		9,389,864		(0.19	)		1,404,000		12,023,156		0.12
	$	(8,789,000	)				(0.94	)		3,599,000			$	0.30
Effect of Dilutive Stock					—		—					270,917		(0.01	)
Diluted	$	(8,789,000	)		9,389,864	$	(0.94	)	$	3,599,000		12,294,073	$	0.29

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Note 13 - Stock Based Compensation (Tables)

9 Months Ended

Jun. 30, 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	%

Risk-free interest rate	1.86	%
Expected term (years)	5.97
Expected volatility	26.27	%
Forfeiture rate	3.49	%
Dividend yield	0.00	%

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Note 14 - Stock Option Plans (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

	Nine Months Ended June 30,
	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		56,600			6.55		67,100			7.93
Options exercised		—			—		(107,531	)		8.11
Options forfeited/cancelled		(53,800	)		14.01		(8,300	)		8.14
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

	Three Months Ended June 30,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		896,867		$	8.14		1,094,867		$	8.45
Options granted		56,600			6.55		—			—
Options exercised		—			—		(100,032	)		8.24
Options forfeited/cancelled		(1,000	)		7.93		—			—
Outstanding options at the end of period		952,467		$	8.05		994,835		$	8.47
Exercisable options at the end of period		867,195		$	8.13		874,826		$	8.51

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	–	$4.3000		3,800		1.8		2.95		3,800	$	2.95
$5.7501	–	$8.6250		824,167		5.1		7.86		738,895		7.94
$8.6251	–	$11.5000		124,500		5.6		9.40		124,500		9.40
				952,467		5.1		8.05		867,195	$	8.13

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Nine Months Ended June 30,
	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		—		—		128,304			7.89
Vested		—		—		(39,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		133,304		$	7.92

	Three Months Ended June 30,
	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		—	$	—		138,304		$	7.92
Awards granted		—		—		—			—
Vested		—		—		(5,000	)		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		133,304		$	7.92

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Note 16 - Fair Value of Financial Measurements and Disclosures (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash equivalents (Level 1)	$	2,864,000	$	2,864,000	$	923,000	$	923,000
Available-for-sale investments (Level 1)		5,500,000		5,500,000		56,764,000		56,764,000
Other investments, net (Level 1)		—		—		3,590,000		3,590,000
Consumer receivables acquired for liquidation (Level 3)		9,210,000		41,488,000		13,427,000		47,233,000

	June 30, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial asset
Structured settlements (Level 3)		88,268,000		88,268,000		86,091,000		86,091,000

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	88,268,000	Discounted cash flow	Discount rate		4.71%	–	6.05%

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Structured Settlement
Balance at September 30, 2016	$	86,091,000
Fair value adjustment		(433,000	)
Total gains and losses included in earnings		(842,000	)
Changes in allowance		242,000
Purchases		13,363,000
Sales		(7,727,000	)
Interest accreted		4,760,000
Payments received		(7,186,000	)
Total	$	88,268,000

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block]

The amount of total gains for the nine months period included in earnings attributable to the change in unrealized gains relating to assets held at June 30, 2017	$	4,511,000
Realized loss relating to assets sold during the nine months ended June 30, 2017	$	(5,353,000	)
Total losses included in the nine months ended June 30, 2017	$	(842,000	)

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Note 17 - Segment Reporting (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

(Dollars in millions)	Consumer Receivables		GAR Disability Advocates			Personal Injury Claims Including Equity Investment (2)		Corporate (3)				Total
Three Months Ended June 30,
2017:
Revenues	$	4.0	$	1.1		$	0.3	$	—			$	5.4.4
Other income		—		—			—		—				0.1
Segment profit (loss)		2.9		0.0			2.6		(3.7	)			1.8
2016:
Revenues		4.6		1.2			—		—				5.8
Other income		—		—			—		0.2				0.2
Segment profit (loss)		4.2		(1.8	)		6.2		(3.6	)			5.0
Nine Months Ended June 30,
2017:
Revenues	$	12.0	$	4.0		$	0.3	$	—			$	16.3.4
Other income		—		—			—		(0.1	)			(0.1	)
Segment profit (loss)		9.7		(1.4	)		2.3		(17.7	)			(7.1	)
Segment Assets(1)		19.6		3.3			52.9		136.9		(4)		212.7
2016:
Revenues		14.6		2.7			—		—				17.3
Other income		—		—			—		1.2				1.2
Segment profit (loss)		10.7		(6.3	)		8.0		(9.1	)			3.3
Segment Assets(1)	19.2			1.5			45.1		180.8		(4)		246.6

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Note 18 - Accumulated Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Nine Months Ended June 30, 2017								Year Ended 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		$	179,000	$	803,000		$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.		—			32,000		32,000			—			(46,000	)		(46,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $404,000 and ($529,000) at June 30 2017, and September 30, 2016, respectively.		(607,000	)		—		(607,000	)		868,000			—			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 and $24,000 at June 30 2017, and September 30, 2016, respectively.		(17,000	)		—		(17,000	)		(39,000	)		—			(39,000	)
Net current-period other comprehensive (loss) income		(624,000	)		32,000		(592,000	)		829,000			(46,000	)	$	783,000
Ending balance	$	—		$	211,000	$	211,000		$	624,000		$	179,000		$	803,000

	Nine Months Ended June 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	225,000		$	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $25,000 during the nine month period ended June 30, 2016.		-			(37,000	)		(37,000	)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($695,000) during the nine month period ended June 30, 2016.		1,046,000			-			1,046,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $24,000 during the nine month period ended June 30, 2016.		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		1,007,000			(37,000	)		970,000
Ending balance	$	802,000		$	188,000		$	990,000

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Note 1 - Restatement of Financial Statements (Details Textual) - USD ($)		3 Months Ended			9 Months Ended
		Jun. 30, 2017		Jun. 30, 2016	Jun. 30, 2017		Jun. 30, 2016	Dec. 31, 2016	Sep. 30, 2016
Other Long-term Investments		$ 3,351,000			$ 3,351,000
Other Assets, Total		3,408,000			3,408,000				6,585,000
Other Liabilities, Total		5,249,000			5,249,000				3,987,000
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance
Equity Method Investments		48,533,000			48,533,000				48,582,000
Revenues, Total		5,458,000		$ 5,917,000	16,133,000		$ 18,433,000
General and Administrative Expense, Total		6,066,000		7,069,000	25,611,000		23,020,000
Net Income (Loss) Attributable to Noncontrolling Interest, Total
Income (Loss) from Equity Method Investments, Total		2,710,000		6,193,000	2,759,000		6,193,000
Revenue, Net (Deprecated 2018-01-31)		5,368,000		5,741,000	16,259,000		17,257,000
Other Nonoperating Income		90,000
Interest Expense, Total		164,000			197,000
Disposal Group, Including Discontinued Operation, Assets, Total		93,692,000			93,692,000				91,506,000
Retained Earnings (Accumulated Deficit), Ending Balance		117,949,000			117,949,000				126,738,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net		9,210,000		14,500,000	9,210,000		14,500,000		13,427,000
Income Taxes Receivable		6,736,000			6,736,000				714,000
Deferred Tax Assets, Net of Valuation Allowance, Total		14,120,000			14,120,000				14,903,000
Income Tax Expense (Benefit), Total		219,000		$ 1,752,000	(31,000)		$ 1,114,000
Pegasus Funding LLC [Member]
Equity Method Investments		48,533,000			48,533,000				48,582,000
Restatement Adjustment [Member]
Income (Loss) from Equity Method Investments, Total	[1]				2,759,000
Restatement Adjustment [Member] | Accounting For Investment in Pegasus Under The Equity Method [Member]
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Ending Balance								$ (24,829,000)
Other Long-term Investments		(24,187,000)	[2]		(24,187,000)	[2]		(24,187,000)
Other Assets, Total		(109,000)	[2]		(109,000)	[2]		(109,000)
Other Liabilities, Total		(755,000)	[2]		(755,000)	[2]		(755,000)
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance		269,000	[2]		269,000	[2]		269,000
Equity Method Investments	[2]	48,639,000			48,639,000
Revenues, Total	[2]	(5,328,000)			(9,766,000)
General and Administrative Expense, Total		(1,681,000)			(6,058,000)
Net Income (Loss) Attributable to Noncontrolling Interest, Total	[2]	(730,000)			(742,000)
Income (Loss) from Equity Method Investments, Total	[2]	2,917,000			2,966,000
Revenue, Net (Deprecated 2018-01-31)	[2]	(5,328,000)			(9,766,000)
Other Nonoperating Income	[2]
Interest Expense, Total	[2]	(2,000)			(6,000)
Disposal Group, Including Discontinued Operation, Assets, Total	[2]
Retained Earnings (Accumulated Deficit), Ending Balance	[2]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	[2]
Income Taxes Receivable	[2]
Deferred Tax Assets, Net of Valuation Allowance, Total	[2]
Income Tax Expense (Benefit), Total	[2]
Restatement Adjustment [Member] | Foreign Currency Gains/Losses On Intercompany Balances and Transactions Corrections [Member]
General and Administrative Expense, Total		493,000			580,000
Revenue, Net (Deprecated 2018-01-31)		13,000			19,000
Other Nonoperating Income		6,000			(52,000)
Interest Expense, Total		34,000			34,000
Restatement Adjustment [Member] | Revision of The Fair Market of The Structured Settlements [Member]
Structured Settlements, Fair Value								(2,600,000)
Prepaid Income Taxes and Deferred Tax Assets								1,000,000
Disposal Group, Including Discontinued Operation, Assets, Total								$ 727,000
Retained Earnings (Accumulated Deficit), Ending Balance		727,000			727,000
Restatement Adjustment [Member] | Addition of Certain Unallocated Payments [Member]
Retained Earnings (Accumulated Deficit), Ending Balance									(648,000)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net									$ (648,000)
Restatement Adjustment [Member] | Correction Of An Amortizable Asset and Related Liability In Conjunction With An Asset Purchase Agreement Entered Into In June 2015 With a Related Party [Member]
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		(34,000)			(153,000)
Restatement Adjustment [Member] | Correction of Other Liabilities That Had Not Been Properly Accrued To The Correct Period And/Or In Improper Amounts [Member]
General and Administrative Expense, Total		0			(271,000)
Restatement Adjustment [Member] | Correction of Personal Injury Claims Assets Balance of Equity Investment [Member] | Pegasus Funding LLC [Member]
Income (Loss) from Equity Method Investments, Total		0			320,000
Restatement Adjustment [Member] | Correction of Personal Injury Claims Assets Balance of Equity Investment, Impact of Related Accruals [Member] | Pegasus Funding LLC [Member]
Equity Method Investments		101,000			101,000
Income (Loss) from Equity Method Investments, Total		(207,000)			(207,000)
Restatement Adjustment [Member] | Tax Impact of Errors Correction [Member]
Income Taxes Receivable		(1,875,000)			(1,875,000)
Deferred Tax Assets, Net of Valuation Allowance, Total		(3,627,000)			(3,627,000)
Income Tax Expense (Benefit), Total		(979,000)			2,139,000
Discontinued Operation, Tax Effect of Discontinued Operation, Total		$ 93,000			$ (233,000)

[1] The Company identified the personal injury claims asset balance of Pegasus was determined to be overstated at March 31, 2017 by $400,000. The correction of this error resulted in a decrease in earnings from the equity investment in Pegasus and income from continuing operations of $0 and $320,000 for the three and nine months ended June 30, 2017. Additionally, the equity investment was increased $101,000 to reflect the impact of the related accruals in the September 30, 2016 Form 10-K/A. During the three and nine months ended June 30, 2017, earnings from equity method investment decreased by $207,000 for a reduction in personal injury claims in Pegasus.

[2] In connection with the Company determining it lacked the requisite control to consolidate Pegasus during the Non-Reliance Period, the Company has now accounted for its investment in Pegasus under the equity method in accordance with US GAAP. On the Company's June 30, 2017 consolidated balance sheet, this resulted in (i) a decrease in cash and restricted cash of $24,829,000; (ii) a decrease in the investment in personal injury claims of $24,187,000; (iii) a decrease in other assets of $109,000; (iv) a decrease in other liabilities of $755,000; and (v) a decrease in non-controlling interest of $269,000, offset by a corresponding increase in the equity method investment of $48,639,000. On the Company's consolidated statement of operations, this resulted in (i) a decrease in total revenues of $5,328,000; (ii) a decrease in expenses of $1,681,000; (iii) a decrease in the income attributable to the non-controlling interest of $730,000; and (iv) a decrease in earnings from equity method investment of $2,917,000 the three months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period. On the Company's consolidated statement of operations, this resulted in (i) a decrease in total revenues of $9,766,000; (ii) a decrease in expenses of $6,058,000; (iii) a decrease in the income attributable to the non-controlling interest of $742,000; and (iv) a decrease in earnings from equity method investment of $2,966,000 the nine months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.

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Note 1 - Restatement of Financial Statements - Adjustments to the Financial Statements (Details) - USD ($)		3 Months Ended				9 Months Ended				12 Months Ended
		Jun. 30, 2017		Jun. 30, 2016		Jun. 30, 2017		Jun. 30, 2016		Sep. 30, 2016	Dec. 31, 2016	Sep. 30, 2015
Cash and cash equivalents		$ 15,213,000				$ 15,213,000				$ 6,282,000
Restricted cash		10,000,000				10,000,000				10,000,000
Available for sale investments (at fair value)		5,500,000				5,500,000				56,763,000
Consumer receivables acquired for liquidation (at net realizable value)		9,210,000		$ 14,500,000		9,210,000		$ 14,500,000		13,427,000
Investment in personal injury claims, net		3,351,000				3,351,000
Due from third party collection agencies and attorneys		1,357,000				1,357,000				1,050,000
Prepaid and income taxes receivable		6,736,000				6,736,000				714,000
Furniture and equipment, net		141,000				141,000				196,000
Equity method investment		48,533,000				48,533,000				48,582,000
Deferred income taxes		14,120,000				14,120,000				14,903,000
Goodwill		1,410,000				1,410,000				1,410,000
Other assets		3,408,000				3,408,000				6,585,000
Assets related to discontinued operations		93,692,000				93,692,000				91,506,000
Total assets		212,671,000		246,600,000	[1]	212,671,000		246,600,000	[1]	255,008,000
Line of credit		9,600,000				9,600,000
Other liabilities		5,249,000				5,249,000				3,987,000
Liabilities related to discontinued operations		78,629,000				78,629,000				69,238,000
Total liabilities		93,478,000				93,478,000				73,225,000
Commitments and contingencies
Preferred stock
Common stock		134,000				134,000				133,000
Additional paid-in capital		68,027,000				68,027,000				67,034,000
Retained earnings		117,949,000				117,949,000				126,738,000
Accumulated other comprehensive income		211,000				211,000				803,000
Treasury stock (at cost)		(67,128,000)				(67,128,000)				(12,925,000)
Non-controlling interest
Total stockholders’ equity		119,193,000		177,544,000		119,193,000		177,544,000		181,783,000		$ 183,407,000
Total liabilities and stockholders’ equity		212,671,000				212,671,000				255,008,000
Finance income recognized		3,993,000		4,572,000		12,018,000		14,557,000
Personal injury claims income		241,000				251,000
Disability fee income		1,134,000		1,169,000		3,990,000		2,700,000
Total revenues		5,368,000		5,741,000		16,259,000		17,257,000
Other Nonoperating Income		90,000
Revenues, Total		5,458,000		5,917,000		16,133,000		18,433,000
General and administrative		6,066,000		7,069,000		25,611,000		23,020,000
Interest		164,000				197,000
Impairment of consumer receivables		148,000				148,000		124,000
Loss (earnings) from equity method investment		(2,710,000)		(6,193,000)		(2,759,000)		(6,193,000)
		3,668,000		876,000		23,197,000		15,124,000
Income (loss) from continuing operations before income tax		1,790,000		5,041,000		(7,064,000)		3,309,000
Income Tax Expense (Benefit), Total		219,000		1,752,000		(31,000)		1,114,000
Net income (loss) from continuing operations		1,571,000		3,289,000		(7,033,000)		2,195,000
Net income (loss) from discontinued operations, net of income tax		560,000		577,000		(1,756,000)		1,404,000
Net Income (Loss) Attributable to Noncontrolling Interest, Total
Net income (loss)		$ 2,131,000		$ 3,866,000		$ (8,789,000)		$ 3,599,000
Continuing operations (in dollars per share)		$ 0.24		$ 0.27		$ (0.75)		$ 0.18
Discontinued operations (in dollars per share)		0.08		0.05		(0.19)		0.12
Basic, per share amount (in dollars per share)		0.32		0.32		(0.94)		0.30
Continuing operations (in dollars per share)		0.23		0.26		(0.75)		0.18
Discontinued operations (in dollars per share)		0.08		0.05		(0.19)		0.11
Diluted, per share amount (in dollars per share)		$ 0.31		$ 0.31		$ (0.94)		$ 0.29
Other income		$ 90,000		$ 176,000		$ (126,000)		$ 1,176,000
Net (loss) income from continuing operations		1,571,000		3,289,000		(7,033,000)		2,195,000
Net loss attributable to Asta Funding, Inc.		$ 2,131,000		$ 3,866,000		$ (8,789,000)		$ 3,599,000
Continuing operations (in dollars per share)						$ (0.75)
Discontinued operations (in dollars per share)						(0.19)
(in dollars per share)						(0.94)
(in dollars per share)		$ 0.31		$ 0.31		$ (0.94)		$ 0.29
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)		$ 18,000		$ 560,000		$ (17,000)		$ 1,046,000
Amount reclassified from other comprehensive (loss) income		(11,000)		(19,000)		(607,000)		(39,000)
Foreign currency translation, net		35,000		(63,000)		32,000		(37,000)
Other comprehensive (loss) income		42,000		478,000		(592,000)		970,000
Total comprehensive income		2,173,000		4,344,000		(9,381,000)		4,569,000
Depreciation and Amortization						75,000		353,000
Deferred income taxes						1,199,000		(78,000)
Stock based compensation						81,000		567,000
Loss on sale of available-for-sale securities		18,000		32,000		1,011,000		63,000
Unrealized gain on other investments								(246,000)
Earnings from equity method investment		(2,710,000)		(6,193,000)		(2,759,000)		(6,193,000)
Forgiveness of debt						552,000
Prepaid and income taxes receivable						(6,022,000)		2,512,000
Due from third party collection agencies and attorneys						(320,000)		376,000
Other assets						3,184,000		(2,444,000)
Income tax payable
Other liabilities						1,294,000		1,911,000
Non-controlling interest
Net cash used in operating activities of discontinued operations						(3,041,000)		(6,649,000)
Net cash (used in) provided by operating activities						(9,797,000)		(5,025,000)
Purchase of consumer receivables acquired for liquidation				(751,000)		(2,213,000)		(6,936,000)
Principal collected on receivables acquired for liquidation						6,324,000		7,384,000
Purchase of available-for-sale securities						(13,193,000)		(11,704,000)
Proceeds from sale of available-for-sale securities						62,406,000		16,302,000
(Increase) decrease in equity method investment						2,808,000		1,826,000
Investments in personal injury claims — advances						(3,351,000)
Investments in personal injury claims — receipts
Capital expenditures						(19,000)		(120,000)
Net cash provided by (used in) investing activities of discontinued operations						1,548,000		(6,756,000)
Net cash provided by (used in) investing activities						54,310,000		(804,000)
Purchase of treasury stock						(54,203,000)		(11,174,000)
Distributions to non-controlling interest
Borrowings from line of credit						9,600,000
Net cash provided by financing activities of discontinued operations						9,000,000		11,056,000
Net cash (used in) provided by financing activities						(35,603,000)		754,000
Foreign currency effect on cash						(37,000)
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations						8,873,000		(5,075,000)
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations						58,000		(283,000)
Net increase (decrease) in cash, cash equivalents and restricted cash						8,931,000		(5,358,000)
Cash, cash equivalents and restricted cash at beginning of period						16,282,000		19,947,000		19,947,000
Cash, cash equivalents and restricted cash at end of period		25,213,000		$ 14,589,000		25,213,000		$ 14,589,000		16,282,000
Correction of Foreign Currency Transaction, Impact from September 30, 2016 10K/A Filing [Member]
Cash and cash equivalents		3,000				3,000
Consumer receivables acquired for liquidation (at net realizable value)		(245,000)				(245,000)
Due from third party collection agencies and attorneys		45,000				45,000
Deferred income taxes		(722,000)				(722,000)
Other assets		(33,000)				(33,000)
Other liabilities		(18,000)				(18,000)
Retained earnings		(1,653,000)				(1,653,000)
Accumulated other comprehensive income		718,000				718,000
Correction of Foreign Currency Transaction, Current Period Impact [Member]
Cash and cash equivalents		(24,000)				(24,000)
Consumer receivables acquired for liquidation (at net realizable value)		337,000				337,000
Due from third party collection agencies and attorneys		(55,000)				(55,000)
Deferred income taxes		(472,000)				(472,000)
Other assets		(26,000)				(26,000)
Other liabilities		(57,000)				(57,000)
Retained earnings		(645,000)				(645,000)
Accumulated other comprehensive income		461,000				461,000
Correction of Foreign Currency Transaction, Cumulative Net Impact [Member]
Cash and cash equivalents		(21,000)				(21,000)
Consumer receivables acquired for liquidation (at net realizable value)		92,000				92,000
Due from third party collection agencies and attorneys		(10,000)				(10,000)
Deferred income taxes		(1,194,000)				(1,194,000)
Other assets		(59,000)				(59,000)
Other liabilities		(75,000)				(75,000)
Retained earnings		(2,298,000)				(2,298,000)
Accumulated other comprehensive income		1,179,000				1,179,000
Correction of Amortizable Asset and Related Liability, Impact from September 30, 2016 10K/A Filing [Member]
Assets related to discontinued operations		307,000				307,000
Liabilities related to discontinued operations		756,000				756,000
Additional paid-in capital
Retained earnings		(442,000)				(442,000)
Correction of Amortizable Asset and Related Liability, Current Period Impact [Member]
Assets related to discontinued operations		(357,000)				(357,000)
Liabilities related to discontinued operations		(756,000)				(756,000)
Additional paid-in capital		552,000				552,000
Retained earnings		(155,000)				(155,000)
Correction of Amortizable Asset and Related Liability, Cumulative Net Impact [Member]
Assets related to discontinued operations		(50,000)				(50,000)
Liabilities related to discontinued operations
Additional paid-in capital		552,000				552,000
Retained earnings		(597,000)				(597,000)
Correction of Other Transactions, Impact from September 30, 2016 10K/A Filing [Member]
Assets related to discontinued operations		45,000				45,000
Other liabilities		269,000				269,000
Retained earnings		(137,000)				(137,000)
Additional paid in capital		8,000				8,000
Correction of Other Transactions, Current Period Impact [Member]
Assets related to discontinued operations
Other liabilities		(269,000)				(269,000)
Retained earnings		270,000				270,000
Additional paid in capital
Correction of Other Transactions, Cumulative Net Impact [Member]
Assets related to discontinued operations		45,000				45,000
Other liabilities
Retained earnings		133,000				133,000
Additional paid in capital		8,000				8,000
Previously Reported [Member]
Cash and cash equivalents		15,315,000				15,315,000
Restricted cash		34,748,000				34,748,000
Available for sale investments (at fair value)		5,500,000				5,500,000
Consumer receivables acquired for liquidation (at net realizable value)		9,118,000				9,118,000
Investment in personal injury claims, net		27,538,000				27,538,000
Due from third party collection agencies and attorneys		1,367,000				1,367,000
Prepaid and income taxes receivable		4,836,000				4,836,000
Furniture and equipment, net		141,000				141,000
Equity method investment
Deferred income taxes		18,940,000				18,940,000
Goodwill		1,410,000				1,410,000
Other assets		3,576,000				3,576,000
Assets related to discontinued operations		93,723,000				93,723,000
Total assets		216,212,000				216,212,000
Line of credit		9,600,000				9,600,000
Other liabilities		6,079,000				6,079,000
Liabilities related to discontinued operations		78,628,000				78,628,000
Total liabilities		94,307,000				94,307,000
Commitments and contingencies
Preferred stock
Common stock		134,000				134,000
Additional paid-in capital		67,467,000				67,467,000
Retained earnings		122,669,000				122,669,000
Accumulated other comprehensive income		(968,000)				(968,000)
Treasury stock (at cost)		(67,128,000)				(67,128,000)
Non-controlling interest		(269,000)				(269,000)
Total stockholders’ equity		121,905,000				121,905,000
Total liabilities and stockholders’ equity		216,212,000				216,212,000
Finance income recognized		3,980,000				11,999,000
Personal injury claims income		5,569,000				10,017,000
Disability fee income		1,134,000				3,990,000
Total revenues		10,683,000				26,006,000
Other Nonoperating Income		84,000
Revenues, Total		10,767,000				25,932,000
General and administrative		7,252,000				31,354,000
Interest		133,000				169,000
Impairment of consumer receivables		148,000				148,000
Loss (earnings) from equity method investment
		7,533,000				31,671,000
Income (loss) from continuing operations before income tax		3,234,000				(5,739,000)
Income Tax Expense (Benefit), Total		1,198,000				(2,170,000)
Net income (loss) from continuing operations		2,036,000				(3,569,000)
Net income (loss) from discontinued operations, net of income tax		526,000				(1,083,000)
Net Income (Loss) Attributable to Noncontrolling Interest, Total		730,000				742,000
Net income (loss)		$ 1,832,000				$ (5,394,000)
Continuing operations (in dollars per share)		$ 0.20
Discontinued operations (in dollars per share)		0.08
Basic, per share amount (in dollars per share)		0.28
Continuing operations (in dollars per share)		0.19				$ (0.46)
Discontinued operations (in dollars per share)		0.08				(0.11)
Diluted, per share amount (in dollars per share)		$ 0.27				$ (0.57)
Other income						$ (74,000)
Net (loss) income from continuing operations		$ 2,036,000				(3,569,000)
Net loss attributable to Asta Funding, Inc.		$ 1,832,000				$ (5,394,000)
Continuing operations (in dollars per share)						$ (0.46)
Discontinued operations (in dollars per share)						(0.11)
(in dollars per share)						(0.57)
(in dollars per share)		$ 0.27				$ (0.57)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)		$ 18,000				$ (17,000)
Amount reclassified from other comprehensive (loss) income		(11,000)				(607,000)
Foreign currency translation, net		(249,000)				(430,000)
Other comprehensive (loss) income		(242,000)				(1,054,000)
Total comprehensive income		1,590,000				(6,448,000)
Depreciation and Amortization						154,000
Deferred income taxes						(2,994,000)
Stock based compensation						81,000
Loss on sale of available-for-sale securities						1,011,000
Unrealized gain on other investments						3,590,000
Earnings from equity method investment
Forgiveness of debt
Prepaid and income taxes receivable						(3,956,000)
Due from third party collection agencies and attorneys						(362,000)
Other assets						3,050,000
Income tax payable						(252,000)
Other liabilities						1,083,000
Non-controlling interest						742,000
Net cash used in operating activities of discontinued operations						(3,654,000)
Net cash (used in) provided by operating activities						(6,753,000)
Purchase of consumer receivables acquired for liquidation						(2,213,000)
Principal collected on receivables acquired for liquidation						6,618,000
Purchase of available-for-sale securities						(13,193,000)
Proceeds from sale of available-for-sale securities						62,406,000
(Increase) decrease in equity method investment
Investments in personal injury claims — advances						(14,624,000)
Investments in personal injury claims — receipts						35,375,000
Capital expenditures						(19,000)
Net cash provided by (used in) investing activities of discontinued operations						1,548,000
Net cash provided by (used in) investing activities						75,898,000
Purchase of treasury stock						(54,203,000)
Distributions to non-controlling interest						(366,000)
Borrowings from line of credit						9,600,000
Net cash provided by financing activities of discontinued operations						9,000,000
Net cash (used in) provided by financing activities						(35,969,000)
Foreign currency effect on cash
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations						33,176,000
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations						58,000
Net increase (decrease) in cash, cash equivalents and restricted cash						33,234,000
Cash, cash equivalents and restricted cash at beginning of period						16,829,000
Cash, cash equivalents and restricted cash at end of period		50,063,000				50,063,000				16,829,000
Restatement Adjustment [Member]
Impairment of consumer receivables
Loss (earnings) from equity method investment	[2]					(2,759,000)
Net income (loss) from continuing operations						(2,722,000)
Net income (loss) from discontinued operations, net of income tax						(673,000)
Net income (loss)						(3,395,000)
Net (loss) income from continuing operations						(2,722,000)
Net loss attributable to Asta Funding, Inc.						(3,395,000)
Depreciation and Amortization						(79,000)
Deferred income taxes	[3],[4]					4,193,000
Stock based compensation
Loss on sale of available-for-sale securities
Unrealized gain on other investments
Earnings from equity method investment	[2]					(2,759,000)
Forgiveness of debt	[5]					552,000
Prepaid and income taxes receivable	[3],[5]					(2,066,000)
Due from third party collection agencies and attorneys	[4]					42,000
Other assets	[4]					134,000
Income tax payable	[6]					252,000
Other liabilities	[4]					211,000
Non-controlling interest	[7]					(742,000)
Net cash used in operating activities of discontinued operations	[5],[6]					613,000
Net cash (used in) provided by operating activities						(3,044,000)
Purchase of consumer receivables acquired for liquidation
Principal collected on receivables acquired for liquidation	[4]					(294,000)
Purchase of available-for-sale securities
Proceeds from sale of available-for-sale securities
(Increase) decrease in equity method investment	[5],[6]					2,808,000
Investments in personal injury claims — advances	[7]					11,273,000
Investments in personal injury claims — receipts	[7]					(35,375,000)
Capital expenditures
Net cash provided by (used in) investing activities of discontinued operations
Net cash provided by (used in) investing activities						(21,588,000)
Purchase of treasury stock
Distributions to non-controlling interest	[7]					366,000
Borrowings from line of credit
Net cash provided by financing activities of discontinued operations
Net cash (used in) provided by financing activities						366,000
Foreign currency effect on cash	[4]					(37,000)
Net increase in cash, cash equivalents and restricted cash including cash, cash equivalents classified within assets related to discontinued operations						(24,303,000)
Less: net decrease in cash, cash equivalents and restricted cash classified within assets related to discontinued operations
Net increase (decrease) in cash, cash equivalents and restricted cash	[2],[3],[4],[5],[6],[7],[8]					(24,303,000)
Cash, cash equivalents and restricted cash at beginning of period						(547,000)
Cash, cash equivalents and restricted cash at end of period		(24,850,000)				(24,850,000)				$ (547,000)
Restatement Adjustment [Member] | Accounting For Investment in Pegasus Under The Equity Method [Member]
Cash and cash equivalents	[7]	(81,000)				(81,000)
Restricted cash	[7]	(24,748,000)				(24,748,000)
Available for sale investments (at fair value)	[7]
Consumer receivables acquired for liquidation (at net realizable value)	[7]
Investment in personal injury claims, net		(24,187,000)	[7]			(24,187,000)	[7]				$ (24,187,000)
Due from third party collection agencies and attorneys	[7]
Prepaid and income taxes receivable	[7]
Furniture and equipment, net	[7]
Equity method investment	[7]	48,639,000				48,639,000
Deferred income taxes	[7]
Goodwill	[7]
Other assets		(109,000)	[7]			(109,000)	[7]				(109,000)
Assets related to discontinued operations	[7]
Total assets	[7]	(486,000)				(486,000)
Line of credit	[7]
Other liabilities		(755,000)	[7]			(755,000)	[7]				(755,000)
Liabilities related to discontinued operations	[7]
Total liabilities	[7]	(755,000)				(755,000)
Commitments and contingencies	[7]
Preferred stock	[7]
Common stock	[7]
Additional paid-in capital	[7]
Retained earnings	[7]
Accumulated other comprehensive income	[7]
Treasury stock (at cost)	[7]
Non-controlling interest		269,000	[7]			269,000	[7]				$ 269,000
Total stockholders’ equity	[7]	269,000				269,000
Total liabilities and stockholders’ equity	[7]	(486,000)				(486,000)
Finance income recognized	[7]
Personal injury claims income	[7]	(5,328,000)				(9,766,000)
Disability fee income	[7]
Total revenues	[7]	(5,328,000)				(9,766,000)
Other Nonoperating Income	[7]
Revenues, Total	[7]	(5,328,000)				(9,766,000)
General and administrative		(1,681,000)				(6,058,000)
Interest	[7]	(2,000)				(6,000)
Impairment of consumer receivables	[7]
Loss (earnings) from equity method investment	[7]	(2,917,000)				(2,966,000)
	[7]	(4,598,000)				(9,024,000)
Income (loss) from continuing operations before income tax	[7]	(730,000)				(742,000)
Income Tax Expense (Benefit), Total	[7]
Net income (loss) from continuing operations	[7]	(730,000)				(742,000)
Net income (loss) from discontinued operations, net of income tax	[7]
Net Income (Loss) Attributable to Noncontrolling Interest, Total	[7]	(730,000)				(742,000)
Net income (loss)	[7]
Other income	[7]
Net (loss) income from continuing operations	[7]	(730,000)				(742,000)
Net loss attributable to Asta Funding, Inc.	[7]
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)	[7]
Amount reclassified from other comprehensive (loss) income	[7]
Foreign currency translation, net	[7]
Other comprehensive (loss) income	[7]
Total comprehensive income	[7]
Earnings from equity method investment	[7]	(2,917,000)				(2,966,000)
Restatement Adjustment [Member] | All Corrections Not Related to Pegasus [Member]
Cash and cash equivalents	[4]	(21,000)				(21,000)
Restricted cash
Available for sale investments (at fair value)
Consumer receivables acquired for liquidation (at net realizable value)	[4]	92,000				92,000
Investment in personal injury claims, net
Due from third party collection agencies and attorneys	[4]	(10,000)				(10,000)
Prepaid and income taxes receivable	[3],[5]	1,900,000				1,900,000
Furniture and equipment, net
Equity method investment	[2]	(106,000)				(106,000)
Deferred income taxes	[3],[4]	(4,820,000)				(4,820,000)
Goodwill
Other assets	[4]	(59,000)				(59,000)
Assets related to discontinued operations	[5],[6]	(31,000)				(31,000)
Total assets		(3,055,000)				(3,055,000)
Line of credit
Other liabilities	[4]	(75,000)				(75,000)
Liabilities related to discontinued operations	[8]	1,000				1,000
Total liabilities		(74,000)				(74,000)
Commitments and contingencies
Preferred stock
Common stock
Additional paid-in capital	[5],[6]	560,000				560,000
Retained earnings	[2],[4],[5],[6],[8],[9]	(4,720,000)				(4,720,000)
Accumulated other comprehensive income	[4]	1,179,000				1,179,000
Treasury stock (at cost)
Non-controlling interest
Total stockholders’ equity		(2,981,000)				(2,981,000)
Total liabilities and stockholders’ equity		(3,055,000)				(3,055,000)
Finance income recognized	[4]	13,000				19,000
Personal injury claims income
Disability fee income
Total revenues		13,000				19,000
Other Nonoperating Income	[4]	6,000
Revenues, Total		19,000				(33,000)
General and administrative	[4],[6]	493,000				309,000
Interest	[4]	33,000				34,000
Impairment of consumer receivables
Loss (earnings) from equity method investment	[2]	207,000				207,000
		733,000				550,000
Income (loss) from continuing operations before income tax		(714,000)				(583,000)
Income Tax Expense (Benefit), Total	[3]	(979,000)				2,139,000
Net income (loss) from continuing operations		265,000				(2,722,000)
Net income (loss) from discontinued operations, net of income tax	[3],[5],[9]	34,000				(673,000)
Net Income (Loss) Attributable to Noncontrolling Interest, Total
Net income (loss)		299,000				(3,395,000)
Other income	[4]					(52,000)
Net (loss) income from continuing operations		265,000				(2,722,000)
Net loss attributable to Asta Funding, Inc.		299,000				(3,395,000)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)
Amount reclassified from other comprehensive (loss) income
Foreign currency translation, net	[4]	284,000				462,000	[6]
Other comprehensive (loss) income		284,000				462,000
Total comprehensive income		583,000				(2,933,000)
Earnings from equity method investment	[2]	$ 207,000				$ 207,000

[1] Includes other amounts in other line items on the consolidated balance sheet.

[2] The Company identified the personal injury claims asset balance of Pegasus was determined to be overstated at March 31, 2017 by $400,000. The correction of this error resulted in a decrease in earnings from the equity investment in Pegasus and income from continuing operations of $0 and $320,000 for the three and nine months ended June 30, 2017. Additionally, the equity investment was increased $101,000 to reflect the impact of the related accruals in the September 30, 2016 Form 10-K/A. During the three and nine months ended June 30, 2017, earnings from equity method investment decreased by $207,000 for a reduction in personal injury claims in Pegasus.

[3] Some of the corrections noted above impacted earnings (loss) before taxes which, in turn, required a calculation of the tax impact. The net impact to the Company's consolidated balance sheet was an (i) increase to prepaid and income taxes receivable of $1,875,000; and (ii) decrease to deferred tax assets of $3,627,000. On the Company's consolidated statement of operations, there was (i) a net (decrease) to income tax expense of ($979,000); and (ii) a (decrease) to income tax benefit from discontinued operations of $(93,000) for the three months ended June 30, 2017. On the Company's consolidated statement of operations, there was (i) a net increase to income tax expense of $2,139,000; and (ii) an increase to income tax benefit from discontinued operations of $233,000 for the nine months ended June 30, 2017.

[4] The Company determined that it had not previously accounted for certain foreign currency gains/losses on intercompany balances and transactions in accordance with US GAAP. The Company improperly accounted for the foreign currency effect of certain transactions as if they were long-term investments by including the foreign currency effect in accumulated other comprehensive income instead of properly recording the effect as operating expenses as required under ASC 830. The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of $13,000, an increase in other income of $6,000, an increase in general and administrative expenses of $493,000 and an increase in interest expense of $34,000 for the three months ended June 30, 2017. The correction to properly apply U.S. GAAP to these foreign currency matters resulted in increased revenue of $19,000, a decrease in other income of $52,000, and an increase in general and administrative expenses of $580,000, and an increase in interest expense of $34,000 for the nine months ended June 30, 2017.

[5] The Company discovered that it did not properly record an amortizable asset and related liability in conjunction with an asset purchase agreement entered into in June 2015 with a related party. The correction of this error resulted in a decrease in income from discontinued operations of $34,000 and $153,000 for the three and nine months ended June 30, 2017.

[6] The Company identified other transactions that had not been properly accounted for in the correct period and/or for improper amounts and/or improper accounts. The adjustments of these errors were immaterial on an individual basis. The correction of these errors resulted in decreased general and administrative expense of $0 and $271,000 for the three and nine months ended June 30, 2017.

[7] In connection with the Company determining it lacked the requisite control to consolidate Pegasus during the Non-Reliance Period, the Company has now accounted for its investment in Pegasus under the equity method in accordance with US GAAP. On the Company's June 30, 2017 consolidated balance sheet, this resulted in (i) a decrease in cash and restricted cash of $24,829,000; (ii) a decrease in the investment in personal injury claims of $24,187,000; (iii) a decrease in other assets of $109,000; (iv) a decrease in other liabilities of $755,000; and (v) a decrease in non-controlling interest of $269,000, offset by a corresponding increase in the equity method investment of $48,639,000. On the Company's consolidated statement of operations, this resulted in (i) a decrease in total revenues of $5,328,000; (ii) a decrease in expenses of $1,681,000; (iii) a decrease in the income attributable to the non-controlling interest of $730,000; and (iv) a decrease in earnings from equity method investment of $2,917,000 the three months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period. On the Company's consolidated statement of operations, this resulted in (i) a decrease in total revenues of $9,766,000; (ii) a decrease in expenses of $6,058,000; (iii) a decrease in the income attributable to the non-controlling interest of $742,000; and (iv) a decrease in earnings from equity method investment of $2,966,000 the nine months ended June 30, 2017. This change to the equity method of accounting had no effect on net (loss) income attributable to Asta Funding, Inc. during the Non-Reliance Period.

[8] The Company determined that it had not accounted for certain unallocated payments reported on its consolidated balance sheet properly during the Non-Reliance Period. The correction of this error resulted in a decrease to consumer receivables acquired for liquidation of $648,000 and retained earnings of $648,000 as of September 30, 2016 and is therefore included in the net adjustment to retained earnings as of June 30, 2017.

[9] Prior to the sale of its structured settlement business, the Company purchased periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company has elected to carry the structured settlements at fair value in accordance with the guidance of FASB ASC, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 822-10-50-28 through 50-22). As previously disclosed in the Restated Form 10-Q/A, the Company did not reflect the quarterly increase in certain underlying benchmark interest rates used in determining fair value of the Company's structured settlements for the quarter ended December 31, 2016 which resulted in a decrease in the fair value of the Company's structured settlements of approximately $2.6 million (reflected in assets related to discontinued operations in this restated consolidated balance sheet) with an associated increase in prepaid income taxes and deferred tax assets of approximately $1.0 million (reflected in the loss from discontinued operations in this consolidated statement of operations). In connection with the Company's filing of the Form 10-K/A, the Company adjusted the fair value of its structured settlements to reflect the appropriate benchmark interest rates at September 30, 2016, which resulted in an decrease in net loss attributable to discontinued operations and an increase in assets related to discontinued operations of $727,000. As this increase in fair value was originally recorded during the three month period ended December 31, 2016, this Amendment includes an increase in both the retained earnings and the net loss attributable to discontinued operations of $727,000 as of and for the nine months ended June 30, 2017.

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Note 2 - Business and Basis of Presentation (Details Textual) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016	Nov. 08, 2016	Sep. 30, 2015	Dec. 31, 2013	Dec. 28, 2011
Cash, Uninsured Amount	$ 9,800,000		$ 9,800,000
Cash, Uninsured Amount, Foreign	2,200,000		2,200,000
Restricted Cash, Total	10,000,000		10,000,000		$ 10,000,000
Disposal Group, Including Discontinued Operation, Restricted Cash	$ 500,000		$ 500,000
International Consumer Debt Portfolios, Percentage of Ownership	80.00%		80.00%
Equity Method Investments	$ 48,533,000		$ 48,533,000		48,582,000
Income (Loss) from Equity Method Investments, Total	2,710,000	$ 6,193,000	2,759,000	$ 6,193,000
Equity Method Investment, Other than Temporary Impairment	0	0	0	0
Goodwill, Ending Balance	$ 1,410,000		$ 1,410,000		1,410,000
Serlefin BPO&O Peru S.A.C. [Member]
Equity Method Investment, Ownership Percentage	49.00%		49.00%
Equity Method Investment, Ownership Percentage, Controlled Party	51.00%		51.00%
CBC [Member]
Equity Method Investment, Ownership Percentage	100.00%		100.00%					80.00%
Goodwill, Ending Balance	$ 1,400,000		$ 1,400,000
VATIV [Member]
Goodwill, Ending Balance	$ 1,400,000		$ 1,400,000
Pegasus Legal Funding LLC [Member]
Equity Method Investment, Percentage of Controlled Equity	50.00%		50.00%
Equity Method Investment, Ownership Percentage	80.00%		80.00%			80.00%			80.00%
Equity Method Investment, Ownership Percentage, Controlled Party						20.00%
Equity Method Investments	$ 48,533,000	48,582,000	$ 48,533,000	48,582,000	48,582,000		$ 40,751,000
Income (Loss) from Equity Method Investments, Total			2,759,000		10,551,000
Serlefin BPO&O Peru S.A.C. [Member]
Equity Method Investments	200,000		200,000		$ 200,000
Income (Loss) from Equity Method Investments, Total			$ 100,000
Pegasus Legal Funding LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest			80.00%
Restricted Cash, Total	$ 24,700,000		$ 24,700,000
Serlefin BPO&O Peru S.A.C. [Member]
International Consumer Debt Portfolios, Percentage of Ownership	20.00%		20.00%
Proceeds from International Consumer Debt Portfolios for Performance Fee	$ 115,000	$ 400,000	$ 94,000	$ 200,000

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Note 3 - Available-for-sale Investments (Details Textual)	3 Months Ended		9 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)
Number of Investments Sold	3	1	6	3
Available-for-sale Securities, Gross Realized Gain (Loss), Excluding Other than Temporary Impairments, Total	$ (18,000)	$ (32,000)	$ (1,011,000)	$ (63,000)
Realized Investment Gains (Losses), Total			177,000	47,000
Available-for-sale Securities, Gross Realized Gain (Loss), Total			$ (834,000)	$ (16,000)
Number of Investments	1		1

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Note 3 - Available-for-sale Investments - Investments Classified as Available-for-sale (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Amortized Cost	$ 5,500,000	$ 55,724,000
Unrealized Gains		1,088,000
Unrealized Losses		(49,000)
Fair Value	$ 5,500,000	$ 56,763,000

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Note 4 - Consumer Receivables Acquired for Liquidation (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2007	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Face Value of Charged-off Consumer Receivables		$ 0	$ 2,200,000	$ 35,000,000	$ 123,200,000
Purchased Cost of Charged-off Consumer Receivables		0	300,000	2,200,000	6,500,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net		$ 9,210,000	$ 14,500,000	$ 9,210,000	$ 14,500,000	$ 13,427,000
Foreign Consumer Receivables, Percentage of Total Consumer Receivable		84.80%	55.20%	84.80%	55.20%
Fee Charged on Portfolio Purchase	3.00%
PERU
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net		$ 4,500,000	$ 4,000,000	$ 4,500,000	$ 4,000,000
COLOMBIA
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net		3,300,000	4,000,000	3,300,000	4,000,000
Non-US [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net		$ 7,800,000	$ 8,000,000	$ 7,800,000	$ 8,000,000

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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		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Balance	$ 11,590,000	$ 16,440,000	$ 13,427,000	$ 15,056,000
Acquisitions of receivable portfolio		751,000	2,213,000	6,936,000
Net cash collections from collection of consumer receivables acquired for liquidation	(6,061,000)	(7,286,000)	(18,148,000)	(22,060,000)
Net cash collections represented by account sales of consumer receivables acquired for liquidation	(1,000)	(83,000)	(191,000)	(83,000)
Impairment	(148,000)		(148,000)	(124,000)
Effect of foreign currency translation	(163,000)	92,000	39,000	205,000
Finance income recognized	3,993,000	4,572,000	12,018,000	14,557,000
Balance	$ 9,210,000	$ 14,485,000	$ 9,210,000	$ 14,485,000
Finance income as a percentage of collections	65.90%	62.00%	65.50%	65.70%

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Note 4 - Consumer Receivables Acquired for Liquidation - Collections Received Less Commissions and Direct Costs (Details) - USD ($)		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Gross collections (1)	[1]	$ 10,659,000	$ 12,380,000	$ 32,641,000	$ 36,982,000
Commissions and fees (2)	[2]	4,597,000	5,011,000	14,302,000	14,839,000
Net collections		$ 6,062,000	$ 7,369,000	$ 18,339,000	$ 22,143,000

[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 are earned by third party collection agencies and attorneys, and include direct costs associated with the collection effort, generally court costs. In December 2007 an arrangement was consummated with one servicer who also received a 3% fee on gross collections received by the Company in connection with the related 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 - Litigation Funding (Details Textual) - USD ($)			3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	May 18, 2012	May 08, 2012	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016	Jan. 12, 2018	Nov. 08, 2016	Sep. 30, 2015	Sep. 30, 2014	May 02, 2014	Dec. 28, 2011
Company Investment in Personal Injury						$ 48,500,000		$ 48,600,000
Equity Method Investments			$ 48,533,000			48,533,000		48,582,000
Income (Loss) from Equity Method Investments, Total			2,710,000	$ 6,193,000		2,759,000	$ 6,193,000
Restricted Cash, Total			10,000,000			10,000,000		10,000,000
Line of Credit Facility, Maximum Borrowing Capacity													$ 30,000,000
Valuation Allowances and Reserves, Other						1,700,000
Net Investment Income, Total						0	0
Provision for Loan and Lease Losses, Total			700,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,000,000											$ 1,500,000
Debt Instrument, Term	2 years
Line of Credit Facility, Write-off					$ 1,500,000
Pegasus Legal Funding LLC [Member]
Earnings in Interest and Fees from Invested Venture			5,100,000	9,800,000		9,800,000	14,800,000
Restricted Cash, Total			$ 24,700,000			$ 24,700,000
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest						80.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners									20.00%	20.00%
BP Case Management, LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest		60.00%
Balance Point Divorce Funding, LLC [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners		40.00%
Pegasus Legal Funding LLC [Member]
Equity Method Investment, Ownership Percentage			80.00%			80.00%				80.00%				80.00%
Equity Method Investments			$ 48,533,000	$ 48,582,000		$ 48,533,000	$ 48,582,000	48,582,000			$ 40,751,000
Income (Loss) from Equity Method Investments, Net of Dividends or Distributions, Total						(49,000)		7,831,000
Income (Loss) from Equity Method Investments, Total						2,759,000		10,551,000
Payments to Acquire Equity Method Investments						$ 2,808,000		$ 2,720,000
Equity Method Investment, Ownership Percentage, Controlled Party										20.00%

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Note 5 - Litigation Funding - Equity Method Investments (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Equity Method Investments	$ 48,533,000	$ 48,582,000
Pegasus Funding LLC [Member]
Equity Method Investments	$ 48,533,000	$ 48,582,000
Equity Method Investment, Ownership Percentage	80.00%	80.00%

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Note 5 - Litigation Funding - Equity Method Investments Financial Statements (Details) - USD ($)	3 Months Ended			9 Months Ended
	Jun. 30, 2017		Jun. 30, 2016	Jun. 30, 2017		Jun. 30, 2016	Sep. 30, 2016
Pegasus Legal Funding LLC [Member]
Personal injury claims income	$ 5,068,000		$ 9,838,000	$ 9,507,000		$ 14,769,000
Operating expenses	1,680,000		2,096,000	6,058,000		4,744,000
Income from operations	3,388,000		7,742,000	3,449,000		10,025,000
Earnings from equity investment	2,710,000		6,193,000	2,759,000		8,020,000
Company’s equity income from operations	2,710,000		$ 6,193,000	2,759,000		$ 8,020,000
Pegasus Funding LLC [Member]
Cash	24,829,000	[1]		24,829,000	[1]		$ 539,000
Investment in personal injury claims	23,927,000			23,927,000			48,289,000
Other assets	109,000			109,000			188,000
Total assets	48,865,000			48,865,000			49,016,000
Due to Asta	31,596,000			31,596,000			34,404,000
Other liabilities	628,000			628,000			1,053,000
Equity	16,641,000			16,641,000			13,559,000
Total liabilities and equity	$ 48,865,000			$ 48,865,000			$ 49,016,000

[1] Included in current assets is $24.7 million in restricted cash. The restriction has been put in place during the Company’s arbitration with PLF, see Note 20 – Subsequent Events.

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Note 6 - Furniture & Equipment - Summary of Furniture and Equipment (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Total	$ 1,878,000	$ 1,858,000
Less accumulated depreciation and amortization	1,737,000	1,662,000
Balance, end of period	141,000	196,000
Furniture and Fixtures [Member]
Total	273,000	273,000
Equipment [Member]
Total	242,000	235,000
Software Development [Member]
Total	$ 1,363,000	$ 1,350,000

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Note 7 - Non Recourse Debt (Details Textual) - USD ($)						1 Months Ended
	Aug. 02, 2017	Mar. 30, 2016	Jun. 03, 2014	May 02, 2014	Aug. 07, 2013	Jun. 30, 2016	Mar. 31, 2007	Jun. 30, 2017	Sep. 30, 2016
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			$ 2,901,000
Voluntary Debt Prepayment			1,866,000
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%
Line of Credit Facility, Covenant Consolidated Tangible Net Worth				$ 150,000,000
Long-term Line of Credit, Total								$ 9,600,000
Amended Loan Agreement [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Line of Credit Facility, Covenant Consolidated Tangible Net Worth		$ 100,000,000
Line of Credit Facility, Covenant Decrease Consolidated Tangible Net Worth		$ 50,000,000
Long-term Line of Credit, Total								9,600,000
Repayments of Long-term Lines of Credit	$ 9,600,000
Bank of Montreal [Member]
Non-Recourse Debt								$ 164,000
Receivables Financing Agreement [Member]
Non-Recourse Debt							$ 227,000,000

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Note 8 - Discontinued Operations (Details Textual) - USD ($)						3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Dec. 13, 2017	Jan. 01, 2016	Dec. 31, 2015	Mar. 01, 2015	Dec. 31, 2013	Jun. 30, 2017	Jun. 30, 2016	Sep. 29, 2014	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2017	Apr. 07, 2017	Sep. 30, 2016	Jul. 08, 2016	Sep. 25, 2015	Nov. 26, 2014	May 02, 2014
Disposal Group, Including Discontinued Operation, Assets, Total						$ 93,692,000			$ 93,692,000				$ 91,506,000
Disposal Group, Including Discontinued Operation, Liabilities, Total						78,629,000			78,629,000				69,238,000
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent, Total						560,000	$ 577,000		(1,756,000)	$ 1,404,000
Cash, Uninsured Amount						9,800,000			9,800,000
Line of Credit Facility, Current Borrowing Capacity																	$ 20,000,000
Line of Credit Facility, Maximum Borrowing Capacity																	$ 30,000,000
Long-term Line of Credit, Total						9,600,000			9,600,000
CBC [Member]
Disposal Group, Including Discontinued Operation, Assets, Total						93,692,000			93,692,000				91,506,000
Disposal Group, Including Discontinued Operation, Liabilities, Total						78,629,000			78,629,000				$ 69,238,000
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent, Total						560,000	$ 577,000		(1,756,000)	$ 1,404,000
Cash, Uninsured Amount						800,000			800,000
Structured Settlements, Unrealized Gain (Losses)									4,500,000
Structured Settlements, Gain on New Structured Settlements Financed									5,900,000
Structured Settlements, Unrealized Gain (Loss), Decrease in Realized Gains Recognized as Realized Interest Income on Structured Settlements									100,000
Structured Settlements, Reduction in Fair Value									1,500,000
Gain (Loss) on Sale of Life contingent Asset Portfolio									(5,300,000)
CBC [Member] | Subsequent Event [Member]
Disposal Group, Including Discontinued Operation, Consideration	$ 10,500,000
Disposal Group, Including Discontinued Operation, Cash Consideration	4,490,000
Disposal Group, Including Discontinued Operation, Promissory Note Consideration	$ 5,750,000
Promissory Note Interest Rate, Discontinued Operations	7.00%
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax, Total											$ 1,900,000
Life Contingent Annuities Portfolio [Member]
Disposal Group, Including Discontinued Operation, Consideration						7,700,000			7,700,000
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax, Total						$ (5,400,000)			$ (5,400,000)
Restricted Stock [Member]
Shares Lock-up Period			1 year
CBC [Member]
Equity Method Investment, Ownership Percentage					80.00%	100.00%			100.00%
Business Combination, Consideration Transferred, Total			$ 1,800,000		$ 5,900,000
Business Acquisition, Percentage of Voting Interests Acquired			20.00%
Payments to Acquire Businesses, Gross			$ 800,000
Employment Agreement Term		2 years
Employee Agreement Renewal Term		1 year
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Total					25,900,000
Line of Credit Facility, Current Borrowing Capacity					$ 12,500,000
Debt Instrument, Floor Interest Rate				4.10%	5.50%			4.75%
Line of Credit Facility, Maximum Borrowing Capacity				$ 25,000,000				$ 22,000,000
Other Long-term Debt, Total						$ 76,400,000			$ 76,400,000
Long-term Line of Credit, Total						4,300,000			4,300,000
Notes Payable, Noncurrent, Total						$ 72,100,000			$ 72,100,000
CBC [Member] | Secured Debt [Member]
Debt Instrument, Face Amount												$ 18,300,000		$ 14,800,000	$ 16,600,000	$ 21,800,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate												5.00%		4.85%	5.10%	5.40%
CBC [Member] | Principal One [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]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares			61,652
Shares Issued, Price Per Share			$ 7.95

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Note 8 - Discontinued Operations - Financial Statements (Details) - USD ($)	3 Months Ended			9 Months Ended
	Jun. 30, 2017		Jun. 30, 2016	Jun. 30, 2017		Jun. 30, 2016	Sep. 30, 2016
Income from discontinued operations, net of income tax	$ 560,000		$ 577,000	$ (1,756,000)		$ 1,404,000
Restricted cash	500,000			500,000
Total assets related to discontinued operations	93,692,000			93,692,000			$ 91,506,000
Total liabilities related to discontinued operations	78,629,000			78,629,000			69,238,000
CBC [Member]
Unrealized gain on structured settlements	7,531,000		1,422,000	4,511,000		4,586,000
Interest income on structured settlements	1,923,000		1,765,000	5,765,000,000		4,473,000
Loss on sale of structured settlements	(5,353,000)			(5,353,000)
Total revenues	4,101,000		3,187,000	4,923,000		9,059,000
Other income	14,000		46,000	44,000		46,000
	4,115,000		3,233,000	4,967,000		9,105,000
General and administrative expenses	2,156,000		1,406,000	5,152,000		4,157,000
Interest expense	990,000		833,000	2,871,000		2,349,000
	3,146,000		2,239,000	8,023,000		6,506,000
Income from discontinued operations before income tax	969,000		994,000	(3,056,000)		2,599,000
Income tax expense from discontinued operations	409,000		417,000	(1,300,000)		1,091,000
Income from discontinued operations, net of income tax	560,000		$ 577,000	(1,756,000)		1,404,000
(Loss) income from discontinued operations before non-controlling interest				(1,756,000)		1,508,000
Non-controlling interest						$ 104,000
Cash and cash equivalents	1,256,000	[1]		1,256,000	[1]		1,198,000
Restricted cash	499,000			499,000			499,000
Structured settlements	88,268,000			88,268,000			86,091,000
Furniture and equipment, net	37,000			37,000			47,000
Goodwill	1,405,000			1,405,000			1,405,000
Other assets	2,227,000			2,227,000			2,266,000
Total assets related to discontinued operations	93,692,000			93,692,000			91,506,000
Other debt - CBC	76,435,000			76,435,000			67,435,000
Other liabilities	2,194,000			2,194,000			1,803,000
Total liabilities related to discontinued operations	$ 78,629,000			$ 78,629,000			$ 69,238,000

[1] Cash balance with one bank at June 30, 2017 that exceeded the balance insured by the FDIC by approximately $0.8 million.

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Note 8 - Discontinued Operations - Components of Structured Settlements (Details) - USD ($)		Jun. 30, 2017	Sep. 30, 2016
Maturity (1) (2)	[1],[2]	$ 135,132,000	$ 133,059,000
Unearned income		(46,864,000)	(46,968,000)
Structured settlements, net		$ 88,268,000	$ 86,091,000

[1] The maturity value represents the aggregate unpaid principal balance at June 30, 2017 and September 30, 2016.

[2] There are no amounts of structured settlements that are past due, or in nonaccrual status at June 30, 2017 and September 30, 2016.

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Note 8 - Discontinued Operations - Structured Settlements (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 88,268,000	$ 86,091,000
Structured Settlement [Member]
Interest Rate	4.10%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 4,300,000	10,154,000
Structured Settlements Encumbered By Notes Payable Due June 2025 [Member]
Interest Rate	8.75%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 1,716,000	1,862,000
Structured Settlements Encumbered By Notes Payable Due August 2026 [Member]
Interest Rate	7.25%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 3,947,000	4,242,000
Structured Settlements Encumbered By Notes Payable Due April 2032 [Member]
Interest Rate	7.125%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 3,907,000	3,987,000
Structured Settlements Encumbered By Notes Payable Due February 2037 [Member]
Interest Rate	5.39%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 17,765,000	18,978,000
Structured Settlements Encumbered By Notes Payable Due March 2034 [Member]
Interest Rate	5.07%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 13,780,000	14,507,000
Structured Settlements Encumbered By Notes Payable Due February 2043 [Member]
Interest Rate	4.85%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 13,259,000	13,705,000
Structured Settlements Encumbered By Notes Payable Due January 2069 [Member]
Interest Rate	5.00%
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 17,761,000
Structured Settlements Encumbered [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	76,435,000	67,435,000
Structured Settlements Not Encumbered [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, encumbered and unencumbered	$ 11,833,000	$ 18,656,000

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Note 8 - Discontinued Operations - Structured Settlements (Details) (Parentheticals) - USD ($)	Jun. 30, 2017	Sep. 30, 2016	May 02, 2014
Revolving line of credit, borrowing capacity			$ 30,000,000
Structured Settlement [Member]
Revolving line of credit, borrowing capacity	$ 25,000,000	$ 25,000,000

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Note 8 - Discontinued Operations - Expected Cash Flows of Structured Settlements Based on Maturity Value (Details) - USD ($)		Jun. 30, 2017	Sep. 30, 2016
September 30, 2017 (3 months)		$ 2,679,000
September 30, 2018		9,020,000
September 30, 2019		9,312,000
September 30, 2020		8,989,000
September 30, 2021		9,474,000
Thereafter		95,658,000
Total	[1],[2]	$ 135,132,000	$ 133,059,000

[1] The maturity value represents the aggregate unpaid principal balance at June 30, 2017 and September 30, 2016.

[2] There are no amounts of structured settlements that are past due, or in nonaccrual status at June 30, 2017 and September 30, 2016.

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Note 9 - Commitments and Contingencies (Details Textual) - USD ($)			3 Months Ended
	Nov. 11, 2016	Jul. 24, 2015	Sep. 30, 2016	Mar. 31, 2016	Jun. 30, 2017	Jun. 30, 2016
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
Litigation Settlement, Amount Offered, Consideration						$ 3,900,000
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, Profit Bonus, Minimum Internal Rate of Return	18.00%
Employment Agreement, Profit Bonus, Percentage of Closing Consideration	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 10 - Income Recognition, Impairments, and Commissions and Fees (Details Textual) - Fixed Income Funds [Member] - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 31, 2014	Mar. 31, 2017	Sep. 30, 2016
Available-for-sale Securities, Equity Securities	$ 5.0
Related Party Transaction, Rate	14.00%
Other than Temporary Impairment Losses, Investments, Total		$ 3.4	$ 1.0

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Note 11 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Effective Income Tax Rate Reconciliation, Percent, Total	12.20%	34.80%	0.40%	33.70%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent				35.00%
Unrecognized Tax Benefits, Ending Balance	$ 0		$ 0

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Note 12 - Net Income (Loss) Per Share (Details Textual) - $ / shares	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	942,067	56,007	186,082
Weighted Average Exercise Price	$ 8.15	$ 12.55	$ 10.88

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Note 12 - Net (Loss) Income Per Share - Computation of Basic and Diluted Per Share Data (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net (loss) income from continuing operations	$ 1,571,000	$ 3,289,000	$ (7,033,000)	$ 2,195,000
Net (loss) income from continuing operations, weighted average shares (in shares)	6,577,784	11,897,139	9,389,864	12,023,156
Net (loss) income from continuing operations, per share amount (in dollars per share)	$ 0.24	$ 0.27	$ (0.75)	$ 0.18
Net income (loss) from discontinued operations, net of income tax	$ 560,000	$ 577,000	$ (1,756,000)	$ 1,404,000
Net (loss) income from discontinued operations, weighted average shares (in shares)	6,577,784	11,897,139	9,389,864	12,023,156
Net (loss) income from discontinued operations, per share amount (in dollars per share)	$ 0.08	$ 0.05	$ (0.19)	$ 0.12
Net income (loss)	$ 2,131,000	$ 3,866,000	$ (8,789,000)	$ 3,599,000
Basic, per share amount (in dollars per share)	$ 0.32	$ 0.32	$ (0.94)	$ 0.30
Effect of Dilutive Stock, weighted average shares (in shares)	301,298	536,285		270,917
Effect of Dilutive Stock (in dollars per share)	$ (0.01)	$ (0.01)		$ (0.01)
Diluted, weighted average shares (in shares)	6,879,082	12,433,424	9,389,864	12,294,073
Diluted, per share amount (in dollars per share)	$ 0.31	$ 0.31	$ (0.94)	$ 0.29

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Note 13 - Stock Based Compensation (Details Textual) - shares				3 Months Ended		9 Months Ended
	Jun. 08, 2017	Dec. 31, 2015	Dec. 16, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	56,600		67,100	56,600		56,600	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				128,304	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	10,000		9,100
Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	10,000
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
Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	10,000
Share-based Compensation Award, Tranche Four [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	26,600
Share-based Compensation Award, Tranche Four [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years

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Note 13 - Stock Based Compensation - Weighted Average Assumptions Used in Option Pricing Model (Details)	Jun. 08, 2017	Dec. 16, 2015
Risk-free interest rate	1.86%	0.24%
Expected term (years) (Year)	5 years 354 days	6 years 91 days
Expected volatility	26.27%	23.40%
Dividend yield	0.00%	0.00%
Forfeiture rate	3.49%

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Note 14 - Stock Option Plans (Details Textual)				3 Months Ended		9 Months Ended			63 Months Ended
	Jun. 08, 2017 shares	Dec. 31, 2015 shares	Dec. 16, 2015 shares	Jun. 30, 2017 USD ($) shares	Jun. 30, 2016 USD ($) shares	Jun. 30, 2017 USD ($) shares	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 shares	Jun. 30, 2017 USD ($) shares	May 05, 2012 shares	Mar. 21, 2012 shares	Mar. 01, 2006 shares	May 01, 2002 shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	56,600		67,100	56,600		56,600	67,100
Allocated Share-based Compensation Expense, Total | $				$ 30,000	$ 139,000	$ 38,000	$ 567,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $				132,000		132,000			$ 132,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $				$ 287,000	$ 208,000	$ 287,000	$ 208,000		287,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term						4 years 255 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period				0	100,032	0	107,531
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $				$ 81,000	$ 120,000	$ 734,000	$ 1,368,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Total Fair Value | $				$ 371,000	$ 0	$ 371,000	$ 709,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		123,304	5,000				128,304	5,000
Allocated Share-based Compensation Expense, Total | $				$ 0	$ 13,000	$ 0	$ 114,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $						0	326,000
Employee Stock Option [Member]
Allocated Share-based Compensation Expense, Total | $				30,000	$ 126,000	38,000	$ 453,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $				$ 132,000		$ 132,000			$ 132,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition						2 years
The 2012 Plan [Member]
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									540,800
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period									67,868
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				1,281,443		1,281,443			1,281,443
Share-based Compensation Arrangement by Share-based Payment Award, Number of Eligible Employees									88
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 Authorized												1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant											0
The 2002 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized													1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant										0

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Note 14 - Stock Option Plans - Summary of Stock Option Plans (Details) - $ / shares			3 Months Ended		9 Months Ended
	Jun. 08, 2017	Dec. 16, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Outstanding options at the beginning of period (in shares)			896,867	1,094,867	949,667	1,043,566
Outstanding options at the beginning of period (in dollars per share)			$ 8.14	$ 8.45	$ 8.47	$ 8.47
Options granted (in shares)	56,600	67,100	56,600		56,600	67,100
Options granted (in dollars per share)			$ 6.55		$ 6.55	$ 7.93
Options exercised (in shares)			0	(100,032)	0	(107,531)
Options exercised (in dollars per share)				$ 8.24		$ 8.11
Options forfeited/cancelled (in shares)			(1,000)		(53,800)	(8,300)
Options forfeited/cancelled (in dollars per share)			$ 7.93		$ 14.01	$ 8.14
Outstanding options at the end of period (in shares)			952,467	994,835	952,467	994,835
Outstanding options at the end of period (in dollars per share)			$ 8.05	$ 8.47	$ 8.05	$ 8.47
Options Exercisable, Number of Shares Exercisable (in shares)			867,195	874,826	867,195	874,826
Options Exercisable, Weighted Average Exercise Price (in dollars per share)			$ 8.13	$ 8.51	$ 8.13	$ 8.51

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Note 14 - Stock Option Plans - Summary of Outstanding Options (Details) - $ / shares	9 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Options Outstanding, Number of Shares Outstanding (in shares)	952,467	896,867	949,667	994,835	1,094,867	1,043,566
Options Outstanding, Weighted Average Remaining Contractual Life (Year)	5 years 36 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 8.05	$ 8.14	$ 8.47	$ 8.47	$ 8.45	$ 8.47
Options Exercisable, Number of Shares Exercisable (in shares)	867,195			874,826
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 8.13			$ 8.51
Range One [Member]
Range of Exercise Price, Lower (in dollars per share)	2.8751
Range of Exercise Price, Upper (in dollars per share)	$ 4.30
Options Outstanding, Number of Shares Outstanding (in shares)	3,800
Options Outstanding, Weighted Average Remaining Contractual Life (Year)	1 year 292 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 Two [Member]
Range of Exercise Price, Lower (in dollars per share)	5.7501
Range of Exercise Price, Upper (in dollars per share)	$ 8.625
Options Outstanding, Number of Shares Outstanding (in shares)	824,167
Options Outstanding, Weighted Average Remaining Contractual Life (Year)	5 years 36 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 7.86
Options Exercisable, Number of Shares Exercisable (in shares)	738,895
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 7.94
Range Three [Member]
Range of Exercise Price, Lower (in dollars per share)	8.6251
Range of Exercise Price, Upper (in dollars per share)	$ 11.50
Options Outstanding, Number of Shares Outstanding (in shares)	124,500
Options Outstanding, Weighted Average Remaining Contractual Life (Year)	5 years 219 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

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Note 14 - Stock Option Plans - Summary of Restricted Stock Transactions (Details) - Restricted Stock [Member] - $ / shares			3 Months Ended		9 Months Ended
	Dec. 31, 2015	Dec. 16, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Unvested at the beginning of period (in shares)				138,304		44,107
Unvested at the beginning of period (in dollars per share)				$ 7.92		$ 9.28
Awards granted (in shares)	123,304	5,000				128,304	5,000
Awards granted (in dollars per share)						$ 7.89
Vested (in shares)				(5,000)		(39,107)
Vested (in dollars per share)						$ 9.57
Forfeited (in shares)
Forfeited (in dollars per share)
Unvested at the end of period (in shares)				133,304		133,304
Unvested at the end of period (in dollars per share)				$ 7.92		$ 7.92

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Note 15 - Stockholders' Equity (Details Textual) - USD ($)								3 Months Ended			9 Months Ended		14 Months Ended
	May 05, 2017	Mar. 10, 2017	Feb. 15, 2017	Feb. 06, 2017	Jan. 06, 2017	Nov. 21, 2016	Mar. 17, 2016	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016	Jan. 18, 2017	Dec. 17, 2015	Aug. 11, 2015
Common Stock, Dividends, Per Share, Declared								$ 0		$ 0	$ 0	$ 0
Treasury Stock, Value, Acquired, Cost Method											$ 54,203,000	$ 11,174,000
Share Price														$ 10.20
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
Right [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	0.001
Right [Member] | Series A Junior Participating Preferred Stock [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 28.60
Mangrove [Member]
Mutual Confidentiality Agreement, Extended Period						30 days
Mangrove [Member] | Ricky Stern Family [Member]
Treasury Stock, Value, Acquired, Cost Method		$ 4,900,000
Treasury Stock, Shares, Acquired		471,086
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
Stock Repurchase Program, Additional Authorized Repurchase Amount															$ 15,000,000
Treasury Stock, Value, Acquired, Cost Method							$ 9,900,000						$ 10,100,000
Treasury Stock, Shares, Acquired													1,186,000
Settlement Agreement [Member]
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, Purchase Price Per Share					$ 10.35
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 16 - Fair Value of Financial Measurements and Disclosures (Details Textual) - USD ($)	9 Months Ended
	Jun. 30, 2017	Sep. 30, 2016
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Redemption Restriction Period	5 years
Available-for-sale Securities, Total	$ 5,500,000	$ 56,763,000
Fair Value, Inputs, Level 2 [Member]
Available-for-sale Securities, Total	0
Fair Value, Inputs, Level 3 [Member]
Available-for-sale Securities, Total	$ 0

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Note 16 - Fair Value of Financial Measurements and Disclosures - Fair Value of Financial Measurements (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Fair Value	$ 5,500,000	$ 56,763,000
Fair Value, Inputs, Level 3 [Member]
Fair Value	0
Reported Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash equivalents (Level 1)	2,864,000	923,000
Fair Value	5,500,000	56,764,000
Other investments, net		3,590,000
Structured settlements (Level 3)	88,268,000	86,091,000
Reported Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Consumer receivables acquired for liquidation (Level 3)	9,210,000	13,427,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash equivalents (Level 1)	2,864,000	923,000
Fair Value	5,500,000	56,764,000
Other investments, net		3,590,000
Structured settlements (Level 3)	88,268,000	86,091,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Consumer receivables acquired for liquidation (Level 3)	$ 41,488,000	$ 47,233,000

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Note 16 - Fair Value of Financial Measurements and Disclosures - Quantitative Information About Level 3 Fair Value Measurements (Details) - Valuation Technique, Discounted Cash Flow [Member]	Jun. 30, 2017 USD ($)
Structured Settlements, Fair Value	$ 88,268,000
Rate	0.0605
Minimum [Member] | Measurement Input, Discount Rate [Member]
Rate	0.0471

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Note 16 - Fair Value of Financial Measurements and Disclosures - Changes in Structured Settlements at Fair Value Using Significant Unobservable Inputs (Details)	9 Months Ended
	Jun. 30, 2017 USD ($)
Balance	$ 86,091,000
Fair value adjustment	(433,000)
Total gains and losses included in earnings	(842,000)
Changes in allowance	242,000
Purchases	13,363,000
Sales	(7,727,000)
Interest accreted	4,760,000
Payments received	(7,186,000)
Balance	$ 88,268,000

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Note 16 - Fair Value of Financial Measurements and Disclosures - Schedule of Realized and Unrealized Gains and Losses (Details)	9 Months Ended
	Jun. 30, 2017 USD ($)
The amount of total gains for the nine months period included in earnings attributable to the change in unrealized gains relating to assets held at June 30, 2017	$ 4,511,000
Realized loss relating to assets sold during the nine months ended June 30, 2017	(5,353,000)
Total losses included in the nine months ended June 30, 2017	$ (842,000)

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Note 17 - Segment Reporting (Details Textual)	9 Months Ended
	Jun. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)
Number of Reportable Segments	3
Disposal Group, Including Discontinued Operation, Assets, Total	$ 93,692,000	$ 91,506,000
CBC [Member]
Disposal Group, Including Discontinued Operation, Assets, Total	93,692,000	$ 91,506,000
CBC [Member] | Corporate, Non-Segment [Member]
Disposal Group, Including Discontinued Operation, Assets, Total	$ 93,700,000		$ 84,800,000

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Note 17 - Segment Reporting - Schedule of Segment Reporting (Details) - USD ($)		3 Months Ended			9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016		Jun. 30, 2017	Jun. 30, 2016		Sep. 30, 2016
Revenue, Net (Deprecated 2018-01-31)		$ 5,368,000	$ 5,741,000		$ 16,259,000	$ 17,257,000
Other income		100,000	200,000		(100,000)	1,200,000
Segment profit (loss)		1,790,000	5,041,000		(7,064,000)	3,309,000
Segment Assets(1)		212,671,000	246,600,000	[1]	212,671,000	246,600,000	[1]	$ 255,008,000
Operating Segments [Member] | Consumer Receivables [Member]
Revenue, Net (Deprecated 2018-01-31)		4,000,000	4,600,000		12,000,000	14,600,000
Other income
Segment profit (loss)		2,900,000	4,200,000		9,700,000	10,700,000
Segment Assets(1)	[1]	19,600,000	19,200,000		19,600,000	19,200,000
Operating Segments [Member] | GAR Disability Advocates [Member]
Revenue, Net (Deprecated 2018-01-31)		1,100,000	1,200,000		4,000,000	2,700,000
Other income
Segment profit (loss)		0	(1,800,000)		(1,400,000)	(6,300,000)
Segment Assets(1)	[1]	3,300,000	1,500,000		3,300,000	1,500,000
Operating Segments [Member] | Personal Injury Claims [Member]
Revenue, Net (Deprecated 2018-01-31)	[2]	300,000			300,000
Other income	[2]
Segment profit (loss)	[2]	2,600,000	6,200,000		2,300,000	8,000,000
Segment Assets(1)	[1],[2]	52,900,000	45,100,000		52,900,000	45,100,000
Corporate, Non-Segment [Member]
Revenue, Net (Deprecated 2018-01-31)	[3]
Other income	[3]		200,000		(100,000)	1,200,000
Segment profit (loss)	[3]	(3,700,000)	(3,600,000)		(17,700,000)	(9,100,000)
Segment Assets(1)	[1],[3],[4]	$ 136,900,000	$ 180,800,000		$ 136,900,000	$ 180,800,000

[1] Includes other amounts in other line items on the consolidated balance sheet.

[2] The Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has included its pro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment.

[3] Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.

[4] Included in Corporate are approximately $93.8 million and $84.8 million of assets related to discontinued operations as of June 30, 2017 and 2016, respectively.

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Note 18 - Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Balance, September 30, 2016, as previously reported			$ 181,783,000	$ 183,407,000	$ 183,407,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)	$ 18,000	$ 560,000	(17,000)	1,046,000
Net current-period other comprehensive (loss) income	42,000	478,000	(592,000)	970,000
Balance	119,193,000	177,544,000	119,193,000	177,544,000	181,783,000
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.	18,000	560,000	(17,000)	1,046,000
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Balance, September 30, 2016, as previously reported			624,000	(205,000)	(205,000)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)			(607,000)	1,046,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit			(17,000)	(39,000)	(39,000)
Net current-period other comprehensive (loss) income			(624,000)	1,007,000	829,000
Balance		802,000		802,000	624,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense)
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.			(607,000)	1,046,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit			(17,000)	(39,000)	(39,000)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance, September 30, 2016, as previously reported			179,000	225,000	225,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.			32,000	(37,000)	(46,000)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)
Amount reclassified from accumulated other comprehensive loss, net of tax benefit
Net current-period other comprehensive (loss) income			32,000	(37,000)	(46,000)
Balance	211,000	188,000	211,000	188,000	179,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense)			32,000	(37,000)	(46,000)
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.
Amount reclassified from accumulated other comprehensive loss, net of tax benefit
AOCI Attributable to Parent [Member]
Balance, September 30, 2016, as previously reported			803,000	20,000	20,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of ($21,000) and $31,000 at June 30 2017, and September 30, 2016, respectively.			32,000	(37,000)	(46,000)
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense)			(607,000)	1,046,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit			(17,000)	(39,000)	(39,000)
Net current-period other comprehensive (loss) income			(592,000)	970,000	783,000
Balance	$ 211,000	$ 990,000	211,000	990,000	803,000
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense)			32,000	(37,000)	(46,000)
Net unrealized securities gain (loss), net of tax (expense)/benefit of $(12,000) and ($364,000) during the three month periods ended June 30, 2017 and 2016, respectively, and $11,000 and ($695,000) during the nine month periods ended June 30, 2017 and 2016, respectively.			(607,000)	1,046,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit			$ (17,000)	$ (39,000)	$ (39,000)

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Note 18 - Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive Income (Loss) (Details) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Unrealized gain (loss) on marketable securities, tax	$ (12,000)	$ (364,000)	$ 404,000	$ (695,000)	$ (529,000)
Reclassified from accumulated other comprehensive loss, tax			11,000		24,000
Unrealized gain (loss) on marketable securities, tax	$ 12,000	$ 364,000	$ (404,000)	695,000	$ 529,000
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Unrealized gain (loss) on marketable securities, tax				695,000
Reclassified from accumulated other comprehensive loss, tax				24,000
Unrealized gain (loss) on foreign currency translation, tax				25,000
Unrealized gain (loss) on marketable securities, tax				$ (695,000)

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Note 19 - Related Party Transactions (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 17, 2015	Jun. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Payments to Acquire Productive Assets, Total					$ 19,000	$ 120,000
Louis Piccolo [Member]
Consulting Agreement Period	2 years
Professional Fees			$ 20,000	$ 20,000	60,000	60,000
Due to Related Parties, Total			0		0		$ 0
Louis Piccolo [Member] | Pegasus Funding LLC [Member]
Related Party Transaction, Amounts of Transaction			33,000	33,000	$ 100,000	100,000
Louis Piccolo [Member] | Pegasus Funding LLC [Member] | Professional Fees Incurred by a Related Party [Member]
Due to Related Parties, Term					6 years
Louis Piccolo [Member] | Pegasus Funding LLC [Member] | Interest Based on Professional Fees [Member]
Related Party Transaction, Rate					4.00%
Louis Piccolo [Member] | Maximum [Member] | Pegasus Funding LLC [Member]
Professional Fees					$ 700,000
Fortress Funding, LLC [Member]
Due to Related Parties, Total			$ 0		0		$ 800,000
Stock Issued During Period, Shares, Purchase of Assets			55,000
Stock Issued During Period, Value, Purchase of Assets			$ 400,000		400,000
Obligation Settlement, Gain (Loss) Recognized			0
Fortress Funding, LLC [Member] | Conversion of Customers From The Acquired Lists [Member]
Payments to Acquire Productive Assets, Total			49,000	$ 32,000	200,000	$ 200,000
Fortress Funding, LLC [Member] | CBC [Member]
Assets Purchase Agreement, Consideration Transferred		$ 500,000
Asset Purchase Agreement, Remaining Amount Owed			$ 600,000		$ 600,000
Fortress Funding, LLC [Member] | CBC [Member] | Conversion of Customers From The Acquired Lists [Member]
Assets Purchase Agreement, Contingent Consideration		$ 1,200,000

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Note 20 - Subsequent Events (Details Textual) - USD ($)							9 Months Ended
	Feb. 28, 2018	Feb. 05, 2018	Jan. 23, 2018	Jan. 12, 2018	Nov. 24, 2017	Nov. 22, 2017	Jun. 30, 2016	Jun. 30, 2017	Nov. 08, 2016	Sep. 30, 2016
Restricted Cash, Total								$ 10,000,000		$ 10,000,000
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests							$ 1,696,000
Subsequent Event [Member]
Dividends Payable, Amount Per Share		$ 5.30
Payments of Dividends, Total	$ 35,000,000
Dividends Payable, Date Declared		Feb. 05, 2018
Dividends Payable, Date to be Paid		Feb. 28, 2018
Dividends Payable, Date of Record		Feb. 16, 2018
Subsequent Event [Member] | Competitor Allaged Former Subsidiary [Member]
Payments for Legal Settlements						$ 500,000
Subsequent Event [Member] | Lawsuit in Montana State Court [Member]
Payments for Legal Settlements					$ 800,000
Subsequent Event [Member] | Global Settlement [Member]
Payments for Legal Settlements			$ 2,300,000
Litigation Settlement, Amount Awarded to Other Party			$ 4,600,000
Pegasus Legal Funding LLC [Member]
Restricted Cash, Total								$ 24,700,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				20.00%					20.00%
Pegasus Legal Funding LLC [Member] | Subsequent Event [Member]
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests				$ 1,800,000