Asta Funding : Quarterly report which provides a continuing view of a company's financial position

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019

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	(IRS Employer
of incorporation or organization)	Identification No.)
210 Sylvan Ave., Englewood Cliffs, New Jersey	07632
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number: [phone]

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	ASFI	Nasdaq Global Select Market

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 every Interactive Data File required to be submitted 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 such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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	☒	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 August 13, 2019, the registrant had 6,568,815 common shares outstanding.

Table of Contents
ASTA FUNDING, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
Part I-FINANCIAL INFORMATION	3
Item 1. Condensed Consolidated Financial Statements	3
Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and September 30, 2018	3
Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2019 (unaudited) and 2018 (unaudited)	4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended June 30, 2019 (unaudited) and
2018 (unaudited)	5
Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended June 30, 2019 (unaudited) and 2018
(unaudited)	6
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2019 (unaudited) and 2018 (unaudited)	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 4. Controls and Procedures	44
Part II-OTHER INFORMATION	44
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	45
Item 5. Other Information	45
Item 6. Exhibits	45
Signatures	47
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Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	ASTA FUNDING, INC. AND SUBSIDIARIES
	Condensed Consolidated Balance Sheets
			June 30,
			2019				September 30,
			(Unaudited)			2018
	ASSETS
	Cash and cash equivalents	$	2,898,000		$	6,284,000
	Available for sale debt securities (at fair value)		50,286,000				38,054,000
	Investments in equity securities (at fair value)		8,032,000				-
	Consumer receivables acquired for liquidation (at cost)		2,184,000				3,749,000
	Investment in personal injury claims, net		5,909,000				10,745,000
	Due from third party collection agencies and attorneys		813,000				755,000
	Accounts receivable, net		235,000				-
	Prepaid and income taxes receivable, net		4,456,000				5,387,000
	Furniture and equipment, net of accumulated depreciation of $1.9 million at June 30, 2019 and $1.8 million
	at September 30, 2018		145,000				100,000
	Equity method investment		207,000				236,000
	Note receivable		-			4,313,000
	Settlement receivable		1,990,000				3,339,000
	Deferred income taxes		10,360,000				10,940,000
	Goodwill		1,410,000				1,410,000
	Other assets		1,443,000				1,003,000
	Total assets	$	90,368,000			$	86,315,000
	LIABILITIES
	Accounts payable and accrued expenses	$	1,208,000		$	2,281,000
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 13,459,708 at June 30, 2019 and
	September 30, 2018; and outstanding 6,605,915 at June 30, 2019 and 6,685,415 at September 30, 2018		135,000				135,000
	Additional paid-in capital		68,558,000				68,551,000
	Retained earnings		87,956,000				82,441,000
	Accumulated other comprehensive income, net of taxes		199,000				35,000
	Treasury stock (at cost) 6,853,793 shares at June 30, 2019 and 6,774,293 at September 30, 2018		(67,688,000)			(67,128,000)
	Total stockholders' equity		89,160,000				84,034,000
Total liabilities and stockholders' equity	$	90,368,000		$	86,315,000

See accompanying notes to condensed consolidated financial statements

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Table of Contents

ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

			Three Months		Three Months		Nine Months		Nine Months
				Ended			Ended			Ended			Ended
			June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
	Revenues:
	Finance income, net	$	3,684,000	$	4,509,000	$	10,659,000	$	12,795,000
	Personal injury claims income			439,000			1,557,000			1,608,000			2,167,000
	Disability fee income			1,175,000			1,188,000			3,732,000			3,248,000
Total revenues			5,298,000			7,254,000			15,999,000			18,210,000
Gain on settlements			273,000			-			596,000			-
	Other income, net			855,000			76,000			1,395,000			179,000
				6,426,000			7,330,000			17,990,000			18,389,000
Expenses:
	General and administrative			2,980,000			4,201,000			10,301,000			11,712,000
	Loss on acquisition of minority interest			-			-			-			1,420,000
	Interest			-			17,000			-			19,000
	Impairment			100,000			100,000			100,000			100,000
	Loss (earnings) from equity method investment			5,000			-			91,000			(845,000)
				3,085,000			4,318,000			10,492,000			12,406,000
Income from continuing operations before income tax			3,341,000			3,012,000			7,498,000			5,983,000
	Income tax expense			1,037,000			1,055,000			2,146,000			5,595,000
Net income from continuing operations			2,304,000			1,957,000			5,352,000			388,000
	Net loss from discontinued operations, net of income tax			-			-			-			(80,000)
Net income	$	2,304,000	$	1,957,000	$	5,352,000	$	308,000
Net income (loss) per basic shares:
	Continuing operations	$	0.35	$	0.29	$	0.80	$	0.06
	Discontinued operations			-			-			-			(0.01)
			$	0.35		$	0.29		$	0.80		$	0.05
	Net income (loss) per diluted shares:
	Continuing operations	$	0.35	$	0.29	$	0.80	$	0.06
	Discontinued operations			-			-			-			(0.01)
			$	0.35		$	0.29		$	0.80		$	0.05
Weighted average number of common shares outstanding:
	Basic			6,666,012			6,685,415			6,678,947			6,654,911
	Diluted			6,666,231			6,685,628			6,679,260			6,657,840

See accompanying notes to condensed consolidated financial statements

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