SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commissions file number: 0-26906
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ASTA FUNDING, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 22-3388607
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
210 Sylvan Ave., Englewood Cliffs, New Jersey 07632
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (201) 567-5648
Former name, former address and former fiscal year, if changed since last
report: N/A
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 7, 2000, the registrant had
3,945,000 common shares outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
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Asta Funding, Inc.
Form 10-QSB March 31, 2000
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31,2000 (unaudited) and
September 30, 1999
Consolidated Statements of Operations for the three-and six-month
periods ended March 31, 2000 and 1999 (unaudited)
Consolidated Statements of Cash Flows for the six-month periods
ended March 31, 2000 and 1999 (unaudited)
Notes to consolidated financial statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Investment in Small Business Resources
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Asta Funding, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, September 30,
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2000 1999
Unaudited
Assets
Cash $ 4,359,000 $ 780,000
Restricted, net 50,000 49,000
Consumer receivables acquired for liquidation 6,573,000 16,500,000
Auto loans receivable, net 5,337,000 8,344,000
Furniture and equipment, net 209,000 174,000
Repossessed automobiles, net 371,000 460,000
Other assets 685,000 643,000
Deferred income taxes 971,000 610,000
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Total assets $ 18,555,000 $ 27,560,000
============ ============
Liabilities and Stockholders' Equity
Liabilities
Accounts payable and accrued expenses $ 2,053,000 $ 256,000
Advances under lines of credit 2,811,000 5,422,000
Notes payable - 10,636,000
Income taxes payable 1,855,000 663,000
Due to affiliate 1,152,000 2,473,000
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Total liabilities 7,871,000 19,450,000
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Stockholders' Equity
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,945,000 39,000 39,000
Additional paid-in capital 9,602,000 9,602,000
Retained earnings (accumulated deficit) 1,043,000 (1,531,000)
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Total stockholders' equity 10,684,000 8,110,000
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Total liabilities and stockholders' equity $ 18,555,000 $ 27,560,000
============ ============
Asta Funding, Inc. and Subsidiaries
Consolidated Statements of Operations
Unaudited
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Interest $ 5,302,000 $ 1,575,000 $ 8,411,000 $ 2,760,000
Servicing fees 19,000 67,000 46,000 110,000
Other income - 6,000 - 23,000
----------- ----------- ----------- -----------
5,321,000 1,648,000 8,457,000 2,893,000
----------- ----------- ----------- -----------
Expenses:
General and administrative 933,000 620,000 1,808,000 1,246,000
Provision for credit losses and repurchases 1,980,000 215,000 2,035,000 465,000
Interest 135,000 306,000 324,000 584,000
----------- ----------- ----------- -----------
3,048,000 1,141,000 4,167,000 2,295,000
----------- ----------- ----------- -----------
Income before income taxes 2,273,000 507,000 4,290,000 598,000
Income tax expense 910,000 203,000 1,716,000 239,000
----------- ----------- ----------- -----------
Net income $ 1,363,000 $ 304,000 $ 2,574,000 $ 359,000
=========== ========= =========== =========
Net income per share - Basic $ 0.35 $ 0.08 $ 0.65 $ 0.09
----------- ----------- ----------- -----------
- Diluted $ 0.33 $ 0.08 $ 0.64 $ 0.09
----------- ----------- ----------- -----------
Weighted average number of shares
outstanding - Basic 3,945,000 3,945,000 3,945,000 3,945,000
----------- ----------- ----------- -----------
- Diluted 4,109,000 3,945,000 4,044,000 3,945,000
----------- ----------- ----------- -----------
Asta Funding, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited Six Months Ended
March 31,
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2000 1999
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Cash flows from operating activities:
Net income $ 2,574,000 $ 359,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 49,000 100,000
Provision for losses and repurchases 2,035,000 465,000
Deferred income taxes (361,000) 236,000
Expenses advanced by affiliate 13,000 40,000
Changes in:
Due from seller - (3,638,000)
Income taxes receivable - 507,000
Restricted cash (1,000) (23,000)
Repossessed automobiles held for sale 89,000 (24,000)
Other assets (42,000) 90,000
Income taxes payable 1,192,000 -
Accounts payable and accrued expenses 1,797,000 (149,000)
----------- -----------
Net cash provided by operating activities 7,345,000 (2,037,000)
Cash flows from investing activities:
Auto loans purchased - (2,122,000)
Auto loan principal payments 2,622,000 3,772,000
Purchase of consumer receivables acquired for liquidation (932,000) (53,000,000)
Principal collected on receivables acquired for liquidation, net 9,209,000 1,855,000
Capital expenditures (84,000) (37,000)
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Net cash provided by (used in) investing activities 10,815,000 (49,532,000)
Cash flows from financing activities:
Advances from affiliate (1,334,000) 2,459,000
Advances (repayments) under lines of credit (2,611,000) (2,889,000)
Advances (repayments) of notes payable (10,636,000) 52,000,000
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Net cash (used in) provided by financing activities (14,581,000) 51,570,000
----------- -----------
Increase (decrease) in cash 3,579,000 1,000
Cash at the beginning of period 780,000 163,000
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Cash at end of period $ 4,359,000 $ 164,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period
Interest $ 281,000 $ 483,000
Income taxes $ 875,000 $ -
Asta Funding, Inc.
Notes to Consolidated Financial Statements
Note 1: Basis of Presentation
Asta Funding, Inc. and its wholly owned subsidiaries (collectively, the
"Company") is a diversified consumer finance company that is engaged in the
business of purchasing, servicing and selling distressed consumer receivables.
Distressed consumer receivables are the unpaid debts of individuals to banks,
finance companies and other credit providers. Most of the Company's receivables
are MasterCard and Visa credit card accounts which were charged-off by the
issuing banks for non-payment. Prior to May 1, 1999, the Company's business was
focused on purchasing, servicing and selling retail installment contracts
originated by dealers in the sale primarily of used automobiles to sub-prime
borrowers.
The consolidated balance sheet as of March 31, 2000, the consolidated statements
of operations for the three-and six-month periods ended March 31, 2000 and 1999,
and the consolidated statements of cash flows for the six-month periods ended
March 31, 2000 and 1999, have been prepared by the Company without an audit. In
the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of the Company
at March 31, 2000 and September 30, 1999, the results of operations for the
three-and six-month periods ended March 31, 2000 and 1999 and the cash flows for
the six-month periods ended March 31, 2000 and 1999 have been made. The results
of operations for the six-month periods ended March 31, 2000 and 1999 are not
necessarily indicative of the operating results for any other interim period or
the full fiscal year.
Pursuant to the rules and regulations of the Securities and Exchange Commission,
certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the presented
financial statements. We suggest that these financial statements be read in
conjunction with the financial statements and notes thereto included in our
Annual Report on Form 10-KSB for the fiscal year ended September 30, 1999.
Note 2: Principles of Consolidation
The consolidated financial statements include the accounts of Asta Funding, Inc.
and its wholly-owned subsidiaries: Asta Auto Receivables Company; E.R.
Receivables Corp., L.L.C.; RAC Acceptance Co., L.L.C.; Palisades Collections,
L.L.C.; Asta Funding Acquisition I, LLC; Asta Funding Acquisition II, LLC; Asta
Funding Acquisition III, LLC; and Asta Funding.Com, LLC. All significant
intercompany balances and transactions have been eliminated in consolidation.
Note 3: Auto Loans Receivable:
The contracts which the Company purchased from dealers provide for finance
charges of between 14.95% and 28.95% per annum. Each contract provides for full
amortization, equal monthly payments and permits prepayments by the borrower at
any time without penalty. The Company generally purchased contracts at a
discount from the full amount financed under a contract.
Note 4: Consumer Receivables Acquired for Liquidation:
Accounts acquired for liquidation are stated at their net realizable value and
consist of consumer loans to individuals throughout the country.
Note 5: Income recognition:
The Company recognizes income on distressed consumer loan portfolios, which are
acquired for liquidation, using either the interest method or cost recovery
method. Upon acquisition of a portfolio of loans, the Company's management
estimates the future anticipated cash flows and determines the allocation of
payments based upon this estimate. If future cash flows cannot be estimated, the
cost recovery method is used. Under the cost recovery method, no income is
recognized until the Company has fully collected the cost of the portfolio.
Interest income from sub-prime automobile loans is recognized using the interest
method. Accrual of interest income on loans receivable is suspended when a loan
is contractually delinquent more than 60 days. The accrual is resumed when the
loan becomes contractually current, and past due interest is recognized at that
time. In addition, a detailed review of loans will cause earlier suspension if
collection is doubtful.
Asta Funding, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company is engaged in the business of purchasing, managing, servicing and
selling distressed consumer receivables. Distressed consumer receivables are the
unpaid debts of individuals that are owed to banks, finance companies and other
credit providers. Most of the Company's receivables are MasterCard and Visa
credit card accounts which were charged-off by the issuing banks for
non-payment. The Company may also purchase bulk receivable portfolios that
include both distressed and performing loans. Prior to May 1, 1999, the
Company's business was focused on purchasing, servicing and selling retail
installment contracts originated by dealers in the sale primarily of used
automobiles to sub-prime borrowers.
Receivables are purchased by the Company at a discount from their charged-off
amount, typically the aggregate unpaid balance at the time of charge-off. The
Company purchases receivables directly from credit grantors through privately
negotiated direct sales and through auction type sales in which sellers of
receivables seek bids from several pre-qualified debt purchasers. In order for
the Company to consider a potential seller of receivables, a variety of factors
are considered. Sellers must demonstrate that they have adequate internal
controls to detect fraud and have the ability to provide post sale support and
to honor buy-back warranty requests. The Company pursues new acquisitions on an
ongoing basis by means of industry newsletters, brokers who specialize in these
assets and other professionals that the Company has relationships with.
The Company generates revenues, earnings and cash flow primarily through the
purchase and collection of principal, interest and other payments on consumer
receivables acquired for liquidation and automobile contracts.
This Form 10-QSB contains forward-looking statements within the meaning of the
"safe harbor" provisions under section 21E of the Securities and Exchange Act of
1934 and the Private Securities Litigation Act of 1995. The Company uses
forward-looking statements in its description of its plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may", "expects", "believes",
"anticipates", "intends", "forecasts", "projects", or similar terms, variations
of such terms or the negative of such terms. These forward-looking statements
are based on management's current expectations and are subject to factors and
uncertainties which could cause actual results to differ materially from those
described in such forward-looking statements. The Company expressly disclaims
any obligation or undertaking to release publicly any updates or revisions to
any forward-looking statements contained in this Form 10-QSB to reflect any
change in its expectations or any changes in events, conditions or circumstances
on which any forward-looking statement is based. Factors which could cause such
results to differ materially from those described in the forward-looking
statements include those set forth under "Risk Factors" and elsewhere in, or
incorporated by reference into this Form 10-QSB. These factors include the
following: the Company is dependent on external sources of financing to fund its
operations; the Company may not be able to purchase receivables at favorable
prices and is subject to competition for such receivables; the Company may not
be able to recover sufficient amounts on its receivables to fund its operations;
government regulations may limit the Company's ability to recover and enforce
receivables and other risks.
In the following discussions, most percentages and dollar amounts have been
rounded to aid presentation. As a result, all figures are approximations.
Asta Funding, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of operations
The three-month period ended March 31, 2000, compared to the three-month period
ended March 31, 1999
- --------------------------------------------------------------------------------
Revenues. During the three-month period ended March 31, 2000, revenues increased
$3.67 million or 222.9% to $5.32 million from $1.65 million for the three-month
period ended March 31, 1999. Interest income increased $3.72 million or 236.2%
to $5.30 million from $1.58 million for the three-months ended March 31, 1999,
and represented 99% of total revenues for the three-month period ended March 31,
2000. The increase in interest income was due to the increase in the dollar
amount of collections on consumer receivables acquired for liquidation during
the three-month period ended March 31, 2000, as compared to the same period in
the prior year. The Company earned servicing fees of $19,000 for the three
months ended March 31, 2000, as compared to $67,000 for the three-month period
ended March 31, 1999. The decrease in servicing fee income was due to a decrease
in the dollar amount of contracts being serviced for the three-months ended
March 31, 2000, as compared to the same period in the prior year.
Expenses. During the three-month period ended March 31, 2000, general and
administrative expenses increased $313,000 or 50.5% to $933,000 from $620,000
for the three-months ended March 31, 1999 and represented 30.6% of total
expenses. The increase in general and administrative expenses was due to an
increase in servicing expenses associated with the increase in consumer
receivables acquired for liquidation that were outstanding during the
three-month period ended March 31, 2000, as compared to the same period in the
prior year.
During the three-month period ended March 31, 2000, interest expense decreased
$171,000 or 55.9% to $135,000 from $306,000 for the three-months ended March 31,
1999 and represented 4.4% of total expenses. The decrease was due to a decrease
in the outstanding borrowings by the Company under the lines of credit and notes
payable during the three-month period ended March 31, 2000, as compared to the
same period in the prior year.
During the three-month period ended March 31, 2000, the provision for credit
losses and repurchases increased $1.77 million or 820.9% to 1.98 million from
$215,000 for the three-months ended March 31, 2000 and represented 65.0% of
total expenses. The increase in the provision for credit losses was due to the
Company reserving $1.5 million for potential obligations on consumer receivables
acquired for liquidation that have been sold and reserving $250,000 against
another portfolio of consumer receivables acquired for liquidation.
The six-month period ended March 31, 2000, compared to the six-month period
ended March 31, 1999
- --------------------------------------------------------------------------------
Revenues. During the six-month period ended March 31, 2000, revenues increased
$5.56 million or 192.3% to $8.46 million from $2.89 million for the six-month
period ended March 31, 1999. Interest income increased $5.65 million or 204.7%
to $8.41 million from $2.76 million for the six-months ended March 31, 1999, and
represented 99% of total revenues for the six-month period ended March 31, 2000.
The increase in interest income was due to the increase in the dollar amount of
collections on consumer receivables acquired for liquidation during the
six-month period ended March 31, 1999, as compared to the same period in the
prior year. The Company earned servicing fees of $46,000 for the six-months
ended March 31, 2000, as compared to $110,000 for the six-month period ended
March 31, 1999. The decrease in servicing fee income was due to a decrease in
the dollar amount of contracts being serviced for the six-months ended March 31,
2000, as compared to the same period in the prior year.
Expenses. During the six-month period ended March 31, 2000, general and
administrative expenses increased $562,000 or 45.1% to $1.81 million from
$1.25million for the six-months ended March 31, 1999 and represented 43.4% of
total expenses. The increase in general and administrative expenses was due to
an increase in servicing expenses associated with the increase in consumer
receivables acquired for liquidation that were outstanding during the six-month
period ended March 31, 2000, as compared to the same period in the prior year.
Asta Funding, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
During the six-month period ended March 31, 2000, interest expense decreased
$260,000 or 44.5% to $324,000 from $584,000 for the six-months ended March 31,
1999 and represented 7.8% of total expenses. The decrease was due to a decrease
in the outstanding borrowings by the Company under the lines of credit and notes
payable during the six-month period ended March 31, 2000, as compared to the
same period in the prior year.
During the six-month period ended March 31, 2000, the provision for credit
losses and repurchases increased $1.57 million or 337.6% to $2.04 million from
$465,000 for the six-months ended March 31, 1999 and represented 48.8% of total
expenses. The increase in the provision for credit losses was due to the Company
reserving $1.5 million for potential obligations of consumer receivables that
have been previously sold and reserving $250,000 against another portfolio of
consumer receivables acquired for liquidation.
Liquidity and Capital Needs
The Company's primary sources of cash from operating activities include borrower
payments on consumer receivables acquired for liquidation and automobile
contracts. The Company's primary uses of cash include its purchases of consumer
receivables acquired for liquidation. As of March 31, 2000, the Company's cash
and cash equivalents were $4.36 million as compared to $780,000 at September 30,
1999. The increase in cash was due to an accumulation of cash from consumer
receivables acquired for liquidation that was not used to repay debt or purchase
consumer receivables.
Net cash provided by operating activities was $7.35 million during the
six-months ended March 31, 2000, compared to net cash used of $3.64 during the
six-months ended March 31, 1999. The net cash provided by operating activities
was largely due to net income from operations, an increase in the provision for
losses and repurchases and increases in income taxes payable, accounts payable
and accrued expenses. Net cash provided by investing activities was $10.8
million during the six-months ended March 31, 2000, compared to net cash used of
$49.5 million during the six-months ended March 31, 1999. The net cash provided
by investing activities was largely due to collections from both auto loans and
receivables acquired for liquidation. Net cash used in financing activities was
$14.6 million during the six-months ended March 31, 2000, compared to net cash
provided of $51.6 million during the six-months March 31, 1999. Net cash used in
financing activities was due to repayments of the Company's debt.
The Company's cash requirements have been and will continue to be significant.
The Company depends on external financing for purchasing consumer receivables.
In February 2000, the Company entered into a stock purchase and financing
agreement with Small Business Resources, Inc. (SBR) The Company has agreed to
invest a total of $2.5 million in SBR within a six-month period. The $2.5
million will consist of a loan of $1.75 million and a common stock investment of
$750,000 for a one-third ownership interest in SBR. As of May 8, 2000, the
Company has funded $750,000 and anticipates funding the remaining $1.75 million
in two installments in May 2000 of $750,000 and August 2000 of $1 million. The
Company will not have any further obligations to fund additional amounts under
the agreement in the event SBR does not provide the Company with certain
satisfactory legal opinions. The investment will be funded from cash provided by
operations. SBR is a business-to-business E-Commerce Company that provides a
business portal where small business owners can access valuable content,
products, resources and advice. To date, SBR has signed more than a dozen
partnership contracts with major companies within the banking, utility and
telecommunications industries. These contracts currently reach more than two
million small business owners with whom SBR's partners have established
relationships. Palisades Collection, LLC, a wholly owned subsidiary of the
Company, will be offering third party collection services to small businesses
through SBR.
In December 1999, a bank provided the Company with a $4.0 million line of
credit, payable on demand with interest at the prime rate plus 1%. As of March
31, 2000, there was no balance outstanding.
In March 1999, the Company borrowed funds from three financial institutions
aggregating $52.0 million and $1.0 million from a Company controlled by the
principal stockholders of the Company. Each financial institution's note is
collateralized by specific portfolios of consumer receivables acquired for
liquidation. During the year ended September 30, 1999 and the six-months ended
March 31, 2000, the Company repaid approximately $41.0 million and $11.0 million
respectively of the $52.0 million borrowed.
Asta Funding, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
o A bank provided $10.0 million in exchange for a note payable with
interest at the prime rate plus 4.5% per annum and the first million
dollars collected on the portfolio after repayment of the note and
interest. As of March 31, 2000, the bank had been paid in full.
o A factoring company loaned the Company $5.0 million in exchange for a
note payable with interest at 20% per annum. As of March 31, 2000, the
factoring company had been paid in full.
o An investment banking firm provided $37.0 million in exchange for a note
payable with interest at the LIBOR rate plus 2% plus $750,000 to be
collected on a different portfolio (payable after the $5 million note
payable to the factoring company is repaid) and sharing in subsequent
collections, net of expenses of the portfolio collateralizing this
obligation. As of March 31, 2000, the note had been paid in full but
certain other payment obligations were still due.
In January 2000, the Company renewed its credit facility with BankAmerica (the
"Credit Facility") pursuant to which BankAmerica agreed to provide the Company
with a maximum of $4 million. The Credit Facility has a term of six months. The
outstanding principal amount of the indebtedness under the Credit Facility bears
interest at the rate of 1% per annum over BankAmerica's reference rate plus .25%
per annum on the average unused amount of the Credit Facility. Under the Credit
Facility, the Company may borrow up to 83% (the "advance rate") of its net
eligible automobile Contracts (depending upon the trade-in value of the
automobiles securing the Contracts), but in no event more than $4 million. The
advance rate is subject to decreases based on certain loan performance criteria
established by BankAmerica. At March 31, 2000, the Company's advance rate was
72% of net eligible installment Contracts. At March 31, 2000, advances under
this facility aggregated $2.8 million. Borrowings under this Credit Facility are
not available for the purchase of consumer receivables.
The Company anticipates the funds available under its current funding agreements
and its cash in the bank and credit facilities as well as funds made available
by Asta Group, Incorporated, an affiliate of the Company, and cash from
operations will be sufficient to satisfy the Company's estimated cash
requirements for at least the next 12 months. If for any reason the Company's
available cash otherwise proves to be insufficient to fund operations (because
of future changes in the industry, general economic conditions, unanticipated
increases in expenses, or other factors), the Company may be required to seek
additional funding.
Asta Funding, Inc.
Form 10-QSB March 31, 2000
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
As of the date of this filing, the Company was not involved in any
material litigation in which it is the defendant. The Company regularly
initiates legal proceedings as a plaintiff concerning its routine collection
activities.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on March 10,
2000. At the meeting, the following persons were elected directors, all of whom
were incumbents: Gary Stern, Arthur Stern, Mitchell Herman, Martin Fife, Herman
Badillo, General Buster Glosson and Edward Celano. Also at the meeting, the
shareholders voted to ratify the appointment of Richard A. Eisner & Company, LLP
as the Company's independent public accountants for fiscal year 2000 and to
approve an amendment to the Company's 1995 Stock Option Plan in order to
increase the number of shares of common stock reserved for issuance thereunder
from 420,000 to 920,000.
Shares were voted for the election of directors as follows:
Authority
Director For Against Withheld
- -------- --- ------- --------
Gary Stern 3,262,829 - -
Arthur Stern 3,262,829 - -
Mitchell Herman 3,262,829 - -
Martin Fife 3,262,829 - -
Herman Badillo 3,262,829 - -
General Buster Glosson 3,262,829 - -
Edward Celano 3,262,829 - -
Shares were voted for the ratification of the appointment of Richard A.
Eisner & Company, LLP as follows:
For 3,262,609
Against 200
Abstentions 20
Broker Non-Votes -
Shares were voted to approve an amendment to the Company's 1995 Stock
Option Plan in order to increase the number of shares of common stock reserved
for issuance thereunder from 420,000 to 920,000 as follows:
For 2,745,050
Against 9,500
Abstentions 20
Broker Non-Votes -
Item 5. Investment in Small Business Resources, Inc.
In February 2000, the Company entered into a stock purchase and financing
agreement with Small Business Resources, Inc. (SBR) The Company has agreed to
invest a total of $2.5 million in SBR within a six-month period. The $2.5
million will consist of a loan of $1.75 million and a common stock investment of
$750,000 for a one-third ownership interest in SBR. As of May 8, 2000, the
Company has funded $750,000 and anticipates funding the remaining $1.75 million
in two installments in May 2000 of $750,000 and August 2000 of $1 million. The
Company will not have any further obligations to fund additional amounts under
the agreement in the event SBR does not provide the Company with certain
satisfactory legal opinions. The investment will be funded from cash provided by
operations. SBR is a business-to-business E-Commerce Company that provides a
business portal where small business owners can access
Asta Funding, Inc.
Form 10-QSB March 31, 2000
valuable content, products, resources and advice. To date, SBR has signed more
than a dozen partnership contracts with major companies within the banking,
utility and telecommunications industries. These contracts currently reach more
than two million small business owners with whom SBR's partners have established
relationships. Palisades Collection, LLC, a wholly owned subsidiary of the
Company, will be offering third party collection services to small businesses
through SBR.
Item 6. Exhibits and Reports on Form 8-K
a. The following exhibits are filed as part of this quarterly report on
form 10-QSB.
10.5 Agreement dated February 14, 2000, by and between the Company and
Small Business Resources, Inc.
10.6 Amendment No. 1 dated February 26, 2000 by and between the Company
and Small Business Resources, Inc.
10.7 Amendment No. 2 dated April 10, 2000 by and between the Company and
Small Business Resources, Inc.
10.8 Amendment No. 3 dated April 10, 2000 by and between the Company
and Small Business Resources, Inc.
27.1 Financial Data Schedule
b. No reports on form 8-K were filed by the Company during the quarter
ended March 31, 2000.
Asta Funding, Inc.
Form 10-QSB March 31, 2000
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ASTA FUNDING, INC.
(Registrant)
Date: May 11, 2000 By: /s/ Gary Stern
-----------------------
Gary Stern, President, Chief Executive Officer
(Principal Executive Officer)
Date: May 11, 2000 By: /s/ Mitchell Herman
-----------------------
Mitchell Herman, Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)