UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended ~~March~~June 3130, 2020

☐	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 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 ☒

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

As of ~~May~~August 2213, 2020, the registrant had 6,567,765 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 March 31, 2020 (unaudited) and September 30, 2019	3
Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and September 30, 2019	3
Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2020 (unaudited) and 2019 (unaudited)	4
Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2020 (unaudited) and 2019 (unaudited)	4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended March 31, 2020 (unaudited) and 2019 (unaudited)	5
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2020 (unaudited) and 2019 (unaudited)	5
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, 2020 (unaudited) and 2019 (unaudited)	6
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended June 30, 2020 (unaudited) and 2019 (unaudited)	6
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2020 (unaudited) and 2019 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2020 (unaudited) and 2019 (unaudited)	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2728
Item 4. Controls and Procedures	3638
Part II-OTHER INFORMATION	3739
Item 1. Legal Proceedings	3739
Item 1A. Risk Factors	3839
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3840
Item 3. Defaults Upon Senior Securities	3840
Item 4. Mine Safety Disclosures	3840
Item 5. Other Information	3940
Item 6. Exhibits	3940
Signatures	4041

Table of Contents

~~PART I~~PARTI. FINANCIAL INFORMATION

Item 1. ~~Financial Statements~~FinancialStatements

ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	March 31, 2020 (Unaudited)			September 30, 2019
	June 30, 2020 (Unaudited)			September 30, 2019
ASSETS
Cash and cash equivalents	$	84,~~982~~165,000		$	4,308,000
Available for sale debt securities (at fair value)		5544,~~692~~001,000			56,123,000
Investments in equity securities (at fair value)		826,~~111~~580,000			8,136,000
Consumer receivables acquired for liquidation (at cost)		1997,~~193,~~000			1,668,000
Investment in personal injury claims, net		3,~~709~~642,000			5,190,000
Due from third party collection agencies and attorneys		~~345~~377,000			596,000
Accounts receivable, net		~~212~~182,000			266,000
Prepaid and income taxes receivable, net		68,000			264,000
Furniture and equipment, net of accumulated depreciation of $2.0 million at March 31, 2020 and $1.9 million at September 30, 2019		72,000			120,000
Furniture and equipment, net of accumulated depreciation of $2.0 million at June 30, 2020 and $1.9 million at September 30, 2019		48,000			120,000
Right of use assets		~~454~~362,000		––
Equity method investment		~~223~~307,000			280,000
Settlement receivable		~~757~~465,000			1,558,000
Deferred income taxes		9,~~383~~388,000			9,631,000
Goodwill		1,410,000			1,410,000
Other assets		1,~~754~~438,000			1,135,000
Total assets	$	9293,~~365~~430,000		$	90,685,000
LIABILITIES
Accounts payable and accrued expenses	$	1,~~499~~219,000		$	994,000
Right of use liability		456,000		––
Note payable		1,118,000		––
Income taxes payable		391,000			787,000
Right of use liabilities		370,000		––
		2,346,000			1,781,000
Income taxes payable		414,000			787,000
Total liabilities		3,121,000			1,781,000
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 March 31, 2020 and September 30, 2019; and outstanding 6,567,765 at March 31, 2020 and September 30, 2019		135,000			135,000
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,459,708 at June 30, 2020 and September 30, 2019; and outstanding 6,567,765 at June 30, 2020 and at September 30, 2019		135,000			135,000
Additional paid-in capital		68,558,000			68,558,000
Retained earnings		8889,~~880~~326,000			87,907,000
Accumulated other comprehensive income, net of taxes		~~418~~262,000			276,000
Treasury stock (at cost) 6,891,943 shares at March 31, 2020 and September 30, 2019		(67,972,000	)		(67,972,000	)
Treasury stock (at cost) 6,891,943 shares at June 30, 2020 and September 30, 2019		(67,972,000	)		(67,972,000	)
Total stockholders’ equity		90,~~019~~309,000			88,904,000
Total liabilities and stockholders’ equity	$	9293,~~365~~430,000		$	90,685,000

See accompanying notes to condensed consolidated financial statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months			Three Months		~~Six~~Nine Months			~~Six~~Nine Months
	Ended			Ended		Ended			Ended
	March 31, 2020			March 31, 2019		March 31, 2020			March 31, 2019
	June 30, 2020			June 30, 2019		June 30, 2020			June 30, 2019
Revenues:
Finance income, net	$	2,~~808~~235,000		$	3,~~481~~684,000	$	58,~~940~~175,000		$	610,~~975~~659,000
Personal injury claims income		~~165~~242,000			~~456~~439,000		~~541~~783,000			1,~~169~~608,000
Disability fee income		~~900~~932,000			1,~~296~~175,000		12,~~708~~640,000			23,~~557~~732,000
Total revenues		3,~~873~~409,000			5,~~233~~298,000		811,~~189~~598,000			1015,~~701~~999,000
Other Income:
Interest and dividend income		~~320~~263,000			~~255~~821,000		~~649~~912,000			~~454~~1,274,000
Gain on settlement		30,000			323,000		30,000			323,000
Gain on settlements	––				273,000		30,000			596,000
Other income (expense), net		(172,000	)		51,000		(161,000	)		86,000
Other income, net		253,000			34,000		92,000			121,000
Total other income		~~178~~516,000			~~629~~1,128,000		~~518~~1,034,000			~~863~~1,991,000
		4,051,000			5,862,000		8,707,000			11,564,000
		3,925,000			6,426,000		12,632,000			17,990,000
Expenses:
General and administrative		3,~~906~~281,000			32,~~395~~980,000		710,~~098~~379,000			710,~~321~~301,000
Impairment of consumer receivables acquired for liquidation	––				—		23,000			—
Interest		1,000			—		1,000			—
Loss from equity method investment		53,000			56,000		57,000			86,000
Impairment	––				100,000		23,000			100,000
		3,959,000			3,451,000		7,178,000			7,407,000
Loss from equity method investment		2,000			5,000		59,000			91,000
Income before income tax		92,000			2,411,000		1,529,000			4,157,000
		3,284,000			3,085,000		10,462,000			10,492,000
Income tax expense		164,000			638,000		556,000			1,109,000
Income before income tax		641,000			3,341,000		2,170,000			7,498,000
Net (loss) income	$	(72,000	)	$	1,773,000	$	973,000		$	3,048,000
Income tax expense		195,000			1,037,000		751,000			2,146,000
Net income (loss) per share:
Net income	$	446,000		$	2,304,000	$	1,419,000		$	5,352,000
Basic	$	(0.01	)	$	0.27	$	0.15		$	0.46
Net income pershare:
Diluted	$	(0.01	)	$	0.27	$	0.15		$	0.46
Basic	$	0.07		$	0.35	$	0.22		$	0.80
Diluted	$	0.07		$	0.35	$	0.21		$	0.80
Weighted average number of common shares outstanding:
Basic		6,567,765			6,~~685~~666,~~415~~012		6,567,765			6,~~685~~678,~~415~~947
Diluted		6,~~567~~748,~~765~~499			6,~~685~~666,~~827~~231		6,~~654~~686,~~873~~081			6,~~685~~679,~~775~~260

See accompanying notes to condensed consolidated financial statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

~~March~~June 3130, 2020 and 2019

(Unaudited)

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019			Six Months Ended March 31, 2020			Six Months Ended March 31, 2019
	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019			Nine Months Ended June 30, 2020			Nine Months Ended June 30, 2019
Comprehensive income is as follows:
Net (loss) income	$	(72,000	)	$	1,773,000		$	973,000		$	3,048,000
Net income	$	446,000		$	2,304,000		$	1,419,000		$	5,352,000
Net unrealized gain (loss) on debt securities, net of tax (expense)/ benefit of ($9,000) and ($35,000) during the three months ended March 31, 2020 and 2019, respectively, and $43,000 and ($87,000) during the six months ended March 31, 2020 and 2019, respectively.		21,000			88,000			(107,000	)		223,000
Net unrealized debt securities gain (loss), net of tax (expense)/benefit of $51,000 and $46,000 during the three months ended June 30, 2020 and 2019, respectively, and $94,000 and ($40,000) during the nine months ended June 30, 2020 and 2019, respectively.		(133,000	)		(121,000	)		(240,000	)		102,000
Reclassification adjustment for securities sold, net of tax expense of ($2,000) and $0 during the three months ended March 31, 2020 and 2019, respectively, and ($50,000) and $0 during the six months ended March 31, 2020 and 2019, respectively.		5,000		––				127,000		––
Reclassification adjustment for securities sold, net of tax expense of $0 and $0 during the three months ended June 30, 2020 and 2019, respectively, and ($50,000) and $0 during the nine months ended June 30, 2020 and 2019, respectively.	––			––				127,000		––
Foreign currency translation, net of tax (expense) / benefit of ($43,000) and $17,000 during the three months ended March 31, 2020 and 2019, respectively, and ($31,000) and ($7,000) during the six months ended March 31, 2020 and 2019, respectively.		166,000			(44,000	)		122,000			36,000
Foreign currency translation, net of tax (expense) / benefit of ($8,000) and ($6,000) during the three months ended June 30, 2020 and 2019, respectively, and ($38,000) and ($14,000) during the nine months ended June 30, 2020 and 2019, respectively.		(23,000	)		16,000			99,000			52,000
Other comprehensive income		192,000			44,000			142,000			259,000
Other comprehensive (loss) income		(156,000	)		(105,000	)		(14,000	)		154,000
Total comprehensive income	$	~~120~~290,000		$	12,~~817~~199,000		$	1,~~115~~405,000		$	35,~~307~~506,000

See accompanying notes to condensed consolidated financial statements

Table of Contents

ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional					Accumulated Other						Total
	Issued Shares		Amount		Paid-in Capital		Retained Earnings			Comprehensive Income			Treasury Stock			Stockholders’ Equity
Balance, September 30, 2019		13,459,708	$	135,000	$	68,558,000	$	87,907,000		$	276,000		$	(67,972,000	)	$	88,904,000
Net income		—		—		—		1,045,000			—			—			1,045,000
Unrealized loss on debt securities, net		—		—		—		—			(128,000	)		—			(128,000	)
Amount reclassified from other comprehensive income		—		—		—		—			122,000		––	—			122,000
Foreign currency translation, net		—		—		—		—			(44,000	)		—			(44,000	)
Balance, December 31, 2019		13,459,708	$	135,000	$	68,558,000	$	88,952,000		$	226,000		$	(67,972,000	)	$	89,899,000
Net loss		—		—		—		(72,000	)		—			—			(72,000	)
Unrealized gain on debt securities, net		—		—		—		—			21,000			—			21,000
Amount reclassified from other comprehensive income		—		—		—		—			5,000		––	—			5,000
Foreign currency translation, net		—		—		—		—			166,000			—			166,000
Balance, March 31, 2020		13,459,708	$	135,000	$	68,558,000	$	88,880,000		$	418,000		$	(67,972,000	)	$	90,019,000
Net income		—		—		—		446,000			—			—			446,000
Unrealized loss on debt securities, net		—		—		—		—			(133,000	)		—			(133,000	)
Foreign currency translation, net		—		—		—		—			(23,000	)		—			(23,000	)
Balance, June 30, 2020		13,459,708	$	135,000	$	68,558,000	$	89,326,000		$	262,000		$	(67,972,000	)	$	90,309,000

	Common Stock				Additional					Accumulated Other						Total
	Issued Shares		Amount		Paid-in Capital		Retained Earnings			Comprehensive Income			Treasury Stock			Stockholders’ Equity
Balance, September 30, 2018		13,459,708	$	135,000	$	68,551,000	$	80,834,000		$	35,000		$	(67,128,000	)	$	82,427,000
Cumulative effect of adjustment for adoption of ASC 606, net of tax of $80,000		—		—		—		173,000			—			—			173,000
Cumulative effect of adjustment for adoption of ASU No. 2016-01, net of tax of $5,000		—		—		—		(10,000	)		10,000			—			—
Adjusted opening equity		13,459,708	$	135,000	$	68,551,000	$	80,997,000		$	45,000		$	(67,128,000	)	$	82,600,000
Stock based compensation expense		—		—		7,000		—			—			—			7,000
Net income		—		—		—		1,275,000			—			—			1,275,000
Unrealized gain on debt securities, net		—		—		—		—			135,000			—			135,000
Foreign currency translation, net		—		—		—		—			80,000			—			80,000
Balance, December 31, 2018		13,459,708	$	135,000	$	68,558,000	$	82,272,000		$	260,000		$	(67,128,000	)	$	84,097,000
Net income		—		—		—		1,773,000			—			—			1,773,000
Unrealized gain on debt securities, net		—		—		—		—			88,000			—			88,000
Foreign currency translation, net		—		—		—		—			(44,000	)		—			(44,000	)
Balance, March 31, 2019		13,459,708	$	135,000	$	68,558,000	$	84,045,000		$	304,000		$	(67,128,000	)	$	85,914,000
Net income		—		—		—		2,304,000			—			—			2,304,000
Unrealized loss on debt securities, net		—		—		—		—			(121,000	)		—			(121,000	)
Foreign currency translation, net		—		—		—		—			16,000			—			16,000
Treasury Stock purchased (79,500 shares)		—		—		—		—			—			(560,000	)		(560,000	)
Balance, June 30, 2019		13,459,708	$	135,000	$	68,558,000	$	86,349,000		$	199,000		$	(67,688,000	)	$	87,553,000

See accompanying notes to condensed consolidated financial statements

Table of Contents

ASTA FUNDING, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	Nine Months Ended
	March 31, 2020			March 31, 2019
	June 30, 2020			June 30, 2019
Cash flows from operating activities:
Net income	$	~~973~~1,419,000		$	35,~~048~~352,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4872,000			4472,000
Deferred income taxes		~~241~~287,000			~~305~~540,000
Impairment of consumer receivables acquired for liquidation		23,000		––	100,000
Stock based compensation	––				7,000
Unrealized (gain)loss on equity securities		162,000			(21,000	)
Unrealized gain on equity securities		(67,000	)		(53,000	)
Provision/ (recoveries) for bad debts – personal injury claims		(59,000	)		158,000
Recoveries of bad debts – personal injury claims, net		(260,000	)		(90,000	)
Loss from equity method investment		5759,000			8691,000
Changes in:
Prepaid and income taxes receivable		196,000			(3,109,000	)
Receipt of income tax carry-back claim	––				3,231,000
Due from third party collection agencies and attorneys		238,000			87,000
Prepaid and income taxes receivable		196,000			(2,300,000	)
Accounts receivable		54,000			(209,000	)
Due from third party collection agencies and attorneys		200,000			(69,000	)
Settlement receivable	––				(223,000	)
Accounts receivable		84,000			(62,000	)
Other assets		(~~619~~304,000	)		(~~449~~440,000	)
Other liabilities		~~627~~325,000			(~~648~~1,021,000	)
Right of use assets		~~182~~274,000		––
Right of use liabilities		(~~180~~266,000	)	––
Income taxes payable		(~~396~~373,000	)	––
Net cash provided by (used in) operating activities		1,547,000			(924,000	)
Net cash provided by operating activities		1,669,000			5,358,000
Cash flows from investing activities:
Principal collected on receivables acquired for liquidation		~~411~~599,000			1,~~026~~373,000
Purchase of available for sale debt securities and investments in equity securities		(97155,~~248~~492,000	)		(3892,~~474~~194,000	)
Proceeds from sale of available for sale debt securities		97149,~~569~~080,000			3072,~~480~~125,000
Proceeds from note receivable	––	—			~~482~~4,313,000
Proceeds from settlement receivable		~~801~~1,093,000			~~925~~1,349,000
Personal injury claims - advances		(~~116~~390,000	)		—(123,000	)
Personal injury claims - receipts		12,~~656~~198,000			35,~~957~~049,000
Change in equity method investment	––				(61,000	)
Increase in equity method investment		(86,000	)		(62,000	)
Capital expenditures	––	—			(~~112~~117,000	)
Net cash (used in) provided by investing activities		3,073,000			(1,777,000	)
Net cash used in investing activities		(2,998,000	)		(8,287,000	)
Cash flows from financing activities:
Net cash provided by financing activities		—			—
Proceeds from note payable		1,118,000		––
Foreign currency effect on cash		54,000			111,000
Purchase of treasury stock	––				(560,000	)
Net increase (decrease) in cash and cash equivalents		4,674,000			(2,590,000	)
Net cash provided by (used in) financing activities		1,118,000			(560,000	)
Foreign currency effect on cash		68,000			103,000
Net decrease in cash and cash equivalents		(143,000	)		(3,386,000	)
Cash and cash equivalents at beginning of period		4,308,000			6,284,000
Cash and cash equivalents at end of period	$	84,~~982~~165,000		$	32,~~694~~898,000
Supplemental disclosure of cash flow information:
Cash paid for: Interest	$	—		$	—
Cash paid for: Income taxes	$	700,000		$	4,000,000
Supplemental disclosure of non-cash operating activities:
Initial recognition of right of use assets	$	636,000		––
Initial recognition of right of use assets	$	636,000		$	—
Initial recognition of right of use assets	$	636,000		$	—

See accompanying notes to condensed consolidated financial statements

Table of Contents

ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 –—Business ~~Correction~~and Basis of ~~Previously Issued Consolidated Financial Statements~~Presentation

During the preparation of its Quarterly Report on Form 10-Q for the three and six months ended March 31, 2020, Asta Funding, Inc. (the “Company”) determined that certain adjustments were needed to correct the previously issued September 30, 2019 consolidated financial statements. Specifically, management determined that it had understated its income taxes payable and related income tax expense from foreign operations and understated accrued professional fees and related professional fee expense as of and for the year ended September 30, 2019. In accordance with Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the materiality of the errors from a qualitative and quantitative perspective and concluded that the effect of the errors were not material to our previously issued consolidated financial statements.Business

AsThe Company, Asta Funding, Inc., a ~~result~~Delaware Corporation (“we” or “us”), ~~the~~together ~~accompanying~~with ~~consolidated~~its ~~financial~~wholly ~~statements~~owned assignificant ofoperating ~~and~~subsidiaries ~~for~~Palisades ~~the~~Collection, ~~year~~LLC, ~~ended~~Palisades ~~September~~Acquisition 30XVI, ~~2019~~LLC ~~have~~(“Palisades ~~been~~XVI”), ~~revised~~Palisades toAcquisition ~~correct~~XIX, ~~for~~LLC ~~these~~(“Palisades ~~immaterial~~XIX”), ~~accounting~~Palisades ~~errors.~~Acquisition ~~Correction~~XXIII, ofLLC ~~these~~(“Palisades ~~immaterial~~XXIII”), ~~errors~~VATIV ~~resulted~~Recovery inSolutions anLLC ~~increase~~(“VATIV”), inASFI ~~income~~Pegasus ~~taxes~~Holdings, ~~payable~~LLC of(“APH”), ~~$212~~Fund Pegasus,~~000~~ ~~and~~LLC an(“Fund ~~increase~~Pegasus”), inGAR ~~accounts~~Disability ~~payable~~Advocates, ~~and~~LLC ~~accrued~~(“GAR ~~expenses~~Disability ofAdvocates”), ~~$53~~Five Star Veterans Disability,~~000~~ ~~with~~LLC a(“Five ~~corresponding~~Star”), ~~increase~~EMIRIC, inLLC ~~income~~(“EMIRIC”), ~~tax~~Simia ~~expense~~Capital, ~~and~~LLC ~~general~~(“Simia”), Sylvave, LLC (“Sylvave”) (formerly known as Pegasus Funding, LLC (“Pegasus”)), Arthur Funding LLC (“Arthur Funding”) (formerly known as Practical Funding, LLC (“Practical Funding”)), and ~~administrative~~other ~~expense~~subsidiaries, ~~respectively.~~which ~~The~~are ~~cumulative~~not ~~effect~~all ofwholly ~~these~~owned, ~~adjustments~~is onengaged ~~retained~~in ~~earnings~~several asbusiness segments in the financial services industry including funding of ~~October~~personal 1injury claims, ~~2019~~through ~~was~~the aCompany's ~~reduction~~wholly owned subsidiaries Sylvave, Simia and Arthur Funding, social security disability advocacy through the Company's wholly owned subsidiaries GAR Disability Advocates and Five Star and the business of ~~$265~~purchasing,~~000~~ managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables.

~~The~~We ~~following~~operate ~~tables~~principally ~~summarize~~in the ~~effects~~United ofStates ~~the~~in ~~revisions~~three onreportable ~~the~~business ~~Company’s~~segments: ~~previously~~consumer ~~reported~~receivables, ~~consolidated~~social ~~financial~~security ~~statements~~disability inadvocacy ~~its Annual Report on Form 10-K as of~~ and ~~for~~personal ~~the~~injury ~~fiscal year ended September 30, 2019 (the “2019 Form 10-K”)~~claims.

	As of September 30, 2019
Consolidated Balance Sheet	As Previously Reported		Adjustment			As Revised
Liabilities:
Accounts payable and accrued expenses	$	941,000	$	53,000		$	994,000
Income taxes payable	$	575,000	$	212,000		$	787,000
Total liabilities	$	1,516,000	$	265,000		$	1,781,000
Stockholders' equity:
Retained earnings	$	88,172,000	$	(265,000	)	$	87,907,000
Total stockholders’ equity	$	89,169,000	$	(265,000	)	$	88,904,000

Consumer receivables

	Year Ended September 30, 2019
Consolidated Income Statement	As Previously Reported		Adjustment			As Revised
General and administrative expense	$	13,378,000	$	53,000		$	13,431,000
Total expenses	$	13,690,000	$	53,000		$	13,743,000
Income from continuing operations before income tax	$	9,754,000	$	(53,000	)	$	9,701,000
Income tax expense	$	2,579,000	$	212,000		$	2,791,000
Net income	$	7,175,000	$	(265,000	)	$	6,910,000
Net income (loss) per share:
Basic	$	1.08	$	(0.04	)	$	1.04
Diluted	$	1.08	$	(0.04	)	$	1.04

This segment is engaged in the business of purchasing, managing for its own account and servicing distressed charged off consumer receivables, including charged off receivables, and semi-performing receivables. 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 acquire these consumer receivables at substantial discounts to their face values, based on the characteristics of the underlying accounts of each portfolio.

	Year Ended September 30, 2019
Consolidated Statement of Cash Flows	As Previously Reported			Adjustment			As Revised
Net income from continuing operations	$	7,175,000		$	(265,000	)	$	6,910,000
Changes in:
Accounts payable and accrued expenses	$	(1,237,000	)	$	53,000		$	(1,184,000	)
Income taxes payable	$	575,000		$	212,000		$	787,000
Net cash provided by operating activities	$	11,319,000		$	-		$	11,319,000

Personal injury claims

~~The~~This ~~correction~~segment is comprised of ~~these~~purchased ~~errors~~interests ~~had~~in nopersonal ~~net~~injury ~~effect~~claims from claimants who are a party to a personal injury claim. The Company advances to each claimant funds on ~~net~~a ~~cash~~non-recourse ~~flows~~basis ~~provided~~at an agreed upon fee, in anticipation of a future settlement. The Company capitalizes employee compensation and benefits expenses as direct costs related to the origination of personal injury advances. Claims purchased consist of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by ~~operating~~reason ~~activities~~of a settlement, judgment or award with respect to such claimant’s claim. The Company historically funded personal injury claims in Simia and noSylvave. ~~effect~~The Company formed a new wholly owned subsidiary, Practical Funding on ~~financing~~March or16, ~~investing~~2018 ~~activities~~to continue in the personal injury claims funding business. On April 8, 2019, Practical Funding changed its name to Arthur Funding, LLC. Arthur Funding began funding advances on personal injury claims in May 2019 (see Note 6).

8Simia commenced operations in January 2017, and conducts its business solely in the United States. Simia obtained its business from external brokers and internal sales professionals soliciting attorneys and law firms who represent claimants who have personal injury claims. Business was also obtained from its website and through attorneys. The personal injury claims segment includes the consolidated results of operations of Sylvave, Simia and Arthur Funding. Simia and Sylvave are not funding any new advances, but continue to collect on outstanding personal claim advances in the ordinary course.

~~Table~~Social ofsecurity ~~Contents~~disability advocacy

~~Note~~This ~~2—Business~~segment consists of advocacy groups representing individuals throughout the United States in their claims for social security disability and ~~Basis~~supplemental social security income benefits from the Social Security Administration and Department of ~~Presentation~~ Veterans Affairs. It relies upon Search Engine Optimization (“SEO”) to bring awareness to its intended market.

~~Business~~Basis of Presentation

The ~~Company,~~condensed ~~Asta~~consolidated ~~Funding~~balance sheet as of June 30, ~~Inc.~~2020, athe ~~Delaware~~condensed ~~Corporation~~consolidated ~~(“we”~~statements orof ~~“us”),~~operations ~~together~~for ~~with~~the ~~its~~three ~~wholly~~and ~~owned~~nine ~~significant~~months ~~operating~~ended ~~subsidiaries~~June ~~Palisades Collection~~30, ~~LLC~~2020 and 2019, ~~Palisades~~the ~~Acquisition~~condensed ~~XVI,~~consolidated ~~LLC~~statements ~~(“Palisades~~of ~~XVI”~~comprehensive income (loss), ~~Palisades~~for ~~Acquisition~~the ~~XIX,~~three ~~LLC~~and ~~(“Palisades~~nine ~~XIX”),~~months ~~Palisades~~ended ~~Acquisition~~June ~~XXIII~~30, ~~LLC~~2020 ~~(“Palisades~~and ~~XXIII”)~~2019, ~~VATIV~~the ~~Recovery~~condensed ~~Solutions~~consolidated ~~LLC~~statements ~~(“VATIV”),~~of ~~ASFI~~stockholders’ ~~Pegasus~~equity ~~Holdings,~~as ~~LLC~~of ~~(“APH”),~~and ~~Fund~~for ~~Pegasus,~~the ~~LLC~~three ~~(“Fund~~and ~~Pegasus”)~~nine months ended June 30, ~~GAR~~2020 ~~Disability~~and ~~Advocates~~2019, ~~LLC~~and ~~(“GAR~~the ~~Disability~~condensed ~~Advocates”),~~consolidated ~~Five~~statements ~~Star~~of ~~Veterans~~cash ~~Disability,~~flows ~~LLC~~for ~~(“Five~~the ~~Star”),~~nine ~~EMIRIC,~~months ~~LLC~~ended ~~(“EMIRIC”)~~June 30, ~~Simia~~2020 ~~Capital~~and 2019, ~~LLC~~are ~~(“Simia”),~~unaudited. ~~Sylvave,~~The ~~LLC~~September ~~(“Sylvave”)~~30, ~~(formerly~~2019 ~~known~~financial asinformation ~~Pegasus~~included ~~Funding,~~in ~~LLC~~this ~~(“Pegasus”)),~~report ~~Arthur~~was ~~Funding~~derived ~~LLC~~from ~~(“Arthur~~our ~~Funding”)~~audited ~~(formerly~~financial ~~known~~statements asincluded ~~Practical~~in ~~Funding,~~our ~~LLC~~Annual ~~(“Practical~~Report ~~Funding”)),~~on ~~and~~Form ~~other~~10-K ~~subsidiaries,~~for ~~which~~the ~~are~~fiscal ~~not~~year ~~all~~ended ~~wholly~~September ~~owned~~30, is2019. ~~engaged~~In inthe ~~several~~opinion ~~business~~of ~~segments~~management, inall ~~the~~adjustments ~~financial~~necessary ~~services~~to ~~industry~~present ~~including~~fairly ~~funding~~our offinancial ~~personal~~position ~~injury~~at ~~claims~~June 30, ~~through~~2020, the ~~Company's~~results ~~wholly~~of ~~owned~~operations ~~subsidiaries~~for ~~Sylvave,~~the ~~Simia~~three and ~~Arthur~~nine ~~Funding,~~months ~~social~~ended ~~security~~June ~~disability~~30, ~~advocacy~~2020 ~~through~~and 2019, the ~~Company's~~condensed ~~wholly~~consolidated ~~owned~~statement ~~subsidiaries~~of ~~GAR~~comprehensive ~~Disability~~income ~~Advocates~~(loss) for the three and ~~Five~~nine ~~Star~~months ended June 30, 2020 and 2019, the ~~business~~condensed consolidated statement of ~~purchasing,~~stockholders' ~~managing~~equity for ~~its~~the ~~own~~three ~~account~~and nine months ended June 30, 2020 and ~~servicing~~2019 ~~distressed~~and ~~consumer~~condensed ~~receivables~~consolidated cash flows for the nine months ended June 30, ~~including~~2020 ~~charged~~and ~~off~~2019 ~~receivables~~have been made. The results of operations for the three and nine months ended June 30, 2020 and ~~semi-performing~~2019 ~~receivables~~are not necessarily indicative of the operating results for any other interim period or the full fiscal year.

~~We operate principally in the United States in three reportable business segments: consumer receivables, social security disability advocacy and personal injury claims.~~8

~~Consumer~~Table ~~receivables~~of Contents

~~This~~ASTA ~~segment is engaged in the business of purchasing~~FUNDING, ~~managing for its own account and servicing distressed charged off receivables including consumer receivables~~INC. ~~Recently,~~AND 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 acquire these consumer receivables at substantial discounts to their face values, based on the characteristics of the underlying accounts of each portfolio. SUBSIDIARIES

~~Personal~~NOTES ~~injury~~TO ~~claims~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This segment is comprised of purchased interests in personal injury claims from claimants who are a party to a personal injury claim. The Company advances to each claimant funds on a non-recourse basis at an agreed upon fee, in anticipation of a future settlement. The Company capitalizes employee compensation and benefits expenses as direct costs related to the origination of personal injury advances. Claims purchased 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 Company historically funded personal injury claims in Simia and Sylvave. The Company formed a new wholly owned subsidiary, Practical Funding on March 16, 2018 to continue in the personal injury claims funding business. On April 8, 2019, Practical Funding changed its name to Arthur Funding, LLC. Arthur Funding began funding advances on personal injury claims in May 2019 (~~see Note 6~~Unaudited).

~~Simia~~Note commenced operations in January 2017, and conducts its business solely in the United States. Simia obtained its business from external brokers and internal sales professionals soliciting attorneys and law firms who represent claimants who have personal injury claims. 1—Business ~~was also obtained from its website~~ and ~~through~~Basis ~~attorneys. The personal injury claims segment includes the consolidated results~~ of ~~operations~~Presentation ~~of Sylvave, Simia and Arthur Funding. Simia and Sylvave are not funding any new advances, but continue to collect on outstanding personal claim advances in the ordinary course.~~ (Continued)

~~Social~~The ~~security~~accompanying ~~disability~~unaudited ~~advocacy~~ condensed 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 our 2019 Form 10-K filed with the Securities and Exchange Commission.

~~This~~The ~~segment~~condensed ~~consists~~consolidated offinancial ~~advocacy~~statements ~~groups~~are ~~representing~~prepared ~~individuals throughout the United States~~ in ~~their~~accordance ~~claims~~with ~~for~~accounting ~~social~~principles ~~security~~generally ~~disability~~accepted ~~and~~in ~~supplemental social security income benefits from~~ the ~~Social~~United ~~Security~~States ~~Administration and Department~~ of ~~Veterans~~America ~~Affairs. It relies upon Search Engine Optimization~~ (“~~SEO~~US GAAP”) toand ~~bring~~industry ~~awareness to its intended market~~practices.

9The 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.

~~Table~~The condensed consolidated financial statements include the accounts of ~~Contents~~Asta Funding, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

~~ASTA~~Going ~~FUNDING,~~Private ~~INC. AND SUBSIDIARIES~~Transaction

~~NOTES~~On TOApril ~~CONDENSED~~8, ~~CONSOLIDATED~~2020 ~~FINANCIAL~~the ~~STATEMENTS~~Company announced that it has entered into a definitive merger agreement (the “Merger Agreement”) under which the Stern Group, comprised of Gary Stern, Chairman, President and Chief Executive Officer of the Company, Ricky Stern and certain related parties, will acquire all of the issued and outstanding shares of common stock of the Company through the merger of the Company with a wholly-owned subsidiary of Asta Finance Acquisition Inc. (“Parent”), with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”). Each share of outstanding common stock under the original Merger Agreement would have been purchased for $11.47 in cash.

The Merger was unanimously approved by the board of directors of Asta (~~Unaudited~~the “Board”), acting on the unanimous recommendation of a special committee of independent and disinterested directors (the “Special Committee”) that was granted full authority to conduct a comprehensive strategic review and evaluate, and if warranted, negotiate an acquisition proposal. Subsequent to the approval of the Merger by the Board, on May 22, 2020, RBF Capital, LLC notified the Company’s Board of Directors, of its proposal to acquire all of the outstanding shares of the Company not currently held by RBF Capital, LLC for a price of $13.00 per

~~Note~~share ~~2—Business~~in ~~and~~cash ~~Basis~~(the of“RBF ~~Presentation~~Capital ~~(Continued~~Proposal”), representing a 13% premium to the Stern Investor Group’s proposed purchase price of $11.47 per share. The Special Committee evaluated the RBF Capital Proposal.

~~Basis~~On ofJune ~~Presentation~~25, 2020, the Company announced that it had entered into an amendment (the “Amendment”) to the Merger Agreement.

~~The~~Pursuant ~~condensed~~to ~~consolidated balance sheet as of March 31, 2020,~~ the ~~condensed~~amended ~~consolidated~~Merger ~~statements~~Agreement ofeach ~~operations~~share ~~for the three and six months ended March 31, 2020 and 2019, the condensed consolidated statements~~ of ~~comprehensive~~outstanding ~~income~~common ~~(loss)~~stock ~~for~~will ~~the~~be ~~three~~purchased ~~and six months ended March 31, 2020 and 2019, the condensed consolidated statements of stockholders’ equity as of and~~ for ~~the~~$13.10 ~~three~~in ~~and six months ended March 31, 2020 and 2019, and the condensed consolidated statements of~~ cash ~~flows for the six months ended March 31, 2020 and 2019, are unaudited~~. The ~~September 30,~~new ~~2019~~purchase ~~financial~~price ~~information~~represents ~~included~~an inincrease ~~this~~of ~~report was derived from our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019~~$1.63 Inper ~~the~~share ~~opinion~~over ~~of management, all adjustments necessary to present fairly our financial position at March 31, 2020,~~ the ~~results~~original ofpurchase ~~operations~~price ~~for the three~~ and ~~six~~a ~~months~~premium ~~ended March 31, 2020 and 2019, the condensed consolidated statement~~ of ~~comprehensive~~approximately ~~income~~18% ~~(loss)~~to ~~for~~ the ~~three~~Company’s ~~and~~closing ~~six~~stock ~~months~~price ~~ended~~on ~~March~~June 3124, 2020 ~~and 2019~~, the ~~condensed~~last ~~consolidated~~trading ~~statement~~day ofprior ~~stockholders'~~to ~~equity for~~ the ~~three~~execution ~~and six months ended March 31, 2020 and 2019 and condensed consolidated cash flows for the six months ended March 31, 2020 and 2019 have been made. The results~~ of ~~operations for~~ the ~~three and six months ended March 31, 2020 and 2019 are not necessarily indicative of the operating results for any other interim period or the full fiscal year~~Amendment.

The ~~accompanying~~Merger ~~unaudited~~Agreement ~~condensed~~and ~~consolidated~~Amendment ~~financial~~were ~~statements~~approved ~~have~~by ~~been~~the ~~prepared~~board inof ~~accordance~~directors ~~with~~of ~~Rule~~Asta ~~10-01~~(the “Board”) (without the participation of ~~Regulation~~Gary ~~S-X~~Stern), ~~promulgated~~acting byon the ~~Securities~~unanimous ~~and~~recommendation ~~Exchange~~of ~~Commission~~a special committee of independent and ~~therefore~~disinterested dodirectors ~~not~~(the ~~include~~“Special ~~all~~Committee”) ~~information~~that ~~and~~was ~~note~~granted ~~disclosures~~full ~~required~~authority ~~under~~to ~~generally~~conduct ~~accepted~~a ~~accounting~~comprehensive ~~principles.~~strategic ~~The~~review ~~Company~~and ~~suggests~~evaluate, ~~that~~and ~~these~~if ~~financial~~warranted, ~~statements~~negotiate bean ~~read~~acquisition inproposal. ~~conjunction~~The ~~with~~Merger ~~the~~is ~~financial~~subject ~~statements~~to ~~and~~the ~~notes~~satisfaction ~~thereto~~of ~~included~~customary inclosing ~~our~~conditions ~~2019~~as ~~Form~~well ~~10-K~~as ~~filed~~the ~~with~~approval by the ~~Securities~~Company’s ~~and~~stockholders ~~Exchange~~other ~~Commission~~than the Stern Group.

~~The~~Simultaneously ~~condensed~~with ~~consolidated~~the ~~financial~~signing ~~statements~~of ~~are~~the ~~prepared~~amended inMerger ~~accordance~~Agreement, the Company also entered into a Settlement and Voting agreement with ~~accounting~~RBF ~~principles~~Capital, ~~generally~~LLC, ~~accepted~~a stockholder of the Company. Pursuant to the terms of the Settlement and Voting Agreement, RBF Capital, LLC has, among other things, agreed to vote the shares of Common Stock of the Company beneficially owned by RBF Capital, LLC, or that may become beneficially owned by it during the term of the Settlement and Voting Agreement, in favor of adopting the ~~United~~amended ~~States~~Merger Agreement, dated June 25, 2020, and any other matters necessary for consummation of ~~America~~the Merger (~~“US~~as ~~GAAP”~~defined in the Settlement and Voting Agreement) and ~~industry~~the ~~practices~~other transactions contemplated by the amended Merger Agreement.

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.9

~~The~~Table ~~condensed consolidated financial statements include the accounts~~ of ~~Asta~~ ~~Funding, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.~~Contents

~~Pending~~ASTA ~~Transactions~~ FUNDING, INC. AND SUBSIDIARIES

OnNOTES ~~April~~TO 8,CONDENSED ~~2020~~CONSOLIDATED ~~the~~FINANCIAL Company announced that it has entered into a definitive merger agreement (the “Merger Agreement”) under which the Stern Group, comprised of Gary Stern, Chairman, President and Chief Executive Officer of the Company, Ricky Stern and certain related parties, will acquire all of the issued and outstanding shares of common stock of the Company through the merger of the Company with a wholly-owned subsidiary of Asta Finance Acquisition Inc. (“Parent”), with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”).STATEMENTS

~~Each share of outstanding common stock will be purchased for $11.47 in cash.~~(Unaudited)

~~The~~Note ~~Merger~~1—Business ~~was~~and ~~unanimously~~Basis ~~approved by the board~~ of ~~directors~~Presentation ~~of Asta~~ (~~the “Board”~~Continued), acting on the unanimous recommendation of a special committee of independent and disinterested directors (the “Special Committee”) that was granted full authority to conduct a comprehensive strategic review and evaluate, and if warranted, negotiate an acquisition proposal. The Merger is subject to the satisfaction of customary closing conditions as well as the approval by the Company’s stockholders other than the Stern Group. Upon closing, the Company will become a privately held company and as such, the Company’s shares of common stock will no longer be listed or traded on the Nasdaq Global Select Market.

~~Subsequent~~The ~~to the approval of the~~ Merger bywill ~~the~~be ~~Board,~~financed ~~on May 22, 2020, RBF Capital, LLC notified the Company’s Board of Directors, of its proposal to acquire all of the outstanding shares of the Company not currently held~~ by ~~RBF Capital, LLC for~~ a ~~price~~committed ofloan ~~$13.00~~facility ~~per~~provided ~~share~~by inBank ~~cash~~Leumi ~~(the “RBF Capital Proposal”), representing a 13% premium to the Stern Investor Group’s proposed purchase price of $11~~USA.47 per share. RBF Capital, LLC intends to finance the proposed acquisition with internal cash. RBF Capital, LLC is prepared to immediately negotiate a confidentiality agreement, commence due diligence and begin negotiation of definitive documentation for a transaction. RBF Capital, LLC is open to a co-investment with the Stern Investor Group as part of their buyout proposal, if the members of the Stern family wish to retain their equity in the Company. The RBF Capital Proposal does not purport to be complete and RBF Capital, LLC reserves the right to modify the RBF Capital Proposal in any way, to extend or discontinue discussions regarding the same, or to withdraw the RBF Capital Proposal at any time. RBF Capital, LLC may, directly or indirectly, take such additional steps from time to time as it may deem appropriate to further the RBF Capital Proposal as may be modified from time to time, including, without limitation, (a) engaging in discussions regarding the same with the Company, other shareholders advisors, and other relevant parties, and (b) entering into other agreements, arrangements and understanding as may be appropriate in connection with its RBF Capital Proposal, as may be modified from time to time. The Special Committee is evaluating the RBF Capital Proposal.

~~During~~The Merger is expected to close in the ~~three~~Company’s fourth fiscal quarter of 2020 and ~~six~~is ~~months~~subject ~~ended~~to ~~March~~the ~~31,~~satisfaction ~~2020,~~of customary closing conditions as well as the approval by the Company’s ~~incurred~~stockholders ~~fees~~other ~~and~~than ~~expenses~~the inStern ~~connection~~Group. ~~with~~The Board recommends that Company’s stockholders vote to adopt and approve the Merger ofAgreement. ~~$531~~Upon closing,~~000~~ the Company will become a privately held company and ~~$785,000,~~as ~~respectively~~such, ~~included~~the inCompany’s ~~general~~shares ~~and~~of ~~administrative~~common ~~expenses~~stock will no longer be listed or traded on the ~~accompanying~~Nasdaq ~~consolidated~~Global ~~statement~~Select ~~of operations~~Market.

10During the three and nine months ended June 30, 2020, the Company incurred fees and expenses in connection with the Merger of $668,000 and $1,453,000, respectively, included in general and administrative expenses on the accompanying consolidated statement of operations.

~~Table~~Risks ofand ~~Contents~~Uncertainties

~~ASTA~~Current ~~FUNDING~~economic uncertainty brought about as a result of the coronavirus 2019 (“COVID-19”) global pandemic may adversely impact the results of operations and liquidity of the Company overall and its business units to varying degrees over the near and longer term, ~~INC.~~particularly ~~AND~~if ~~SUBSIDIARIES~~the economic effects of the pandemic worsen or persist for an extended period of time.

~~NOTES~~A TOcontributing ~~CONDENSED~~factor ~~CONSOLIDATED~~to ~~FINANCIAL~~this ~~STATEMENTS~~expected near-term impact is that the COVID-19 pandemic has significantly impacted the ability of many consumers to pay their charged-off consumer receivable balances. In addition, the world-wide effect of this pandemic has been to drastically reduce employment both in the U.S. and abroad, and because employment is the greatest predictor of a consumer debtor to fulfill his or her obligations, diminished cash flows are probable in this segment. Our Personal Injury claims business relies on the adjudication of personal injury claims for which we purchase an interest in 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. Most courthouses have temporarily closed and lawsuits are not being adjudicated. It is unclear as to when there will be a full reopening of the court system, and, as such, many cases will be held in abeyance as part of an already long-standing backlog.

~~(Unaudited)~~Through June 30, 2020, our consumer receivables segment has experienced a downturn in cash collections attributable to consumer delays in making payments on their outstanding debts. Management attributes these delays to circumstances caused by COVID-19. Through June 30, 2020, our Personal Injury segment has not experienced noticeable delays in the adjudication of claims despite the fact that most courthouses have been temporarily closed. However, we have experienced customer payment delays due to COVID-19 impacts in our Peru operations.

~~Note~~While ~~2—Business~~it is premature to quantify the impact of the evolving effects of COVID-19 and ~~Basis~~the effectiveness of ~~Presentation~~measures ~~(Continued)~~ taken by global governments to mitigate the pandemic and its economic impact, we expect COVID-19 will negatively impact the Company’s results of operations and its cash flows across both the consumer receivable and personal injury claim segments. The nature, extent and duration of the impact to the Company’s businesses will depend on implications to the general economic and financial markets, changes in economic variables, such as the availability of consumer credit, the ability of consumers to pay amounts owed to us; the effect on the rate of unemployment; the number and size of personal bankruptcy filings; the levels of consumer confidence and consumer debt; investor sentiment.; and any closures to our foreign offices. Additionally, government actions in response to the pandemic may hinder our collection activities or result in increased expenses.

~~Risks~~Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, and ~~Uncertainties~~ workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for fiscal year 2020.

~~Current~~Concentration ~~economic uncertainty brought about as a result~~ of ~~the~~Credit ~~coronavirus~~Risk ~~2019~~– ~~(“COVID-19”)~~Cash ~~global pandemic may adversely impact the results of operations~~ and ~~liquidity~~cash ofequivalents ~~the Company overall and its business units to varying degrees over the near and longer term, particularly if the economic effects of the pandemic worsen or persist for an extended period of time.~~

AThe ~~contributing~~Company ~~factor~~considers toall ~~this~~highly ~~expected~~liquid ~~near-term~~investments ~~impact~~with isa ~~that~~maturity ~~the~~date ~~COVID-19 pandemic has significantly impacted the ability~~ of ~~many~~three ~~consumers~~months to pay their charged-off consumer receivable balances. In addition, the world-wide effect of this pandemic has been to drastically reduce employment both in the U.S. and abroad, and because employment is the greatest predictor of a consumer debtor to fulfill his or ~~her~~less ~~obligations,~~at ~~diminished cash flows are probable in this segment. Our Personal Injury claims business relies on~~ the ~~adjudication~~date of ~~personal injury claims for which we~~ purchase ~~an interest in 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. Most courthouses have temporarily closed and lawsuits are not being adjudicated. It is unclear as to when there will be acash ~~full reopening of the court system, and, as such, many cases will be held in abeyance as part of an already long-standing backlog~~equivalents.

~~While~~Cash itbalances isare ~~premature~~maintained toat ~~quantify~~various ~~the~~depository ~~impact~~institutions ~~of the evolving effects of COVID-19~~ and ~~the~~are ~~effectiveness~~insured ~~of measures taken~~ by ~~global governments to mitigate~~ the ~~pandemic~~Federal ~~and~~Deposit ~~its~~Insurance ~~economic~~Corporation ~~impact,~~(“FDIC”). weThe ~~expect COVID-19 will negatively impact the~~ Company’s ~~results~~had ~~of operations and its~~ cash ~~flows~~balances ~~across~~with ~~both~~two ~~the~~banks ~~consumer~~at ~~receivable~~June ~~and personal injury claim segments. The nature~~30, ~~extent~~ ~~and~~2020 ~~duration~~that ofeach ~~the~~exceeded ~~impact to~~ the ~~Company’s~~balance ~~businesses~~insured ~~will~~by ~~depend on implications to~~ the ~~general~~ ~~economic~~FDIC ~~and~~by ~~financial~~approximately ~~markets,~~$0.6 ~~changes~~million. ~~in economic variables~~Additionally, ~~such~~three asforeign ~~the~~banks ~~availability~~with ofan ~~consumer~~aggregate ~~credit,~~$1.7 ~~the~~million ~~ability~~in ofcash ~~consumers~~balances toare ~~pay~~not ~~amounts~~FDIC ~~owed~~insured. toThe ~~us;~~Company ~~the~~does ~~effect~~not onbelieve ~~the~~it ~~housing~~is ~~market;~~exposed ~~the~~to ~~rate of unemployment; the number and size of personal bankruptcy filings;the effect on energy costs; the levels of consumer confidence and consumer debt; investor sentiment; and~~ any ~~closures~~significant tocredit ~~our~~risk ~~offices.~~due ~~Additionally, government actions in response~~ to ~~the~~concentration ~~pandemic~~of ~~may hinder our collection activities or result in increased expenses~~cash.

~~Concentration~~Table of ~~Credit Risk – Cash and cash equivalents~~ Contents

~~The~~ASTA ~~Company~~FUNDING, ~~considers~~INC. ~~all~~AND ~~highly liquid investments with a maturity date of three months or less at the date of purchase to be cash equivalents.~~ SUBSIDIARIES

~~Cash~~NOTES ~~balances~~TO ~~are~~CONDENSED ~~maintained~~CONSOLIDATED atFINANCIAL various depository institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had a cash balance with one bank at March 31, 2020 that exceeded the balance insured by the FDIC by approximately $5.3 million. Additionally, three foreign banks with an aggregate $2.3 million balances are not FDIC insured. The Company does not believe it is exposed to any significant credit risk due to concentration of cash. STATEMENTS

~~Investments in Equity Securities~~ (Unaudited)

~~All~~Note ~~equity~~1—Business ~~investments~~and inBasis ~~nonconsolidated entities are measured at fair value with changes recognized in earnings, except for those accounted for using the equity method~~ of ~~accounting.~~Presentation ~~Changes in the fair value of equity securities are included in other income, net on the condensed consolidated statement of operations.~~(Continued)

~~Available-for-Sale~~Investments ~~Debt~~in Equity Securities

~~Debt~~All equity investments ~~that~~in ~~the~~nonconsolidated ~~Company~~entities ~~intends~~are tomeasured ~~hold~~at ~~for~~fair anvalue ~~indefinite~~with ~~period~~changes ofrecognized ~~time~~in earnings, ~~but~~except ~~not~~for ~~necessarily~~those toaccounted ~~maturity,~~for ~~are~~using ~~classified~~the asequity ~~available-for-sale~~method ~~debt~~of ~~securities~~accounting. ~~and~~Changes ~~are~~in ~~carried~~the at fair value. ~~Unrealized~~of ~~gains~~equity ~~and losses on available-for-sale debt~~ securities are ~~determined~~included ~~using~~in ~~the~~other ~~specific-identification~~income, ~~method.~~net ~~Unrealized~~on ~~gains/losses~~the ~~are~~condensed ~~recorded~~consolidated instatement ~~other~~of ~~comprehensive income (loss)~~operations.

~~Declines in the fair value of individual available~~Available-for-~~sale~~Sale ~~debt~~Debt securities below their respective costs that are other than temporary will result in write-downs of the individual securities to their fair value. Factors affecting the determination of whether an other-than-temporary impairment has occurred include: a downgrading of the security by a rating agency, a significant deterioration in the financial condition of the issuer, or that management would not have the ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value. Securities

~~Personal~~Debt ~~Injury~~investments ~~Claim~~that ~~Advances~~the Company intends to hold for an indefinite period of time, but not necessarily to maturity, are classified as available-for-sale debt securities and ~~Impairments~~are carried at fair value. Unrealized gains and losses on available-for-sale debt securities are determined using the specific-identification method. Unrealized gains/losses are recorded in other comprehensive income (loss).

~~The~~Declines ~~Company accounts for its investments~~ in ~~personal~~the ~~injury~~fair ~~claims~~value ~~at an agreed upon fee, in anticipation~~ of aindividual ~~future~~available-for-sale ~~settlement.~~debt ~~Purchased~~securities ~~personal~~below ~~injury~~their ~~claim~~respective ~~advances~~costs ~~consists~~that ofare ~~the~~other ~~right~~than totemporary ~~receive~~will ~~from~~result ain ~~claimant~~write-downs ~~part~~ of the ~~proceeds~~individual orsecurities ~~recoveries which such claimant receives by reason of a settlement, judgment or reward with respect~~ to ~~such~~their ~~claimant’s~~fair ~~claim~~value. ~~Open~~Factors ~~case~~affecting ~~revenue is estimated, recognized and accrued based on~~ the ~~expected~~determination ~~realization~~of ~~and~~whether ~~underwriting~~an ~~guidelines~~other-than-temporary ~~and~~impairment ~~facts~~has ~~and~~occurred ~~circumstances~~include: ~~for~~a ~~each~~downgrading ~~individual~~of ~~case.~~the ~~These~~security ~~personal~~by ~~injury~~a ~~claims~~rating ~~are~~agency, ~~non-recourse. When~~ a ~~case~~significant isdeterioration ~~closed~~in ~~and~~ the ~~cash~~financial iscondition ~~received~~of ~~for~~ the ~~advance provided to a claimant~~issuer, ~~revenue~~or isthat ~~recognized~~management ~~based~~would ~~upon~~not have the ~~contractually~~ability ~~agreed~~to ~~upon~~hold ~~fee,~~a ~~and,~~security iffor ~~applicable,~~a ~~adjusted~~period ~~for~~of ~~any~~time ~~changes~~sufficient ~~due~~ to aallow ~~settled~~for ~~amount~~any ~~and~~anticipated ~~fees~~recovery ~~charged~~in tofair ~~the claimant~~value.

~~Management~~ Personal ~~assesses~~Injury ~~the~~Claim ~~quality~~Advances 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 collections of the fee income. 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 on fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection of its initially funded cases as well as its fee income.Impairments

11The Company accounts for its investments in personal injury claims at an agreed upon fee in anticipation of a future settlement. Purchased personal injury claim advances consists of the right to receive from a claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or reward with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractually agreed upon fee, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant.

~~Table~~Management assesses the quality of ~~Contents~~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 collections of the fee income. 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 of fee income and establishes reserves on fee income consistent with the historically experienced collection rates. Management regularly analyzes and updates the historical collection of its initially funded cases as well as its fee income.

~~ASTA~~ Income ~~FUNDING,~~Recognition ~~INC.~~- ~~AND~~Consumer ~~SUBSIDIARIES~~Receivables

~~NOTES~~The TOCompany ~~CONDENSED~~accounts ~~CONSOLIDATED~~for ~~FINANCIAL~~certain ~~STATEMENTS~~of its investments in consumer receivables using the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 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 (~~Unaudited~~unless replaced by the seller) or removed from the pool (unless sold or returned to the seller).

~~Note 2—Business and Basis of Presentation (Continued)~~ 11

~~Income~~Table ~~Recognition~~of ~~- Consumer Receivables~~ Contents

~~The~~ASTA ~~Company accounts for certain of its investments in consumer receivables using the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310~~FUNDING, ~~Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310”)~~INC. ~~Under~~AND 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.SUBSIDIARIES

~~Under~~NOTES ~~the~~TO ~~guidance~~CONDENSED ofCONSOLIDATED ~~ASC~~FINANCIAL 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).STATEMENTS

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~~Unaudited) ~~while still generating cash collections. At such time, all cash collections are recognized as revenue when received.~~

~~Impairments~~Note -1—Business ~~Consumer~~and ~~Receivables~~ Basis of Presentation (Continued)

The Company ~~accounts~~uses ~~for~~the ~~its~~cost ~~impairments~~recovery inmethod ~~accordance~~when ~~with~~collections ~~ASC 310, which provides guidance~~ on ~~how~~a toparticular ~~account~~pool ~~for~~of ~~differences~~accounts ~~between~~cannot ~~contractual~~be ~~and~~reasonably ~~expected~~predicted. ~~cash~~Under ~~flows~~the ~~from~~cost anrecovery ~~investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable~~method, atno ~~least in part, to credit quality. The recognition of~~ income ~~under ASC 310~~ is ~~dependent~~recognized onuntil the ~~Company~~cost ~~having the ability to develop reasonable expectations~~ of ~~both~~ the ~~timing~~portfolio ~~and~~has ~~amount~~been offully ~~cash flows to be collected~~recovered. InA ~~the~~pool ~~event~~can ~~the~~become ~~Company~~fully ~~cannot~~amortized ~~develop~~(zero acarrying ~~reasonable~~balance ~~expectation~~on ~~as to both~~ the ~~timing~~balance ~~and~~sheet) ~~amount~~while ofstill generating cash ~~flows~~collections. ~~expected~~At tosuch ~~be collected~~time, ~~ASC~~all ~~310~~cash ~~permits~~collections ~~the~~are ~~change~~recognized toas ~~the~~revenue ~~cost~~when ~~recovery method~~received. ~~The Company will recognize income only after it has recovered its carrying value.~~

If Impairments ~~collection~~- ~~projections~~Consumer 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. The Company believes it has significant experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the amount actually owed by underlying customers. The Company invests in these portfolios only after both qualitative and quantitative analyses of the underlying receivables are performed and a calculated purchase price is paid so that it believes its estimated cash flow offers an adequate return on acquisition costs after servicing expenses. Additionally, when considering larger portfolio purchases of accounts, or portfolios from issuers with whom the Company has limited experience, it has the added benefit of soliciting its third party collection agencies and attorneys for their input on liquidation rates and, at times, incorporates such input into the estimates it uses for its expected cash flows, and the Company’s ability to recover their cost basis.Receivables

~~Income~~The ~~Recognition~~Company -accounts ~~Social~~for ~~Security~~its ~~Disability~~impairments ~~Advocacy~~ 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.

InIf ~~accordance~~collection ~~with~~projections ~~FASB~~indicate ~~ASC~~the ~~606,~~carrying ~~Revenue~~value ~~from~~will ~~Contracts~~not ~~with~~be ~~Customers~~recovered, an impairment is required. The impairment will be equal to the ~~Company~~difference ~~recognizes~~between ~~disability~~the ~~fee~~carrying ~~income~~value ~~for~~at ~~GAR~~the ~~Disability~~time ~~Advocates~~of the forecast and ~~Five~~the ~~Star~~corresponding ~~when~~estimated ~~disability~~remaining ~~claimant’s~~future ~~cases~~collections. ~~close,~~The ~~when~~Company ~~cash~~believes isit ~~received~~has orsignificant ~~when~~experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the amount actually owed by underlying customers. The Company ~~receives~~invests ain ~~notice~~these ofportfolios ~~award~~only ~~from~~after ~~the~~both ~~Social~~qualitative ~~Security~~and ~~Administration~~quantitative ~~(“SSA”)~~analyses orof the ~~Department~~underlying ofreceivables ~~Veterans~~are ~~Affairs~~performed and a calculated purchase price is paid so that ~~stipulates~~it ~~the~~believes ~~amount~~its ofestimated ~~fee~~cash ~~approved~~flow byoffers ~~the~~an ~~SSA~~adequate toreturn beon ~~paid~~acquisition tocosts ~~the~~after ~~Company~~servicing expenses. ~~The~~Additionally, ~~Company~~when ~~establishes~~considering alarger ~~reserve~~portfolio ~~for~~purchases ~~the~~of ~~differentials~~accounts, inor ~~amounts~~portfolios ~~awarded~~from byissuers with whom the ~~SSA~~Company ~~compared~~has tolimited experience, it has the ~~actual~~added ~~amounts~~benefit ~~received~~of bysoliciting ~~the~~its ~~Company.~~third ~~Fees~~party ~~paid~~collection toagencies ~~the~~and ~~Company~~attorneys ~~are~~for ~~withheld~~their byinput ~~the~~on ~~SSA~~liquidation ~~against~~rates and, at times, incorporates such input into the ~~claimant's~~estimates ~~disability~~it ~~claim~~uses ~~award,~~for ~~and~~its ~~are~~expected ~~remitted~~cash ~~directly~~flows, toand the Company’s ~~from~~ability ~~the~~to ~~SSA~~recover their cost basis.

~~Commissions~~ Income ~~and~~Recognition ~~fees~~ - Social Security Disability Advocacy

~~Commissions~~In ~~and~~accordance ~~fees~~with ~~are~~FASB ASC 606, Revenue from Contracts with Customers, the ~~contractual~~Company ~~commissions~~recognizes ~~earned~~disability byfee ~~third~~income ~~party~~for ~~collection~~GAR ~~agencies~~Disability Advocates and ~~attorneys~~Five Star when disability claimant’s cases close, ~~and~~when ~~direct~~cash ~~costs~~is ~~associated~~received ~~with~~or when the ~~collection~~Company ~~effort,~~receives ~~generally~~a ~~court~~notice ~~costs~~of ~~and~~award ~~asset~~from ~~searches~~the Social Security Administration (“SSA”) or the Department of Veterans Affairs that stipulates the amount of fee approved by the SSA to be paid to the Company. The Company ~~utilizes~~establishes ~~third~~a ~~party~~reserve ~~collection~~for ~~agencies~~the differentials in amounts awarded by the SSA compared to the actual amounts received by the Company. Fees paid to the Company are withheld by the SSA against the claimant's disability claim award, and ~~attorney~~are ~~networks~~remitted directly to the Company from the SSA.

~~Income~~ Commissions ~~taxes~~ and fees

~~Deferred~~Commissions ~~federal~~ and ~~state~~fees ~~taxes~~are ~~arise~~the ~~from~~contractual ~~(i) recognition~~commissions ofearned ~~finance~~by ~~income~~third ~~collected~~party ~~for~~collection ~~tax~~agencies ~~purposes~~and attorneys, ~~but~~and ~~not~~direct ~~yet~~costs ~~recognized~~associated ~~for~~with ~~financial~~the ~~reporting;~~collection ~~(ii) provision for impairments/credit losses~~effort, ~~all~~generally ~~resulting~~court incosts ~~timing differences between financial accounting~~ and ~~tax~~asset ~~reporting;~~searches. ~~(iii) amortization~~The ofCompany ~~intangibles~~utilizes ~~resulting~~third inparty ~~timing~~collection ~~differences~~agencies ~~between financial accounting~~ and ~~tax~~attorney ~~reporting; (iv) stock based compensation; and (v) partnership investments~~networks.

12 Income taxes

~~Table~~Deferred federal and state taxes arise from (i) recognition of ~~Contents~~finance income collected for tax purposes, but not yet recognized for financial reporting; (ii) provision for impairments/credit losses, all resulting in timing differences between financial accounting and tax reporting; (iii) amortization of intangibles resulting in timing differences between financial accounting and tax reporting; (iv) stock based compensation; and (v) partnership investments.

~~ASTA~~ Fair ~~FUNDING,~~Value ~~INC. AND SUBSIDIARIES~~Hierarchy

~~NOTES~~FASB TOASC ~~CONDENSED~~825, ~~CONSOLIDATED~~Financial ~~FINANCIAL~~Instruments, ~~STATEMENTS~~(“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.

~~(Unaudited)~~12

~~Note~~Table ~~2—Business and Basis~~ of ~~Presentation (Continued)~~ Contents

~~Fair~~ASTA ~~Value~~FUNDING, ~~Hierarchy~~ INC. AND SUBSIDIARIES

~~FASB~~NOTES ~~ASC~~TO ~~825,~~CONDENSED ~~Financial~~CONSOLIDATED ~~Instruments,~~FINANCIAL (“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.STATEMENTS

The Company records its available-for-sale debt securities and investments in equity securities at estimated fair value on a recurring basis. The accompanying condensed consolidated financial statements include estimated fair value information regarding its available-for-sale debt securities and investments in equity securities as of March 31, 2020, as required by FASB ASC 820, Fair Value Measurements and Disclosures (~~“ASC 820”~~Unaudited). 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~~Note 1—Business -and ~~Quoted~~Basis ~~prices~~of Presentation (~~unadjusted~~Continued) ~~in active markets for identical assets or liabilities that the Company has the ability to assess at the measurement date.~~

~~Level~~The 2Company records its available-for-sale ~~Observable~~debt ~~inputs~~securities ~~other~~and ~~than~~investments ~~Level~~in 1equity ~~prices,~~securities ~~such~~at asestimated ~~quoted~~fair ~~prices~~value on a recurring basis. The accompanying condensed consolidated financial statements include estimated fair value information regarding its available-for-sale ~~similar~~debt ~~assets~~securities orand ~~liabilities~~investments in ~~active~~equity ~~markets;~~securities ~~quoted~~as ~~prices~~of inMarch ~~markets~~31, ~~that~~2020, ~~are~~as ~~not~~required ~~active~~by ~~for~~FASB ~~identical~~ASC or820, ~~similar~~Fair ~~assets~~Value orMeasurements ~~liabilities;~~and orDisclosures ~~other~~(“ASC ~~inputs~~820”). ASC 820 defines fair value as the price that ~~are~~would ~~observable~~be received to sell an asset or ~~can~~paid beto ~~corroborated~~transfer bya ~~observable~~liability (an exit price) in an orderly transaction between market ~~data~~participants ~~for~~on ~~substantially~~the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the ~~full~~use ~~term~~of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s level within the ~~asset~~fair orvalue ~~liability~~hierarchy is based on the lowest level of input significant to the fair value measurement.

Level 31 - ~~Unobservable~~Quoted ~~inputs~~prices ~~that~~(unadjusted) ~~are~~in ~~supported~~active bymarkets ~~little~~for oridentical ~~no market activity and significant to the fair value of the~~ assets or liabilities that ~~are~~the ~~developed~~Company ~~using~~has the ~~reporting~~ability ~~entities’~~to ~~estimates~~assess ~~and~~at ~~assumptions,~~the ~~which reflect those that market participants would use~~measurementdate.

~~ASC~~Level ~~825~~2 ~~requires~~- ~~disclosure~~Observable ofinputs ~~fair~~other ~~value~~than ~~information~~Level ~~about~~1 ~~financial instruments~~prices, ~~whether~~such oras ~~not~~quoted ~~recognized~~prices onfor ~~the~~similar ~~balance~~assets ~~sheet,~~or ~~for~~liabilities ~~which~~in itactive ismarkets; ~~practicable~~quoted toprices ~~estimate~~in markets that ~~value. Because there~~ are anot ~~limited~~active ~~number of market participants~~ for ~~certain~~identical ofor ~~the~~similar ~~Company’s~~ assets ~~and~~or liabilities,; ~~fair~~or ~~value estimates are based upon judgments regarding credit risk, investor expectation of economic conditions, normal cost of administration and~~ other ~~risk~~inputs ~~characteristics,~~that ~~including~~are ~~interest~~observable ~~rate~~or ~~and~~can ~~prepayment~~be ~~risk.~~corroborated ~~These~~by ~~estimates~~observable ~~are~~market ~~subjective~~data infor ~~nature~~substantially ~~and~~the ~~involve~~full ~~uncertainties~~term ~~and matters~~ of ~~judgment,~~the ~~which~~asset ~~significantly~~or ~~affect the estimates~~liability.

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

~~Adopted~~ASC ~~During~~825 requires disclosure of fair value information about financial instruments, whether or not recognized on the ~~Six~~balance ~~Months~~sheet, ~~Ended~~for ~~March~~which 31it is practicable to estimate that value. Because there are a limited number of market participants for certain of the Company’s assets and liabilities, ~~2020~~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.

InRecent ~~February~~Accounting 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. For a lease with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right-of-use asset and lease liability. Additionally, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option or not exercise an option to terminate the lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). ASU 2018-01 was issued to address concerns about the cost and complexity of complying with the transition provisions of ASU 2016-02. Additionally, in July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements, which provides an alternative transition method that permits an entity to use the effective date of ASU 2016-02 as the date of initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. The standard became effective in for fiscal years beginning after December 15, 2018 and interim periods within those years, and early adoption is permitted (see Note 8 – Right of Use Assets). Pronouncements

13Adopted During the Nine Months EndedJune 30, 2020

~~Table~~In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which requires lessees to recognize right-of-use ~~Contents~~assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. For a lease with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right-of-use asset and lease liability. Additionally, when measuring assets and liabilities arising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option or not exercise an option to terminate the lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). ASU 2018-01 was issued to address concerns about the cost and complexity of complying with the transition provisions of ASU 2016-02. Additionally, in July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements, which provides an alternative transition method that permits an entity to use the effective date of ASU 2016-02 as the date of initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. The standard became effective in for fiscal years beginning after December 15, 2018 and interim periods within those years, and early adoption is permitted (see Note 8 – Right of Use Assets).

~~ASTA~~The ~~FUNDING~~Company adopted the lease accounting standard using the modified retrospective transition option on adoption on October 1, ~~INC~~2019, which had an immaterial impact to the Company’s condensed consolidated balance sheet. ~~AND~~Upon ~~SUBSIDIARIES~~adoption, the Company recorded additional lease liabilities of approximately $636,000 attributable to the Company’s operating leases based on the present value of the remaining minimum lease payments with an increase to right-of-use assets of approximately $636,000. The Company used 3.5% as its incremental borrowing rate to calculate the net present value of its leases at October 1, 2019, based on the Company's estimated borrowing rate for a collateralized loan. The Company had no debt outstanding as of October 1, 2019.

~~NOTES~~In TOFebruary ~~CONDENSED~~2018, ~~CONSOLIDATED~~the ~~FINANCIAL~~FASB ~~STATEMENTS~~issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. ASU 2018-02 was effective for the Company's fiscal year beginning October 1, 2019, with early adoption permitted, and was applied in the period of adoption in which the effect of the change in the U.S. federal corporate income tax rate in the Act was recognized. The adoption of this accounting update did not have a material impact on the Company’s condensed consolidated financial statements.

~~(Unaudited)~~13

~~Note~~Table ~~2—Business and Basis~~ of ~~Presentation (Continued)~~Contents

~~Recent~~ASTA ~~Accounting~~FUNDING, ~~Pronouncements~~INC. ~~(continued)~~AND SUBSIDIARIES

~~The~~NOTES ~~Company~~TO ~~adopted~~CONDENSED ~~the~~CONSOLIDATED ~~lease~~FINANCIAL accounting standard using the modified retrospective transition option on adoption on October 1, 2019, which had an immaterial impact to the Company’s condensed consolidated balance sheet. Upon adoption, the Company recorded additional lease liabilities of approximately $636,000 attributable to the Company’s operating leases based on the present value of the remaining minimum lease payments with an increase to right-of-use assets of approximately $636,000. The Company used 3.5% as its incremental borrowing rate to calculate the net present value of its leases at October 1, 2019, based on the Company's estimated borrowing rate for a collateralized loan. The Company had no debt outstanding as of October 1, 2019.STATEMENTS

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (~~loss~~Unaudited) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. ASU 2018-02 was effective for the Company's fiscal year beginning October 1, 2019, with early adoption permitted, and was applied in the period of adoption in which the effect of the change in the U.S. federal corporate income tax rate in the Act was recognized. The adoption of this accounting update did not have a material impact on the Company’s condensed consolidated financial statements.

~~Recent~~Note ~~Accounting~~1—Business ~~Pronouncements~~and ~~Not~~Basis ~~Yet~~of ~~Adopted~~Presentation (Continued)

InRecent ~~June~~Accounting ~~2016,~~Pronouncements ~~the~~Not ~~FASB~~Yet 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, 2022. Upon adoption, the Company will accelerate the recording of its credit losses and is continuing to assess the impact on its consolidated financial statements.Adopted

In ~~January~~June ~~2017~~2016, the FASB issued ASU ~~2017~~2016-0413, ~~Intangibles~~Financial Instruments-Credit ~~Goodwill~~Losses ~~and Other~~ (Topic ~~350~~326): ~~Simplifying~~Measurement ~~the~~of ~~Test~~Credit ~~for~~Losses ~~Goodwill~~on ~~Impairment~~Financial Instruments. The ~~objective~~ASU ofrequires ~~this~~an ~~update~~organization is to ~~simplify~~measure all expected credit losses for financial assets held at the ~~subsequent~~reporting ~~measurement~~date ofbased ~~goodwill~~on historical experience, bycurrent ~~eliminating~~conditions, ~~step~~and 2reasonable ~~from~~and supportable forecasts. Additionally, the ~~goodwill~~ASU ~~impairment~~amends ~~test~~the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ~~The~~For ~~amendments~~the inCompany, this update ~~are~~will be effective for interim periods and annual periods beginning after December 15, ~~2019,~~2022. ~~and~~Upon ~~interim~~adoption, ~~periods~~the ~~within~~Company ~~those~~will ~~fiscal~~accelerate ~~years.~~the ~~The~~recording ~~Company~~of ~~does~~its ~~not~~credit ~~believe~~losses ~~this~~and ~~update~~is ~~will~~continuing ~~have~~to aassess ~~material~~the impact on its consolidated financial statements.

In ~~August~~January ~~2018~~2017, the FASB issued ASU ~~No.~~2017-04 ~~2018~~Intangibles -~~13,~~ ~~Fair~~Goodwill ~~Value~~and ~~Measurement~~Other (Topic ~~820~~350): ~~Disclosure~~Simplifying ~~Framework - Changes to~~ the ~~Disclosure~~Test ~~Requirements~~ for ~~Fair~~Goodwill ~~Value Measurement~~Impairment. ~~This ASU modifies the disclosure requirements on fair value measurements.~~ The ~~ASU~~objective ~~removes~~of ~~the~~this ~~requirement~~update is to ~~disclose:~~simplify the ~~amount~~subsequent measurement of ~~and~~goodwill, ~~reasons~~by ~~for~~eliminating ~~transfers~~step ~~between Level 1 and Level~~ 2 offrom the ~~fair~~goodwill ~~value~~impairment ~~hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements~~test. The ~~ASU~~amendments ~~requires disclosure of changes~~ in ~~unrealized~~this ~~gains~~update ~~and~~are ~~losses~~effective for ~~the~~annual ~~period~~periods ~~included~~beginning inafter ~~other~~December ~~comprehensive~~15, income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for fiscal years2019, and interim periods within those fiscal years~~, beginning after December 15, 2019~~. The Company isdoes ~~currently~~not ~~evaluating~~believe ~~the impact~~ this ~~guidance~~update will have a material impact on its consolidated financial statements.

In ~~December~~August ~~2019~~2018, the FASB issued ASU ~~2019~~No. 2018-1213, ~~Income~~ ~~Taxes~~Fair Value Measurement (Topic ~~740~~820): ~~Simplifying~~Disclosure ~~the~~Framework ~~Accounting~~- ~~for~~Changes ~~Income~~to ~~Taxes,~~the ~~which~~Disclosure isRequirements ~~intended~~for toFair ~~simplify~~Value ~~various~~Measurement. ~~aspects~~This ~~related~~ASU tomodifies ~~accounting~~the ~~for~~disclosure ~~income~~requirements ~~taxes~~on fair value measurements. The ASU ~~2019-12~~ removes ~~certain~~the ~~exceptions~~requirement to disclose: the ~~general~~amount ~~principles~~of inand ~~Topic~~reasons ~~740~~for transfers between Level 1 and ~~also~~Level ~~clarifies~~2 of the fair value hierarchy; the policy for timing of transfers between levels; and ~~amends~~the ~~existing~~valuation ~~guidance~~processes tofor ~~improve~~Level ~~consistent~~3 ~~application~~fair value measurements. The ASU ~~2019-12~~requires isdisclosure ~~effective~~of changes in unrealized gains and losses for the ~~Company~~period ~~beginning~~included in ~~fiscal~~other ~~2022.~~comprehensive ~~The~~income ~~Company~~(loss) isfor ~~evaluating~~recurring Level 3 fair value measurements held at the ~~impact~~end of the ~~adoption~~reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU ~~2019-12~~is oneffective ~~its~~for ~~financial~~fiscal ~~statements~~years, ~~but~~and ~~does~~interim ~~not~~periods ~~expect~~within ~~such~~those ~~adoption~~fiscal toyears, ~~have~~beginning aafter ~~material~~December 15, 2019. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

14In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2022. The Company is evaluating the impact of the adoption of ASU 2019-12 on its financial statements, but does not expect such adoption to have a material impact.

~~Table~~Note of2—Investments ~~Contents~~in Debt and Equity Securities

~~ASTA~~Investments ~~FUNDING,~~in ~~INC.~~Equity ~~AND SUBSIDIARIES~~Securities

~~NOTES~~Investments TOin ~~CONDENSED~~equity ~~CONSOLIDATED~~securities ~~FINANCIAL~~at ~~STATEMENTS~~June 30, 2020 and September 30, 2019, consist of mutual funds valued at $26.6 million and $8.1 million, respectively.

~~(Unaudited)~~ Net gains and losses recognized on investments in equity securities for the three and nine months ended June 30, 2020 and 2019 are as follows:

Note 3—Investments in Debt and Equity Securities

Three

Nine

Months

Ended

June 30,

June 30,

2020

2019

2020

2019

Unrealized gains and (losses) recognized during the reporting period on equity securities still held at the reporting date

228,000

32,000

67,000

53,000

~~Investments in Equity Securities~~ 14

~~Investments~~Table of ~~equity securities at March 31, 2020 and September 30, 2019, consist of mutual funds valued at $8.1 million and $8.1 million, respectively.~~Contents

~~Net~~ASTA ~~gains and losses recognized on investments in equity securities for the three and six months ended March 31~~FUNDING, ~~2020~~INC. ~~and~~AND ~~2019 are as follows:~~SUBSIDIARIES

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019		Six Months Ended March 31, 2020			Six Months Ended March 31, 2019
Net gains and (losses) recognized during the period on equity securities	$	(172,000	)	$	50,000	$	(162,000	)	$	21,000
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		—					—
Unrealized gains and (losses) recognized during the reporting period on equity securities still held at the reporting date	$	(172,000	)	$	50,000	$	(162,000	)	$	21,000

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Available for Sale Debt Securities~~(Unaudited)

~~Available~~Note ~~for~~2—Investments ~~sale~~in ~~debt~~Debt ~~securities at March 31, 2020~~ and ~~September 30,~~Equity ~~2019, consist of the following:~~Securities(Continued)

March 31, 2020		Amortized Cost				Unrealized Gains				Unrealized Losses				Fair Value
Available for sale debt securities		$	55,488,000			$	204,000			$	—			$	55,692,000

Available for Sale Debt Securities

September 30, 2019		Amortized Cost				Unrealized Gains				Unrealized Losses				Fair Value
Available for sale debt securities		$	55,946,000			$	178,000			$	1,000			$	56,123,000

Available for sale debt securities at June 30, 2020 and September 30, 2019, consist of the following:

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

	Amortized		Unrealized		Unrealized
June 30, 2020	Cost		Gains		Losses		Fair Value
Available for sale debt securities	$	43,981,000	$	23,000	$	3,000	$	44,001,000

Note 4—Consumer Receivables Acquired for Liquidation

	Amortized		Unrealized		Unrealized
September 30, 2019	Cost		Gains		Losses		Fair Value
Available for sale debt securities	$	55,946,000	$	178,000	$	1,000	$	56,123,000

~~Accounts~~Unrealized ~~acquired~~holding gains and losses on available for ~~liquidation~~sale debt securities are ~~stated~~included atin ~~cost~~other ~~and~~comprehensive ~~consist~~income ~~primarily~~(loss) ofwithin ~~defaulted~~stockholders’ ~~consumer~~equity. ~~loans~~Realized ofgains ~~individuals~~(losses) ~~primarily,~~on ~~throughout~~available ~~the~~for ~~United~~sale ~~States~~debt securities are included in other income (loss) and, ~~South~~when ~~America~~applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

15Note 3—Consumer Receivables Acquired for Liquidation

~~Table~~Accounts acquired for liquidation are stated at cost and consist primarily of ~~Contents~~defaulted consumer loans of individuals primarily, throughout the United States and South America.

~~ASTA~~The ~~FUNDING,~~following ~~INC.~~tables ~~AND~~summarize ~~SUBSIDIARIES~~the changes in the consolidated balance sheet account of consumer receivables acquired for liquidation during the following periods:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	For the Three Months Ended June 30,
	2020			2019
Balance, beginning of period	$	1,193,000		$	2,626,000

Net cash collections from collection of consumer receivables acquired for liquidation		(2,421,000	)		(4,112,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		—			—
Impairment		—			(100,000	)
Effect of foreign currency translation		(10,000	)		86,000
Finance income recognized		2,235,000			3,684,000
Balance, end of period	$	997,000		$	2,184,000
Finance income as a percentage of collections		92.3	%		89.6	%

(Unaudited)

	For the Nine Months Ended June 30,
	2020			2019
Balance, beginning of period	$	1,668,000		$	3,749,000

Net cash collections from collection of consumer receivables acquired for liquidation		(8,771,000	)		(12,026,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		—			—
Impairment		(23,000	)		(100,000	)
Effect of foreign currency translation		(52,000	)		(98,000	)
Finance income recognized		8,175,000			10,659,000
Balance, end of period	$	997,000		$	2,184,000
Finance income as a percentage of collections		93.2	%		88.6	%

~~Note~~During ~~4—Consumer~~the ~~Receivables~~three ~~Acquired~~and ~~for~~nine ~~Liquidation~~months ~~(Continued)~~ended June 30, 2020 and 2019 the Company did not purchase any new portfolios.

~~The following tables summarize the changes in the condensed consolidated balance sheet account of consumer receivables acquired for liquidation during the following periods:~~15

	For the Three Months Ended March 31,
	2020			2019
Balance, beginning of period	$	1,448,000		$	3,071,000
Net cash collections		(2,975,000	)		(3,889,000	)
Effect of foreign currency translation		(88,000	)		(37,000	)
Finance income recognized		2,808,000			3,481,000
Balance, end of period	$	1,193,000		$	2,626,000
Finance income as a percentage of collections		94.4	%		89.5	%

Table of Contents

	For the Six Months Ended March 31,
	2020			2019
Balance, beginning of year	$	1,668,000		$	3,749,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,350,000	)		(7,914,000	)
Impairment		(23,000	)
Effect of foreign currency translation		(42,000	)		(184,000	)
Finance income recognized		5,940,000			6,975,000
Balance, end of period	$	1,193,000		$	2,626,000
Finance income as a percentage of collections		93.5	%		88.1	%

ASTA FUNDING, INC. AND SUBSIDIARIES

~~During~~NOTES ~~the~~TO ~~three~~CONDENSED ~~and~~CONSOLIDATED ~~six~~FINANCIAL ~~months ended March 31, 2020 and 2019 the Company did not purchase any new portfolios.~~STATEMENTS

As of March 31, 2020, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $0.8 million and $0.2 million, respectively. The total amount of foreign consumer receivables acquired for liquidation was $1.0 million, or 81.7% of the $1.2 million in total consumer receivables held at March 31, 2020. Of the total consumer receivables held domestically and internationally 3 individual portfolios comprise 26.3%, 18.3% and 14.5% of the overall asset balance at March 31, 2020.(Unaudited)

AsNote ~~of September 30, 2019, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $1.1 million and $0.~~3—Consumer ~~million,~~Receivables ~~respectively.~~Acquired ~~The total amount of foreign consumer receivables acquired~~ for ~~liquidation~~Liquidation was $1.4 million, or 83.8% of the total consumer receivables held of $1.7 million at September 30, 2019. Of the total consumer receivables held domestically and internationally 4 individual portfolios comprise 23.9%, 16.2%, 14.1% and 11.0% of the overall asset balance at September 30, 2019.(Continued)

As of ~~March~~June 3130, 2020, ~~and~~the ~~September~~Company ~~30,~~held ~~2019,~~consumer 1receivables acquired for liquidation from Peru and Colombia of $0.1%7 million and $0.1 million, respectively.5% The total amount of ~~the~~internationally ~~Company's~~held ~~total~~consumer ~~assets~~receivables ~~were~~acquired ~~related~~for toliquidation ~~its~~was ~~international~~$0.8 ~~operations~~million, ~~respectively~~or 79.5% ~~For~~of the ~~three~~$1.0 ~~and~~million ~~six~~in ~~months~~total ~~ended~~consumer ~~March~~receivables 31held at June 30, 2020. ~~and~~Of ~~2019,~~the 5total consumer receivables four individual portfolios comprise 26.5%, ~~and 4~~20.95%, ~~respectively, and 5~~14.94% and 48.90%, ~~respectively,~~ of the ~~Company's~~overall ~~total~~asset ~~revenue~~balance ~~were~~at ~~related~~June to30, ~~its international operation~~2020.

AtAs ~~March 31, 2020, approximately 34%~~ of ~~the Company’s portfolio face value was serviced by five collection organizations. At~~ September 30, 2019, ~~approximately 28% of~~ the Company’s ~~portfolio~~held ~~face~~consumer ~~value~~receivables ~~was~~acquired ~~serviced~~for byliquidation ~~five~~from ~~collection~~Peru ~~organizations.~~and ~~The~~Colombia ~~Company~~of ~~has~~$1.1 ~~servicing~~million ~~agreements~~and in$0.3 ~~place with these five collection organizations~~million, asrespectively. ~~well~~The astotal ~~all~~amount of ~~the~~foreign ~~Company’s~~consumer ~~other~~receivables ~~third-party~~acquired ~~collection~~for ~~agencies~~liquidation ~~and~~was ~~attorneys~~$1.4 ~~that~~million, ~~cover~~or ~~standard~~83.8% ~~contingency fees and servicing~~ of the ~~accounts.~~total ~~While~~consumer ~~the~~receivables 5held ~~collection organizations represent only 34% and 28% as~~ of ~~March~~$1.7 ~~31,~~million ~~2020~~at ~~and~~ September 30, 2019,. ~~respectively,~~Of of the ~~Company’s~~total ~~portfolio~~consumer ~~face~~receivables ~~value,~~held itdomestically ~~does represent approximately 89%~~ and ~~86%~~internationally of4 ~~the~~individual ~~Company’s~~portfolios ~~portfolio~~comprise ~~face~~23.9%, ~~value~~16.2%, at14.1% ~~all third-party collection agencies~~ and ~~attorneys~~11.0% as of ~~March~~the ~~31,~~overall ~~2020~~asset ~~and~~balance at September 30, 2019~~, respectively~~.

16As of June 30, 2020, and September 30, 2019, 0.8% and 1.5% of the Company's total assets were related to its international operations, respectively. For the three and nine months ended June 30, 2020 and 2019, 6.2% and 3.9%, respectively, and 6.0% and 4.6%, respectively, of the Company's total revenue were related to its international operation.

~~Table~~At June 30, 2020, approximately 30% of ~~Contents~~the Company’s portfolio face value was serviced by five collection organizations. At September 30, 2019, approximately 28% of the Company’s portfolio face value was serviced by five collection organizations. The Company has servicing agreements in place with these five collection organizations, as well as all of the Company’s other third-party collection agencies and attorneys that cover standard contingency fees and servicing of the accounts. While the 5 collection organizations represent only 30% and 28% as of June 30, 2020 and September 30, 2019, respectively, of the Company’s portfolio face value, it does represent approximately 87% and 86% of the Company’s portfolio face value at all third-party collection agencies and attorneys as of June 30, 2020 and September 30, 2019, respectively.

~~ASTA~~The ~~FUNDING~~following table summarizes collections received by the Company’s third-party collection agencies and attorneys, ~~INC.~~less ~~AND~~commissions ~~SUBSIDIARIES~~and direct costs, for the three and nine months ended June 30, 2019 and 2018, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2020			2019			2020			2019
Gross collections (1)	$	4,565,000		$	7,680,000		$	16,818,000		$	23,262,000
Commissions and fees (2)		(2,144,000	)		(3,568,000	)		(8,047,000	)		(11,236,000	)
Net collections	$	2,421,000		$	4,112,000		$	8,771,000		$	12,026,000

(Unaudited)

(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 and skip tracing in connection with this portfolio purchase.

Note 4—~~Consumer~~Equity ~~Receivables~~Method ~~Acquired for Liquidation (Continued)~~ Investments

~~The~~Serlefin ~~following~~Peru ~~table~~is ~~summarizes~~a ~~collections~~joint ~~received~~venture byin which the Company’s ~~third-party~~has ~~collection~~a ~~agencies~~49% ~~and~~ownership ~~attorneys~~interest. 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, ~~less~~and ~~commissions~~the 51% shareholders collectively manage the operations of the business. Based on the Company's ownership and ~~direct~~voting ~~costs~~rights, the Company lacks requisite control of Serlefin Peru, and therefore accounts for its investment in Serlefin Peru under the ~~three~~equity ~~and~~method ~~six~~of ~~months~~accounting. ~~ended~~Under ~~March~~the 31joint venture agreement, ~~2020~~the ~~and~~Company ~~2019~~is entitled to a management fee from Serlefin Peru in connection with certain payments made to Serlefin Peru. In light of the novel coronavirus (“COVID-19”) pandemic, ~~respectively~~the Company agreed to delay the reimbursement of management fees due in April through December 2020.

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2020			2019			2020			2019
Gross collections (1)	$	5,701,000		$	7,362,000		$	12,251,000		$	15,582,000
Commissions and fees (2)		(2,726,000	)		(3,473,000	)		(5,901,000	)		(7,668,000	)
Net collections	$	2,975,000		$	3,889,000		$	6,350,000		$	7,914,000

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 $0.2 million and $0.2 million, and $0.9 million and $0.7 million in performance fees for the three and nine months ended June 30, 2020 and 2019, respectively. During June 2020, Serlefin Peru recapitalized $89,000 of loans due to the Company into equity in accordance with statutory requirements in Peru. Accordingly, the Company has reclassed $89,000 from other assets into equity method investment in its consolidated balance sheet at June 30, 2020. Further reclassifications of loans, as well as additional capital investments may be required to fund the ongoing operations of Serlefin Peru in the future.

(1)

Gross collections include collections from third party collection agencies and attorneys, collections from in-house efforts and collections represented by account sales.

(2)

~~Note~~Table ~~5—Equity~~of ~~Method Investments~~Contents

~~Serlefin~~ASTA Peru is a joint venture in which the Company has a 49% ownership interest. 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 ownershipFUNDING, ~~and the 51% shareholders collectively manage the operations of the business~~INC. ~~Based~~AND 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. Under the joint venture agreement, the Company is entitled to a management fee from Serlefin Peru in connection with certain payments made to Serlefin Peru. In light of the novel coronavirus (“COVID-19”) pandemic, the Company agreed to delay the reimbursement of management fees due in April and May 2020.SUBSIDIARIES

~~Additionally,~~NOTES ~~the~~TO ~~Company~~CONDENSED ~~and~~CONSOLIDATED ~~Serlefin~~FINANCIAL 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 $0.4 million and $0.2 million, and $0.7 million and $0.5 million in performance fees for the three and six months ended March 31, 2020 and 2019, respectively.STATEMENTS

The carrying value of the investment in Serlefin Peru was $223,000 and $280,000 as of March 31, 2020 and September 30, 2019, respectively. The cumulative net loss from our investment in Serlefin Peru from the date of the initial investment through March 31, 2020 was approximately $308,000, and was not significant to the Company's condensed consolidated statement of operations. The Company has determined that there is no impairment of this investment at March 31, 2020.(Unaudited)

Note 64—~~Personal~~Equity ~~Injury~~Method ~~Claims Funding~~ Investments(Continued)

~~Simia~~The operating results for Serlefin Peru were negatively impacted by COVID-19 during the three and ~~Sylvave~~nine months ended June 30, 2020. The carrying value of the investment in Serlefin Peru was $307,000 and $280,000 as of June 30, 2020 and September 30, 2019, respectively. The cumulative net loss from our investment in Serlefin Peru from the date of the initial investment through June 30, 2020 was approximately $311,000, and was not significant to the Company's condensed consolidated statement of operations. The Company has determined that there is no impairment of this investment at June 30, 2020.

AsNote of5—Personal ~~March~~Injury ~~31,~~Claims 2020, Simia had a personal injury claims portfolio of $1.0 million, and recognized revenue for the three and six months then ended of $55,000 and $71,000, respectively. As of September 30, 2019, Simia had a personal injury claims portfolio of $1.3 million, and recognized revenue of $15,000 and $29,000, respectively, for the three and six months ended March 31, 2019.Funding

AsSimia ~~of March 31, 2020, Sylvave had a personal injury claims portfolio of $2.4 million,~~ and ~~recognized revenue for the three and six months then ended of $94,000 and $440,000, respectively. As of September 30, 2019,~~ Sylvave ~~had a personal injury claims portfolio of $3.7 million, and recognized revenue of $441,000 and $1,140,000, respectively, for the three and six months ended March 31, 2019.~~

As of June 30, 2020, Simia had a personal injury claims portfolio of $0.6 million, and ~~Sylvave~~recognized ~~remain~~revenue infor ~~operation~~the tothree ~~continue~~and tonine ~~collect~~months onthen ~~their~~ended ~~outstanding~~of $97,000 and $168,000, respectively. As of September 30, 2019, Simia had a personal injury ~~claim~~claims ~~portfolios~~portfolio of $1.3 million, ~~but~~and ~~will~~recognized ~~not~~revenue beof ~~funding~~$31,000 ~~any~~and ~~new~~$60,000 ~~advances~~for tothe ~~claimants~~three and nine months ended June 30, 2019, respectively.

17As of June 30, 2020, Sylvave had a personal injury claims portfolio of $2.4 million, and recognized revenue for the three and nine months then ended of $128,000 and $568,000, respectively. As of September 30, 2019, Sylvave had a personal injury claims portfolio of $3.7 million. For the three and nine months ended June 30, 2019, Sylvave recognized revenue of $406,000 and $1,546,000, respectively.

~~Table~~Simia ofand ~~Contents~~Sylvave remain in operation to continue to collect on their outstanding personal injury claim portfolios, but will not be funding any new advances to claimants.

~~ASTA~~Arthur ~~FUNDING, INC. AND SUBSIDIARIES~~Funding

~~NOTES~~Arthur TOFunding ~~CONDENSED~~began ~~CONSOLIDATED~~funding ~~FINANCIAL~~advances ~~STATEMENTS~~on personal injury claims in May 2019. As of June 30, 2020, Arthur Funding had a personal injury claims portfolio of $0.6 million, and recognized revenue for the three and nine months then ended of $26,000 and $56,000, respectively. As of September 30, 2019, Arthur Funding had a personal injury claims portfolio of $0.2 million, and recognized revenue for the three and nine months ended June 30, 2019 of $2,000.

~~(Unaudited)~~ The following tables summarize the changes in the balance sheet account of personal injury claim portfolios held by Simia, Sylvave and Arthur Funding, net of reserves, for the following periods:

Note 6—Personal Injury Claims Funding (Continued)

	For the Three Months ended June 30,
	2020			2019
Balance, beginning of period	$	3,709,000		$	6,630,000
Personal claim advances		274,000			123,000
(Write offs) recoveries		201,000			248,000
Personal injury claims income		251,000			439,000
Personal injury claims receipts		(793,000	)		(1,531,000	)
Balance, end of period	$	3,642,000		$	5,909,000

Arthur Funding

	For the Nine Months ended June 30,
	2020			2019
Balance, beginning of period	$	5,190,000		$	10,745,000
Personal claim advances		390,000			123,000
(Write offs) recoveries		260,000			90,000
Personal injury claims income		792,000			1,608,000
Personal injury claims receipts		(2,990,000	)		(6,657,000	)
Balance, end of period	$	3,642,000		$	5,909,000

Arthur Funding began funding advances on personal injury claims in May 2019. As of March 31, 2020, Arthur Funding had a personal injury claims portfolio of $0.4 million, and recognized revenue for the three and six months then ended of $16,000 and $30,000, respectively. As of September 30, 2019, Arthur Funding had a personal injury claims portfolio of $0.2 million, and no revenue was recognized for the three and six months ended March 31, 2019. 17

~~The~~Table ~~following tables summarize the changes in the balance sheet account~~ of ~~personal injury claim portfolios held by Simia, Sylvave and Arthur Funding, net of reserves, for the following periods:~~ Contents

	For the Three Months ended March 31,
	2020			2019
Balance, beginning of period	$	4,533,000		$	8,813,000
Personal injury claim advances		67,000			—
(Write offs) recoveries		(243,000	)		45,000
Personal injury claims income		165,000			456,000
Personal injury claims receipts		(813,000	)		(2,684,000	)
Balance, end of period	$	3,709,000		$	6,630,000

ASTA FUNDING, INC. AND SUBSIDIARIES

	For the Six Months ended March 31,
	2020			2019
Balance, beginning of year	$	5,190,000		$	10,745,000
Personal claim advances		116,000			—
(Write offs) recoveries		60,000			(158,000	)
Personal injury claims income		541,000			1,169,000
Personal injury claims receipts		(2,198,000	)		(5,126,000	)
Balance, end of period	$	3,709,000		$	6,630,000

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recognized personal injury claims income of $0.2 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively, and $0.5 million and $1.2 million for the six months ended March 31, 2020 and 2019, respectively. The Company has recorded a net reserve against its investment in personal injury claims of $1.4 million as of March 31, 2020 and $1.2 million as of September 30, 2019. During the quarter and six months ended March 31, 2020, the Company incurred personal injury bad debt expense (~~recovery~~Unaudited) ~~of $243,000 and ($60,000), respectively, as compared with ($45,000) and $158,000 in the comparable periods of fiscal 2019, respectively.~~

Note 75—~~Non-Recourse~~Personal ~~Debt~~Injury Claims Funding (Continued)

~~Non-Recourse~~ The ~~Debt~~Company ~~–Bank~~recognized personal injury claims income of ~~Montreal~~$0.3 ~~(“BMO”)~~million and $0.4 million for the three months ended June 30, 2020 and 2019, respectively, and $0.8 million and $1.6 million for the nine months ended June 30, 2020 and 2019, respectively. The personal injury claims income for the three and nine months ended June 30, 2020 excludes broker fees of $9,000 for both periods. The Company has recorded a reserve on principle fundings in personal injury claims of $1.0 million as of June 30, 2020 and $1.2 million as of September 30, 2019. During the three and nine months ended June 30, 2020, the Company realized personal injury bad debt recoveries of $201,000 and $260,000, respectively, as compared with $248,000 and $90,000 in the comparable periods of fiscal 2019, respectively.

AsNote of6—Non-Recourse ~~March~~Debt 31, 2020 and September 30, 2019, the Company recorded a liability to BMO of approximately $96,000 and $22,000, respectively, which has been recorded in accounts payable and accrued expenses on the Company’s consolidated balance sheet. The funds were subsequently remitted to BMO on April 10, 2020 and October 10, 2019, respectively. The liability to BMO is recorded when actual collections are received.

18Non-Recourse Debt –Bank of Montreal (“BMO”)

~~Table~~As of ~~Contents~~June 30, 2020, and September 30, 2019, the Company recorded a liability to BMO of approximately $75,000 and $22,000, respectively, which has been recorded in accounts payable and accrued expenses on the Company’s consolidated balance sheet. The funds were subsequently remitted to BMO on July 10, 2020 and October 10, 2019, respectively. The liability to BMO is recorded when actual collections are received.

~~ASTA~~Note ~~FUNDING,~~7 ~~INC.~~—Right ~~AND~~of ~~SUBSIDIARIES~~Use Assets and Liabilities

~~NOTES~~Effective TOOctober ~~CONDENSED~~1, ~~CONSOLIDATED~~2019, ~~FINANCIAL~~the ~~STATEMENTS~~Company adopted ASU 2016-02, and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 affected the accounting treatment for operating lease agreements in which the Company is the lessee by recognizing lease assets and liabilities on the balance sheet. The Company leases the premises for two New Jersey office facilities under operating lease agreements expiring in various years through 2023. The Company is responsible to pay all insurance, utilities, maintenance and repairs on the office spaces. All of the Company’s leases are classified as operating leases.

~~(Unaudited)~~On October 1, 2019, the Company recorded lease liabilities of approximately $636,000 attributable to the Company’s operating leases based on the present value of the remaining minimum lease payments along with right-of-use assets of approximately $636,000. The Company used 3.5% as its incremental borrowing rate to calculate the net present value of its leases on October 1, 2019. As of June 30, 2020, the Company’s operating lease right-of-use assets and operating lease liabilities were approximately $362,000 and $370,000, respectively.

~~Note~~The 8Company –leases ~~Right~~office ofspace ~~Use~~in ~~Assets~~Englewood Cliffs, New Jersey and ~~Liabilities~~subleases office space in Fort Lee, New Jersey under agreements classified as operating leases.

~~Effective~~The ~~October~~lease ~~1, 2019,~~agreement ~~the~~in ~~Company~~Englewood ~~adopted ASU 2016-02~~Cliffs, ~~and~~New ~~all~~Jersey ~~subsequent~~expires ~~ASUs~~on ~~that~~August ~~modified Topic 842. For the Company~~31, ~~Topic~~2020 ~~842 affected the accounting treatment for operating lease agreements in which the Company is the lessee by recognizing lease assets~~ and ~~liabilities~~does onnot ~~the~~include ~~balance~~any ~~sheet~~renewal option. The ~~Company~~lease ~~leases~~agreement ~~the~~provides ~~premises~~ for ~~two~~an ~~New~~initial ~~Jersey~~monthly ~~office~~base ~~facilities~~amount ~~under~~plus ~~operating~~annual ~~lease~~escalations ~~agreements expiring in various years~~ through ~~2023. The Company is responsible to pay all insurance, utilities, maintenance and repairs on~~ the ~~office~~term ~~spaces. All~~ of the ~~Company’s leases are classified as operating leases~~lease.

OnThe ~~October~~sublease 1,agreement ~~2019,~~in ~~the~~Fort ~~Company~~Lee, ~~recorded~~New ~~lease~~Jersey ~~liabilities~~expires ofon ~~approximately~~March ~~$636~~31,~~000~~ ~~attributable~~2023 toand ~~the~~does ~~Company’s~~not ~~operating~~include ~~leases~~any ~~based~~renewal onoption. ~~the~~The ~~present value of the remaining minimum~~ lease ~~payments~~agreement ~~along~~provides ~~with~~for ~~right-of-use~~an ~~assets~~initial ofmonthly ~~approximately~~base ~~$636,000.~~amount ~~The~~plus ~~Company~~certain ~~used~~additional ~~3.5%~~amounts aspursuant ~~its incremental borrowing rate~~ to ~~calculate~~ the ~~net~~leasing ~~present~~arrangement ~~value~~between ~~of its leases on October 1, 2019. As of March 31, 2020,~~ the ~~Company’s~~landlord ~~operating lease right-of-use assets~~ and ~~operating lease liabilities were approximately $454,000 and $456,000, respectively~~sublessor.

~~The~~In ~~Company~~adopting ~~leases~~the ~~office~~new ~~space~~accounting ~~in Englewood Cliffs~~guidance, ~~New~~the ~~Jersey~~Company ~~and~~used ~~subleases~~the ~~office~~following ~~space~~practical inexpedients ~~Fort~~for ~~Lee,~~transitional ~~New~~relief ~~Jersey~~as ~~under~~provided ~~agreements~~for ~~classified~~in asASU ~~operating leases.~~2018-01:

~~The~~●An ~~lease~~entity ~~agreement~~need ~~in Englewood Cliffs, New Jersey expires on August 31, 2020 and does~~ not ~~include~~reassess whether any ~~renewal~~expired ~~option.~~or ~~The~~existing ~~lease~~contracts ~~agreement~~are ~~provides~~or ~~for~~contain ~~an initial monthly base amount plus annual escalations through the term of the lease~~leases.

~~The~~●An ~~sublease~~entity ~~agreement~~need ~~in Fort Lee, New Jersey expires on March 31, 2023 and does~~ not ~~include~~reassess ~~any~~the ~~renewal option. The~~ lease ~~agreement~~classification ~~provides~~ for anany ~~initial~~expired ~~monthly~~or ~~base~~existing ~~amount plus certain additional amounts pursuant to the leasing arrangement between the landlord and sublessor~~leases.

In●An ~~adopting~~entity ~~the~~need ~~new~~not ~~accounting~~reassess ~~guidance,~~initial ~~the~~direct ~~Company~~costs ~~used the following practical expedients~~ for ~~transitional~~any ~~relief~~existing ~~as provided for in ASU 2018-01:~~leases.

●An entity ~~need~~may ~~not~~elect ~~reassess~~to ~~whether~~apply ~~any~~hindsight ~~expired~~to orleases ~~existing~~that ~~contracts~~existed ~~are~~during orthe ~~contain~~period ~~leases~~from the beginning of the earliest period presented in the financial statements until the effective date.

~~●An~~The ~~entity~~Company ~~need~~also elected not ~~reassess~~to ~~the~~include ~~lease~~short-term ~~classification~~leases ~~for~~(i.e., ~~any~~leases ~~expired~~with initial terms of twelve months or ~~existing~~less) or insignificant equipment leases on the condensed consolidated balance sheet as provided for in the accounting guidance.

~~●An entity need not reassess initial direct costs for any existing leases.~~18

~~●An~~Table ~~entity may elect to apply hindsight to leases that existed during the period from the beginning~~ of ~~the earliest period presented in the financial statements until the effective date.~~Contents

~~The~~ASTA ~~Company~~FUNDING, ~~also elected not to include short-term leases (i~~INC.~~e.,~~ ~~leases~~AND ~~with initial terms of twelve months or less) or insignificant equipment leases on the condensed consolidated balance sheet as provided for in the accounting guidance.~~SUBSIDIARIES

~~The~~NOTES ~~following~~TO ~~provides~~CONDENSED ~~additional~~CONSOLIDATED ~~information~~FINANCIAL ~~about the Company’s operating leases:~~STATEMENTS

~~As of March 31, 2020:~~(Unaudited)

Weighted average remaining lease term (in years)			2.35
Weighted average discount rate			3.5	%

Note 7 —Right of Use Assets and Liabilities (Continued)

19The following provides additional information about the Company’s operating leases:

Table of Contents

As of June 30, 2020:

Weighted average remaining lease term (in years)	2.40
Weighted average discount rate	3.5	%

~~ASTA~~As ~~FUNDING~~of June 30, ~~INC.~~2020, ~~AND~~the ~~SUBSIDIARIES~~future minimum payments for the fiscal years are as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020	$	68,000
2021		122,000
2022		131,000
2023		66,000
Thereafter		–

Total lease payments		387,000
Less interest		(17,000	)
Operating lease liability	$	370,000

The Company leases its facilities in (~~Unaudited~~i) Englewood Cliffs, New Jersey, and (ii) Fort Lee, New Jersey. Rent expense for the three and nine months ended June 30, 2020 and 2019 was $0.1 million and $0.1 million and $0.3 million and $0.2 million, respectively.

~~Note~~On July 8, –2020, ~~Right~~the Company entered into an agreement with its landlord to amend its lease for its corporate offices by terminating its tenancy for approximately 1,888 square feet of ~~Use~~space ~~Assets~~as per the lease agreement dated October 7, 2015. Accordingly, rent due for this space is waived by the landlord and ~~Liabilities~~the ~~(Continued)~~Company waived any and all tenancy rights for this space. The Company’s remaining monthly rent for its corporate office is $14,000 or 82% of the current monthly rent. This change shall be effective as of August 1, 2020 and all other terms and conditions of the lease remain unchanged and in full effect.

~~As of March 31,~~ ~~2020,~~Note ~~the~~8 ~~future~~— ~~minimum~~Note ~~payments for the fiscal years are as follows:~~ Payable

2020	$	159,000
2021		122,000
2022		131,000
2023		65,000
Thereafter		–
Total lease payments		477,000
Less interest		(21,000	)
Operating lease liability	$	456,000

On April 10, 2020, the Company applied for a $1.1 million Paycheck Protection Program (“PPP”) loan under the CARES Act. On May 11, 2020, the Company signed a PPP loan note with an interest rate of 1% and a May 11, 2022 maturity date, though PPP loans may be forgiven if certain conditions are met. The PPP loan was funded on May 20, 2020. During the quarter ended June 30, 2020, the Company used the proceeds of the PPP loan for payroll, lease payments and utility payments. The Company has not applied for PPP loan forgiveness.

~~The~~Note ~~Company~~9 ~~leases~~— its facilities in (i) Englewood Cliffs, New Jersey, and (ii) Fort Lee, New Jersey. Rent expense for the three and six months ended March 31, 2020 and 2019 was $0.1 million and $0.1 million and $0.2 million and $0.1 million, respectively. Settlements

~~Note~~In 9–August ~~Settlements~~2014, 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. On or about July 12, 2018, the parties agreed to settle the action pursuant to a settlement agreement and release, which provides for, among other things, the payment by the third-party servicer of $4.4 million to the Company pursuant to an agreed upon schedule with a lump sum payment to be made at the third anniversary of the agreement.

InThese ~~August 2014, the Company filed a lawsuit in Delaware state court against a third~~fee-~~party~~based ~~servicer~~settlements ~~arising~~are ~~from~~required ~~the third-party servicer’s failure~~ to ~~pay~~total ~~the~~$2.4 ~~Company~~million ~~certain~~and ~~amounts~~$4.4 ~~that~~million ~~are~~by ~~due~~ the ~~Company~~second ~~under~~and athird ~~servicing~~anniversaries, ~~agreement~~respectively. ~~The~~To ~~third-party servicer filed a counterclaim in~~ the ~~Delaware~~extent ~~action alleging~~ that ~~the~~these ~~Company owes certain amounts to the third~~fee-~~party~~based ~~servicer for court costs pursuant to an alleged arrangement between the companies. On or about July 12, 2018, the parties agreed to settle the action pursuant to a~~ settlement ~~agreement~~fees ~~and~~are ~~release,~~less ~~which~~than ~~provides~~these ~~for~~amounts, ~~among other things,~~ the ~~payment by the third-party~~ servicer ofis ~~$4.4~~required ~~million~~ to ~~the~~make ~~Company pursuant to an agreed upon schedule with a~~ lump sum ~~payment~~true-up ~~to be made at the third anniversary of the agreement~~payments.

~~These~~The Company determined the fair value of this settlement using (i) historical collection history to estimate the fee- based ~~settlements~~settlement fees that are ~~required~~expected to ~~total~~be ~~$2.4~~received ~~million~~each ~~and~~month ~~$4.4~~from ~~million~~the byservicer; (ii) the ~~second~~contractual ~~and~~true-up ~~third~~dates, ~~anniversaries~~discussed above, ~~respectively.~~in Toorder ~~the~~to ~~extent~~estimate ~~that~~the ~~these~~anticipated ~~fee~~true-~~based~~up ~~settlement~~payments ~~fees~~that ~~are~~will ~~less~~be ~~than~~received ~~these~~from ~~amounts,~~ the servicer ison ~~required~~the tosecond ~~make~~and ~~lump~~third ~~sum~~anniversaries; ~~true-up~~and ~~payments~~(iii) an imputed interest rate of 8.5%.

The Company determined the fair value of this settlement using (i) historical collection history to estimate the fee based settlement fees that are expected to be received each month from the servicer; (ii) the contractual true-up dates, discussed above, in order to estimate the anticipated true-up payments that will be received from the servicer on the second and third anniversaries; and (iii) an imputed interest rate of 8.5%.19

AsTable of March 31, 2020, and September 30, 2019, the Company has a settlement receivable due from this third-party servicer of $0.8 million and $1.6 million, respectively. During the six months ended March 31, 2020, the Company received $0.4 million in payments from this third-party servicer. For the three and six months ended March 31, 2020 and 2019, the Company recorded $33,000 and $58,000 and $72,000 and $126,000, respectively, in interest income, which is included in other income on the Company's condensed consolidated statements of operations. Contents

OnASTA ~~January 22~~FUNDING, ~~2018, DLCA, LLC (“DLCA”), a Delaware limited liability company and a wholly owned subsidiary of the Company, filed a complaint against Balance Point Divorce Funding, LLC~~INC. ~~(“Balance~~AND Point”) and Stacey Napp (“Napp”) in the United States District Court of New Jersey, asserting various claims including breach of contract, conversion, unjust enrichment and fraud associated with a loan made to Balance Point and Napp in May 2012.SUBSIDIARIES

OnNOTES ~~May~~TO ~~22,~~CONDENSED ~~2019,~~CONSOLIDATED ~~Napp~~FINANCIAL ~~and DLCA entered into a Settlement Agreement that settled the action as well as all other claims for monies and/or other obligations owed as and between the parties.~~STATEMENTS

~~Napp agreed to pay the sum of $1.4 million~~ (~~the “Settlement Amount”~~Unaudited)~~, the payment terms of which are between May 21, 2019 and January 12, 2022.~~

~~The~~Note ~~Company~~9 ~~has~~— ~~previously~~Settlements reviewed the financial condition of both Balance Point and Napp, and has concluded that neither entity currently has assets sufficient to honor the obligations set forth in the Settlement Agreement. Therefore, due to the uncertainty of collecting the Settlement Amount from either Balance Point or Napp, the Company will realize the gain on this settlement, as the Company receives the cash proceeds. Napp missed the $25,000 due in December 2019 and made a $30,000 payment in February 2020. The Company has recognized a gain on settlement of $30,000 for the three and six months ended March 31, 2020 in its condensed consolidated statements of operations.(Continued)

20As of June 30, 2020, and September 30, 2019, the Company has a settlement receivable due from this third-party servicer of $0.5 million and $1.6 million, respectively. During the nine months ended June 30, 2020, the Company received $1.1 million in payments from this third-party servicer. For the three and nine months ended June 30, 2020 and 2019, the Company recorded interest income of $29,000 and $53,000 and $101,000 and $180,000, respectively, which is included in other income on the Company's consolidated statements of operations.

~~Table~~On January 22, 2018, DLCA, LLC ("DLCA"), a Delaware limited liability company and a wholly owned subsidiary of ~~Contents~~the Company, filed a complaint against Balance Point Divorce Funding, LLC. ("Balance Point") and Stacey Napp ("Napp") in the United States District Court of New Jersey, asserting various claims including breach of contract, conversion, unjust enrichment and fraud associated with a loan made to Balance Point and Napp in May 2012.

~~ASTA~~On ~~FUNDING~~May 22, ~~INC.~~2019, ~~AND~~Napp ~~SUBSIDIARIES~~and DLCA entered into a Settlement Agreement that settled the action as well as all other claims for monies and/or other obligations owed as and between the parties.

~~NOTES~~Napp TOagreed ~~CONDENSED~~to ~~CONSOLIDATED~~pay ~~FINANCIAL~~the ~~STATEMENTS~~sum of $1.4 million (the "Settlement Amount"), the payment terms of which are between May 21, 2019 and January 12, 2022.

~~(Unaudited)~~The Company has previously reviewed the financial condition of both Balance Point and Napp, and has concluded that neither entity currently has assets sufficient to honor the obligations set forth in the Settlement Agreement. Therefore, due to the uncertainty of collecting the Settlement Amount from either Balance Point or Napp, the Company will realize the gain on this settlement, as the Company receives the cash proceeds. Napp missed the $25,000 payment due in December 2019 and made a $30,000 payment in February 2020. Napp missed the $25,000 payment due on May 31, 2020 and indicated to make up that payment by July 31, 2020, along with the regularly scheduled $25,000 payment that was due on July 31, 2020 under the Settlement Agreement. Napp missed the double payment of $50,000 due on July 31, 2020 and promised to make the double payment of $50,000 by September 30, 2020. The Company has recognized a gain on settlement of $0 and $30,000 for the three and nine months ended June 30, 2020 in its condensed consolidated statements of operations. The Company had recognized a gain on settlement of $25,000 for the three and nine months ended June 30, 2019 in its consolidated statements of operations.

~~Note~~On 10June –30, ~~Interest~~2017, ~~Dividend~~GAR Disability Advocates, filed a complaint against a former employee, Pamela Hofer ("Hofer"), and ~~Other~~others ~~Income~~in the United States Court for the District of New Jersey (the "Action"), asserting claims of conversion and tortious interference with existing business relationships. On May 22, 2018, the Action was transferred to the Eastern District of Kentucky.

~~The~~On ~~following~~May ~~tables~~7, ~~summarize interest~~2019, ~~dividend~~GAR agreed to dismiss and ~~other~~settle ~~income~~the Action for ~~the~~a ~~three~~payment ~~and~~from ~~six~~Hofer ~~month~~in ~~periods~~the ~~ended~~amount ~~March~~of 31$47,500, ~~2020~~payable ~~and~~to GAR no later than May 8, 2019:.

	For the Three Months ended March 31,					For the Six Months ended March 31,
	2020			2019		2020			2019
Interest and dividend income	$	320,000		$	255,000		649,000		$	454,000
Realized gain		—			—	––				25,000
Unrealized gain (loss)		(172,000	)		50,000		(162,000	)		21,000
Other	––				1,000		1,000			40,000
	$	148,000		$	306,000	$	488,000		$	540,000

On May 8, 2019, GAR received the payment from Hofer, and delivered to Hofer an executed Stipulation of Dismissal of the Action. The Company recognized a gain on settlement of $47,500 for the three and nine months ended June 30, 2019 in its consolidated statements of operations.

~~Note~~On ~~11—Commitments~~May 15, 2019, the Company received $0.2 million from the bankruptcy trustee in New Jersey, associated with the bankruptcy filing of Axiant, LLC, and ~~Contingencies~~a previous third-party servicer. The Company recorded a gain on settlement of $0.2 million for the three and nine months ended June 30, 2019 in its consolidated statements of operations.

~~Legal~~ Note ~~Matters~~10 — Interest, Dividend and Other Income

On November 7, 2019, a shareholder of the Company filed a verified shareholder derivative complaint in the Court of Chancery of the State of Delaware against certain current and former officers and directors of the Company, and named the Company as a nominal defendant, alleging that certain actions taken by management constituted a violation of fiduciary duty to the Company. The ~~Company~~following ~~believes~~tables ~~the~~summarize ~~lawsuit~~other isincome ~~without~~for ~~merit and intends to vigorously defend~~ the ~~matter.~~three ~~On or about January 8, 2020, a motion to dismiss the complaint was filed on behalf of all individual defendants~~ and ~~the~~nine ~~Company~~months asended nominal defendant. In light of the execution of the merger agreement, the parties to the lawsuit entered into a joint stipulation and submitted a proposed order to stay proceedings in the lawsuit until the earlier of: (i) an announcement by the Company of the completion or cancellation of the merger, or (ii) June 30, 2020. ~~On April 14, 2020, the court granted the parties’ stipulation~~ and ~~proposed order.~~2019:

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. The Company is not involved in any other material litigation in which we are a defendant.

	For the Three Months Ended June 30,
	2020		2019
Interest and dividend income	$	263,000	$	821,000
Gain on settlements	––			273,000
Unrealized gain on equity securities		228,000		33,000
Other		25,000		1,000
	$	516,000	$	1,128,000

Note 12—Income Taxes

	For the Nine Months Ended June 30,
	2020		2019
Interest and dividend income	$	912,000	$	1,274,000
Gain on settlements		30,000		596,000
Realized gain	––			25,000
Unrealized gain on equity securities		67,000		53,000
Other		25,000		43,000
	$	1,034,000	$	1,991,000

The Company’s effective rate for the three months ended March 31, 2020 differed from the U.S. federal statutory rate of 21%, primarily due to changes in forecasted income, income from foreign operations resulting in tax expense of $62,000, and state income taxes. The Company’s effective tax rate from operations for the six months ended March 31, 2020 differed from the U.S. federal statutory rate of 21%, primarily due to income from foreign operations, state income taxes and other differences discrete to the quarter.20

~~The~~Table ~~Company~~of ~~files income tax returns in the U.S federal jurisdiction, various state jurisdictions, and various foreign countries. The Company does not have any uncertain tax positions.~~ Contents

OnASTA ~~March 27~~FUNDING, ~~2020,~~ ~~the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law~~INC. ~~The~~ ~~CARES~~AND Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense, class life changes to qualified improvements (in general, from 39 years to 15 years), and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years. The income tax provisions of the CARES Act had limited applicability to the Company as of March 31, 2020, and therefore, the enactment of the CARES Act did not have a material impact on the Company’s condensed consolidated financial statements as of, and for the three and six months ended, March 31, 2020. We will continue to evaluate the impact of tax legislation and will update our disclosures as additional information and interpretive guidance becomes available.SUBSIDIARIES

21NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Table of Contents~~(Unaudited)

~~ASTA~~Note ~~FUNDING,~~11—Commitments ~~INC.~~and ~~AND SUBSIDIARIES~~Contingencies

~~NOTES~~Legal ~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Matters

On November 7, 2019, a shareholder of the Company filed a verified shareholder derivative complaint in the Court of Chancery of the State of Delaware against certain current and former officers and directors of the Company, and named the Company as a nominal defendant, alleging that certain actions taken by management constituted a violation of fiduciary duty to the Company. The Company believes the lawsuit is without merit and intends to vigorously defend the matter. On or about January 8, 2020, a motion to dismiss the complaint was filed on behalf of all individual defendants and the Company as nominal defendant. In light of the execution of the merger agreement, the parties to the lawsuit entered into a joint stipulation and submitted a proposed order to stay proceedings in the lawsuit until the earlier of: (~~Unaudited~~i) an announcement by the Company of the completion or cancellation of the merger, or (ii) June 30, 2020. On April 14, 2020, the court granted the parties’ stipulation and proposed order. On July 8, 2020, the court granted the parties' stipulation and proposed order to extend the stay until the earlier of: (i) an announcement by the Company of the completion or cancellation of the merger, or (ii) September 30, 2020.

~~Note~~In ~~13—Net~~the ~~Income~~ordinary ~~(Loss)~~course ~~per~~of ~~Share~~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. The Company is not involved in any other material litigation in which we are a defendant.

Basic per share data is determined by dividing net income (loss) by the weighted average shares outstanding during the period. Diluted per share data is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive Commitments

~~potential~~On ~~common~~June ~~shares~~9, ~~were~~2020, ~~issued.~~a ~~The~~newly ~~assumed~~formed ~~proceeds~~subsidiary ~~from~~of the ~~exercise~~Company ofentered ~~dilutive~~into ~~options~~an ~~are~~agreement ~~calculated~~with ~~using~~a ~~the~~third ~~treasury~~party ~~stock~~pursuant ~~method~~to ~~based~~which onit will provide funding in connection with certain consumer lease transactions. Under the ~~average~~agreement, ~~market~~when ~~price~~a consumer is approved for financing at a participating merchant, the Company purchases the merchandise and then leases it to the consumer pursuant to a consumer lease agreement. The Company agreed to fund a maximum of $300,000 in total transactions, over a three-month period beginning with the date of the third party agreement. The Company did not make any funding payments during the month of June 2020.

~~The~~Note ~~following~~12—Income ~~table presents the computation of basic and diluted per share data for the three and six months ended March 31, 2020 and 2019:~~Taxes

	For the Three Months Ended March 31, 2020			For the Three Months Ended March 31, 2019		For the Six Months Ended March 31, 2020		For the Six Months Ended March 31, 2019
Net Income (Loss)	$	(72,000	)	$	1,773,000	$	973,000	$	3,048,000
Basic earnings (loss) per common share	$	(0.01	)	$	0.27	$	0.15		0.46
Diluted earnings per common share	$	(0.01	)	$	0.27	$	0.15		0.46
Weighted average number of common shares outstanding:
Basic		6,567,765			6,685,415		6,567,765		6,685,415
Dilutive effect of stock options	––				412		87,108		360
Diluted		6,567,765			6,685,827		6,654,873		6,685,775

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. The estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate from operations for the three and nine months ended June 30, 2020 was 30.4% and 34.6%, respectively, compared to 31.0% and 28.6%, respectively, for the same periods in the prior year.

AtThe ~~March~~Company’s ~~31,~~effective ~~2020~~rate ~~there~~for ~~were~~the nothree ~~stock~~months ~~options~~ended ~~outstanding~~June ~~that~~30, ~~were~~2020 ~~anti-dilutive~~differed from the U.S. Atfederal ~~March~~statutory 31rate of 21%, ~~2019~~primarily ~~there~~due ~~were~~to ~~725~~income from foreign operations,~~567~~ ~~stock~~and ~~options~~state ~~outstanding~~income ~~that~~taxes. ~~could~~The ~~have~~Company’s aneffective ~~effect~~tax onrate from operations for the ~~future~~nine ~~computation~~months ended June 30, 2020 differed from the U.S. federal statutory rate of ~~dilution~~21%, ~~per~~primarily ~~common~~due ~~share~~to income from foreign operations resulting in income tax expense of $144,000, ~~had~~state ~~their~~income ~~effect~~taxes ~~not~~and ~~been~~other ~~anti-dilutive~~differences discrete to the quarter.

~~Note~~The ~~14—Stock~~Company ~~Option~~files ~~Plans~~ income tax returns in the U.S federal jurisdiction, various state jurisdictions, and various foreign countries. The Company does not have any uncertain tax positions.

~~2012 Stock Option and Performance Award Plan~~ 21

OnTable ~~February 7, 2012, the Company adopted the 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 replaced the Equity Compensation Plan (as defined below).~~ Contents

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

~~The~~NOTES ~~Company~~TO ~~authorized~~CONDENSED ~~2,000,000~~CONSOLIDATED ~~shares~~FINANCIAL 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, awarded 245,625 shares of restricted stock, and has cancelled 118,568 options, leaving 1,332,143 shares available as of March 31, 2020. At March 31, 2020, 49 of the Company’s employees were able to participate in the 2012 Plan. STATEMENTS

~~Equity Compensation Plan~~ (Unaudited)

OnNote ~~December 1,~~12—Income ~~2005,~~Taxes ~~the Company adopted the Equity Compensation Plan~~ (~~the “Equity Compensation Plan”~~Continued)~~, 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).~~

InOn ~~addition~~March to27, ~~permitting~~2020, the ~~grant~~Coronavirus ofAid, ~~stock~~Relief, ~~options~~and asEconomic ~~are~~Security ~~permitted~~Act ~~under~~ (the ~~2002~~"CARES ~~Stock~~Act") ~~Option~~was ~~Plan,~~signed ~~the~~into ~~Equity~~law. ~~Compensation~~The ~~Plan~~CARES ~~allowed~~Act ~~the~~contains ~~Company~~several ~~flexibility~~new ~~with~~or ~~respect~~changed income tax provisions, including but not limited to ~~equity~~the ~~awards~~following: byincreased ~~also~~limitation ~~providing~~threshold for ~~grants~~determining ofdeductible ~~stock~~interest ~~awards~~expense, class life changes to qualified improvements (~~i.e.~~in ~~restricted~~general, orfrom ~~unrestricted~~39 years to 15 years), ~~stock~~and ~~purchase~~the ~~rights~~ability ~~and~~to ~~stock~~carry ~~appreciation~~back ~~rights~~net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years.

The income tax provisions of the CARES Act had limited applicability to the Company ~~authorized~~as 1of June 30,~~000~~ 2020,~~000~~ ~~shares~~and therefore, the enactment of ~~Common~~the ~~Stock~~CARES ~~for~~Act ~~issuance~~did ~~under~~not have a material impact on the ~~Equity~~Company’s ~~Compensation~~condensed ~~Plan.~~consolidated Asfinancial statements as of, ~~March 21~~and for the three and nine months ended, ~~2012~~June 30, no2020. ~~more~~We ~~awards~~will ~~could~~continue beto ~~issued~~evaluate ~~under~~the ~~this~~impact ~~plan~~of tax legislation and will update our disclosures as additional information and interpretive guidance becomes available.

~~2002~~Note ~~Stock~~13—Net ~~Option~~Income ~~Plan~~ (Loss) per Share

OnBasic ~~March 5,~~per ~~2002,~~share ~~the~~data ~~Company~~is ~~adopted~~determined by dividing net income (loss) by the ~~2002~~weighted ~~Stock~~average ~~Option~~shares ~~Plan~~outstanding (during the ~~“2002~~period. ~~Plan”),~~Diluted ~~which~~per ~~was~~share ~~approved~~data is computed by ~~the~~dividing ~~stockholders~~net ofincome (loss) by the ~~Company~~weighted onaverage ~~May 1~~shares outstanding, ~~2002~~assuming all dilutive potential common shares were issued. The ~~2002~~assumed ~~Plan~~proceeds ~~was~~from ~~adopted~~the inexercise ~~order~~of todilutive ~~attract~~options ~~and~~are ~~retain~~calculated ~~qualified~~using ~~directors,~~the ~~officers~~treasury ~~and~~stock ~~employees~~method ~~of,~~based ~~and~~on ~~consultants~~the ~~to,~~average market price for the ~~Company~~period.

22The following table presents the computation of basic and diluted per share data for the three and nine months ended June 30, 2020 and 2019:

Table of Contents

	For the Three Months Ended June 30, 2020		For the Three Months Ended June 30, 2019		For the Nine Months Ended June 30, 2020		For the Nine Months Ended June 30, 2019
Net Income	$	446,000	$	2,304,000	$	1,419,000	$	5,352,000

Basic earnings per share	$	0.07	$	0.35	$	0.22	$	0.80

Diluted earnings per share	$	0.07	$	0.35	$	0.21	$	0.80

Weighted average number of common shares outstanding:
Basic		6,567,765		6,666,012		6,567,765		6,678,947
Dilutive effect of stock options		180,734		219		118,316		313
Diluted		6,748,499		6,666,231		6,686,081		6,679,260

~~ASTA~~ At ~~FUNDING~~June 30, ~~INC~~2020 there were no stock options outstanding that were anti-dilutive. ~~AND~~At ~~SUBSIDIARIES~~June 30, 2019 there were 725,567 stock options outstanding that could have an effect on the future computation of dilution per common share, had their effect not been anti-dilutive.

~~NOTES~~Note TO14—Stock ~~CONDENSED~~Option ~~CONSOLIDATED FINANCIAL STATEMENTS~~Plans

~~(Unaudited)~~ 2012 Stock Option and Performance Award Plan

~~Note~~On ~~14—~~February 7, 2012, the Company adopted the 2012 Stock Option ~~Plans~~and Performance Award Plan (~~Continued~~the “2012 Plan”), which was approved by the stockholders of the Company on March 21, 2012. The 2012 Plan replaced the Equity Compensation Plan (as defined below).

The ~~2002~~2012 Plan ~~authorized~~provides the ~~granting~~Company ofwith ~~incentive~~flexibility ~~stock~~with ~~options~~respect ~~(as~~to ~~defined~~equity inawards ~~Section 422~~by ofproviding ~~the~~for ~~Internal~~grants ~~Revenue Code~~ of ~~1986,~~stock asawards ~~amended~~ (~~the~~i.e. ~~“Code”))~~restricted ~~and~~or ~~non-qualified~~unrestricted), stock ~~options~~purchase torights ~~eligible~~and ~~employees~~stock ofappreciation ~~the Company~~rights, ~~including~~in ~~officers~~addition ~~and~~to ~~directors of~~ the ~~Company~~granting ~~(whether or not employees) and consultants~~ of ~~the~~stock ~~Company~~options.

The Company authorized 12,000,000 shares of Common Stock for issuance under the ~~2002~~2012 Plan. AsUnder the 2012 Plan, the Company has granted options to purchase an aggregate of ~~March 5~~540,800 ~~2012~~shares, noawarded ~~more~~245,625 ~~awards~~shares ~~could~~of berestricted ~~issued~~stock, ~~under~~and ~~this~~has ~~plan~~cancelled 118,668 options, leaving 1,332,243 shares available as of June 30, 2020. At June 30, 2020, 49 of the Company’s employees were able to participate in the 2012 Plan.

~~Summary of the Plans~~22

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

~~The~~ASTA ~~following table summarizes stock option transactions under the 2012 Plan~~FUNDING, ~~the~~INC. ~~Equity~~AND ~~Compensation Plan and the 2002 Plan (collectively the “Plans”):~~SUBSIDIARIES

	For the Three Months Ended March 31,
	2020					2019
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		670,167		$	8.19		728,533		$	8.17
Options exercised		—					—
Options forfeited/cancelled		(3,300	)		8.21		(1,766	)		8.21
Outstanding options at the end of period		666,867		$	8.19		726,767		$	8.17
Exercisable options at the end of period		666,867		$	8.19		726,767		$	8.17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	For the Six Months Ended March 31,
	2020					2019
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		722,567		$	8.18		728,867		$	8.17
Options exercised		—			—		—			—
Options forfeited/cancelled		(55,700	)		8.08		(2,100	)		8.17
Outstanding options at the end of period		666,867		$	8.19		726,767		$	8.17
Exercisable options at the end of period		666,867		$	8.19		726,767		$	8.17

(Unaudited)

~~The~~Note ~~following~~14—Stock ~~table~~Option ~~summarizes information about the~~ Plans ~~outstanding options as of March 31, 2020:~~(Continued)

			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
$5.7501	-	$8.6250		557,367		2.4	$	7.96		557,367	$	7.96
$8.6251	-	$11.5000		109,500		2.8		9.37		109,500		9.37
				666,867		2.5	$	8.19		666,867	$	8.19

Equity Compensation Plan

23On December 1, 2005, the Company adopted the 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).

~~Table~~In addition to permitting the grant of ~~Contents~~stock options as are permitted under the 2002 Stock Option Plan, the Equity Compensation Plan allowed 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.

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

~~NOTES~~2002 TOStock ~~CONDENSED~~Option ~~CONSOLIDATED FINANCIAL STATEMENTS~~Plan

On March 5, 2002, the Company adopted the 2002 Stock Option Plan (~~Unaudited~~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.

~~Note~~The ~~14—Stock~~2002 ~~Option~~Plan ~~Plans~~authorized the granting of incentive stock options (~~Continued~~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 ~~did~~authorized ~~not recognize any compensation expense related to the stock option grants during the three and six months ended March 31~~1, ~~2020. The Company recognized $0 and $7~~000,000 shares of ~~compensation~~Common ~~expense~~Stock ~~related~~under to the ~~stock~~2002 ~~options vested during the three and six months ended March 31, 2019, respectively~~Plan. As of March 31 5, ~~2020~~2012, ~~there was~~ no ~~unrecognized~~more ~~compensation~~awards ~~cost~~could ~~related~~be toissued ~~stock~~under ~~option~~this ~~awards~~plan.

~~The~~Summary ~~intrinsic value~~ of the outstanding and exercisable options as of March 31, 2020 was approximately $124,000. The weighted average remaining contractual life of exercisable options is 2.5 years. There were no options exercised during the three and six months ended March 31, 2020 and 2019. The fair value of the stock options that vested during the three and six months ended March 31, 2020 was approximately $0 for both periods. The fair value of the stock options that vested during the three and six months ended March 31, 2019 was approximately $0 and $84,000, respectively. There were no options granted during the three and six months ended March 31, 2020 and 2019. Plans

~~The~~Compensation ~~Company~~expense ~~did~~for ~~not~~stock ~~grant~~options ~~any~~and restricted stock ~~awards~~is ~~during~~recognized over the ~~three~~requisite ~~and~~vesting ~~six~~or ~~months~~service ~~ended March 31, 2020 and 2019~~period. AsCompensation ofexpense ~~March~~for ~~31,~~restricted ~~2020,~~stock ~~and~~is ~~September~~based ~~30,~~upon ~~2019,~~the ~~there~~market ~~was~~price noof ~~unrecognized~~the ~~compensation~~shares ~~cost~~underlying ~~related~~the toawards ~~restricted~~on ~~stock~~the ~~awards~~grant date.

~~Note~~The ~~15—Stockholders’~~following table summarizes stock option transactions under the 2012 Plan, the Equity Compensation Plan and the 2002 Plan (collectively the “Plans”):

The Company has 5,000,000 authorized preferred shares with a par value of $0.01 per share. The Board of Directors of the Company (the “Board”) are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.

	For the Three Months Ended June 30,
	2020					2019
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		666,867		$	8.19		726,767		$	8.17
Options exercised		—			—		—			—
Options forfeited/cancelled		(100	)		7.93		(1,200	)		2.95
Outstanding options at the end of period		666,767		$	8.19		725,567		$	8.18
Exercisable options at the end of period		666,767		$	8.19		725,567		$	8.18

~~There were no shares of preferred stock issued and outstanding as of March 31, 2020 and 2019.~~23

~~Dividends~~Table ~~are declared at the discretion~~ of the Board and depend upon the Company’s financial condition, operating results, capital requirements and other factors that the Board deems relevant. In addition, agreements with the Company’s lenders may, from time to time, restrict the ability to pay dividends. As of March 31, 2020, there were no such restrictions, as there were no lending agreements in place. No dividends were declared during the three and six months ended March 31, 2020. Contents

~~Note~~ASTA ~~16—Fair~~FUNDING, ~~Value~~INC. ofAND ~~Financial Measurements and Disclosures~~ SUBSIDIARIES

~~Fair~~NOTES ~~Value~~TO ofCONDENSED ~~Financial~~CONSOLIDATED ~~Instruments~~ FINANCIAL STATEMENTS

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

	March 31, 2020				September 30, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash equivalents (Level 1)	$	5,398,000	$	5,398,000	$	64,000	$	64,000
Investments in equity securities (Level 1)		8,111,000		8,111,000		8,136,000		8,136,000
Available-for-sale debt securities (Level 2)		55,692,000		55,692,000		56,123,000		56,123,000
Consumer receivables acquired for liquidation (Level 3)		1,193,000		26,154,000		1,668,000		25,783,000

Note 14—Stock Option Plans (Continued)

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:

	For the Nine Months Ended June 30,
	2020					2019
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		722,567		$	8.18		728,867		$	8.17
Options exercised		—			—		—			—
Options forfeited/cancelled		(55,800	)		8.08		(3,300	)		6.27
Outstanding options at the end of period		666,767		$	8.19		725,567		$	8.18
Exercisable options at the end of period		666,767		$	8.19		725,567		$	8.18

~~Cash equivalents -~~ The ~~Company~~following ~~considers~~table ~~all~~summarizes ~~highly~~information ~~liquid~~about ~~debt~~the ~~instruments~~Plans ~~purchased~~outstanding ~~with~~options anas ~~original maturity~~ of ~~three~~June ~~months~~30, ~~or less to be cash equivalents. The carrying amount of cash equivalents approximates fair value.~~2020:

Investments in equity securities - The investments in equity consist of mutual funds that are valued based on quoted prices in active markets.

			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
$5.7501	-	$8.6250		557,267		2.2		7.96		557,267		7.96
$8.6251	-	$11.5000		109,500		2.6		9.37		109,500		9.37
				666,767		2.2	$	8.19		666,767	$	8.19

~~Available-for-sale~~The ~~debt~~Company ~~securities~~did -not ~~The~~recognize ~~available-for-sale~~any ~~debt~~compensation ~~securities~~expense ~~consist~~related ofto ~~U.S.~~the ~~treasury~~stock ~~bills~~option ~~that~~grants ~~are~~during ~~valued~~the ~~based~~three onand ~~quoted~~nine ~~prices~~months inended ~~active~~June ~~markets~~30, 2020. The ~~U.S.~~Company ~~treasury~~recognized ~~bills~~$0 ~~have~~and ~~been~~$7,000 ~~classified~~of ascompensation ~~available~~expense ~~for~~related ~~sale~~to bythe stock optionsvested during the ~~Company,~~three asand ~~they~~nine ~~are~~months ~~deemed~~ended toJune be30, ~~short~~2019, ~~term~~respectively. ~~investments~~As of June 30, ~~and~~2020, ~~can~~there bewas ~~liquidated~~no asunrecognized ~~needed~~compensation bycost ~~the~~related ~~Company~~to stock option awards.

24The intrinsic value of the outstanding and exercisable options as of June 30, 2020 was approximately $3,162,000. The weighted average remaining contractual life of exercisable options is 2.2 years. There were no options exercised during the three and nine months ended June 30, 2020 and 2019. The fair value of the stock options that vested during the three and nine months ended March 31, 2020 was approximately $0 for both periods. The fair value of the stock options that vested during the three and nine months ended June 30, 2019 was approximately $0 and $126,000, respectively. There were no options granted during the three and nine months ended June 30, 2020 and 2019.

~~Table~~The Company did not grant any restricted stock awards during the three and nine months ended June 30, 2020 and 2019. As of ~~Contents~~June 30, 2020, and September 30, 2019, there was no unrecognized compensation cost related to restricted stock awards.

~~ASTA~~Note ~~FUNDING,~~15—Stockholders’ ~~INC. AND SUBSIDIARIES~~Equity

~~NOTES~~The TOCompany ~~CONDENSED~~has ~~CONSOLIDATED~~5,000,000 ~~FINANCIAL~~authorized ~~STATEMENTS~~preferred shares with a par value of $0.01 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.

~~(Unaudited)~~There were no shares of preferred stock issued and outstanding as of June 30, 2020 and 2019.

~~Note~~Dividends ~~16—Fair~~are ~~Value~~declared at the discretion of ~~Financial~~the ~~Measurements~~Board and ~~Disclosures~~depend ~~(Continued)~~ 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, fromtime to time, restrict the ability to pay dividends. As of June 30, 2020, there were no such restrictions. No dividends were declared during the three and nine months ended June 30, 2020.

The Company’s investments in equity securities and available-for-sale debt securities are classified as Level 1 and Level 2 financial instruments, respectively, based on the classifications described above. The Company did not have any transfers into (out of) Level 1 investments during the fiscal year ended September 30, 2019. The Company had no Level 3 available-for-sale investments during the three and six months ended March 31, 2020.24

~~Consumer~~Table ~~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 monthly collections for consumer receivables over the estimated collection period, which is currently April of 2020 through March of 2029. These cash flows are then fair valued using a discount rate of 20%. See Note 4 for the rollforward of Level 3 activity. Contents

~~Note~~ASTA ~~17—Related~~FUNDING, ~~Party~~INC. ~~Transactions~~AND SUBSIDIARIES

~~The~~NOTES ~~Company~~TO ~~utilizes~~CONDENSED ~~the~~CONSOLIDATED ~~services~~FINANCIAL of a consultant in conjunction with its international operations. The consultant is the spouse of one of the owners of Serlefin Peru. For the three and six months ended March 31, 2020 and 2019, the Company paid this consultant $12,500 and $25,000, and $25,239 and $50,478, respectively. The Company does not have a formal agreement in place for these services, and the Company had no amounts due to this consultant as of March 31, 2020 and September 30, 2019.STATEMENTS

On August 15, 2019, the Company and Lou Piccolo, a non-independent member of the Company’s Board of Directors, entered into a new one-year, $30,000 contract, pursuant to which Mr. Piccolo will provide consulting services. The compensation is to be paid quarterly. The Company recorded an expense of $7,500 and $15,000 for the three and six months ended March 31, 2020. There were no amounts due to Mr. Piccolo at March 31, 2020 and September 30, 2019.(Unaudited)

Note 1816—~~Segment~~Fair ~~Reporting~~Value of Financial Measurements and Disclosures

~~The~~Fair ~~Company~~Value operates through strategic business units that are aggregated into three reportable segments: Consumer receivables, personal injury claims and social security disability advocacy. The three reportable segments consist of ~~the~~Financial ~~following:~~Instruments

• 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~~estimated ~~are~~fair ~~based~~value ~~on the characteristics (issuer, account size, debtor location and age~~ of ~~debt) of~~ the ~~underlying accounts of each portfolio. Recently, the~~ Company'’s ~~efforts~~financial ~~have~~instruments ~~been~~is insummarized ~~the international areas (mainly South America),~~ as we have curtailed our active purchasing of consumer receivables in the United States. The Company holds consumers receivable acquired for liquidation in both Colombia and Peru of approximately $1.0 million. The business conducts its activities primarily under the name Palisades Collection, LLC.follows:

• Personal injury claims – This segment is comprised of purchased interests in personal injury claims from claimants who are a party in personal injury litigation or claims. The Company advances to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The Company historically funded personal injury claims in Simia and Sylvave. The Company formed a new wholly owned subsidiary, Arthur Funding, on March 16, 2018 to continue in the personal injury claims funding business. Arthur Funding began funding advances on personal injury claims in May 2019. Arthur Funding, Simia and Sylvave conduct its businesses solely in the United States and obtains business from external brokers and internal sales professionals soliciting attorneys and law firms who represent claimants who have personal injury claims. Business is also obtained from its website and through attorneys. Simia and Sylvave are not funding any new advances, but continue to collect on outstanding personal injury claim advances in the ordinary course.

	June 30, 2020				September 30, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash equivalents (Level 1)	$	645,000	$	645,000	$	64,000	$	64,000
Investments in equity securities (Level 1)		26,580,000		26,580,000		8,136,000		8,136,000
Available-for-sale debt securities (Level 2)		44,001,000		44,001,000		56,123,000		56,123,000
Consumer receivables acquired for liquidation (Level 3)		997,000		23,554,000		1,668,000		25,783,000

25Disclosure 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:

~~Table~~Cash equivalents - The Company considers all highly liquid debt instruments purchased with an original maturity of ~~Contents~~three months or less to be cash equivalents. The carrying amount of cash equivalents approximates fair value.

~~ASTA~~Investments ~~FUNDING,~~in ~~INC.~~equity ~~AND~~securities ~~SUBSIDIARIES~~- The investments in equity consist of mutual funds that are valued based on quoted prices in active markets.

~~NOTES~~Available-for-sale TOdebt ~~CONDENSED~~securities ~~CONSOLIDATED~~- ~~FINANCIAL~~The ~~STATEMENTS~~available-for-sale debt securities consist of U.S. treasury bills that are valued based on quoted prices in active markets. The U.S. treasury bills have been classified as available for sale by the Company, as they are deemed to be short term investments, and can be liquidated as needed by the Company.

The Company’s investments in equity securities and available-for-sale debt securities are classified as Level 1 and Level 2 financial instruments, respectively, based on the classifications described above. The Company did not have any transfers into (~~Unaudited~~out of) Level 1 investments during the fiscal year ended September 30, 2019. The Company had no Level 3 available-for-sale investments during the three and nine months ended June 30, 2020.

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 monthly collections for consumer receivables over the estimated collection period, which is currently July of 2020 through March of 2029. These cash flows are then fair valued using a discount rate of 20%. See Note ~~18—Segment~~4 ~~Reporting~~for ~~(Continued)~~the rollforward of Level 3 activity.

•Note ~~Social~~17—Related Security benefit advocacy – GAR Disability and Five Star are advocacy groups representing individuals throughout the United States in their claims for social security disability and supplemental security income benefits from the Social Security and Veterans Administration.Party

~~Certain~~The ~~non-allocated~~Company ~~administrative~~utilizes ~~costs,~~the ~~interest~~services ~~income~~of ~~and~~a ~~various~~consultant ~~other~~in ~~non-operating~~conjunction ~~income~~with ~~and~~its ~~expenses~~international ~~are~~operations. ~~reflected~~The inconsultant ~~Corporate.~~is ~~Corporate~~the ~~assets~~spouse ~~include~~of ~~cash~~one of the owners of Serlefin Peru. For the three and ~~cash~~nine ~~equivalents,~~months ~~investments~~ended inJune ~~equity~~30, ~~securities~~2020 and ~~available-for-sale~~2019, ~~debt~~the ~~securities~~Company paid this consultant $12,500 ~~settlement~~and ~~receivable~~$37,500, ~~property~~and $16,000 and ~~equipment~~$64,000, ~~goodwill~~respectively. The Company does not have a formal agreement in place for these services, ~~deferred~~and ~~taxes~~the Company had no amounts due to this consultant as of June 30, 2020 and ~~other~~September ~~assets~~30, 2019.

On August 15, 2019, the Company and Lou Piccolo, a non-independent member of the Company’s Board of Directors, entered into a new one-year, $30,000 contract, pursuant to which Mr. Piccolo will provide consulting services. The ~~following~~compensation ~~table~~is ~~shows~~to ~~results~~be bypaid ~~reporting~~quarterly. ~~segment~~The Company recorded an expense of $7,500 and $23,650 for the three and ~~six~~nine months ended ~~March~~June 3130, 2020. On July 18, 2020, the Companyand Mr. Piccolo entered into a six-month, $15,000 contract, pursuant to which Mr. Piccolo will continue toprovide consulting services to the Company. The compensation is to be paid quarterly in the amount of $7,500 on August 15, 2020 and November 30, 2020. There were no amounts due to Mr. Piccolo at June 30, 2020 and September 30, 2019:.

(Dollars in millions)	Consumer Receivables		Social Security Disability Advocacy		Personal Injury Claims			Corporate (2)			Total
Three Months Ended March 31,
2020:
Revenues	$	2.8	$	0.9	$	0.2		$	—		$	3.9
Other income	0.1			—		—			0.1			0.2
Segment profit (loss)		2.2		0.1		(0.2	)		(2.0	)	0.1
2019:
Revenues	$	3.5	$	1.3	$	0.4		$	—		$	5.2
Other income		0.4		—		—			0.2			0.6
Segment profit (loss)		3.6		0.4		0.4			(2.0	)		2.4
Six Months Ended March 31,
2020:
Revenues	$	5.9	$	1.7	$	0.6		$	—		$	8.2
Other income		0.1		—		—			0.4			0.5
Segment profit (loss)		5.1		0.2		0.4			(4.2	)		1.5
Segment Assets (1)		7.0		0.9		4.2			80.3			92.4
2019:
Revenues	$	7.0	$	2.6	$	1.1		$	—		$	10.7
Other income		0.5		—		—			0.3			0.8
Segment profit (loss)		6.5		0.8		0.9			(4.1	)		4.1
Segment Assets (1)		10.0		0.9		7.1			71.1			89.1

~~The~~Table ~~Company~~of ~~does not have any intersegment revenue transactions.~~Contents

(1)	Includes other amounts in other line items on the condensed consolidated balance sheet.
(2)	Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.

ASTA FUNDING, INC. AND SUBSIDIARIES

~~Note~~NOTES ~~19—Subsequent~~TO ~~Events~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~On April 10, 2020, the Company applied for a $1.1 million Paycheck Protection Program~~ (~~“PPP”~~Unaudited) loan under the CARES Act. The proceeds of the loan are intended to be used to retain the Company’s employees, maintain payroll and make lease and utility payments. The Company received approval for a PPP loan from the Small Business Administration. On May 11, 2020, the Company signed a PPP loan note with an interest rate of 1% and a May 11, 2022 maturity date, though PPP loans may be forgiven if certain conditions are met. The PPP loan was funded on May 20, 2020.

26Note 18—Segment Reporting

~~Table~~The Company operates through strategic business units that are aggregated into three reportable segments: Consumer receivables, personal injury claims and social security disability advocacy. The three reportable segments consist of ~~Contents~~the following:

~~Item~~• 2Consumer receivables - This segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumerreceivables, including judgment receivables, charged off receivables and semi-performing receivables. ~~Management’s~~Judgment ~~Discussion~~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 ~~Analysis~~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 ~~Financial~~individuals ~~Condition~~to banks, finance companies and ~~Results~~other credit providers. A large portion of ~~Operations~~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 (~~“MD&A”~~issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio. Recently, the Company's efforts have been in the international areas (mainly South America), as we have curtailed our active purchasing of consumer receivables in the United States. The Company holds consumers receivable acquired for liquidation in both Colombia and Peru of approximately $0.8 million. The business conducts its activities primarily under the name Palisades Collection, LLC.

~~Caution~~• ~~Regarding~~Personal ~~Forward~~injury ~~Looking~~claims ~~Statements~~– This segment is comprised of purchased interests in personal injury claims from claimants who are a party in personal injury litigation or claims. The Company advances to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The Company historically funded personal injury claims in Simia and Sylvave. The Company formed a new wholly owned subsidiary, Arthur Funding, on March 16, 2018 to continue in the personal injury claims funding business. Arthur Funding began funding advances on personal injury claims in May 2019. Arthur Funding, Simia and Sylvave conduct its businesses solely in the United States and obtains business from external brokers and internal sales professionals soliciting attorneys and law firms who represent claimants who have personal injury claims. Business is also obtained from its website and through attorneys. Simia and Sylvave are not funding any new advances, but continue to collect on outstanding personal injury claim advances in the ordinary course.

~~The~~• ~~“COVID-19”~~Social ~~pandemic,~~Security ~~and~~benefit ~~measures~~advocacy ~~taken~~– toGAR ~~mitigate~~Disability the pandemic, could cause actual results to differ materially from those set forth in the forward-looking statements, particularly if the pandemic persists for an extended period of time both domestically and ~~internationally.~~Five ~~While~~Star itare isadvocacy ~~difficult~~groups torepresenting ~~predict~~individuals ~~the~~throughout ~~extent to which~~ the ~~evolving~~United ~~effects~~States of COVID-19 and measures taken to mitigate the pandemic, they may impact us, they could have an adverse effect on our results of operations and cash flows, particularly as they affect general economic and financial markets, changes in ~~economic~~their ~~variables,~~claims ~~such~~for associal ~~the~~security ~~availability~~disability ~~of consumer credit, the ability of consumers to pay amounts owed to us, the housing market, energy costs, the number~~ and ~~size~~supplemental ofsecurity ~~personal~~income ~~bankruptcy~~benefits ~~filings,~~from the ~~rate~~Social ofSecurity ~~unemployment, the levels of consumer confidence~~ and ~~consumer~~Veterans ~~debt, and investor sentiment~~Administration. ~~Additionally, government actions in response to the pandemic may hinder our collection activities or result in increased expenses.~~

~~This~~Certain ~~Form 10~~non-Qallocated ~~contains~~administrative ~~certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933~~costs, asinterest ~~amended~~income and ~~Section 21~~various ~~E of the Securities Exchange Act of 1934, as amended. All statements~~ other ~~than~~non-operating ~~statements~~income ofand ~~historical~~expenses ~~facts~~are ~~included~~reflected ~~or incorporated by reference~~ in ~~this~~Corporate. ~~report,~~Corporate ~~including~~assets ~~without~~include ~~limitation,~~cash ~~statements~~and ~~regarding~~cash ~~our future financial position~~equivalents, ~~business~~investments ~~strategy,~~in ~~budgets,~~equity ~~projected~~securities ~~revenues, projected costs~~ and ~~plans and objective of management~~ available-for ~~future operations, are forward~~-~~looking~~sale ~~statements.~~debt ~~Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may~~securities,” ~~“will,”~~a ~~“expects,”~~note ~~“intends~~receivable,” ~~“plans,”~~property ~~“projects,”~~and ~~“estimates~~equipment,” ~~“anticipates~~goodwill,” ordeferred ~~“believes”~~taxes orand ~~the~~other ~~negative thereof or any variation there on or similar terminology or expressions~~assets.

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 impact of the COVID-19 pandemic on general political and economic conditions, including as a result of efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter in place orders and third-party business closures and resource allocations, our ability to execute our business continuity as well as our operational and budget plans in light of the COVID-19 pandemic, our ability to consummate the proposed Merger, satisfaction of closing conditions to the consummation of the proposed Merger, the impact of the announcement or the closing of the Merger on the Company’s relationships with its employees, existing customers or potential future customers, the ability to realize anticipated benefits of the proposed Merger, the restatement of previously issued financial statements, the identified material weaknesses in our internal control over financial reporting and our ability remediate those material 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 Annual Report on Form 10-K for the fiscal year ended September 30, 2019.26

~~All~~Table ~~subsequent~~of 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.Contents

~~Overview~~ASTA FUNDING, INC. AND SUBSIDIARIES

~~Asta~~NOTES ~~Funding,~~TO ~~Inc.,~~CONDENSED aCONSOLIDATED ~~Delaware~~FINANCIAL Corporation (the “Company,” “we” or “us”), together with our 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 XXIII”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), Five Star Veterans Disability, LLC (“Five Star”), EMIRIC, LLC (“EMIRIC”), Simia Capital, LLC (“Simia”), Sylvave, LLC (“Sylvave”) (formerly known as Pegasus Funding, LLC (“Pegasus”)), Arthur Funding LLC (“Arthur Funding”) (formerly known as Practical Funding, LLC (“Practical Funding”)), and other subsidiaries, which are not all wholly owned, are engaged in several business segments in the financial services industry including funding of personal injury claims, through our wholly owned subsidiaries Sylvave, Simia and Arthur Funding, social security disability advocacy through our wholly owned subsidiaries GAR Disability Advocates and Five Star and the business of purchasing, managing for our own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables. STATEMENTS

27(Unaudited)

~~Table~~ Note of18—Segment ~~Contents~~Reporting (Continued)

WeThe ~~operate~~following ~~principally~~table inshows ~~the~~results ~~United~~by ~~States~~reporting insegment ~~three~~for ~~reportable~~the ~~business~~three ~~segments:~~and ~~consumer~~nine ~~receivables,~~months ~~social~~ended ~~security~~June ~~disability~~30, ~~advocacy~~2020 and ~~personal injury claims.~~2019:

For a detailed description of our segments, please read Note 18 – Segment Reporting, in our notes to condensed consolidated financial statements.

(Dollars in millions)	Consumer Receivables		Social Security Disability Advocacy		Personal Injury Claims		Corporate (2)			Total
Three Months Ended June 30,
2020:
Revenues	$	2.2	$	0.9	$	0.3	$	—		$	3.4
Other income		—		—		—		0.5			0.5
Segment profit (loss)		2.0		0.1		0.4		(1.9	)		0.6
2019:
Revenues		3.7		1.2		0.4		—			5.3
Other income		0.2		—		—		0.9			1.1
Segment profit (loss)		3.3		0.4		0.6		(1.0	)		3.3
Nine Months Ended June 30,
2020:
Revenues		8.2		2.6		0.8		—			11.6
Other income		0.1		—		—		0.9			1.0
Segment profit (loss)		7.1		0.3		0.8		(6.0	)		2.2
Segment Assets (1)		6.0		1.0		4.1		82.3			93.4
2019:
Revenues		10.7		3.7		1.6		—			16.0
Other income		0.7		—		—		1.3			2.0
Segment profit (loss)		9.9		1.2		1.5		(5.1	)		7.5
Segment Assets (1)		9.1		0.6		6.2		74.5			90.4

~~Pending Transactions~~ The Company does not have any intersegment revenue transactions.

On April 8, 2020 the Company announced that it has entered into a definitive merger agreement (the “Merger Agreement”) under which the Stern Group, comprised of Gary Stern, Chairman, President and Chief Executive Officer of the Company, Ricky Stern and certain related parties, will acquire all of the issued and outstanding shares of common stock of the Company through the merger of the Company with a wholly-owned subsidiary of Asta Finance Acquisition Inc. (“Parent”), with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”).

(1)	Includes other amounts in other line items on the consolidated balance sheet.
(2)	Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.

~~Each~~Note ~~share~~19–Subsequent ~~of outstanding common stock will be purchased for $11.47 in cash.~~Events

~~The~~On ~~Merger~~August ~~was~~13, ~~unanimously approved by the board of directors of Asta (the “Board”)~~2020, ~~acting on~~ the ~~unanimous~~Company ~~recommendation~~entered ofinto a ~~special~~sale ~~committee of independent~~ and ~~disinterested~~assignment ~~directors~~agreement ~~(the~~with ~~“Special Committee”) that was granted full authority to conduct~~ a ~~comprehensive~~third ~~strategic~~party ~~review~~(Assignor) and ~~evaluate,~~purchased ~~and if warranted, negotiate an acquisition proposal. The Merger is subject to~~ the ~~satisfaction of customary closing conditions as well as the approval by the Company~~Assignor’s ~~stockholders other than the Stern Group. Upon closing~~rights, ~~the~~title ~~Company~~and ~~will~~interest ~~become~~in a ~~privately~~certain ~~held~~litigation ~~company~~funding ~~and~~agreement asin ~~such,~~ the ~~Company’s~~amount ~~shares~~ of ~~common stock will no longer be listed or traded on the Nasdaq Global Select Market~~$675,000.

Subsequent to the approval of the Merger by the Board, on May 22, 2020, RBF Capital, LLC notified the Company’s Board of Directors, of its proposal to acquire all of the outstanding shares of the Company not currently held by RBF Capital, LLC for a price of $13.00 per share in cash (the “RBF Capital Proposal”), representing a 13% premium to the Stern Investor Group’s proposed purchase price of $11.47 per share. RBF Capital, LLC intends to finance the proposed acquisition with internal cash. RBF Capital, LLC is prepared to immediately negotiate a confidentiality agreement, commence due diligence and begin negotiation of definitive documentation for a transaction. RBF Capital, LLC is open to a co-investment with the Stern Investor Group as part of their buyout proposal, if the members of the Stern family wish to retain their equity in the Company. The RBF Capital Proposal does not purport to be complete and RBF Capital, LLC reserves the right to modify the RBF Capital Proposal in any way, to extend or discontinue discussions regarding the same, or to withdraw the RBF Capital Proposal at any time. RBF Capital, LLC may, directly or indirectly, take such additional steps from time to time as it may deem appropriate to further the RBF Capital Proposal as may be modified from time to time, including, without limitation, (a) engaging in discussions regarding the same with the Company, other shareholders advisors, and other relevant parties, and (b) entering into other agreements, arrangements and understanding as may be appropriate in connection with its RBF Capital Proposal, as may be modified from time to time. The Special Committee is evaluating the RBF Capital Proposal.27

~~During~~Table ~~the three and six months ended March 31, 2020, the Company incurred fees and expenses in connection with the Merger~~ of ~~$531,000 and $785,000, respectively, included in general and administrative expenses on the accompanying consolidated statement of operations.~~ Contents

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

~~The~~Caution ~~novel~~Regarding ~~coronavirus~~Forward ~~2019~~Looking (“COVID-19”) outbreak emerged in late 2019 and was declared a global pandemic by the World Health Organization on March 11, 2020. Current economic uncertainty brought about as a result of COVID-19 global pandemic may adversely impact the results of operations and liquidity of the Company overall and its business units to varying degrees over the near and longer term, particularly if the economic effects of the pandemic worsen or persist for an extended period of time. Statements

AThe ~~contributing~~“COVID-19” ~~factor~~pandemic, and measures taken to ~~this~~mitigate ~~expected~~the ~~near-term~~pandemic, ~~impact~~could iscause ~~that~~actual results to differ materially from those set forth in the ~~COVID~~forward-19looking statements, particularly if the pandemic ~~has~~persists ~~significantly~~for ~~impacted~~an ~~the~~extended ~~ability~~period of ~~many~~time ~~consumers~~both todomestically ~~pay~~and ~~their~~internationally. ~~charged-off~~While ~~consumer~~it ~~receivable~~is ~~balances. In~~difficult ~~addition,~~to predict the ~~world-wide~~extent ~~effect~~to which the evolving effects of ~~this~~COVID-19 ~~pandemic~~and ~~has~~measures ~~been~~taken to ~~drastically~~mitigate ~~reduce~~the ~~employment~~pandemic, ~~both~~they inmay ~~the~~impact ~~U.S.~~us, they could have an adverse effect on our results of operations and ~~abroad~~cash flows, particularly as they affect general economic and ~~because~~financial ~~employment~~markets, ischanges ~~the~~in ~~greatest~~economic ~~predictor~~variables, ofsuch aas the availability of consumer ~~debtor~~credit, the ability of consumers to ~~fulfill~~pay ~~his~~amounts orowed ~~her~~to ~~obligations~~us, ~~diminished~~the ~~cash~~housing ~~flows~~market, ~~are~~energy ~~probable~~costs, inthe ~~this~~number ~~segment.~~and ~~Accordingly,~~size ~~while~~of wepersonal ~~cannot~~bankruptcy ~~quantify~~filings, the ~~expected~~rate ~~effects~~of unemployment, wethe ~~believe~~levels ~~revenues~~of consumer confidence and ~~cash~~consumer ~~collections~~debt, ~~generated~~and byinvestor ~~our~~sentiment. ~~Consumer~~Additionally, ~~Receivables~~government ~~business~~actions ~~are~~in ~~likely~~response to bethe ~~below~~pandemic ~~our~~may ~~budgeted~~hinder ~~expectations~~our ~~for~~collection atactivities ~~least~~or ~~the~~result ~~remainder~~in ofincreased ~~2020~~expenses.

~~Our~~This ~~Personal~~Form ~~Injury~~10-Q ~~clams~~contains ~~business~~certain ~~relies~~forward-looking onstatements within the ~~adjudication~~meaning of ~~personal~~Section 27A ~~injury~~of ~~claims~~the ~~for~~Securities ~~which~~Act weof ~~purchase~~1933, anas ~~interest~~amended inand ~~the~~Section 21 ~~right~~E toof ~~receive,~~the ~~from~~Securities ~~such~~Exchange ~~claimant,~~Act ~~part~~ of ~~the~~1934, ~~proceeds~~as oramended. ~~recoveries~~All ~~which~~statements ~~such~~other ~~claimant~~than ~~receives~~statements ~~by reason~~ of ahistorical ~~settlement,~~facts ~~judgment~~included or ~~award~~incorporated ~~with~~by ~~respect~~reference toin ~~such~~this ~~claimant’s~~report, ~~claim.Most~~including ~~courthouses~~without ~~have~~limitation, ~~temporarily~~statements ~~closed~~regarding ~~and~~our ~~lawsuits~~future ~~are~~financial ~~not~~position, ~~being~~business ~~adjudicated. It~~strategy, isbudgets, ~~unclear~~projected asrevenues, toprojected ~~when~~costs ~~there~~and ~~will~~plans beand aobjective ~~full reopening~~ of ~~the~~management ~~court~~for ~~system,~~future ~~and~~operations, asare ~~such,~~forward-looking ~~many~~statements. ~~cases~~Forward-looking ~~will~~statements begenerally ~~held~~can inbe ~~abeyance~~identified asby ~~part~~the use of ~~an already long~~forward-~~standing~~looking ~~backlog.~~terminology ~~While~~such weas ~~cannot~~“may,” ~~quantify~~“will,” ~~the~~“expects,” ~~effects~~“intends,” of“plans,” ~~this~~“projects,” ~~downward~~“estimates,” ~~trend~~“anticipates,” weor ~~believe~~“believes” ~~COVID~~or ~~19 may negatively impact~~ the ~~results~~negative ofthereof ~~future~~or ~~operations~~any ~~and~~variation ~~cash~~there ~~flows~~on ~~related~~or tosimilar ~~this~~terminology ~~segment~~or expressions.

~~While~~We ithave isbased ~~premature~~these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to ~~quantify~~known ~~the~~and ~~impact~~unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of ~~the~~activity, ~~evolving~~performance ~~effects~~or achievements to be materially different from any future results, levels of ~~COVID~~activity, performance or achievements expressed or implied by such forward-19looking statements. Important factors which could materially affect our results and our future performance include, without limitation, the ~~effectiveness~~impact of ~~measures~~the ~~taken~~COVID-19 pandemic on general political and economic conditions, including as a result of efforts by ~~global~~governmental ~~governments~~authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter in place orders and ~~its~~third-party ~~economic~~business ~~impact~~closures and resource allocations, weour ~~expect~~ability to execute our business continuity as well as our operational and budget plans in light of the COVID-19 ~~will~~pandemic, ~~negatively~~our ~~impact~~ability to consummate the ~~Company’s~~proposed ~~results~~Merger, satisfaction of ~~operations~~closing ~~and~~conditions ~~its~~to ~~cash~~the ~~flows. The~~consummation ~~nature~~of the proposed Merger, ~~extent~~ ~~and~~the ~~duration~~impact of the ~~impact~~announcement toor the closing of the Merger on the Company’s ~~businesses~~relationships ~~will~~with ~~depend~~its onemployees, ~~implications~~existing customers or potential future customers, the ability to realize anticipated benefits of the ~~general~~ ~~economic~~proposed ~~and~~Merger, the restatement of previously issued financial ~~markets~~statements, ~~changes~~the identified material weaknesses in ~~economic~~our ~~variables~~internal control over financial reporting and our ability remediate those material weaknesses, ~~such~~our asability ~~the~~to ~~availability~~purchase ofdefaulted consumer ~~credit~~receivables at appropriate prices, ~~the~~changes ~~ability~~in ofgovernment ~~consumers~~regulations that affect our ability to ~~pay~~collect sufficient amounts ~~owed~~on our defaulted consumer receivables, our ability to ~~us;~~employ ~~the~~and ~~effect~~retain onqualified ~~the~~employees, ~~housing~~changes ~~market;~~in the ~~rate~~credit ofor ~~unemployment;~~capital ~~the~~markets, ~~number~~changes ~~and~~in ~~size~~interest ofrates, ~~personal~~deterioration ~~bankruptcy~~in ~~filings;the~~economic ~~effect~~conditions, onnegative ~~energy~~press ~~costs;~~ regarding the ~~levels~~debt ofcollection ~~consumer~~industry ~~confidence~~which ~~and~~may ~~consumer~~have ~~debt;~~a ~~investor~~negative ~~sentiment;~~impact ~~and~~on ~~any~~a ~~closures~~debtor’s willingness to ~~our~~pay ~~offices.~~the ~~Additionally~~debt we acquire, ~~government~~and ~~actions~~statements inof ~~response~~assumption tounderlying any of the ~~pandemic~~foregoing, ~~may~~as ~~hinder~~well ~~our~~as ~~collection~~other ~~activities~~factors orset ~~result~~forth under “Item 1A. Risk Factors” in ~~increased~~our ~~expenses~~Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

~~Management~~All issubsequent ~~actively~~written ~~monitoring~~and ~~the~~oral ~~impact~~forward-looking ofstatements ~~the~~attributable ~~global~~to ~~situation~~us, onor ~~our~~persons ~~financial~~acting ~~condition,~~on ~~liquidity,~~our ~~operations~~behalf, ~~and~~are ~~workforce.~~expressly ~~Given~~qualified ~~the~~in ~~daily~~their ~~evolution~~entirety ofby the ~~COVID-19~~foregoing. ~~pandemic~~Except ~~and~~as ~~the~~required ~~global~~by ~~responses to curb its spread~~law, ~~the~~we ~~Company~~assume isno ~~not~~duty ~~able~~ to ~~estimate~~update ~~the~~or ~~effects~~revise ofany ~~the COVID~~forward-19looking ~~pandemic on its results of operations, financial condition, or liquidity for fiscal year 2020~~statements.

28Overview

~~Table~~Asta Funding, Inc., a Delaware Corporation (the “Company,” “we” or “us”), together with our 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 XXIII”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), Five Star Veterans Disability, LLC (“Five Star”), EMIRIC, LLC (“EMIRIC”), Simia Capital, LLC (“Simia”), Sylvave, LLC (“Sylvave”) (formerly known as Pegasus Funding, LLC (“Pegasus”)), Arthur Funding LLC (“Arthur Funding”) (formerly known as Practical Funding, LLC (“Practical Funding”)), and other subsidiaries, which are not all wholly owned, are engaged in several business segments in the financial services industry including funding of ~~Contents~~personal injury claims, through our wholly owned subsidiaries Sylvave, Simia and Arthur Funding, social security disability advocacy through our wholly owned subsidiaries GAR Disability Advocates and Five Star and the business of purchasing, managing for our own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables.

~~Financial~~For ~~Information~~the ~~About~~period ~~Operating~~October ~~Segments~~1, 2017 to January 12, 2018, Pegasus was 80% owned, but not controlled, and accounted for under the equity method. On January 12, 2018 (“Date of Acquisition”), we acquired the remaining 20% minority interest and a controlling financial interest, in Pegasus and changed its name to Sylvave and now own 100% of Sylvave. Commencing on the Date of Acquisition, we consolidated the financial results of this entity.

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 six months ended March 31, 2020 and 2019. The personal injury claims segment accounted for its investment in Sylvave under the equity method of accounting through January 12, 2018, for subsequent periods we included the financial results of Sylvave in our consolidated statement of operations, while Simia is a consolidated entity. The following table summarizes total revenues by percentage from our three lines of business for the three and six months ended March 31, 2020 and 2019:28

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2020			2019			2020			2019
Finance income (consumer receivables)		72.5	%		66.5	%		72.5	%		65.2	%
Personal injury claims income		4.3			8.7			6.6			10.9
Disability fee income		23.2			24.8			20.9			23.9
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%

Table of Contents

~~Information~~We ~~about~~operate ~~the~~principally ~~results~~in ofthe ~~each~~United ofStates ~~our~~in ~~reportable segments for the~~ three ~~and~~reportable ~~six~~business ~~months~~segments: ~~ended~~consumer ~~March 31~~receivables, ~~2020~~social ~~and,~~security ~~2019,~~disability ~~reconciled~~advocacy ~~to the consolidated results, are set forth below. Separate segment MD&A is not provided, as segment revenue corresponds to the revenue presented in our condensed consolidated statement of operations,~~ and ~~material~~personal ~~expense~~injury ~~items are not allocable to any specific segment~~claims.

(Dollars in millions)	Consumer Receivables		Social Security Disability Advocacy		Personal Injury Claims			Corporate (2)			Total
Three Months Ended March 31,
2020:
Revenues	$	2.8	$	0.9	$	0.2		$	—		$	3.9
Other income	0.1			—		—			0.1			0.2
Segment profit (loss)		2.2		0.1		(0.2	)		(2.0	)	0.1
2019:
Revenues	$	3.5	$	1.3	$	0.4		$	—		$	5.2
Other income		0.4		—		—			0.2			0.6
Segment profit (loss)		3.6		0.4		0.4			(2.0	)		2.4
Six Months Ended March 31,
2020:
Revenues	$	5.9	$	1.7	$	0.6		$	—		$	8.2
Other income		0.1		—		—			0.4			0.5
Segment profit (loss)		5.1		0.2		0.4			(4.2	)		1.5
Segment Assets (1)		7.0		0.9		4.2			80.3			92.4
2019:
Revenues	$	7.0		2.6	$	1.1		$	—		$	10.7
Other income		0.5		—		—			0.3			0.8
Segment profit (loss)		6.5		0.8		0.9			(4.1	)		4.1
Segment Assets (1)		10.0		0.9		7.1			71.1			89.1

For a detailed description of our segments, please read Note 19 – Segment Reporting, in our notes to condensed consolidated financial statements.

WeGoing doPrivate ~~not have any intersegment revenue transactions.~~ Transaction

(1)	Includes other amounts in other line items on the condensed consolidated balance sheet.
(2)	Corporate is not part of our three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment

~~Consumer~~ The ~~Receivables~~ Merger was unanimously approved by the board of directors of Asta (the “Board”), acting on the unanimous recommendation of a special committee of independent and disinterested directors (the “Special Committee”) that was granted full authority to conduct a comprehensive strategic review and evaluate, and if warranted, negotiate an acquisition proposal. Subsequent to the approval of the Merger by the Board, on May 22, 2020, RBF Capital, LLC notified the Company’s Board of Directors, of its proposal to acquire all of the outstanding shares of the Company not currently held by RBF Capital, LLC for a price of $13.00 per share in cash (the “RBF Capital Proposal”), representing a 13% premium to the Stern Investor Group’s proposed purchase price of $11.47 per share. The Special Committee evaluated the RBF Capital Proposal.

~~The~~On ~~consumer~~June ~~receivable~~25, ~~portfolios~~2020, ~~generally~~the ~~consist~~Company ofannounced ~~one~~that orit ~~more~~had ofentered into an amendment (the ~~following~~“Amendment”) ~~types~~to ofthe ~~consumer~~Merger ~~receivables:~~ Agreement.

•Pursuant ~~charged-off~~to ~~receivables~~the —amended ~~accounts~~Merger ~~that~~Agreement ~~have~~each ~~been~~share ~~written-off~~of byoutstanding common stock will be purchased for $13.10 in cash. The new purchase price represents an increase of $1.63 per share over the ~~originators~~original purchase price and ~~may~~a ~~have~~premium ~~been~~of ~~previously~~approximately ~~serviced~~18% byto ~~collection~~the ~~agencies;~~Company’s ~~and~~closing stock price on June 24, 2020, the last trading day prior to the execution of the Amendment.

•The ~~semi-performing~~Merger ~~receivables~~Agreement —and ~~accounts~~Amendment ~~where~~were approved by the ~~debtor~~board isof ~~making~~directors ~~partial~~of orAsta ~~irregular~~(the ~~monthly~~“Board”) ~~payments~~(without the participation of Gary Stern), ~~but~~acting on the ~~accounts~~unanimous ~~may~~recommendation ~~have~~of ~~been~~a ~~written-off~~special committee of independent and disinterested directors (the “Special Committee”) that was granted full authority to conduct a comprehensive strategic review and evaluate, and if warranted, negotiate an acquisition proposal. The Merger is subject to the satisfaction of customary closing conditions as well as the approval by the ~~originators~~Company’s stockholders other than the Stern Group.

WeSimultaneously ~~acquire~~with ~~these~~the ~~consumer~~signing ~~receivable~~of ~~portfolios~~the atamended Merger Agreement, the Company also entered into a ~~significant~~Settlement ~~discount~~and toVoting ~~the~~agreement ~~amount~~with ~~actually~~RBF ~~owed~~Capital, byLLC, a stockholder of the ~~borrowers~~Company. WePursuant ~~acquire~~to ~~these~~the ~~portfolios~~terms ~~after~~of athe ~~qualitative~~Settlement and ~~quantitative~~Voting ~~analysis~~Agreement, ofRBF Capital, LLC has, among other things, agreed to vote the ~~underlying~~shares ~~receivables~~of ~~and~~Common ~~calculate~~Stock of the ~~purchase~~Company ~~price~~beneficially soowned by RBF Capital, LLC, or that ~~our~~may ~~estimated~~become ~~cash~~beneficially ~~flow~~owned ~~offers~~by usit anduring ~~adequate~~the ~~return~~term onof ~~our~~the ~~investment~~Settlement ~~after~~and ~~servicing~~Voting ~~expenses.~~Agreement, ~~After~~in ~~purchasing~~favor aof ~~portfolio~~adopting the amended Merger Agreement, wedated ~~actively~~June ~~monitor~~25, ~~its~~2020, ~~performance~~and any other matters necessary for consummation of the Merger (as defined in the Settlement and ~~review~~Voting Agreement) and ~~adjust~~the ~~our~~other ~~collection~~transactions ~~and~~contemplated ~~servicing~~by ~~strategies~~the ~~accordingly~~amended Merger Agreement.

WeThe ~~purchase~~Merger ~~receivables~~will ~~from~~be ~~credit~~financed ~~grantors~~by ~~and~~a ~~others~~committed ~~through~~loan ~~privately~~facility ~~negotiated~~provided ~~direct~~by ~~sales,~~Bank ~~brokered~~Leumi ~~transactions and auctions in which sellers of receivables seek bids from several pre-qualified debt purchasers~~USA. ~~We pursue new acquisitions of consumer receivable portfolios on an ongoing basis through:~~

•The ~~our~~Merger ~~relationships~~is ~~with~~expected ~~industry~~to ~~participants,~~close ~~financial~~in ~~institutions,~~the ~~collection~~Company’s ~~agencies~~fourth fiscal quarter of 2020 and is subject to the satisfaction of customary closing conditions as well as the approval by the Company’s stockholders other than the Stern Group. The Board recommends that Company’s stockholders vote to adopt and approve the Merger Agreement. Upon closing, ~~investors~~the Company will become a privately held company and ~~our~~as ~~financing~~such, ~~sources;~~the Company’s shares of common stock will no longer be listed or traded on the Nasdaq Global Select Market.

•During ~~brokers~~the ~~who~~three ~~specialize~~and nine months ended June 30, 2020, the Company incurred fees and expenses in connection with the ~~sale~~Merger of ~~consumer~~$668,000 ~~receivable~~and ~~portfolios;~~$1,453,000, respectively, included in general and administrative expenses on the accompanying consolidated statement of operations.

•Risks ~~other~~and ~~sources.~~Uncertainties

29The novel coronavirus 2019 (“COVID-19”) outbreak emerged in late 2019 and was declared a global pandemic by the World Health Organization on March 11, 2020. Current economic uncertainty brought about as a result of COVID-19 global pandemic may adversely impact the results of operations and liquidity of the Company overall and its business units to varying degrees over the near and longer term, particularly if the economic effects of the pandemic worsen or persist for an extended period of time.

~~Table of Contents~~29

~~Personal~~Table ~~Injury~~of ~~Claims~~Contents

~~This~~A ~~Company’s~~contributing ~~personal~~factor ~~injury~~to ~~claims~~this ~~business~~expected ~~segment~~near-term impact is ~~comprised~~that ofthe ~~purchased~~COVID-19 ~~interests~~pandemic inhas ~~personal~~significantly ~~injury~~impacted ~~claims~~the ~~from~~ability ~~claimants~~of ~~who~~many ~~are~~consumers ato ~~party~~pay intheir ~~personal~~charged-off ~~injury~~consumer ~~litigation~~receivable ~~or claims~~balances. ~~The~~In ~~Company~~addition, ~~advances~~the ~~to each claimant funds on a non~~world-~~recourse~~wide ~~basis~~effect atof anthis ~~agreed~~pandemic ~~upon~~has ~~interest~~been ~~rate,~~to indrastically ~~anticipation~~reduce ofemployment aboth ~~future settlement. The interest~~ in ~~each claim purchased consists of~~ the ~~right~~U.S. toand ~~receive~~abroad, ~~from~~and ~~such~~because ~~claimant,~~employment ~~part~~is of the ~~proceeds~~greatest orpredictor ~~recoveries which such claimant receives by reason~~ of a ~~settlement,~~consumer ~~judgment~~debtor ~~or award with respect~~ to ~~such~~fulfill ~~claimant’s~~his ~~claim.~~or ~~The~~her ~~Company~~obligations, ~~historically~~diminished ~~funded~~cash ~~personal~~flows ~~injury~~are ~~claims~~probable in ~~Simia~~this ~~and Sylvave~~segment. ~~The~~Accordingly, ~~Company~~while ~~formed~~we acannot ~~new~~quantify ~~wholly~~the ~~owned~~expected ~~subsidiary~~effects, ~~Arthur~~we ~~Funding,~~believe onrevenues ~~March~~and ~~16,~~cash ~~2018~~collections togenerated ~~continue~~by inour ~~the~~Consumer ~~personal~~Receivables ~~injury~~business ~~claims~~are ~~funding~~likely ~~business.~~to ~~Arthur~~be ~~Funding~~below ~~began~~our ~~funding~~budgeted ~~advances~~expectations onfor ~~personal~~at ~~injury~~least ~~claims~~the inremainder ~~May~~of ~~2019~~2020. ~~Arthur~~For ~~Funding,~~the ~~Simia~~three ~~and~~months ~~Sylvave~~ended ~~conduct~~June ~~its~~30, ~~businesses~~2020, ~~solely~~we indid ~~the~~experience ~~United~~a ~~States~~downturn ~~and~~in ~~obtains~~cash ~~business~~collections ~~from~~attributable ~~external~~to ~~brokers~~consumer ~~and~~delays ~~internal~~in ~~sales~~making ~~professionals~~payments ~~soliciting~~on ~~attorneys~~their ~~and~~outstanding ~~law~~debts. ~~firms~~Management ~~who~~attributes ~~represent~~these ~~claimants~~delays ~~who~~to ~~have~~circumstances ~~personal~~caused ~~injury~~by ~~claims.~~COVID-19 ~~Business~~and isexpects ~~also~~additional ~~obtained~~delays ~~from~~in ~~its~~customer ~~website~~payments ~~and~~in ~~through~~future ~~attorneys~~periods. ~~Simia~~We ~~and~~have ~~Sylvave~~also ~~are~~experienced ~~not~~customer ~~funding~~payment ~~any~~delays ~~new~~due ~~advances, but continue~~ to ~~collect~~COVID-19 onimpacts ~~outstanding personal injury claim advances~~ in ~~the~~our ~~ordinary~~Peru ~~course~~operations.

~~Disability~~Our ~~Advocacy~~Personal ~~Business~~Injury claims business relies on the adjudication of personal injury claims for which we purchase an interest in 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. Most courthouses have temporarily closed and lawsuits are not being adjudicated. It is unclear as to when there will be a full reopening of the court system, and, as such, many cases will be held in abeyance as part of an already long-standing backlog. Our Personal Injury segment has not experienced noticeable delays in the adjudication of claims despite the fact that most courthouses have been temporarily closed. While we cannot quantify the effects of this downward trend, we believe COVID-19 may negatively impact the results of future operations and cash flows related to this segment.

~~GAR~~While ~~Disability~~it ~~Advocates~~is premature to quantify the impact of the evolving effects of COVID-19 and ~~Five~~the ~~Star~~effectiveness ~~are~~of ~~disability~~measures ~~advocacy~~taken ~~groups~~by global governments to mitigate the pandemic and its economic impact, ~~which~~we ~~for~~expect aCOVID-19 ~~fee~~will ~~obtain~~negatively impact the Company’s results of operations and ~~represent~~its ~~individuals~~cash flows. The nature, extent and duration of the impact to the Company’s businesses will depend on implications to the general economic and financial markets, changes in ~~their~~economic ~~claims~~variables, ~~for~~such ~~social~~as ~~security~~the ~~disability~~availability of consumer credit, ~~supplemental~~the ~~security~~ability ~~income~~of ~~benefits~~consumers ~~from~~to pay amounts owed to us; the ~~Social~~effect ~~Security~~on ~~Administration~~the rate of unemployment; the number and ~~veterans~~size ~~benefits~~of ~~with~~personal bankruptcy filings; the ~~Veteran's~~levels ~~Administration~~of consumer confidence and consumer debt; investor sentiment; and any closures to our foreign offices. Additionally, government actions in response to the pandemic may hinder our collection activities or result in increased expenses.

~~Critical~~Management ~~Accounting~~is ~~Policies~~actively monitoring the impact of the global situation on our financial condition, liquidity, operations, and workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for fiscal year 2020.

~~Income~~Financial ~~Recognition~~Information -About ~~Consumer~~Operating ~~Receivables~~ Segments

WeThe ~~account for certain of our investments in~~ consumer receivables ~~using~~segment ~~the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310, Receivables - Loans~~ and ~~Debt~~the ~~Securities~~social ~~Acquired~~security ~~with~~benefit ~~Deteriorated~~advocacy ~~Credit~~segment ~~Quality~~each ~~(“ASC~~accounted ~~310”).~~for ~~Under~~10% ~~the~~or ~~guidance~~more of ~~ASC~~consolidated ~~310,~~net ~~static~~revenue ~~pools~~for ofthe ~~accounts~~three ~~are~~and ~~established.~~nine ~~These~~months ~~pools~~ended ~~are~~June ~~aggregated~~30, ~~based~~2020 onand ~~certain common risk criteria~~2019. ~~Each~~The ~~static~~personal ~~pool~~injury isclaims ~~recorded~~segment ~~at cost and is~~ accounted for asits ainvestment ~~single~~in ~~unit~~Sylvave ~~for~~under the ~~recognition~~equity method of ~~income,~~accounting ~~principal~~through ~~payments~~January ~~and~~12, ~~loss~~2018, ~~provision.~~for ~~Due~~subsequent toperiods we included the ~~substantial~~financial ~~reduction~~results of ~~portfolios~~Sylvave ~~reported~~in ~~under~~our ~~the~~consolidated ~~interest~~statement ~~method~~of operations, ~~and~~while ~~the~~Simia ~~inability~~is toa ~~reasonably~~consolidated ~~estimate~~entity. ~~cash~~The ~~collections~~following ~~required~~table tosummarizes ~~account~~total ~~for~~revenues ~~those~~by ~~portfolios~~percentage ~~under~~from ~~the~~our ~~interest~~three ~~method,~~lines weof ~~concluded~~business for the ~~cost~~three ~~recovery~~and ~~method~~nine ismonths ~~the~~ended ~~appropriate~~June ~~accounting~~30, ~~method~~2020 ~~under~~and ~~the circumstances.~~2019:

Under the guidance of ASC 310-30, we 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).

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2020			2019			2020			2019
Finance income (consumer receivables)		65.6	%		69.5	%		70.5	%		66.6	%
Personal injury claims income		7.1			8.3			6.7			10.1
Disability fee income		27.3			22.2			22.8			23.3
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%

We use 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. 30

~~Impairments~~Table -of ~~Consumer Receivables~~Contents

WeInformation ~~account~~about ~~for~~the ~~our~~results ~~impairments~~of ineach ~~accordance~~of ~~with~~our ~~ASC~~reportable ~~310,~~segments ~~which provides guidance on how to account~~ for ~~differences~~the ~~between~~three ~~contractual~~ and ~~expected~~nine ~~cash~~months ~~flows~~ended ~~from~~June an30, ~~investor’s~~2020 ~~initial investment in loans or debt securities acquired in a transfer if those differences are attributable~~and, ~~at least in part~~2019, toreconciled ~~credit quality. The recognition of income under ASC 310 is dependent on us having the ability~~ to ~~develop reasonable expectations of both~~ the ~~timing~~consolidated ~~and~~results, ~~amount~~are ofset ~~cash~~forth ~~flows to be collected~~below. InSeparate ~~the~~segment ~~event~~MD&A weis ~~cannot~~not ~~develop~~provided, aas ~~reasonable~~segment ~~expectation~~revenue ascorresponds to ~~both~~ the ~~timing~~revenue ~~and~~presented ~~amount~~in ofour ~~cash~~condensed ~~flows~~consolidated ~~expected~~statement toof beoperations, ~~collected.~~and ~~ASC~~material ~~310~~expense ~~permits~~items ~~the~~are ~~change~~not allocable to ~~the~~any ~~cost~~specific ~~recovery method~~segment. ~~We will recognize income only after we have recovered our 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. We believe we have significant experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the amount actually owed by underlying customers. We invest in these portfolios only after both qualitative and quantitative analyses of the underlying receivables are performed and a calculated purchase price is paid so that it believes its estimated cash flow offers an adequate return on acquisition costs after servicing expenses. Additionally, when considering larger portfolio purchases of accounts, or portfolios from issuers with whom we have limited experience, it has the added benefit of soliciting its third-party collection agencies and attorneys for their input on liquidation rates and, at times, incorporates such input into the estimates it uses for its expected cash flows, and our ability to recover our cost basis. For the three and six months ended March 31, 2020, we recorded impairment of our international portfolios by $0 and $23,000, respectively.For the three and six months ended March 31, 2019, we did not record any impairments on our domestic or international portfolios.

(Dollars in millions)	Consumer Receivables		Social Security Disability Advocacy		Personal Injury Claims		Corporate (2)			Total
Three Months Ended June 30,
2020:
Revenues	$	2.2	$	0.9	$	0.3	$	—		$	3.4
Other income		—		—		—		0.5			0.5
Segment profit (loss)		2.0		0.1		0.4		(1.9	)		0.6
2019:
Revenues		3.7		1.2		0.4		—			5.3
Other income		0.2		—		—		0.9			1.1
Segment profit (loss)		3.3		0.4		0.6		(1.0	)		3.3
Nine Months Ended June 30,
2020:
Revenues		8.2		2.6		0.8		—			11.6
Other income		0.1		—		—		0.9			1.0
Segment profit (loss)		7.1		0.3		0.8		(6.0	)		2.2
Segment Assets (1)		6.0		1.0		4.1		82.3			93.4
2019:
Revenues		10.7		3.7		1.6		—			16.0
Other income		0.7		—		—		1.3			2.0
Segment profit (loss)		9.9		1.2		1.5		(5.1	)		7.5
Segment Assets (1)		9.1		0.6		6.2		74.5			90.4

30We do not have any intersegment revenue transactions.

Table of Contents

(1)	Includes other amounts in other line items on the consolidated balance sheet.
(2)	Corporate is not part of our three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment

~~Personal~~Consumer ~~Injury Claim Advances and Impairments~~ Receivables

WeThe ~~account~~consumer ~~for~~receivable ~~our~~portfolios ~~investments~~generally inconsist ~~personal injury claims at an agreed upon interest rate, in anticipation~~ of aone ~~future~~or ~~settlement.~~more ~~Our interest purchased in personal injury claim advances consists~~ of the ~~right~~following totypes ~~receive from a claimant part~~ of ~~the~~consumer proceeds or recoveries which such claimant receives by reason of a settlement, judgment or reward with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at a rate based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractually agreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant.receivables:

We• assess 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. We specifically reserve for those fundings where the underlying cases are identified as uncollectible, due to anticipated noncharged-~~favorable~~off ~~verdicts~~receivables ~~and/or~~— ~~settlements~~accounts ~~at levels where recovery of the advance outstanding is unlikely. For cases~~ that have ~~not~~been ~~exhibited~~written-off ~~any~~by ~~specific negative collection indicators, we establish reserves based on~~ the ~~historical~~originators collection rates of our fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. In addition, we also monitor our historical collection rates on fee income and ~~establish reserves~~may onhave ~~fee~~been ~~income~~previously ~~consistent~~serviced ~~with~~by ~~the historically experienced~~ collection ~~rates.~~agencies; ~~We regularly analyze~~ and ~~update the historical collection rates of our initially funded cases as well as our fee income.~~

~~Income~~• ~~Recognition~~ semi-performing ~~Social~~receivables ~~Security~~— ~~Disability~~accounts ~~Advocacy~~ where the debtor is making partial or irregular monthly payments, but the accounts may have been written-off by the originators.

InWe ~~accordance~~acquire ~~with~~these ~~FASB~~consumer ~~ASC~~receivable ~~606,~~portfolios ~~Revenue~~at ~~from Contracts with Customers, we recognize disability fee income for GAR Disability Advocates and Five Star when disability claimant’s cases close, when cash is received, or when we receive~~ a ~~notice~~significant ofdiscount ~~award~~to ~~from~~ the ~~Social Security Administration (“SSA”) that stipulates the~~ amount ofactually ~~fee~~owed ~~approved~~ by the ~~SSA to be paid to us~~borrowers. We ~~establish~~acquire athese ~~reserve~~portfolios ~~for~~after ~~the~~a ~~differentials~~qualitative inand ~~amounts~~quantitative ~~awarded~~analysis byof the ~~SSA~~underlying receivables and ~~Veterans~~calculate ~~Administration compared to~~ the ~~actual~~purchase ~~amounts~~price ~~received~~so bythat ~~us.~~our ~~Fees~~estimated ~~paid~~cash toflow offers us ~~are~~an ~~withheld~~adequate byreturn ~~the~~on ~~SSA~~our ~~and~~investment ~~Veterans~~after ~~Administration~~servicing ~~against~~expenses. ~~the~~After ~~claimant's~~purchasing ~~disability~~a ~~claim award~~portfolio, ~~and~~we ~~are~~actively ~~remitted~~monitor ~~directly~~its toperformance usand ~~from~~review ~~the~~and ~~SSA~~adjust our collection and ~~Veterans~~servicing ~~Administration~~strategies accordingly.

InWe ~~the~~purchase ~~following~~receivables ~~discussions,~~from ~~most~~credit ~~percentages~~grantors and ~~dollar~~others ~~amounts~~through ~~have~~privately ~~been~~negotiated ~~rounded~~direct tosales, ~~aid~~brokered transactions and auctions in ~~the~~which ~~presentation.~~sellers Asof areceivables ~~result,~~seek ~~all~~bids ~~figures~~from ~~are~~several ~~approximations~~pre-qualified debt purchasers. We pursue new acquisitions of consumer receivable portfolios on an ongoing basis through:

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

~~Six~~• ~~Months~~brokers ~~Ended~~who ~~March~~specialize ~~31,~~in ~~2020, Compared to~~ the ~~Six~~sale ~~Months~~of ~~Ended~~consumer ~~March~~receivable ~~31,~~portfolios; ~~2019~~and

~~Finance~~• ~~income.~~other ~~For the six months ended March 31, 2020, finance income decreased $1~~sources.1 million, or 14.8%, to $5.9 million from $7.0 million for the six months ended March 31, 2019. The decrease in finance income was due to reduction in the collections on portfolios during the six months ended March 31, 2020 compared to the six months ended March 31, 2019 and the overall age of the portfolios. During the six months ended March 31, 2020 and 2019 the Company did not purchase any consumer portfolios. Net collections for the six months ended March 31, 2020 decreased 19.8% to $6.4 million from $7.9 million for the same prior year period. During the first six months of fiscal year 2020, gross collections decreased 21.4% or $3.3 million to $12.3 million from $15.6 million for the six months ended March 31, 2019. Commissions and fees associated with gross collections from our third-party collection agencies and attorneys decreased $1.8 million, or 23.0%, to $5.9 million for the six months ended March 31, 2020 from $7.7 million for the six months ended March 31, 2019. Commissions and fees amounted to 48.2% of gross collections for the six months ended March 31, 2020, compared to 49.2% in the same period of the prior year, due to a lower percentage of commissionable collections in the current year period.

Management’s outlook for our Consumer Receivables business segment is that we expect that Finance income may continue to decline due to the continued aging of our existing credit card portfolios. Although we may purchase new portfolios in future periods, we may not be able to purchase consumer receivable portfolios domestically at favorable prices or on sufficient terms. The expected decline in our future Finance income may have a negative impact on our Consumer Receivables business segment and our consolidated pre-tax profits in fiscal 2020 and future periods.31

~~Personal~~Table Injury Claims income. Personal injury claims income decreased 53.7% or $0.6 million to $0.6 million for the six months ended March 31, 2020 from $1.2 million for the six months ended March 31, 2019 as a result of ~~lower new advances in Arthur Funding partially offset by continued collections on historical personal injury claims.~~Contents

~~Social~~Personal ~~security~~Injury benefit advocacy fee income.For the six months ended March 31, 2020, disability fee income decreased $0.9 million, or 33.2%, to $1.7 million as compared to $2.6 million for the six months ended March 31, 2019, due to decreases in average fees per case earned for the disability claimants’ cases closed with the Social Security and Veterans Administration during the current period.Claims

31This Company’s personal injury claims business segment is comprised of purchased interests in personal injury claims from claimants who are a party in personal injury litigation or claims. The Company advances to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The Company historically funded personal injury claims in Simia and Sylvave. The Company formed a new wholly owned subsidiary, Arthur Funding, on March 16, 2018 to continue in the personal injury claims funding business. Arthur Funding began funding advances on personal injury claims in May 2019. Arthur Funding, Simia and Sylvave conduct its businesses solely in the United States and obtains business from external brokers and internal sales professionals soliciting attorneys and law firms who represent claimants who have personal injury claims. Business is also obtained from its website and through attorneys. Simia and Sylvave are not funding any new advances, but continue to collect on outstanding personal injury claim advances in the ordinary course.

~~Table~~ Disability ofAdvocacy ~~Contents~~Business

~~Management’s~~GAR ~~outlook for our Social Security~~ Disability ~~Advocacy~~Advocates ~~business~~and ~~segment~~Five isStar ~~that~~are ~~revenue~~disability ~~and~~advocacy ~~segment~~groups, ~~profitability~~which ~~may be lower~~ for ~~the~~a ~~full~~fee ~~year~~obtain ofand ~~fiscal~~represent ~~2020~~individuals asin ~~compared~~their ~~with~~claims ~~the~~for ~~full~~social ~~year~~security ofdisability, ~~fiscal~~supplemental ~~2019.~~security ~~This~~income ~~full~~benefits ~~year~~from ~~outlook for fiscal 2020 is attributable to~~ the ~~decline~~Social inSecurity ~~our~~Administration ~~first~~ and ~~second~~veterans’ ~~quarter~~benefits ~~revenues and segment profits in the first two quarters of fiscal 2020 as compared~~ with the ~~first~~Veteran's ~~two quarters of fiscal 2019 and the fourth quarter of fiscal 2019~~Administration.

~~Earnings~~Critical ~~(loss)~~Accounting from equity method investee. Loss from equity method investment decreased by $29,000 to a loss of $57,000 for the six months ended March 31, 2020 from a loss of $86,000 during the six months ended March 31, 2019.Policies

~~Gain~~Income onRecognition Settlement. For the six months ended March 31, 2020, the Company recognized a gain on settlement associated with Balance Point Divorce Funding and Stacey Napp of $30,000. For the six months ended March 31, 2019, the Company recognized $0.3 million in gain on settlement associated with prior overcharges billed to the Company by a third-~~party~~ ~~servicer~~Consumer ~~in excess of contractually permitted amounts.~~ Receivables

~~Interest~~We ~~and~~account ~~dividend~~for ~~income.~~certain ~~Interest~~of our investments in consumer receivables using the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Receivables - Loans and ~~dividend~~Debt ~~income~~Securities ~~increased~~Acquired $0with Deteriorated Credit Quality (“ASC 310”).1 ~~million~~Under the guidance of ASC 310, orstatic ~~43%~~pools toof $0accounts are established.6 ~~million~~These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for ~~the~~as ~~six~~a ~~months~~single ~~ended~~unit ~~March~~for 31the recognition of income, ~~2020~~principal ~~from~~payments $0and loss provision.5 ~~million~~Due ~~for~~to the ~~three~~substantial ~~months~~reduction ~~ended~~of ~~March~~portfolios ~~31,~~reported ~~2019~~under the interest method, ~~due~~and ~~primarily~~the inability to ~~higher~~reasonably ~~balances~~estimate incash ~~U.S.~~collections ~~Treasury~~required ~~securities~~to account for those portfolios under the interest method, we concluded the cost recovery method is the appropriate accounting method under the circumstances.

~~Other~~Under ~~income~~the ~~(loss)~~guidance of ASC 310-30, ~~net.~~we ~~The~~must ~~following~~analyze ~~table~~a ~~summarizes~~portfolio ~~other~~upon ~~income~~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 (~~loss~~unless replaced by the seller) ~~for~~or removed from the ~~six~~pool ~~months~~(unless ~~ended~~sold ~~March~~or ~~31,~~returned ~~2020~~to ~~and~~the ~~2019:~~seller).

	For the Six Months Ended March 31,
	2020			2019
Realized gain	––				25,000
Unrealized (loss) gain on equity securities		(162,000	)		21,000
Other		1,000			40,000
	$	(161,000	)	$	86,000

~~General~~Impairments ~~and~~- ~~administrative~~Consumer expenses. For the six months ended March 31, 2020, general and administrative expense decreased $0.2 million, or 3.0%, to $7.1 million from $7.3 million for the six months ended March 31, 2019, primarily due to an increase in cost of outside services of $0.8 million (costs related to the Merger), offset by decreased professional fees of $0.4 million and payroll expenses of $0.3 million.Receivables

~~Segment~~We ~~profit~~account –for ~~Consumer~~our ~~Receivables.~~impairments ~~For~~in ~~the~~accordance ~~six~~with ~~months~~ASC ~~ended~~310, ~~March~~which ~~31,~~provides ~~2020,~~guidance ~~segment~~on ~~profit~~how ~~decreased~~to ~~$1.4~~account ~~million~~for todifferences ~~$5.1~~between ~~million~~contractual ~~from~~and ~~$6.5~~expected ~~million~~cash ~~for~~flows ~~the~~from ~~six~~an ~~months~~investor’s ~~ended~~initial ~~March~~investment ~~31,~~in ~~2019,~~loans ~~primarily~~or ~~due~~debt ~~the~~securities ~~decrease~~acquired in ~~revenue~~a oftransfer ~~$1.1~~if ~~million~~those differences are attributable, ~~decrease~~at least in ~~other~~part, to credit quality. The recognition of income under ASC 310 is dependent on us having the ability to develop reasonable expectations of $0both the timing and amount of cash flows to be collected.4 ~~million~~In ~~offset~~the byevent we cannot develop a ~~favorable~~reasonable ~~foreign~~expectation ~~exchange~~as ~~variance~~to both the timing and amount of $0cash flows expected to be collected.1 ~~million~~ASC 310 permits the change to the cost recovery method. We will recognize income only after we have recovered our carrying value.

~~Segment~~If ~~profit~~collection –projections ~~Personal~~indicate ~~Injury Claims. For~~ the ~~six~~carrying ~~months~~value ~~ended~~will ~~March~~not ~~31,~~be ~~2020~~recovered, ~~segment~~an ~~profit~~impairment ~~was~~is $0required.4 ~~million~~The asimpairment ~~compared~~will be equal to ~~segment~~the ~~profit~~difference ofbetween ~~$0.9~~the ~~million~~carrying ~~for~~value at the ~~six~~time ~~months~~of ~~ended~~the ~~March~~forecast ~~31,~~and ~~2019~~the corresponding estimated remaining future collections. ~~The~~We ~~decrease~~believe ~~was~~we ~~attributable~~have significant experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the ~~decrease~~amount actually owed by underlying customers. We invest in ~~earning~~these portfolios only after both qualitative and quantitative analyses of ~~interest~~the underlying receivables are performed and ~~fees~~a calculated purchase price is paid so that it believes its estimated cash flow offers an adequate return on acquisition costs after servicing expenses. Additionally, when considering larger portfolio purchases of accounts, or portfolios from issuers with whom we have limited experience, it has the added benefit of $0soliciting its third-party collection agencies and attorneys for their input on liquidation rates and, at times, incorporates such input into the estimates it uses for its expected cash flows, and our ability to recover our cost basis.6 ~~million~~For ~~offset~~the bythree ~~reduction~~and innine ~~various~~months ~~overhead~~ended ~~expenses~~June 30, 2020, we recorded impairment of our international portfolios by $0 and $23,000, respectively.1For ~~million~~the three and nine months ended June 30, 2019, we recorded impairment of our international portfolios by $100,000for both periods.

Segment profit – Social Security Disability Advocates. For the six months ended March 31, 2020, segment profit was $0.2 million as compared to $0.8 million for the same period in the prior year. The decrease in profit of $0.6 million in the current period was primarily the result of decreased revenues of $0.8 million partially offset by a reduction in overhead expenses of $0.2 million.32

~~Income~~Table ~~tax expense. Income tax expense, consisting~~ of federal and state components, for six months ended March 31, 2020, was $0.6 million, as compared to an income tax expense, consisting of federal and state income taxes, of $1.1 million for the six months ended March 31, 2019. The decrease in income tax expense in the current year was primarily related to lower profit during current year partially offset by an increase in foreign tax expense.Contents

~~Net~~Personal ~~income. As~~Injury aClaim ~~result~~Advances ofand ~~the above, the Company had a net income for the six months ended March 31, 2020 of $1.0 million compared to $3.0 million for the six months ended March 31, 2019.~~Impairments

~~Three~~We ~~Months~~account ~~Ended~~for ~~March~~our 31investments in personal injury claims at an agreed upon interest rate, ~~2020~~in anticipation of a future settlement. Our interest purchased in personal injury claim advances consists of the right to receive from a claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, ~~Compared~~judgment or reward with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at a rate based on the ~~Three~~expected ~~Months~~realization ~~Ended~~and ~~March~~underwriting 31guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, ~~2019~~ revenue is recognized based upon the contractually agreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant.

~~Finance~~We ~~income.~~assess ~~For~~ the ~~three~~quality ~~months~~of ~~ended~~the ~~March~~personal ~~31,~~injury ~~2020,~~claims ~~finance~~portfolio ~~income~~through ~~decreased~~an ~~$0.7~~analysis ~~million,~~of orthe ~~19.3%,~~underlying topersonal ~~$2.8~~injury ~~million~~fundings ~~from~~on ~~$3.5 million~~a ~~for~~case ~~the~~by ~~three~~case ~~months ended March 31, 2019~~basis. ~~The~~Cases ~~decrease~~are inreviewed ~~finance~~through ~~income~~periodic ~~was~~updates ~~due~~with toattorneys ~~reduction~~handling in the ~~collections~~cases, onas ~~portfolios~~well ~~during~~as ~~the~~with ~~three~~third ~~months~~party ~~ended~~research ~~March~~tools ~~31,~~which ~~2020~~monitor ~~compared~~public tofilings, ~~the~~such ~~three~~as ~~months~~motions ~~ended~~or ~~March~~judgments ~~31,~~rendered ~~2019~~on ~~and~~specific ~~the~~cases. ~~overall~~We ~~age~~specifically ofreserve ~~the~~for ~~portfolios.~~those ~~During~~fundings where the ~~three~~underlying ~~months~~cases ~~ended~~are ~~March~~identified ~~31,~~as ~~2020 and 2019~~uncollectible, ~~the~~due ~~Company~~to ~~did~~anticipated ~~not~~non-favorable ~~purchase~~verdicts ~~any~~and/or ~~consumer~~settlements ~~portfolios.~~at ~~Net~~levels ~~collections~~where ~~for~~recovery of the ~~three~~advance ~~months~~outstanding ~~ended~~is ~~March 31, 2020 decreased 23~~unlikely.5% toFor ~~$3.0~~cases ~~million~~that ~~from~~have ~~$3.9 million~~not ~~for~~exhibited ~~the three~~any ~~months~~specific ~~ended~~negative ~~March~~collection 31indicators, ~~2019. For~~we ~~the~~establish ~~three~~reserves ~~months~~based ~~ended~~on ~~March~~the ~~31,~~historical ~~2020~~collection ~~gross~~rates ~~collections~~of ~~decreased~~our 22fundings.~~6%,~~ orFee ~~$1.7~~income ~~million,~~on toadvances ~~$5.7~~is ~~million~~reserved ~~from~~for ~~$7.4~~on ~~million~~all ~~for~~cases ~~the~~where ~~three~~a ~~months~~specific ~~ended~~reserve ~~March~~is ~~31,~~established ~~2019.~~on ~~For~~ the ~~three~~initially ~~months~~funded ~~ended~~amount. ~~March~~In 31addition, ~~2020~~we ~~commissions~~also ~~and~~monitor ~~fees associated with gross collections from~~ our ~~third-party~~historical collection ~~agencies~~rates ~~and~~on ~~attorneys~~fee ~~decreased~~income ~~21.5%~~and orestablish ~~$0.8~~reserves ~~million~~on tofee ~~$2.7~~income ~~million~~consistent ~~from~~with ~~$3.5 million for~~ the ~~three~~historically ~~months~~experienced ~~ended~~collection ~~March~~rates. ~~31,~~We ~~2019.~~regularly ~~Commissions~~analyze and ~~fees~~update ~~amounted to 47.8% of gross collections for~~ the ~~three~~historical ~~months~~collection ~~ended~~rates ~~March~~of ~~31,~~our ~~2020,~~initially ~~compared~~funded tocases ~~47.2%~~as ~~for~~well ~~the~~as ~~three~~our ~~months~~fee ~~ended March 31, 2019 resulting from higher percentage of commissionable collections in the current year period~~income.

32Income Recognition - Social Security Disability Advocacy

~~Table~~In accordance with FASB ASC 606, Revenue from Contracts with Customers, we recognize disability fee income for GAR Disability Advocates and Five Star when disability claimant’s cases close, when cash is received, or when we receive a notice of ~~Contents~~award from the Social Security Administration (“SSA”) that stipulates the amount of fee approved by the SSA to be paid to us. We establish a reserve for the differentials in amounts awarded by the SSA and Veterans Administration compared to the actual amounts received by us. Fees paid to us are withheld by the SSA and Veterans Administration against the claimant's disability claim award, and are remitted directly to us from the SSA and Veterans Administration.

~~Personal~~In ~~Injury~~the ~~Claims~~following ~~income.~~discussions, ~~Personal~~most ~~injury~~percentages ~~claims~~and ~~income~~dollar ~~decreased~~amounts ~~63.8%~~have orbeen ~~$0.3~~rounded ~~million~~ to ~~$0.2~~aid ~~million~~in ~~for~~ the ~~three months ended March 31, 2020 from $0~~presentation.5 ~~million~~As ~~for the three months ended March 31, 2019 as~~ a result, ofall ~~lower~~figures ~~new~~are ~~advances in Arthur Funding partially offset by continued collections on historical personal injury claims~~approximations.

~~Social~~Results ~~security~~of benefit advocacy fee income. Disability fee income decreased $0.4 million, or 30.6%, to $0.9 million for the three months ended March 31, 2020 from $1.3 million for the three months ended March 31, 2019, due to decreases in average fees per case earned for the disability claimants’ cases closed with the Social Security and Veterans Administration during the current period. Operations

~~Earnings~~Nine ~~(loss)~~Months ~~from~~Ended ~~equity~~June ~~method investee. Loss from equity method investment decreased by $3~~30,~~000~~ ~~to a loss of $53,000 for the three months ended March 31,~~ 2020 ~~from $56~~,~~000~~ ~~during~~Compared to the ~~three~~Nine ~~months~~Months ~~ended~~Ended ~~March~~June 3130, 2019.

~~Gain~~Finance ~~on Settlement~~income. For the ~~three~~nine months ended ~~March~~June 3130, 2020, ~~the~~finance ~~Company~~income ~~recognized~~decreased a$2.5 ~~gain~~million, onor ~~settlement~~23.3%, ~~associated~~to ~~with~~$8.2 ~~Balance~~million ~~Point~~from ~~Divorce~~$10.7 ~~Funding~~million ~~and~~for ~~Stacey~~the ~~Napp~~nine ofmonths $ended June 30,~~000~~ 2019. ~~For~~During the ~~three~~nine months ended ~~March~~June 3130, 2020 and 2019, the Company ~~recognized~~did not purchase any consumer portfolios. Net collections for the nine months ended June 30, 2020 decreased 27.1% to $08.38 million infrom ~~gain~~$12.0 onmillion ~~settlement~~for ~~associated~~the ~~with~~same prior ~~overcharges~~year ~~billed~~period. During the first nine months of fiscal year 2020, gross collections decreased 27.7% or $6.5 million to $16.8 million from $23.3 million for the ~~Company~~nine bymonths aended June 30, 2019. Commissions and fees associated with gross collections from our third-party ~~servicer~~collection agencies and attorneys decreased $3.2 million, or 28.4%, to $8.0 million for the nine months ended June 30, 2020 from $11.2 million for the nine months ended June 30, 2019. Commissions and fees amounted to 47.8% of gross collections for the nine months ended June 30, 2020, compared to 48.3% in ~~excess~~the same period of ~~contractually~~the ~~permitted~~prior ~~amounts~~year, due to a higher percentage of commissionable collections in the prior year period.

~~Interest~~Management’s ~~and~~outlook ~~dividend~~for our Consumer Receivables business segment is that we expect that Finance income may continue to decline due to the continued aging of our existing credit card portfolios. ~~Interest~~ ~~and~~Although ~~dividend~~we ~~income~~may ~~increased~~purchase ~~$65~~new portfolios in future periods,~~000,~~ we may not be able to purchase consumer receivable portfolios domestically at favorable prices or 25on sufficient terms.5% toThe ~~$320,000~~expected ~~for~~decline ~~the~~in ~~three~~our ~~months~~future ~~ended~~Finance ~~March~~income ~~31,~~may ~~2020~~have ~~from~~a ~~$255,000~~negative ~~for~~impact ~~the~~on ~~three~~our ~~months~~Consumer ~~ended~~Receivables ~~March~~business ~~31,~~segment ~~2019,~~and ~~due~~our toconsolidated ~~higher~~pre-tax ~~balances~~profits in ~~U.S.~~the ~~Treasury~~remainder ~~securities~~of fiscal 2020 and future periods.

~~Other~~Personal Injury Claims income,.Personal ~~net~~injury claims income decreased 51.3% ~~The~~or ~~following~~$0.8 ~~table~~million ~~summarizes~~to ~~other~~$0.8 ~~income~~million for the ~~three~~nine months ended ~~March~~June 3130, 2020 ~~and~~from $1.6 million for the nine months ended June 30, 2019: as a result of lower new advances in Arthur Funding partially offset by continued collections on historical personal injury claims.

	For the Three Months Ended March 31,
	2020			2019
Unrealized (loss) gain on equity securities		(172,000	)		50,000
Other	––				1,000
	$	(172,000	)	$	51,000

Disability fee income. For the nine months ended June 30, 2020, disability fee income decreased $1.1 million, or 29.3%, to $2.6 million as compared to $3.7 million for the nine months ended June 30, 2019, due to decreases in average fees per case earned for the disability claimants’ cases closed with the Social Security and Veterans Administration during the current period.

~~General~~Management’s ~~and~~outlook ~~administrative~~for ~~expenses. For~~our ~~the~~Social ~~three~~Security ~~months~~Disability ~~ended~~Advocacy ~~March~~business ~~31,~~segment ~~2020,~~is ~~general~~that revenue and ~~administrative~~segment ~~expenses~~profitability ~~increased~~may ~~$0.5 million,~~be orlower ~~15.1%,~~for tothe ~~$3.9 million~~full ~~from~~year ~~$3.4 million~~of ~~for~~fiscal ~~the~~2020 ~~three~~as ~~months~~compared ~~ended~~with ~~March~~the ~~31,~~full ~~2019,~~year ~~primarily~~of ~~due~~fiscal to2019. anThis ~~increase~~full inyear ~~cost~~outlook offor ~~outside~~fiscal ~~services~~2020 ofis ~~$0.5~~attributable ~~million~~to ~~(costs~~the ~~related~~decline toin ~~the~~our ~~Merger),~~first ~~increase~~and insecond ~~bad~~quarter ~~debt~~revenues ~~expense~~and ofsegment ~~$0.3~~profits ~~million,~~in ~~unfavorable~~the ~~foreign~~first ~~exchange~~three ~~variance~~quarters of ~~$0.4~~fiscal ~~million,~~2020 ~~partially~~as ~~offset~~compared bywith athe ~~decrease~~first inthree ~~salaries~~quarters of ~~$0.4~~fiscal ~~million~~2019 and ~~professional~~the ~~fees~~fourth quarter of ~~$0.2~~fiscal ~~million~~2019.

Segment profit – Consumer Receivables. Segment profit decreased $1.4 million to $2.2 million for the three months ended March 31, 2020 from $3.6 million for the three months ended March 31, 2019. This decrease in profitability was a result of decreased revenue of $0.7 million, decrease in other income of $0.3 million, and unfavorable foreign exchange variance of $0.4 million.33

~~Segment~~Table ~~profit – Personal Injury Claims. Segment profit decreased $0.6 million to a loss~~ of $0.2 million for the three months ended March 31, 2020, from a profit of $0.4 million for the three months ended March 31, 2019. This decrease in profitability was a result of decreased revenue of $0.3 million and an increase in bad debt expense of $0.3 million.Contents

~~Segment~~Earnings ~~profit~~(loss) –from ~~Social~~equity ~~Security~~method ~~Disability Advocates~~investee.Loss ~~The~~from ~~Segment~~equity ~~profit~~method ~~was~~investment ~~$0.1~~decreased ~~million~~by ~~for~~$32,000 ~~the~~to ~~three~~a ~~months~~loss ~~ended~~of ~~March 31~~$59,000 ~~2020 as compared $0.4 million~~ for the ~~three~~nine months ended ~~March~~June 3130, ~~2019.~~2020 ~~The~~from ~~decrease~~a inloss ~~profitability~~ of $~~0.3~~91,000 ~~million~~during in the ~~current~~nine ~~fiscal~~months ~~year~~ended ~~was~~June ~~primarily~~30, ~~the result of decreased revenue of $0~~2019.~~4 million partially offset by decrease in various overhead expenses of $0.1 million.~~

~~Income~~Gain ~~tax~~on ~~expense~~Settlement. For ~~Income~~the ~~tax~~nine ~~expense,~~months ~~consisting~~ended ofJune ~~federal~~30, ~~and~~2020, ~~state~~the ~~components~~Company recognized $30,000 ~~for~~in ~~three~~gain on settlement. For the nine months ended ~~March~~June 3130, ~~2020~~2019, ~~was~~the Company recognized $0.2 6 million, asin ~~compared~~gain toon ~~$0.6~~settlement ~~million~~associated ~~for~~with prior overcharges billed to the ~~three~~Company ~~months~~by ~~ended~~a ~~March~~third-party 31servicer in excess of contractually permitted amounts, ~~2019~~a bankruptcy settlement from a previous third party service provider, ~~primarily~~a ~~due~~gain toon ~~lower~~settlement ~~income~~associated inwith ~~the~~Balance ~~current~~Point ~~year~~Divorce ~~period~~Funding ~~partially~~and ~~offset~~Stacey byNapp ~~income~~and ~~from~~a ~~foreign~~gain ~~operations~~on ~~resulting~~settlement inassociated ~~tax~~with ~~expense~~a ofcomplaint ~~$0.1~~against ~~million~~a former employee.

~~Net~~Interest ~~income~~and ~~(loss)~~dividend income. AsInterest aand ~~result~~dividend ofincome ~~the~~decreased ~~above~~$0.4 million, weor ~~generated~~28.4% ~~net~~to ~~loss~~$0.9 million for the ~~three~~nine months ended ~~March~~June 3130, 2020 offrom $0.1 ~~million, compared to net income of $1~~.83 million for the ~~three~~nine months ended ~~March~~June 3130, 2019, due primarily to lower interest rates on U.S. Treasury securities.

~~Liquidity~~Other ~~and~~income ~~Capital~~(loss), ~~Resources~~net. The following table summarizes other income (loss) for the nine months ended June 30, 2020 and 2019:

We manage our liquidity and capital resources to fund our operating and investing activities. We rely on cash flows from operations as the main source for liquidity.

	For the Nine Months Ended June 30,
	2020		2019
Realized gain	$	—	$	25,000
Unrealized gain on equity securities		67,000		53,000
Other		25,000		43,000
	$	92,000	$	121,000

33General and administrative expenses. For the nine months ended June 30, 2020, general and administrative expenses increased $0.1 million to $10.4 million from $10.3 million for the nine months ended June 30, 2019, primarily due to an increase in outside services cost of $1.3 millionoffset by a decrease in professional fees of $0.5 million,payroll expenses of $0.4 million, bad debt expense of $0.2 million and collection expenses of $0.1 million. During the nine months ended June 30, 2020, the Company incurred fees and expenses in connection with the Merger of $1.4 million.

~~Table~~Interest ofexpense. Interest ~~Contents~~expense for the nine months ended June 30, 2020, was $1,000 attributable to the Company’s recently added loan payable as compared to no interest expense for the nine months ended June 30, 2019.

~~Our~~Segment ~~primary~~profit ~~source~~– ofConsumer ~~cash~~Receivables. For the nine months ended June 30, 2020, segment profit decreased $2.8 million to $7.1 million from ~~operations~~$9.9 ismillion ~~collections~~for onthe nine months ended June 30, 2019, primarily due to the ~~receivable~~decrease ~~portfolios~~in werevenue ~~have~~of ~~acquired~~$2.5 million, and ~~the~~decrease ~~funds~~in ~~generated~~other ~~from~~income ~~the~~of ~~liquidation~~$0.6 million offset by a decrease in collection expense of ~~our~~$0.1 ~~personal~~million ~~injury~~and ~~claim~~payroll ~~portfolios~~expenses of $0.2 million.

~~Our~~Segment ~~primary~~profit ~~uses~~– ofPersonal ~~cash~~Injury ~~include~~Claims. ~~costs~~For ~~involved~~the innine ~~the~~months ~~collection~~ended ofJune ~~consumer~~30, ~~receivables~~2020, ~~the~~segment ~~liquidation~~profit was $0.8 million as compared to segment profit of ~~our~~$1.5 ~~personal~~million ~~injury~~for ~~portfolio~~the nine months ended June 30, ~~and~~2019. ~~the~~The ~~costs~~decrease is attributable to ~~run~~decrease ~~our~~in ~~disability~~revenue ~~advocacy~~of ~~business~~$0.8 million partially offset by various lower operating expenses of $0.1 million.

AtSegment ~~March~~profit 31– Social Security Benefit Advocacy. For the nine months ended June 30, 2020, ~~the~~segment ~~Company~~profit ~~had~~was $9.0.3 million as compared to $1.2 million for the same period in ~~cash~~the ~~and~~prior ~~cash~~year. ~~equivalents,~~The asdecrease ~~well~~in asprofit of $630.89 million in ~~investments~~the incurrent ~~debt~~period ~~and~~is ~~equity~~primarily ~~securities~~the result of decreased revenues of $1. ~~The~~1 ~~Company~~million ~~had~~partially nooffset ~~outstanding~~by ~~debt~~a asreduction ofin ~~March~~overhead ~~31,~~expenses ~~2020~~of $0.2 million.

~~Current~~Income ~~economic~~tax ~~uncertainty brought about as a result of the coronavirus 2019~~ (~~“COVID-19”~~benefit) ~~global~~expense. ~~pandemic~~Income ~~may~~tax ~~adversely~~expense, ~~impact~~consisting ~~the results~~ of ~~operations~~federal and ~~liquidity~~state ofcomponents, ~~the~~for ~~Company~~nine ~~overall~~months ~~and~~ended ~~its~~June ~~business~~30, ~~units~~2020, towas ~~varying degrees over the near term~~$0.8 million, ~~particularly~~as ifcompared ~~the~~to ~~economic effects of the pandemic worsen or persist for~~ an ~~extended~~income ~~period~~tax expense of ~~time~~$2. As1 amillion ~~result~~for of the ~~evolving~~nine ~~effects~~months ofended ~~the~~June ~~COVID-19 on our businesses~~30, ~~we are continuing to evaluate our liquidity position and cash flows to ensure we are judiciously utilizing our cash~~2019.

InNet ~~recognition~~income ~~of expected reductions in future operating cash flows, on April 10, 2020, the Company applied for a $1.1 million Paycheck Protection Program~~ (~~“PPP”~~loss) ~~loan under the CARES Act~~. ~~The~~As ~~proceeds~~a result of the ~~loan~~above, ~~are intended to be used to retain~~ the Company’s ~~employees,~~had ~~maintain~~net ~~payroll~~income ~~and make lease and utility payments. The Company received approval~~ for ~~a PPP loan from~~ the ~~Small~~nine ~~Business~~months ~~Administration.~~ended OnJune ~~May 11~~30, 2020, ~~the Company signed a PPP loan note with an interest rate~~ of $1%.5 ~~and~~million acompared ~~May~~to ~~11,~~$5.4 ~~2022~~million ~~maturity~~net ~~date,~~income ~~though~~for ~~PPP~~the ~~loans~~nine ~~may~~months beended ~~forgiven~~June ~~if certain conditions are met. The PPP loan was funded on May 20~~30, ~~2020~~2019.

~~Receivables Financing Agreement~~34

AsTable of March 31, 2020, we recorded a liability to BMO of approximately $0.1 million. The funds were subsequently remitted to BMO on April 10, 2020. The liability to BMO is recorded when actual collections are received.Contents

~~Cash~~Three ~~Flow~~Months Ended June 30, 2020, Compared to the Three Months Ended June 30, 2019

AtFinance ~~March~~income. 31For the three months ended June 30, 2020, ~~our~~finance ~~cash~~income ~~increased~~decreased $41.75 million, or 39.3%, to $92.02 million from $4.3.7 million atfor ~~September~~the three months ended June 30, 2019. ~~Our~~The ~~cash~~decrease ~~balance~~in ~~remained~~finance ~~consistent;~~income is due to a reduction in the ~~fact~~collections weon ~~invested~~portfolios ~~all~~during ~~excess~~the ~~cash~~three inmonths Uended June 30, 2020 compared to the three months ended June 30, 2019 and the overall age of the portfolios.S During the three months ended June 30, 2020 and 2019, the Company did not purchase any consumer portfolios. ~~Treasury~~Net ~~bills~~collections for the three months ended June 30, ~~which~~2020 ~~are~~decreased ~~accounted~~41.1% to $2.4 million from $4.1 million for asthe three ~~available~~months ended June 30, 2019. For the three months ended June 30, 2020 gross collections decreased 40.6%, or $3.1 million, to $4.6 million from $7.7 million for ~~sale~~the ~~debt~~three ~~securities~~months onended June 30, 2019. For the three months ended June 30, 2020 commissions and fees associated with gross collections from our ~~condensed~~third-party ~~consolidated~~collection ~~balance~~agencies ~~sheet~~and attorneys decreased 39.9% or $1.5 million to $2.1 million from $3.6 million for the three months ended June 30, 2019. Commissions and fees amounted to 47.0% of gross collections for the three months ended June 30, 2020, compared to 46.5% for the three months ended June 30, 2019 resulting from higher percentage of commissionable collections in the current year period.

~~Net~~Personal ~~cash~~Injury ~~provided~~Claims ~~by operating activities was $1~~income.5 Personal ~~million~~injury ~~during~~claims ~~the~~income ~~six~~decreased ~~months ended March 31, 2020, as compared to $0~~44.9% ~~million~~or ~~used in operating activities for the six months ended March 31, 2019, primarily resulting from the net income of~~ $1.0.2 million ~~in the current period compared~~ to $3.0 ~~million in the prior year period, change in prepaid and income taxes receivable of $3~~.32 million, ~~change~~for ~~in deferred tax of ($0.1) million and change in other liabilities of $1.3 million in~~ the ~~current~~three ~~year period. Net cash provided by investing activities was $3.1 million during the six~~ months ended ~~March~~June 3130, 2020, asfrom ~~compared to net cash used in investing activities of~~ $10.84 million ~~during~~for the ~~six~~three months ended ~~March~~June 3130, 2019. ~~The~~as ~~change~~a inresult ~~cash provided by (used in) investing activities was primarily due to the net purchase~~ of ~~available~~lower ~~for~~new ~~sale~~advances ~~debt securities and investments~~ in ~~equity~~Arthur ~~securities~~Funding ofpartially ~~$0.3~~offset ~~million~~by incontinued ~~the~~collections ~~current~~on ~~period~~historical ~~compared to ($8.0) million in the prior period, lower collection from receivables acquired for liquidation and~~ personal injury claims ~~of ($3~~.0) million and proceeds from notes receivable of $0.5 million in the prior year period. There was no cash provided by financing activities during the six months ended March 31, 2020 and in the same prior year period.

~~Our~~Social ~~cash~~security ~~requirements~~benefit ~~have~~advocacy ~~been~~fee income. For ~~and~~the ~~will~~three ~~continue~~months toended beJune ~~significant~~30, to2020, ~~operate~~disability ~~our~~fee ~~various~~income ~~lines~~decreased ~~of business~~$0.3 ~~Significant requirements include costs involved in the collections of consumer receivables~~million, ~~investment~~or ~~in consumer receivable portfolios and investment in personal injury claims~~20. ~~In addition~~7%, ~~dividends~~to ~~could~~$0.9 bemillion ~~declared~~as ~~and~~compared ~~paid~~to if$1.2 ~~and~~million ~~when~~for ~~approved by~~ the ~~Board.~~three ~~Acquisitions~~months ~~recently~~ended ~~have~~June ~~been~~30, ~~financed~~2019, ~~through~~due ~~cash~~to ~~flows~~decreases ~~from~~in ~~operating~~average ~~activities.~~fees Weper ~~believe~~case weearned ~~will~~for ~~not~~the bedisability ~~dependent~~claimants’ oncases aclosed ~~credit~~with ~~facility in~~ the ~~short-term,~~Social asSecurity ~~our~~and ~~cash~~Veterans ~~balances~~Administration ~~will~~during ~~be sufficient to invest in personal injury claims, purchase portfolios and finance~~ the ~~disability~~current ~~advocacy business~~period.

WeEarnings do(loss) ~~not~~from ~~expect~~equity tomethod ~~incur~~investee. ~~any~~Loss ~~material~~from ~~capital~~equity ~~expenditures~~method ~~during~~investment was $2,000 for the ~~next~~three ~~twelve~~months ended June 30, 2020 as compared to a loss of a loss of $5,000 for the three months ended June 30, 2019.

WeGain ~~believe~~on ~~our~~Settlement. For ~~available~~the ~~cash~~three ~~resources~~months ~~and~~ended ~~expected~~June ~~cash~~30, ~~flows~~2020, ~~from~~the ~~operations~~Company ~~will~~did benot ~~sufficient~~recognize toany ~~fund~~gain ~~operations~~on ~~for~~settlement. atFor ~~least~~the three months ended June 30, 2019, the ~~next~~Company ~~twelve~~recognized ~~months~~$0.3 million in gain on settlement associated with a bankruptcy settlement from a previous third-party servicer, a gain on settlement with Balance Point Divorce Funding and Stacey Napp and a gain on settlement with a former employee.

WeOther ~~are~~income, ~~cognizant~~net. ofThe ~~the~~following ~~current~~table ~~market~~summarizes ~~fundamentals~~other inincome for the ~~debt~~three ~~purchase~~months ~~and~~ended ~~company~~June ~~acquisition markets which~~30, ~~because~~2020 ~~of significant supply~~ and ~~tight capital availability, could result in increased buying opportunities.~~2019:

	For the Three Months Ended June 30,
	2020		2019
Unrealized gain on equity securities	$	228,000	$	33,000
Other		25,000		1,000
	$	253,000	$	34,000

~~Table~~General and administrative expenses. For the three months ended June 30, 2020, general and administrative expenses increased $0.2 million, or 5.9%, to $3.2 million from $3.0 million for the three months ended June 30, 2019, primarily due to an increase in outside services cost of ~~Contents~~$0.4 million offset by a decrease in bad debt expense of $0.2 million. During the three months ended June 30, 2020, the Company incurred fees and expenses in connection with the Merger of $0.6 million.

~~The~~Segment ~~outcome~~profit of– ~~any~~Consumer ~~future~~Receivables. ~~transactions~~Segment isprofit ~~subject~~decreased to$1.3 ~~market~~million ~~conditions~~to $2.0 Inmillion ~~addition~~for the three months ended June 30, ~~due~~2020 tofrom ~~these~~$3.3 ~~opportunities~~million for the three months ended June 30, we2019. ~~may~~This ~~seek~~decrease ~~opportunities~~in ~~with~~profitability ~~banking~~is ~~organizations~~a ~~and~~result ~~others~~of on decreased revenue of $1.5 million partially offset by a ~~possible~~decrease ~~financing loan~~in ~~facility~~impairment cost of $0.1 million, and decreases in various operating expenses of $0.1 million.

~~Off~~Segment ~~Balance~~profit ~~Sheet~~– ~~Arrangements~~ Personal Injury Claims. Segment profit decreased $0.2 million to $0.4 million for the three months ended June 30, 2020, from $0.6 million for the three months ended June 30, 2019. This decrease in profitability is primarily due to decreased revenue of $0.2 million.

WeSegment doprofit ~~not~~– ~~have~~Social ~~any~~Security ~~off-balance~~Disability ~~sheet~~Advocates. ~~arrangements~~The Segment profit was $0.1 million for the three months ended June 30, 2020 as compared $0.4 million for the three months ended June 30, 2019. The decrease in profitability of $0.3 million is primarily the result of decreased revenue of $0.3 million.

~~Additional~~Income ~~Supplementary~~tax ~~Information:~~expense– Income tax expense, consisting of federal and state components, for three months ended June 30, 2020, was $0.2 million, as compared to $1.0 million for the three months ended June 30, 2019, primarily due to lower income in the current year period.

WeNet doincome ~~not~~(loss)– ~~anticipate~~As ~~collecting~~a ~~the~~result ~~majority~~ of the ~~purchased principal amounts of our various portfolios. Accordingly~~above, ~~the~~we ~~difference~~generated ~~between~~net ~~the~~income ~~carrying~~for ~~value of~~ the ~~portfolios~~three ~~and~~months ~~the~~ended ~~gross~~June ~~receivables~~30, is2020 ~~not indicative~~ of ~~future~~$0.5 ~~revenues~~million, ~~from~~compared ~~these~~to ~~accounts~~$2.3 ~~acquired~~million for ~~liquidation.~~the ~~Since~~three wemonths ~~purchased~~ended ~~these~~June ~~accounts at significant discounts~~30, ~~we anticipate collecting only a portion of the face amounts~~2019.

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.35

~~Recent~~Table ~~Accounting~~of ~~Pronouncements~~Contents

~~Adopted~~Liquidity ~~During~~and ~~The~~Capital ~~Six Months Ended March 31, 2020~~ Resources

InWe ~~February~~manage ~~2016,~~our ~~the~~liquidity ~~FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which requires lessees to recognize right-of-use assets~~ and ~~lease~~capital ~~liabilities~~resources ~~on the balance sheet for all leases with terms longer than 12 months. For a lease with a term of 12 months or less, a lessee is permitted~~ to ~~make~~fund anour ~~accounting~~operating ~~policy election by class of underlying asset not to recognize a right-of-use asset~~ and ~~lease~~investing ~~liability~~activities. ~~Additionally,~~We ~~when~~rely ~~measuring~~on ~~assets~~cash ~~and~~flows ~~liabilities arising~~ from aoperations lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise a purchase option or not exercise an option to terminate the lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). ASU 2018-01 was issued to address concerns about the cost and complexity of complying with the transition provisions of ASU 2016-02. Additionally, in July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements, which provides an alternative transition method that permits an entity to use the effective date of ASU 2016-02 as the ~~date~~main ofsource ~~initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. The standard became effective in~~ for ~~fiscal years beginning after December 15, 2018 and interim periods within those years, and early adoption is permitted (see Note 8 – Right of Use Assets)~~liquidity.

~~The~~Our ~~Company~~primary ~~adopted~~source ~~the~~of ~~lease~~cash ~~accounting~~from ~~standard~~operations ~~using~~is ~~the~~collections ~~modified retrospective transition option~~ on ~~adoption on October 1, 2019, which had an immaterial impact to~~ the ~~Company’s~~receivable ~~condensed~~portfolios ~~consolidated~~we ~~balance~~have ~~sheet.~~acquired ~~Upon~~and ~~adoption,~~ the ~~Company~~funds ~~recorded~~generated ~~additional~~from ~~lease liabilities of approximately $636,000 attributable to~~ the ~~Company’s~~liquidation ~~operating leases based on the present value~~ of ~~the~~our ~~remaining~~personal ~~minimum~~injury ~~lease~~claim ~~payments with an increase to right-of-use assets of approximately $636,000~~portfolios. The Company used 3.5% as its incremental borrowing rate to calculate the net present value of its leases at October 1, 2019, based on the Company's estimated borrowing rate for a collateralized loan. The Company had no debt outstanding as of October 1, 2019.

InOur ~~February~~primary ~~2018,~~uses ~~the FASB issued ASU 2018-02, Reclassification~~ of ~~Certain~~cash ~~Tax~~include ~~Effects~~costs ~~from~~involved ~~Accumulated~~in ~~Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from~~ the ~~Tax~~collection ~~Cuts~~of ~~and~~consumer ~~Jobs Act enacted on December 22~~receivables, ~~2017 (“Tax Act”), and requires certain disclosures about stranded tax effects. ASU 2018-02 was effective for~~ the ~~Company's~~liquidation ~~fiscal~~of ~~year~~our ~~beginning~~personal ~~October~~injury 1portfolio, ~~2019, with early adoption permitted,~~ and ~~was applied in~~ the ~~period~~costs ofto ~~adoption~~run inour ~~which~~disability ~~the~~advocacy ~~effect of the change in the U~~business.S. federal corporate income tax rate in the Tax Act was recognized. The adoption of this accounting update did not have a material impact on the Company’s condensed consolidated financial statements.

~~Recent~~At ~~Accounting~~June ~~Pronouncements~~30, 2020, ~~Not~~the ~~Yet~~Company ~~Adopted~~had $4.2 million in cash and cash equivalents, as well as $70.6 million in investments in debt and equity securities on hand and $1.1 in debt. In addition, the Company had $90.4 million in stockholders’ equity at June 30, 2020.

InCurrent ~~June~~economic ~~2016,~~uncertainty ~~the~~brought ~~FASB~~about ~~issued~~as ~~ASU~~a ~~2016-13,~~result ~~Financial~~of ~~Instruments-Credit~~the ~~Losses~~coronavirus ~~(Topic~~2019 ~~326~~(“COVID-19”): ~~Measurement~~global ofpandemic ~~Credit~~may ~~Losses~~adversely onimpact ~~Financial~~the ~~Instruments.~~results ~~The~~of ~~ASU~~operations ~~requires~~and anliquidity ~~organization~~of tothe ~~measure~~Company ~~all~~overall ~~expected~~and ~~credit~~its ~~losses~~business ~~for~~units ~~financial~~to ~~assets~~varying ~~held~~degrees atover the ~~reporting~~near ~~date based on historical experience~~term, ~~current~~particularly ~~conditions,~~if ~~and~~the ~~reasonable~~economic ~~and~~effects ~~supportable~~of ~~forecasts. Additionally,~~ the ~~ASU~~pandemic ~~amends~~worsen ~~the~~or ~~accounting~~persist for ~~credit~~an ~~losses~~extended onperiod ~~available-for-sale~~of ~~debt~~time. ~~securities~~As ~~and~~a ~~purchased~~result ~~financial~~of ~~assets~~the ~~with~~evolving ~~credit~~effects ~~deterioration.~~of ~~For~~ the ~~Company,~~COVID-19 ~~this~~on ~~update~~our ~~will be effective for interim periods and annual periods beginning after December 15~~businesses, ~~2022.~~we ~~Upon~~are ~~adoption,~~continuing ~~the~~to ~~Company~~evaluate ~~will~~our ~~accelerate~~liquidity ~~the~~position ~~recording of its credit losses~~ and iscash ~~continuing~~flows to ~~assess~~ensure ~~the~~we ~~impact~~are onjudiciously ~~its~~utilizing ~~consolidated~~our ~~financial statements~~cash.

35In recognition of expected reductions in future operating cash flows, on April 10, 2020, the Company applied for a $1.1 million Paycheck Protection Program (“PPP”) loan under the CARES Act. On May 11, 2020, the Company signed a PPP loan note with an interest rate of 1% and a May 11, 2022 maturity date, though PPP loans may be forgiven if certain conditions are met. The PPP loan was funded on May 20, 2020.

~~Table~~Receivables ofFinancing ~~Contents~~Agreement

InAs ~~January~~of ~~2017~~June 30, ~~the~~2020, ~~FASB~~we ~~issued~~recorded ~~ASU~~a ~~2017-04~~liability ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The objective of this update is~~ to ~~simplify~~BMO ~~the subsequent measurement~~ of ~~goodwill,~~approximately by$0.1 ~~eliminating step 2 from the goodwill impairment test~~million. The ~~amendments~~funds inwere ~~this~~subsequently ~~update~~remitted ~~are~~to ~~effective~~BMO ~~for~~on ~~annual~~July ~~periods beginning after December 15~~10, ~~2019, and interim periods within those fiscal years~~2020. The ~~Company~~liability ~~does~~to ~~not~~BMO ~~believe~~is ~~this~~recorded ~~update~~when ~~will~~actual ~~have~~collections aare ~~material impact on its consolidated financial statements~~received.

InCash August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.Flow

InAt ~~December~~June ~~2019~~30, ~~the FASB issued ASU 2019-12~~2020, ~~Income~~ ~~Taxes~~our ~~(Topic~~cash ~~740):~~decreased ~~Simplifying~~$0.1 ~~the~~million ~~Accounting for Income Taxes, which is intended~~ to ~~simplify~~$4.2 ~~various~~million ~~aspects~~from ~~related~~$4.3 tomillion ~~accounting~~at ~~for~~September ~~income~~30, ~~taxes~~2019. ~~ASU~~Our ~~2019-12~~cash ~~removes~~balance ~~certain~~remained ~~exceptions~~consistent; due to the ~~general~~fact ~~principles~~we ininvested ~~Topic~~all ~~740~~excess ~~and~~cash ~~also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning~~ in ~~fiscal 2022~~U.S. ~~The~~Treasury ~~Company~~bills, iswhich ~~evaluating~~are ~~the~~accounted ~~impact~~for ofas ~~the~~available ~~adoption~~for ofsale ~~ASU~~debt ~~2019-12~~securities on ~~its~~our ~~financial~~condensed ~~statements,~~consolidated ~~but~~balance ~~does not expect such adoption to have a material impact~~sheet.

~~Item~~Net cash provided by operating activities was $1.7 million during the nine months ended June 30, 2020, as compared to $5.4 million provided by operating activities for the nine months ended June 30, 2019, primarily resulting from the net income of $1.4 ~~Controls~~million in the current period compared to a net income of $5.4 million in the prior year period. Net cash used in investing activities was $3.0 million during the nine months ended June 30, 2020, as compared to $8.3 million used in investing activities during the nine months ended June 30, 2019. The change in cash provided by (used in) investing activities was primarily due to the net purchase of available for sale debt securities and ~~Procedures~~investments in equity securities of ($6.4) million in the current period compared to ($20.1) million in the prior period, lower collection from receivables acquired for liquidation of ($0.8) million,lower receipts from personal injury claims of ($2.8) million in the current year and proceeds from notes receivable of $4.3 million in the prior year period. Cash provided by financing activities during the nine months ended June 30, 2020 was $1.1 million from the PPP loan. Cash used in financing activities during the nine months ended June 30, 2019 was $0.6 million. The cash used in financing activities during the prior year was due to the purchase of treasury stock of $0.6 million.

~~Disclosure~~Our ~~Controls~~cash requirements have been and ~~Procedures~~will continue to be significant to operate our various lines of business. Significant requirements include costs involved in the collections of consumer receivables, investment in consumer receivable portfolios and investment in personal injury claims. In addition, dividends could be declared and paid if and when approved by the Board. Acquisitions recently have been financed through cash flows from operating activities. We believe we will not be dependent on a credit facility in the short-term, as our cash balances will be sufficient to invest in personal injury claims, purchase portfolios and finance the disability advocacy business.

~~Disclosure~~We ~~controls~~do ~~and~~not ~~procedures~~expect ~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed~~ to ~~ensure~~incur ~~that~~any ~~information~~material ~~required~~capital toexpenditures beduring ~~disclosed in~~ the ~~reports~~next wetwelve file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosuresmonths.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2020 due to the existence of the material weaknesses in internal control over financial reporting described below (which we view as an integral part of our disclosure controls and procedures).36

WeTable ~~did~~of not design and implement effective control over our control environment, risk assessment, control activities and monitoring activities with regard to our processes and procedures commensurate with our financial reporting requirements which we determined to be material weaknesses. Specifically, our control deficiencies are in the following areas:Contents

~~Control~~We ~~Environment~~believe our available cash resources and ~~Risk~~expected ~~Assessment:~~cash flows from operations will be sufficient to fund operations for at least the next twelve months.

●We ~~The~~are ~~Company~~cognizant ~~did~~of ~~not~~the ~~design~~current ~~and~~market ~~implement~~fundamentals ain ~~sufficient~~the ~~level~~debt ofpurchase ~~formal financial reporting~~ and ~~operating~~company ~~policies~~acquisition ~~and~~markets ~~procedures that define how transactions are initiated~~which, ~~processed,~~because ~~approved,~~of ~~recorded~~significant ~~and~~supply ~~appropriately reported~~ and ~~disclosed~~tight ~~within~~capital ~~the~~availability, ~~annual~~could ~~and~~result ~~interim~~in ~~consolidated~~increased ~~financial~~buying ~~statements~~opportunities. ● The ~~Company~~outcome ~~did~~of ~~not~~any ~~maintain~~future ~~sufficient~~transaction(s) ~~policies~~is ~~and~~subject ~~procedures~~ to ~~ensure~~market ~~that~~conditions. ~~financial~~In ~~statement disclosures are complete~~addition, ~~accurate~~due ~~and~~to ~~comply~~these ~~with professional standards. ● The Company did not maintain a sufficient number of personnel with the necessary level of accounting knowledge~~opportunities, ~~experience,~~we ~~and~~may ~~training~~seek inopportunities ~~the application of U.S. GAAP commensurate~~ with ~~its~~banking ~~financial~~organizations ~~reporting requirements~~ and ~~the~~others ~~complexity~~on a ofpossible ~~the~~financing loan ~~Company’s operations and transactions~~facility.

~~Control~~Off ~~Activities:~~Balance Sheet Arrangements

●We ~~The~~do ~~Company did~~ not ~~maintain~~have ~~and~~any ~~document control activities designed and implemented to identify, review and report, on a timely basis, related party transactions, and account for unusual, non~~off-~~recurring~~balance ~~complex~~sheet ~~transactions and income taxes~~arrangements. ● The Company did not maintain and document internal controls with sufficient precision designed to provide reasonable assurance related to third party service providers and third-party advocates providing cash collection and advocacy services including the completeness and accuracy of related information.

36Additional Supplementary Information:

~~Table~~We do not anticipate collecting the majority of ~~Contents~~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.

~~Monitoring~~For ~~Activities:~~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.

~~The~~Recent ~~Company~~Accounting ~~did not maintain effective monitoring and review activities including communicating deficiencies in a timely manner to those parties responsible for taking corrective action.~~Pronouncements

~~Changes~~Adopted inDuring ~~Internal~~The ~~Controls~~Nine ~~over~~Months ~~Financial~~Ended ~~Reporting.~~June 30, 2020

~~Our~~ In ~~management~~February 2016, ~~under~~ the ~~supervision~~FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which requires lessees to recognize right-of-use assets and ~~with~~lease liabilities on the ~~participation~~balance sheet for all leases with terms longer than 12 months. For a lease with a term of ~~our~~12 ~~Chief~~months ~~Executive~~or ~~Officer~~less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a right-of-use asset and ~~Chief~~lease ~~Financial~~liability. ~~Officer~~Additionally, ~~evaluated~~when ~~our~~measuring ~~internal~~assets ~~control~~and ~~over~~liabilities ~~financial~~arising ~~reporting~~from toa ~~determine~~lease, ~~whether~~optional ~~any~~payments ~~changes~~should ~~occurring~~be ~~during~~included only if the ~~second~~lessee ~~quarter~~is ofreasonably ~~fiscal~~certain ~~year~~to ~~2020~~exercise ~~that~~an ~~have~~option ~~materially~~to ~~affected~~extend the lease, exercise a purchase option or ~~are~~not ~~reasonably~~exercise ~~likely~~an option to ~~affect~~terminate the lease. In January 2018, ~~our~~the ~~internal~~FASB ~~control~~issued ~~over~~ASU ~~financial~~2018-01, ~~reporting~~Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). ~~Management~~ASU ~~has~~2018-01 ~~concluded~~was ~~that~~issued ~~there~~to ~~have~~address ~~been~~concerns noabout ~~changes~~the ~~that~~cost ~~occurred~~and ~~during~~complexity ~~such~~of ~~quarter~~complying ~~that~~with ~~have~~the ~~materially~~transition ~~affected~~provisions of ASU 2016-02. Additionally, orin ~~are~~July ~~reasonably~~2018, ~~likely~~the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements, which provides an alternative transition method that permits an entity to ~~materially~~use ~~affect~~the effective date of ASU 2016-02 as the date of initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. The standard became effective in for fiscal years beginning after December 15, ~~our~~2018 ~~internal~~and ~~control~~interim ~~over~~periods ~~financial~~within ~~reporting~~those years, and early adoption is permitted (see Note 8 – Right of Use Assets).

~~PART~~The IICompany adopted the lease accounting standard using the modified retrospective transition option on adoption on October 1, 2019, which had an immaterial impact to the Company’s condensed consolidated balance sheet. ~~OTHER~~Upon ~~INFORMATION~~adoption, the Company recorded additional lease liabilities of approximately $636,000 attributable to the Company’s operating leases based on the present value of the remaining minimum lease payments with an increase to right-of-use assets of approximately $636,000. The Company used 3.5% as its incremental borrowing rate to calculate the net present value of its leases at October 1, 2019, based on the Company's estimated borrowing rate for a collateralized loan. The Company had no debt outstanding as of October 1, 2019.

~~Item~~In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. ASU 2018-02 was effective for the Company's fiscal year beginning October 1, 2019, with early adoption permitted, and was applied in the period of adoption in which the effect of the change in the U.S. ~~Legal~~federal ~~Proceedings~~corporate income tax rate in the Act was recognized. The adoption of this accounting update did not have a material impact on the Company’s condensed consolidated financial statements.

InRecent ~~the~~Accounting ~~ordinary~~Pronouncements ~~course~~Not ofYet 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.Adopted

37In 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, 2022. Upon adoption, the Company will accelerate the recording of its credit losses and is continuing to assess the impact on its consolidated financial statements.

~~Table of Contents~~37

~~Originators,~~Table 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.~~Contents

~~Legal~~In ~~proceedings~~January ~~are~~2017, ~~subject~~the toFASB ~~substantial~~issued ~~uncertainties~~ASU ~~concerning~~2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the ~~outcome~~Test offor ~~material~~Goodwill ~~factual~~Impairment. ~~and~~The ~~legal~~objective ~~issues~~of ~~relating~~this update is to simplify the ~~litigation.~~subsequent ~~Accordingly~~measurement of goodwill, weby ~~cannot~~eliminating ~~currently~~step ~~predict~~2 from the ~~manner~~goodwill ~~and~~impairment ~~timing~~test. ofThe ~~the~~amendments ~~resolution~~in ofthis ~~some~~update ofare ~~these~~effective ~~matters~~for annual periods beginning after December 15, 2019, and ~~may~~interim beperiods ~~unable~~within tothose ~~estimate~~fiscal ayears. ~~range~~The ofCompany ~~possible~~does ~~losses~~not orbelieve ~~any~~this ~~minimum~~update ~~loss~~will ~~from~~have ~~such~~a ~~matters~~material impact on its consolidated financial statements.

OnIn ~~November~~August 72018, ~~2019,~~the aFASB ~~shareholder~~issued ofASU ~~the~~No. ~~Company~~2018-13, ~~filed~~Fair aValue ~~verified~~Measurement ~~shareholder~~(Topic ~~derivative~~820): ~~complaint~~Disclosure inFramework ~~the~~- ~~Court~~Changes ofto ~~Chancery~~the ofDisclosure ~~the~~Requirements ~~State~~for ofFair ~~Delaware~~Value ~~against~~Measurement. ~~certain~~This ~~current~~ASU ~~and~~modifies ~~former~~the ~~officers~~disclosure ~~and~~requirements ~~directors~~on offair ~~the~~value ~~Company,~~measurements. ~~and~~The ~~named~~ASU removes the ~~Company~~requirement asto adisclose: ~~nominal~~the ~~defendant,~~amount ~~alleging~~of ~~that~~and ~~certain~~reasons ~~actions~~for ~~taken~~transfers bybetween ~~management~~Level ~~constituted~~1 aand ~~violation~~Level 2 of ~~fiduciary~~the ~~duty~~fair tovalue hierarchy; the ~~Company.~~policy ~~The~~for ~~Company~~timing ~~believes~~of ~~the~~transfers ~~lawsuit~~between islevels; ~~without~~and ~~merit~~the ~~and~~valuation ~~intends~~processes tofor ~~vigorously~~Level ~~defend~~3 ~~the~~fair ~~matter~~value measurements. OnThe orASU ~~about~~requires ~~January~~disclosure 8,of ~~2020,~~changes ain ~~motion~~unrealized togains ~~dismiss~~and ~~the~~losses ~~complaint~~for ~~was~~the ~~filed~~period onincluded ~~behalf~~in ofother ~~all~~comprehensive ~~individual~~income ~~defendants~~(loss) ~~and~~for ~~the~~recurring ~~Company~~Level as3 ~~nominal~~fair ~~defendant.~~value Inmeasurements ~~light~~held ofat the ~~execution~~end of the ~~Merger~~reporting ~~Agreement,~~period ~~the~~and ~~parties to~~ the ~~lawsuit~~range ~~entered~~and ~~into~~weighted aaverage ~~joint~~of ~~stipulation~~significant ~~and~~unobservable ~~submitted~~inputs aused ~~proposed order~~ to ~~stay~~develop ~~proceedings~~Level in3 ~~the~~fair ~~lawsuit~~value ~~until~~measurements. ~~the~~This ~~earlier~~ASU ~~of:~~is ~~(i)~~effective anfor ~~announcement~~fiscal byyears, ~~the~~and ~~Company~~interim ofperiods ~~the~~within ~~completion~~those orfiscal ~~cancellation of the merger~~years, orbeginning ~~(ii)~~after ~~June~~December 3015, ~~2020~~2019. OnThe ~~April~~Company ~~14,~~is ~~2020,~~currently evaluating the ~~court~~impact ~~granted~~this ~~the~~guidance ~~parties’~~will ~~stipulation~~have ~~and~~on ~~proposed~~its ~~order~~consolidated financial statements.

~~Item~~In 1ADecember 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ~~Risk~~ASU ~~Factors~~2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2022. The Company is evaluating the impact of the adoption of ASU 2019-12 on its financial statements, but does not expect such adoption to have a material impact.

~~For a discussion of our potential risks and uncertainties, see the information previously disclosed in Part I,~~ Item 1A4. ~~“Risk~~Controls ~~Factors”~~and in our Annual Report on Form 10-K, for the year ended September 30, 2019 filed with the SEC on December 20, 2019. With the exception of the following, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K. Procedures

~~Our~~Disclosure ~~results~~Controls ~~of operations have been adversely affected~~ and ~~could in the future be materially adversely impacted by the COVID-19 pandemic~~Procedures

~~The~~Disclosure ~~global~~controls ~~spread of the COVID-19 pandemic has created significant economic volatility, uncertainty~~ and ~~disruption.~~procedures ~~The~~(as ~~extent~~defined toin ~~which~~Rules ~~the COVID~~13a-1915(e) ~~pandemic impacts our business, operations~~ and ~~financial~~15d-15(e) ~~results~~under ~~will~~the ~~depend~~Exchange onAct) ~~numerous~~are ~~evolving~~designed ~~factors that we may not be able~~ to ~~accurately~~ensure ~~predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions~~ that ~~have~~information ~~been~~required ~~and continue~~ to be ~~taken~~disclosed in ~~response~~the toreports ~~the~~we ~~pandemic;~~file ~~the~~or ~~impact~~submit ofunder the ~~pandemic~~Exchange onAct ~~economic~~is ~~activity~~recorded, ~~and actions taken in response; changes in economic variables~~processed, ~~such~~summarized asand ~~the~~reported ~~availability~~within ~~of consumer credit;~~ the ~~ability~~time ofperiods ~~consumers~~specified toin ~~pay~~SEC ~~amounts~~rules ~~owed~~and toforms ~~us;~~and ~~the~~that ~~effect~~such oninformation ~~the~~is ~~housing~~accumulated ~~market; the rate of unemployment; the number~~ and ~~size~~communicated ofto ~~personal~~our ~~bankruptcy~~management, ~~filings;~~including ~~the~~our ~~effect~~Chief onExecutive ~~energy~~Officer ~~costs; the levels of consumer confidence~~ and ~~consumer~~Chief ~~debt;~~Financial ~~and investor sentiment. Additionally~~Officer, ~~government actions in response~~ to ~~the~~allow ~~pandemic~~timely ~~may~~decisions ~~hinder~~regarding ~~our~~required ~~collection activities or result in increased expenses~~disclosures.

~~Cyber-attacks~~Our management, under the supervision and ~~other~~with ~~malicious~~the ~~internet-based~~participation ~~activity~~of ~~continue~~our toChief ~~increase~~Executive ~~generally,~~Officer and ~~cloud-based~~Chief ~~platform~~Financial ~~providers~~Officer, evaluated the effectiveness of ~~software~~the design and ~~services~~operation ~~have~~of ~~been~~our ~~targeted.~~disclosure ~~Due~~controls toand ~~the~~procedures ~~COVID-19~~as ~~pandemic~~of June 30, ~~many~~2020. ofBased on that evaluation, our ~~employees~~Chief ~~are~~Executive ~~temporarily~~Officer ~~working~~and ~~remotely~~Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2020 due to the existence of the material weaknesses in internal control over financial reporting described below (which ~~may~~we ~~pose~~view ~~additional~~as ~~data~~an ~~security~~integral ~~risks~~part of our disclosure controls and procedures).

~~Management~~We isdid ~~actively~~not ~~monitoring~~design ~~the~~and ~~impact~~implement ofeffective ~~the~~control ~~global~~over ~~situation on~~ our ~~financial~~control ~~condition~~environment, ~~liquidity,~~risk ~~operations~~assessment, ~~and~~control ~~workforce.~~activities ~~Given~~and ~~the~~monitoring ~~daily~~activities ~~evolution~~with ofregard ~~the~~to ~~COVID-19~~our ~~pandemic~~processes and ~~the~~procedures ~~global~~commensurate ~~responses~~with toour ~~curb~~financial ~~its~~reporting ~~spread,~~requirements ~~the~~which ~~Company~~we isdetermined ~~not able~~ to ~~estimate~~be ~~the~~material ~~effects~~weaknesses. ~~of the COVID-19 pandemic on its results of operations~~Specifically, ~~financial~~our ~~condition,~~control ordeficiencies ~~liquidity~~are ~~for fiscal year 2020. Any of these events could cause or contribute to the risks and uncertainties enumerated~~ in the ~~Annual~~following ~~Report and could materially adversely affect our business, financial condition, results of operations and/or stock price.~~areas:

~~Item~~Control 2.Environment ~~Unregistered Sales of Equity Securities~~ and ~~Use~~Risk ~~of Proceeds~~Assessment:

~~None~~● The Company did not design and implement a sufficient level of formal financial reporting and operating policies and procedures that define how transactions are initiated, processed, approved, recorded and appropriately reported and disclosed within the annual and interim consolidated financial statements.

~~Item~~● 3.The ~~Default~~Company ~~Upon~~did ~~Senior~~not ~~Securities~~maintain sufficient policies and procedures to ensure that financial statement disclosures are complete, accurate and comply with professional standards.

~~None~~● The Company did not maintain a sufficient number of personnel with the necessary level of accounting knowledge, experience, and training in the application of U.S. GAAP commensurate with its financial reporting requirements and the complexity of the Company’s operations and transactions. In addition, the Company lacked appropriate segregation of duties over certain accounting processes, including the approval and authorization of certain transactions.

~~Item 4. Mine Safety Disclosures~~38

~~Not~~Table ~~applicable~~of Contents

38Control Activities:

~~Table~~● ofThe ~~Contents~~Company did not maintain and document control activities designed and implemented to identify, review and report, on a timely basis, related party transactions, and account for unusual, non-recurring complex transactions and income taxes.

~~Item~~● 5.The ~~Other~~Company ~~Information~~did not maintain and document internal controls with sufficient precision designed to provide reasonable assurance related to third party service providers and third-party advocates providing cash collection and advocacy services including the completeness and accuracy of related information.

~~None~~Monitoring Activities:

~~Item~~The 6.Company ~~Exhibits~~did not maintain effective monitoring and review activities including communicating deficiencies in a timely manner to those parties responsible for taking corrective action.

~~(a) Exhibits~~Changes in Internal Controls over Financial Reporting.

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 Steven Leidenfrost, 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 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.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated our internal control over financial reporting to determine whether any changes occurring during the third quarter of fiscal year 2020 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

32.2*	Certification of Steven Leidenfrost, 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.

The Company identified an additional material weakness during our third quarter of fiscal 2020. Specifically, the Company identified a control deficiency relating to proper segregation of duties over certain accounting processes, including the approval and authorization of certain transactions.

*Management ~~Filed~~has ~~herewith~~concluded that there have been no other changes that occurred during such quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

39PARTII. OTHER INFORMATION

~~Table~~Item of1. ~~Contents~~Legal Proceedings

~~SIGNATURES~~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. The Company is not involved in any other material litigation in which we are a defendant.

~~Pursuant~~Originators, todebt ~~the~~purchasers ~~requirements~~and ofthird-party collection agencies and attorneys in the ~~Securities~~consumer ~~Exchange~~credit ~~Act~~industry ofare ~~1934,~~frequently ~~the~~subject ~~Registrant~~to ~~has~~putative ~~duly~~class ~~caused~~action ~~this~~lawsuits ~~report~~and other litigation. Claims include failure to becomply ~~signed~~with onapplicable ~~its~~laws ~~behalf~~and byregulations ~~the~~and ~~undersigned,~~improper ~~thereunto~~or ~~duly~~deceptive ~~authorized~~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.

	ASTA FUNDING, INC. (Registrant)
Date: May 29, 2020	By:	/s/ Gary Stern
		Gary Stern, President, Chief Executive Officer
		(Principal Executive Officer)
Date: May 29, 2020	By:	/s/ Steven Leidenfrost
		Steven Leidenfrost, Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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.

40On November 7, 2019, a shareholder of the Company filed a verified shareholder derivative complaint in the Court of Chancery of the State of Delaware against certain current and former officers and directors of the Company, and named the Company as a nominal defendant, alleging that certain actions taken by management constituted a violation of fiduciary duty to the Company. The Company believes the lawsuit is without merit and intends to vigorously defend the matter. On or about January 8, 2020, a motion to dismiss the complaint was filed on behalf of all individual defendants and the Company as nominal defendant. In light of the execution of the merger agreement, the parties to the lawsuit entered into a joint stipulation and submitted a proposed order to stay proceedings in the lawsuit until the earlier of: (i) an announcement by the Company of the completion or cancellation of the merger, or (ii) June 30, 2020. On April 14, 2020, the court granted the parties’ stipulation and proposed order. On July 8, 2020, the court granted the parties' stipulation and proposed order to extend the stay until the earlier of: (i) an announcement by the Company of the completion or cancellation of the merger, or (ii) September 30, 2020.

Item 1A.

Risk factors

For a discussion of our potential risks and uncertainties, see the information previously disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K, for the year ended September 30, 2019 filed with the SEC on December 20, 2019. With the exception of the following, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K.

Our results of operations have been adversely affected and could in the future be materially adversely impacted by the COVID-19 pandemic

The global spread of the COVID-19 pandemic has created significant economic volatility, uncertainty and disruption. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; changes in economic variables, such as the availability of consumer credit; the ability of consumers to pay amounts owed to us; the effect on the housing market; the rate of unemployment; the number and size of personal bankruptcy filings; the effect on energy costs; the levels of consumer confidence and consumer debt; and investor sentiment. Additionally, government actions in response to the pandemic may hinder our collection activities or result in increased expenses.

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Cyber-attacks and other malicious internet-based activity continue to increase generally, and cloud-based platform providers of software and services have been targeted. Due to the COVID-19 pandemic, many of our employees are temporarily working remotely, which may pose additional data security risks.

Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, and workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for fiscal year 2020. Any of these events could cause or contribute to the risks and uncertainties enumerated in the Annual Report and could materially adversely affect our business, financial condition, results of operations and/or stock price.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.

Default Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not applicable

Item 5.

Other Information

None

Item 6.

Exhibits

	(a) Exhibits.

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 Steven Leidenfrost, 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 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 Steven Leidenfrost, 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.

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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: August 14, 2020	By:	/s/ Gary Stern
		Gary Stern, President, Chief Executive Officer
		(Principal Executive Officer)

Date: August 14, 2020	By:	/s/ Steven Leidenfrost
		Steven Leidenfrost, Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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