Asta Funding
Annual Report 2017

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549 Form 10-K ☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2017 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35637ASTA FUNDING, INC. (Exact Name of Registrant Specified in its Charter) Delaware 22-3388607(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 210 Sylvan Avenue, EnglewoodCliffs, NJ 07632(Zip Code)(Address of Principal Executive Offices) Registrant's telephone number, including area code: (201) 567-5648 Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registeredCommon Stock, par value $.01 per share NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ☐ No ☑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes ☐ No ☑ ☐ 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 Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes ☐ No ☑ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes ☐ No ☑ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. ☑ Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, oran emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growthcompany” in Rule 12b-2 of the Exchange Act (Check one): Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☑ Smaller reporting company ☑ Emerging growth company ☐ We qualified as a “Smaller Reporting Company” and would have qualified as a non-accelerated filer as of the due date of this report, and qualifyas a “Smaller Reporting Company” and a non-accelerated filer as of the date hereof, in each case, based on the rules and regulations of the SEC then ineffect with respect to such terms and/or categorizations. If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying withany 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 ☑ The aggregate market value of voting and nonvoting common equity held by non-affiliates of the registrant was approximately $19,937,378 and$9,641,265 as of the last business day of the registrant’s most recently completed second fiscal quarter in 2017 and 2018, respectively. As of October 11, 2018, the registrant had 6,685,415 shares of Common Stock issued and outstanding. Table of Contents DOCUMENTS INCORPORATED BY REFERENCE Table of Contents FORM 10-K TABLE OF CONTENTS PagePART IItem 1.Business3Item 1A.Risk Factors12Item 2.Properties21Item 3.Legal Proceedings22Item 4.Mine Safety Disclosures22 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities23Item 6.Selected Financial Data Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations23Item 8.Financial Statements and Supplementary Data35Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure35Item 9AControls and Procedures36Item 9B.Other Information38 PART IIIItem 10.Directors, Executive Officers and Corporate Governance39Item 11.Executive Compensation41Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters44Item 13.Certain Relationships and Related Transactions, and Director Independence46Item 14.Principal Accounting Fees and Services46 PART IVItem 15.Exhibits and Financial Statement Schedules48 Table of Contents Caution Regarding Forward Looking Statements This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) . All statements other than statements of historicalfacts included or incorporated by reference in this Annual Report on Form 10-K, including without limitation, statements regarding our future financialposition, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,”“intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation there on or similar terminology orexpressions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statementsare not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels ofactivity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed orimplied by such forward-looking statements. Important factors which could materially affect our results and our future performance include, withoutlimitation, the restatement of previously issued financial statements, the identified material weaknesses in our internal control over financial reportingand our ability to remediate those material weaknesses, our ability to timely file our periodic reports, our ability to maintain the listing of our commonstock on the Nasdaq Global Select Market, our ability to purchase defaulted consumer receivables at appropriate prices, changes in governmentregulations that affect our ability to collect sufficient amounts on our defaulted consumer receivables, our ability to employ and retain qualifiedemployees, changes in the credit or capital markets, changes in interest rates, deterioration in economic conditions, negative press regarding the debtcollection industry which may have a negative impact on a debtor’s willingness to pay the debt we acquire, and statements of assumption underlying anyof the foregoing, as well as other factors set forth under “Item 1A. Risk Factors” and “Item 7—Management’s Discussions and Analysis of FinancialCondition and Results of Operation” below. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in theirentirety by the foregoing. Except as required by law, we assume no duty to update or revise any forward-looking statements. 2Table of Contents Part I Item 1.Business. Overview Asta Funding, Inc., a Delaware corporation (“Asta”), was formed in August 1995. Asta together with its wholly owned significant operatingsubsidiaries Palisades Collection, LLC, Palisades Acquisition XVI, LLC (“Palisades XVI”), Palisades Acquisition XIX, LLC (“Palisades XIX”), PalisadesAcquisition 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”), Simia Capital, LLC(“Simia”) and other subsidiaries, which are not all wholly owned (the “Company,” “we” or “us”), is engaged in several business segments in the financialservices industry including funding of personal injury claims, through our wholly owned subsidiary, Simia, social security and disability advocacythrough our wholly owned subsidiaries GAR Disability Advocates and Five Star and the business of purchasing, managing for its own account andservicing distressed consumer receivables, including charged off receivables, and semi-performing receivables. The Company started out in the consumerreceivable business in 1995 as a subprime auto lender. For the periods covered by these financial statements, Pegasus Funding, LLC (“Pegasus”), which engaged in the funding of personal injury claimsprior to entering liquidation in April 2017, was 80% owned and 50% controlled, and accounted for under the equity method. On January 12, 2018, theCompany acquired the remaining 20% minority shareholder's interest in Pegasus, and now currently owns 100% of Pegasus. Commencing in the quarterending March 31, 2018, the Company will consolidate the financial results of this entity. Pegasus remains in operation to liquidate its current portfolio ofadvances, but will not fund any new advances. We operate principally in the United States in three reportable business segments: consumer receivables, GAR disability advocates and personalinjury claims. We previously operated a fourth segment when we engaged in the structured settlements business through our wholly owned subsidiaryCBC Settlement Funding, LLC (“CBC”), which we sold on December 13, 2017. As a result of the sale of CBC all prior periods presented herein account for CBC as a discontinued operation. This determination resulted in thereclassification of the assets and liabilities comprising the structured settlement business to assets and liabilities related to discontinued operations in theconsolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflect discontinued operations for allperiods presented. See Note 2 - Discontinued Operations in the Company's notes to the consolidated financial statements. Financial Information about Operating Segments The Company operates through strategic business units that are aggregated into three reportable segments: consumer receivables, personal injuryclaims, and GAR Disability Advocates. The three reportable segments consist of the following: •Consumer receivables - This segment is engaged in the business of purchasing, managing for its own account and servicing distressedconsumer receivables, including judgment receivables, charged off receivables and semi-performing receivables. Judgment receivables areaccounts where outside attorneys have secured judgments directly against the consumer. Primary charged-off receivables are accounts thathave been written-off by the originators and may have been previously serviced by collection agencies. Semi-performing receivables areaccounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by theoriginators. Distressed consumer receivables are the unpaid debts of individuals to banks, finance companies and other credit providers. Alarge portion of our distressed consumer receivables are MasterCard ® , Visa ® and other credit card accounts which were charged-off bythe issuers or providers for non-payment. We acquire these and other consumer receivable portfolios at substantial discounts to their facevalues. The discounts are based on the characteristics (issuer, account size, debtor location and age of debt) of the underlying accounts ofeach portfolio. The business conducts its activities primarily under the name Palisades Collection, LLC. •Personal injury claims – Pegasus Funding, LLC, purchased interests in personal injury claims from claimants who are a party to personal injurylitigation. Pegasus advanced to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a futuresettlement. The interest in each claim purchased by Pegasus consists of the right to receive, from such claimant, part of the proceeds orrecoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. Effective January2017, Simia commenced funding personal injury settlement claims while Pegasus will not fund any new advances, and will remain in operationto liquidate its current portfolio of advances. Simia's activity for the years ended September 30, 2017 and 2016 are included in this segment,along with that of the Company's equity method investment in Pegasus. •Social Security benefit advocacy – GAR Disability Advocates and Five Star are advocacy groups which represent individuals nationwide intheir claims for social security disability and supplemental security income benefits from the Social Security Administration. 3Table of Contents The consumer receivable segment and the GAR Disability Advocates segment each accounted for more than 10% of revenues in fiscal year 2017and 2016. Pegasus is accounted for under the equity method within the personal injury claims segment. The following table summarizes the net revenuesby percentage from the three lines of business for the fiscal years 2017 and 2016: Year Ended September 30, 2017 2016 Finance income (consumer receivables) 74.3% 82.5%Personal injury claims income 2.0 — GAR Disability Advocates 23.7 17.5 Total revenues 100.0% 100.0% Information about the results of each of the Company’s reportable segments for the last two fiscal years and total assets as of the end of the last twofiscal years, reconciled to the consolidated results, is set forth below. Separate segment MD&A is not provided, as segment revenue corresponds to therevenue presented in the Company's consolidated statement of operations, and material expense items are not allocable to any specific segment. Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected inCorporate. Corporate assets include cash and cash equivalents, available-for-sale securities, property and equipment, goodwill, deferred taxes, otherassets, and assets related to discontinued operations. (Dollars in millions) ConsumerReceivables GARDisabilityAdvocates PersonalInjuryClaims (2) Corporate (3) Total Fiscal Year Ended September 30, 2017: Revenues $15.9 $5.1 $0.4 $— $21.4 Other income — — — (0.1) (0.1)Segment profit (loss) 12.5 (1.7) 4.1 (22.2) (7.3)Segment Assets (1) (4) 20.4 3.9 55.0 122.2 201.5 2016: Revenues 18.9 4.0 — — 22.9 Other income — — — 1.7 1.7 Segment profit (loss) 14.2 (7.3) 10.5 (11.7) 5.7 Segment Assets (1) (4) 18.9 2.0 48.6 185.5 255.0 The Company does not have any intersegment revenue transactions. (1)Includes other amounts in other line items on the consolidated balance sheet.(2)The Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has includedits pro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment, and the carrying value of theinvestment is included in segment assets. Commencing in fiscal 2017, the consolidated results of Simia are included in this segment.(3)Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.(4)Included in Corporate are approximately $92.2 million and $91.5 million of assets related to discontinued operations as of September 30, 2017and 2016, respectively. See Note 2 - Discontinued Operations in the Company's notes to consolidated financial statements. 4Table of Contents Principal Markets and Methods of Distribution All of the Company’s lines of business are principally conducted in the United States, with approximately $6.2 million of the receivablesoriginating and being serviced overseas. Consumer receivables Prior to purchasing a portfolio, we perform a qualitative and quantitative analysis of the underlying receivables and calculate the purchase pricewhich is intended to offer us an adequate return on our investment after servicing expenses. After purchasing a portfolio, we actively monitor performanceand review and adjust our collection and servicing strategies accordingly. We purchase receivables from credit grantors and others through privately negotiated direct sales, brokered transactions and auctions in whichsellers of receivables seek bids from several pre-qualified debt purchasers. We fund portfolios through internally generated cash flow. Our objective is to maximize our return on investment in acquired consumer receivable portfolios. As a result, before acquiring a portfolio, weanalyze the portfolio to determine how to best maximize collections in a cost efficient manner and decide whether to use our internal servicing andcollection department, third-party collection agencies, attorneys, or a combination of all three options. When we outsource the servicing of receivables, our management typically determines the appropriate third-party collection agencies and attorneysbased on the type of receivables purchased. Once a group of receivables is sent to third-party collection agencies and attorneys, our management activelymonitors and reviews the third-party collection agencies’ and attorneys’ performance on an ongoing basis. Based on portfolio performanceconsiderations, our management will either (i) move certain receivables from one third-party collection agency or attorney to another, or (ii) sell portionsof the portfolio accounts. Our internal collection unit, which currently employs five collection-related staff, including senior management, assists us inbenchmarking our third-party collection agencies and attorneys, and provides us with greater flexibility for servicing a percentage of our consumerreceivable portfolios in-house. We have increased our focus on purchasing consumer receivables internationally from foreign banks via direct sales or auctions, similar to thedomestic purchase process. We have established relationships with agencies and attorneys in our selected countries, particularly Colombia and Peru, andwe are committed to continue acquiring foreign consumer receivables to maximize our return on investment. Personal injury claims Simia commenced operation in January 2017, and conducts its business solely in the United States. Simia obtains its business from external brokersand internal sales professionals soliciting individuals with personal injury claims. Business is also obtained from the its website and through attorneys.Pegasus has not funded new cases since April 2017, but remains in business to liquidate its existing personal injury claim advance portfolio. GAR Disability Advocates GAR Disability Advocates and Five Star provide its disability advocacy services throughout the United States. It relies upon search engineoptimization (“SEO”) to bring awareness to its intended market. Industry Overview Consumer receivables The purchasing, servicing and collection of charged-off, semi-performing and performing consumer receivables is an industry that is driven by: •increasing levels of consumer debt; •increasing defaults of the underlying receivables; and •increasing utilization of third-party providers to collect such receivables. 5Table of Contents Personal injury claims The funding of personal injury claims is driven by the growth of the market for financing personal injury claims. Individuals with personal injuryclaims incur current cash obligations which will not be recouped until insurance settlements are paid, if at all. The demand for providing financing toindividuals in need of short term funds pending insurance settlements of their personal injury claims is driven by the long periods of time taken by theinsurance industry to settle and pay such claims, primarily due to lengthy litigation and the court process. GAR Disability Advocates The disability advocate industry is driven by the increasing number of disability applicants who find it difficult to obtain such benefits without theaid of third party assistance. Strategy Consumer receivables Our primary objective both domestically and internationally is to utilize our management’s experience and expertise by identifying, evaluating,pricing and acquiring consumer receivable portfolios and maximizing collections of such receivables in a cost efficient manner. Our strategies include: •managing the collection and servicing of our consumer receivable portfolios, including outsourcing those activities to maintain low fixedoverhead by partnering with experienced collection and debt buying firms; •selling accounts on an opportunistic basis, generally when our efforts have been exhausted through traditional collecting methods, or when wecan capitalize on pricing during times when we feel the pricing environment is high; and •capitalizing on our strategic relationships to identify and acquire consumer receivable portfolios as pricing, financing and conditions permit. Personal injury claims Simia attracts new business through its attorneys, brokers and sales contacts. Since April 2017 Pegasus has not funded new cases, but remains inbusiness to collect on its portfolio of personal injury claim advances. GAR Disability Advocates GAR Disability Advocates intends to explore expansion into related businesses. In fiscal year 2017, GAR Disability Advocates and Five Starcontinue to assist claimants in securing disability benefits from the Social Security and Veteran's administration. Operations Consumer Receivables The Operations Servicing Division of consumer receivables consists of the Collection Department, which handles disputes and correspondence, andthe Accounting and Finance Department. Collection Department The Collection Department is responsible for making contact with and receiving calls from consumers for the purpose of collecting upon theaccounts contained in our consumer receivables portfolios. Collection efforts are specific to accounts that are not yet being serviced by our network ofexternal agencies and attorneys. The Collection Department uses a friendly, customer service approach to collect receivables and utilizes collectionsoftware, a dialer and telephone system to accomplish this goal. Each collector is responsible for: Initiating outbound collection calls and handling incoming calls from the consumer; Identifying the debt and iterating the benefits of paying the obligation; Working with the customer to develop acceptable means of satisfying the obligation; and Offering (if necessary, and based upon the individual situation) an obligor a discount on the overall obligation. 6Table of Contents Accounting and Finance Department In addition to customary accounting activities, the Accounting and Finance Department is responsible for: Making daily deposits of customer payments; Posting payments to customers accounts; and Providing senior management with daily, weekly and monthly receivable activity and performance reports. Additionally, the Accounting Department reviews the results of the collection of consumer receivable portfolios that are being serviced by third-party collection agencies and attorneys. The Accounting and Finance Department also participates in the internal auditing and consolidation of allbusiness segments. Personal Injury Claims The operations structure of the personal injury claims unit of Simia includes: Sales — the sales group is responsible for business development and generating leads for possible funding of personal injury cases. Underwriting — The underwriting group is responsible for analyzing the merits of the personal injury claims presented for possible funding. Accounting — The accounting group is responsible for the reporting of all the financial operations of the personal injury claims unit. GAR Disability Advocates GAR Disability Advocates and Five Star utilize SEO to bring more awareness to prospective clients. In particular, through substantial use of theinternet, it intends to increase consumer awareness of its existence on various government websites. Marketing — The Marketing Group is responsible for researching various court records to secure information to follow up for possible structuredsettlement cases. Sales — The Sales Group is responsible for the sales strategy and advertising campaigns. Accounting — The accounting group is responsible for the reporting of all the financial operations of the structured settlement unit. GAR Disability Advocates consists of the following departments: Intake — The Intake Department is responsible for client development, including screening leads and developing information on individual cases. Case Management — The Case Management Department processes approved cases through the Social Security Disability process. Marketing Consumer receivables The Company made three portfolio consumer debt purchases in fiscal year 2017. We have expanded relationships with credit providersinternationally, as well as maintained our existing relationships domestically with brokers, finance companies and other credit providers. We are workingto expand our name recognition internationally by attending international conferences, utilizing email solicitations and attending face-to-face bankmeetings. Personal injury claims Simia will not invest in a formal marketing program at this time. It will rely on external brokers, internal sales professionals and attorneys to acquiremarket share. 7Table of Contents GAR Disability Advocates GAR Disability Advocates utilizes SEO to bring more awareness to prospective clients. In particular, through substantial use of the internet, itintends to increase consumer awareness of its existence on various government websites. Competition Consumer receivables With the competitive nature of the domestic market, there are strategic advantages of acquiring portfolios internationally in specific foreigncountries with less established competition. We feel our expertise in establishing alliances with third-party collection agencies and attorneys can beleveraged in the international sector to be successful against our competitors; however, we cannot assure that the international competition will notincrease in the future, affecting our consumer receivables financial performance. We compete with: •other purchasers of consumer receivables, including third-party collection companies; and •other financial services companies who purchase consumer receivables. Some of our competitors are larger and more established and may have substantially greater financial, technological, personnel and other resourcesthan we have, including greater access to the credit and capital markets. We compete in the marketplace for consumer receivable portfolios based on many factors, including: •purchase price; •representations, warranties and indemnities requested; •timeliness of purchase decisions; and •reputation. Our strategy is designed to capitalize on the market’s lack of a dominant industry player. We believe that our management’s experience andexpertise in identifying, evaluating, pricing and acquiring consumer receivable portfolios and managing collections, coupled with our strategic allianceswith third-party collection agencies and attorneys and our sources of financing, give us a competitive advantage. However, we cannot assure that we willbe able to compete successfully against current or future competitors or that competition will not increase in the future. Personal injury claims The litigation funding business is highly competitive and fragmented, and we expect that competition from new and existing companies willcontinue. We compete in the litigation funding marketplace based on many factors, including: cost of funds lent; application fee costs; brokers’ commissions and bonuses paid; reputation; and direct and on-line marketing. We believe that Simia's management team has expertise and experience in identifying, evaluating, pricing, managing and acquisition of litigatingfunding cases. However, we cannot assure that our litigation funding businesses will be able to compete against current or future competitors or thatcompetition will not increase in the future. 8Table of Contents GAR Disability Advocates The social security benefit advocacy environment is competitive. We believe that the management of GAR Disability Advocates has the knowledgeto compete in this environment. Nevertheless, we can offer no assurance that the business will remain competitive against current and future competitors. Seasonality and Trends Consumer receivables Our management believes that our operations may, to some extent, be affected by high delinquency rates and by lower recoveries on consumerreceivables acquired for liquidation during or shortly following certain holiday periods and during the summer months. Personal injury claims There are no discernible trends to indicate seasonality in the personal injury claims business. GAR Disability Advocates There is no indication that seasonality has any noticeable impact on the social security disability process. Technology Consumer receivables We believe that a high degree of automation is necessary to enable us to grow and successfully compete with other finance companies. Accordingly,we continually look to upgrade our technology systems to support the servicing and recovery of consumer receivables acquired for liquidation. Ourtelecommunications and technology systems allow us to quickly and accurately process large amounts of data necessary to purchase and serviceconsumer receivable portfolios. In addition, we rely on the information technology of our third-party collection agencies and attorneys and periodicallyreview their systems to ensure that they can adequately service the consumer receivable portfolios outsourced to them. Due to our desire to increase productivity through automation, we periodically review our systems for possible upgrades and enhancements. Webegan the process of enhancing our international systems capabilities during fiscal year 2016, and during fiscal year 2017 we increased our systemcapabilities enabling us to effectively compete in the international marketplace. Personal injury claims Simia is dependent on its website to maintain and increase its business and, therefore, must remain current in its technology. GAR Disability Advocates GAR Disability Advocates relies on substantial use of the internet and, therefore, endeavors to remain current technologically. We completed theinstallation of a new client software system in fiscal year 2016, which has improved management reporting capabilities. Government Regulation Consumer receivables Our businesses are subject to extensive federal and state regulations. The relationship of a consumer and a creditor is extensively regulated byfederal, state and local laws, rules, regulations and ordinances. These laws include, but are not limited to, the following federal statutes and regulations:the Federal Truth-In-Lending Act, the Fair Credit Billing Act (“FCBA”), the Equal Credit Opportunity Act and the Fair Credit Reporting Act (“FCRA”), aswell as comparable statutes in states where consumers reside and/or where creditors are located. Among other things, the laws and regulations applicableto various creditors impose disclosure requirements regarding the advertisement, application, establishment and operation of credit card accounts or othertypes of credit programs. Federal law requires a creditor to disclose to consumers, among other things, the interest rates, fees, grace periods and balancecalculation methods associated with their accounts. In addition, consumers are entitled to have payments and credits applied to their accounts promptly,to receive prescribed notices and to request that billing errors be resolved promptly. Moreover, some laws prohibit certain discriminatory practices inconnection with the extension of credit. Further, state laws may limit the interest rate and the fees that a creditor may impose on consumers. Failure bycreditors to comply with applicable laws could create claims and rights of offset by consumers that would reduce or eliminate their obligations, whichcould have a material adverse effect on our operations. Pursuant to agreements under which we purchase receivables, we are typically indemnified againstlosses resulting from the failure of the creditor to have complied with applicable laws relating to the receivables prior to our purchase of such receivables. 9Table of Contents Certain laws, including the laws described above, may limit our ability to collect amounts owing with respect to the receivables regardless of anyact or omission on our part. For example, under the FCBA, a credit card issuer may be subject to certain claims and defenses arising out of certaintransactions in which a credit card is used if the consumer has made a good faith attempt to obtain satisfactory resolution of a problem relative to thetransaction and, except in cases where there is a specified relationship between the person honoring the card and the credit card issuer, the amount of theinitial transaction exceeds $50 and the place where the initial transaction occurred was in the same state as the consumer’s billing address or within100 miles of that address. Accordingly, as a purchaser of defaulted receivables, we may purchase receivables subject to valid defenses on the part of theconsumer. Other laws provide that, in certain instances, consumers cannot be held liable for, or their liability is limited to $50 with respect to, charges tothe credit card credit account that were a result of an unauthorized use of the credit card account. No assurances can be given that certain of thereceivables were not established as a result of unauthorized use of a credit card account, and, accordingly, the amount of such receivables may not becollectible by us. Several federal, state and local laws, rules, regulations and ordinances, including, but not limited to, the Fair Debt Collection Practices Act(“FDCPA”) and the Federal Trade Commission Act and comparable state statutes, regulate consumer debt collection activity. Although, for a variety ofreasons, we may not be specifically subject to the FDCPA or certain state statutes that govern third-party debt collectors, it is our policy to comply withlaws in our collection activities. Additionally, our third-party collection agencies and attorneys may be subject to these laws. To the extent that some orall of these laws apply to our collection activities or our third-party collection agencies’ and attorneys’ collection activities, failure to comply with suchlaws could have a material adverse effect on us. In order to comply with the foregoing laws and regulations, we provide a comprehensive development training program for our newcollection/dispute department representatives and on-going training for all collection/dispute department associates. All collection and disputerepresentatives are tested annually on their knowledge of the FDCPA and other applicable laws. Account representatives not achieving our minimumstandards are required to complete a FDCPA review session and are then retested. In addition, annual supplemental instruction in the FDCPA andcollection techniques is provided to all our account representatives. There are significant corporate governance and executive compensation-related provisions in the Dodd Frank Wall Street Reform and Provision Act(“Dodd-Frank Act”) that required the SEC to adopt additional rules and regulations in areas such as corporate governance, and executive compensation .Our efforts to comply with these requirements have resulted in an increase in expenses and a diversion of management’s time from other businessactivities. We are subject to changing rules and regulations of federal and state governments, the Public Company Accounting Oversight Board(“PCAOB”), the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the NASDAQ Global Market, all of which have issued a significant numberof new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional regulationsand requirements in response to laws enacted by Congress. The Dodd-Frank Act subjects us to substantial additional federal regulation, and we cannot predict the effect of such regulation on our business,results of operations, cash flows or financial condition. Through the Dodd-Frank Act, Congress established the Consumer Financial Protection Bureau(the “CFPB”), which has regulatory, supervisory and enforcement authority over entities involved in consumer financial markets. The CFPB has theauthority to conduct periodic examinations of “larger participants” in each market, and we believe it is likely that we will be subject to an examination. The CFPB published a final rule that allows the agency to federally supervise the larger consumer debt collectors. The CFPB also released the fieldguide that examiners will use to ensure that companies and banks engaging in debt collection are following the law. The consumer debt collection market covered by the rule includes three main types of debt collectors: first, firms that may buy defaulted debt andcollect the proceeds for themselves; second, firms that may collect defaulted debt owned by another company in return for a fee; and third, debt collectionattorneys that collect through litigation. A single company may be involved in any or all of these activities. The CFPB’s supervisory authority over these entities began when the rule took effect on January 2, 2013. Under the rule, any firm that has more than$10 million in annual receipts from consumer debt collection activities will be subject to the CFPB’s supervisory authority. This authority will extend toabout 175 debt collectors, which, according to the CFPB, account for over 60 percent of the industry’s annual receipts in the consumer debt collectionmarket. 10Table of Contents Pursuant to the CFPB’s supervisory authority, examiners assess potential risks to consumers and whether debt collectors are complying withrequirements of federal consumer financial law. Among other things, examiners evaluate whether debt collectors provide required disclosures; useaccurate information; maintain a consumer complaint and dispute resolution process; and communicate with consumers in the manner required by law. The CFPB’s general Supervision and Examination Manual, as well as its examination manual specific to the debt collection market, provideguidance on how the bureau conducts its monitoring of debt collection activities. Examiners will evaluate the quality of the regulated entity’scompliance management systems, review practices to ensure they comply with federal consumer financial law, and identify risks to consumers throughoutthe debt collection process. The CFPB can seek relief that includes: rescission or reformation of contracts, restitution, disgorgement of profits, payment ofdamages, limits on activities and civil money penalties of up to $1 million per day for knowing violations. As a company that engages in debt collection, we need to understand the oversight that the CFPB brings. Preparing for a CFPB audit will cost timeand money. Additionally, the CFPB has the power to bring an enforcement action or cause a required settlement. In addition, the amount of privilegedand confidential information the CFPB could release, can lead to private lawsuits, including class and mass actions, as well as other state and federalagency oversight. The CFPB is expressly charged with prohibiting unfair, deceptive or abusive acts or practices. Through its broad powers to regulate and enforcefederal consumer financial laws, the CFPB could place restrictions on our business, the businesses of our customers and the business of our affiliates, if theCFPB were to determine through rulemaking, supervisory or enforcement actions, for example, that particular acts or practices were unfair, deceptive orabusive to consumers. The CFPB thus exercises supervisory authority over us. At this time, it is not possible or practical to attempt to provide a comprehensive analysis ofhow these laws and regulations may impact debt collectors. Additionally, the Dodd-Frank Act empowers state attorneys general (or the equivalent thereof) to bring civil actions in federal district court (or astate court that is located in that state and that has jurisdiction over the defendant), to enforce Title X of the Act or regulations issued by the CFPBthereunder. Therefore, we could also be the subject of investigations and enforcement actions by the Federal Trade Commission or by state agencies (e.g.,state attorneys general) with powers to enforce CFPB regulations and the FCRA. Additional laws or amendments to existing laws, may be enacted thatcould impose additional restrictions on the servicing and collection of receivables. Such new laws or amendments may adversely affect our ability tocollect the receivables. The Dodd-Frank Act authorized the CFPB to prescribe rules interpreting the FDCPA. On November 12, 2013, the CFPB signaled its intention topromulgate substantive rules under the FDCPA by publishing an Advance Notice of Proposed Rulemaking (ANPR) with regard to debt collectionpractices. The ANPR requested comments with regard to a wide array of issues relating to debt collection. The comment period closed on February 28,2014. The CFPB has not yet issued a proposed rule. In its Spring 2018 rulemaking agenda, the CFPB stated that it intends to issue a proposed rule inMarch 2019. The Company has and will continue to have a substantive compliance program and maintain procedures to ensure that the law is followed and thatconsumer complaints are dealt with in an appropriate fashion. We currently hold a number of licenses issued under applicable consumer credit laws or other licensing statutes or regulations. Certain of our currentlicenses, and any licenses that we may be required to obtain in the future, may be subject to periodic renewal provisions and/or other requirements. Ourinability to renew licenses or to take any other required action with respect to such licenses could have a material adverse effect upon our results ofoperation and financial condition. Personal injury claims Numerous states have recently introduced legislation with respect to the litigation funding business, which, up to now, has been largelyunregulated. Recently proposed laws, while varying from state to state, generally would establish requirements for contracts relating to litigationfunding, including setting maximum amounts of interest, fees and other charges that may be imposed. GAR Disability Advocates The availability of funds to pay Social Security disability and Veteran's benefits, are dependent on governmental regulation and budgetaryconstraints, which could have a material impact on the GAR Disability Advocates and Five Star business. Employees As of September 30, 2017, we had a total of 86 full-time employees. We are not a party to any collective bargaining agreements. 11Table of Contents Additional Information Our web address is www.astafunding.com. Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form8-K, proxy statements, amendments thereto, and other Securities and Exchange Commission (the “SEC”) reports are available on our website as soon asreasonably practical after filing electronically with the SEC. No part of our website is incorporated by reference into this report. Item 1A. Risk Factors. Note Regarding Risk Factors You should carefully consider the risk factors below as well as risks identified throughout this Annual Report on Form 10-K and our other filingswith the SEC in evaluating us. In addition to the following identified risks, there may also be risks that we do not yet know of or that we currently thinkare immaterial that may also impair our business operations. If any of the following risks occur, or if risks that we do not yet know or that we currentlythink are minor occur, our business, results of operation or financial condition could be adversely affected, the trading price of our common stock coulddecline and stockholders might lose all or part of their investment. The risk factors presented below are those which we currently consider material.However, they are not the only risks facing our company. Additional risks not presently known to us, or which we currently consider immaterial, mayalso adversely affect us. There may be risks that a particular investor views differently from us, and our analysis might be wrong. If any of the risks thatwe face actually occur, our business, financial condition and operating results could be materially adversely affected and could differ materially fromany possible results suggested by any forward-looking statements that we have made or might make. In such case, the trading price of our common stockcould decline, and you could lose part or all of your investment. Except as required by law, we expressly disclaim any obligation to update or revise anyforward-looking statements. We have restated prior consolidated financial statements, which may lead to additional risks and uncertainties, including loss of investorconfidence and negative impacts on our stock price. We have restated our consolidated financial statements as of and for the fiscal years ended September 30, 2016, 2015 and 2014 (including thequarterly periods within those years), as well our consolidated financial statements as of and for the fiscal quarters ended December 31, 2016, March 31,2017 and June 30, 2017, in order to correct certain accounting errors related to, among other items, our historical decision to consolidate the financialresults of Pegasus. As a result of those restatements and the circumstances giving rise to the restatements, we have become subject to a number of additional costs andrisks, including accounting and legal fees incurred in connection with the restatement. In addition, the restatement may lead to a loss of investorconfidence and have negative impacts on the trading price of our common stock. We have identified material weaknesses in our internal control over financial reporting that, if not remediated, could result in additional materialmisstatements in our financial statements. As described in “Part II, Item 9A — Controls and Procedures,” management has identified and evaluated the control deficiencies that gave rise to theaccounting errors related to equity method accounting, foreign currency matters, related party transactions and accounting for significant and/or complextransactions, and has concluded that those deficiencies, represent material weaknesses in our internal control over financial reporting. A materialweakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that amaterial misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of those materialweaknesses, management has concluded that we did not maintain effective internal control over financial reporting as of September 30, 2017. See “Part II,Item 9A — Controls and Procedures.” We are in the process of developing and implementing a remediation plan to address the material weaknesses. If our remediation efforts are insufficientor if additional material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financialstatements may contain material misstatements and we could be required to further restate our financial results, which could materially and adverselyaffect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significantresources to correct the material weaknesses, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investorconfidence. Government regulations may limit our ability to recover and enforce the collection of our receivables. Federal, state and local laws, rules, regulations and ordinances may limit our ability to recover and enforce our rights with respect to the receivablesacquired by us. These laws include, but are not limited to, the following federal statutes and regulations promulgated thereunder and comparable statutesin states and foreign jurisdictions such as Colombia and Peru where consumers reside and/or where creditors are located: •The Fair Debt Collection Practices Act; 12Table of Contents •The Federal Trade Commission Act; •The Truth-In-Lending Act; •The Fair Credit Billing Act; •The Equal Credit Opportunity Act; •The Fair Credit Reporting Act; •The Financial Privacy Rule; •The Safeguards Rule; •Telephone Consumer Protection Act; •Health Insurance Portability and Accountability Act (“HIPAA”)/Health Information Technology for Economical and Clinical Health Act(“HITECH”); •U.S. Bankruptcy Code; and •Credit Card Accountability Responsibility and Disclosure Act of 2009. We may be precluded from collecting receivables we purchase where the creditor or other previous owner or third-party collection agency orattorney failed to comply with applicable law in originating or servicing such acquired receivables. Laws relating to the collection of consumer debt alsodirectly apply to our business. Our failure to comply with any laws applicable to us, including state licensing laws, could limit our ability to recover onreceivables and could subject us to fines and penalties, which could reduce our earnings and result in a default under our loan arrangements. In addition,our third-party collection agencies and attorneys may be subject to these and other laws and their failure to comply with such laws could also materiallyadversely affect our finance income and earnings. Additional laws or amendments to existing laws may be enacted that could impose additional restrictions on the servicing and collection ofreceivables. Such new laws or amendments may adversely affect the ability to collect on our receivables, which could also adversely affect our financeincome and earnings. Because our receivables are generally originated and serviced pursuant to a variety of federal, state and/or local laws by a variety of entities and mayinvolve consumers in all 50 states, the District of Columbia, Puerto Rico and South America, there can be no assurance that all originating and servicingentities have, at all times, been in substantial compliance with applicable law. Additionally, there can be no assurance that we or our third-partycollection agencies and attorneys have been or will continue to be at all times in substantial compliance with applicable law. Failure to comply withapplicable law could materially adversely affect our ability to collect our receivables and could subject us to increased costs, fines and penalties. We are subject to changing rules and regulations of federal and state government as well as the stock exchange on which our common stock islisted. These entities, including PCAOB, the SEC and the NASDAQ Global Market, have issued a significant number of new and increasingly complexrequirements and regulations over the course of the last several years and continue to develop additional regulations and requirements in response to lawsenacted by Congress. Changes in governmental laws and regulations could increase our costs and liabilities or impact our operations. Title X of the Dodd-Frank Act (also referred to as the Consumer Financial Protection Act) created a new independent regulator, the ConsumerFinancial Protection Bureau ("CFPB"). The CFPB has rulemaking, supervisory, and enforcement and other authorities relating to consumer financialproducts and services, including debt collection, provided by covered persons. We are subject to the CFPB's supervisory and enforcement authority. The relationship between consumers, lenders and credit card issuers is extensively regulated by consumer protection and related laws andregulations. Changes in laws and regulations or the manner in which they are interpreted or applied may alter our business environment. This could affectour results of operations or increase our liabilities. These negative impacts could result from changes in collection laws, laws related to credit reporting,statutes of limitation, laws related to consumer bankruptcy or insolvency, privacy protection, accounting standards, taxation requirements, employmentlaws and communications laws, among others. 13Table of Contents The CFPB also accepts debt collection consumer complaints and has provided form letters for consumers to use in their correspondences with debtcollectors. The CFPB makes publicly available its data on consumer complaints, and consumer complaints against us could result in reputational damageto us. The Dodd-Frank Act also mandates the submission of multiple studies and reports to Congress by the CFPB, and CFPB staff is regularly makingspeeches on topics related to credit and debt. All of these activities could trigger additional legislative or regulatory action. The CFPB has rulemaking authority with respect to significant federal statutes that impact the debt collection industry, including the Federal DebtCollection Practices Act ("FDCPA"), the Fair Credit Reporting Act "FCRA", and Section 5 of the Federal Trade Commission ("FTC Act"), which prohibitsunfair or deceptive acts or practices. As a result, the CFPB has the authority to adopt regulations that interpret the FDCPA, and the FTC Act, potentiallydescribing specified acts and practices as being "unfair," "deceptive" or "abusive," impacting the manner in which we conduct our debt collectionbusiness. The CFPB has the authority to conduct hearings and adjudication proceedings, impose monetary penalties for violations of applicable federalconsumer financial laws (including Title X of the Dodd-Frank Act, FDCPA, and FCRA, among other consumer protection statutes) which may requireremediation of practices and include enforcement actions. The CFPB also has the authority to obtain cease and desist orders (which can include orders forrestitution or rescission of contracts, as well as other kinds of affirmative relief), costs, and monetary penalties. In addition, where a company has violatedTitle X of the Dodd-Frank Act or CFPB regulations implemented thereunder, the Dodd-Frank Act empowers state Attorneys General and other stateregulators to bring civil actions to remedy violations under state law. The CFPB has been active in its supervision, examination and enforcement offinancial services companies, most notably bringing enforcement actions imposing fines and mandating large refunds to customers of several financialinstitutions for practices relating to the extension and collection of consumer credit. If the CFPB, the FTC, acting under the FTC Act or other applicablestatute such as the FDCPA, or one or more state Attorneys General or other state regulators make findings that we have violated any of the applicable lawsor regulations, they could exercise their enforcement powers in ways that could have an adverse effect on our business, results of operations, cash flows, orfinancial condition. We may become subject to additional costs or liabilities in the future resulting from our own, or our vendors' supervision or examination by theCFPB, or by changes in, or additions to laws and regulations that could adversely affect our results of operations and financial condition. Further, wecannot definitively predict the scope and substance of any such laws or regulations ultimately adopted by the CFPB related to our activities and the exactefforts required by us to comply therewith, nor can we have any way to know with certainty the ultimate impact on our business, results of operations, andfinancial condition that such regulations may have. Investigations or enforcement actions by governmental authorities may result in changes to our business practices; negatively impact ourreceivables portfolio purchasing volume; make collection of receivables more difficult or expose us to the risk of fines, penalties, restitution paymentsand litigation. Our business practices are subject to review from time to time by various governmental authorities and regulators, including the Consumer FinancialProtection Bureau ("CFPB"), who may commence investigations or enforcement actions or reviews targeted at businesses in the financial servicesindustry. These reviews may involve governmental authority consideration of individual consumer complaints, or could involve a broader review of ourdebt collection policies and practices. Such investigations could lead to assertions by governmental authorities that we are not complying withapplicable laws or regulations. In such circumstances, authorities may request or seek to impose a range of remedies that could involve potentialcompensatory or punitive damage claims, fines, restitution payments, sanctions or injunctive relief, that if agreed to or granted, could require us to makepayments or incur other expenditures that could have an adverse effect on our financial position. Government authorities could also request or seek torequire us to cease certain of our practices or institute new practices. We may also elect to change practices that we believe are compliant with applicable law and regulations in order to respond to the concerns ofgovernmental authorities. In addition, we may become required to make changes to our internal policies and procedures in order to comply with newstatutory and regulatory requirements under the Dodd-Frank Act or other applicable laws. Such changes in practices or procedures could negativelyimpact our results of operations. Negative publicity relating to investigations or proceedings brought by governmental authorities could have an adverseimpact on our reputation, could harm our ability to conduct business with industry participants, and could result in financial institutions reducing oreliminating sales of receivables portfolios to us which would harm our business and negatively impact our financial results. Moreover, changing ormodifying our internal policies or procedures, responding to governmental inquiries and investigations and defending lawsuits or other proceedingscould require significant efforts on the part of management and result in increased costs to our business. In addition, such efforts could divertmanagement's full attention from our business operations. All of these factors could have an adverse effect on our business, results of operations, andfinancial condition. 14Table of Contents We are exposed to interest rate volatility risk as interest rates can fluctuate in the period between when we purchase structured settlements paymentstreams and when we securitize such payment streams. We purchase structured settlements at a discount rate based on, among other factors, our then estimates of the future interest rate environment. Oncea critical mass of payment streams is achieved, those payment streams are then securitized, generally through fixed rate private placements. The discountrate at which our securitization is sold to investors is based on the current interest rates as of the time of the securitization. Interest rates may fluctuatesignificantly during the period between the purchase and securitization of payment streams, which can increase or decrease the spread between thediscount rate at which we purchase the payment streams and the discount rate at which we securitize such payment streams, which could increase ordecrease our revenues. Volatile interest rate environments can lead to volatility in our results of operations. We may not be able to purchase consumer receivable portfolios domestically and internationally at favorable prices or on sufficiently favorableterms if at all. Our success in the consumer receivables business segment depends upon the continued availability of consumer receivable portfolios that meet ourpurchasing criteria and our ability to identify and finance the purchases of such portfolios. The availability of consumer receivable portfolios at favorableprices and on terms acceptable to us, if at all, depends on a number of factors outside of our control, including: •the growth in consumer debt; •the volume of consumer receivable portfolios available for sale; •availability of financing to fund purchases; •competitive factors affecting potential purchasers and sellers of consumer receivable portfolios; •possible future changes in the bankruptcy laws, state laws and homestead acts which could make it more difficult for us to collect, and •The foreign exchange rate changes of the countries in which we do business There is no assurance that we will realize the full value of the deferred tax asset. As of September 30, 2017, we had a net deferred tax asset of $12.7 million. Our ability to use our deferred tax asset is dependent on our ability togenerate future earnings within the operating loss carry-forward periods, which are generally 20 years. Some or all of our deferred tax asset could expireunused if we are unable to generate taxable income in the future sufficient to utilize the deferred tax asset, or we enter into transactions that limit our rightto use it. If a material portion of our deferred tax asset expires unused, it could have a material adverse effect on our future business, results of operations,financial condition and the value of our common stock. Our ability to realize the deferred tax asset is periodically reviewed and any necessary valuationallowance is adjusted accordingly. Additionally, on December 22, 2017 the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces theFederal statutory corporate income tax rate from 35% to 21%. This rate reduction is expected to have a significant impact on our provisions for incometaxes for periods beginning after September 30, 2017, including a one-time impact resulting from the revaluation of our deferred tax assets and liabilitiesto reflect the new lower rate. Based on our initial assessment of the Act, we expect that it will result in a charge to income taxes of approximately $3.5million in the first quarter of fiscal 2018. We may not be able to collect sufficient amounts on our consumer receivable portfolios to recover the costs associated with the purchase of thoseportfolios and to fund our operations. We acquire and collect on consumer receivable portfolios that contain charged-off receivables. In order to operate profitably over the long term, wemust continually purchase and collect on a sufficient volume of receivables to generate revenue that exceeds our purchase costs. For accounts that arecharged-off or semi-performing, the originators or interim owners of the receivables generally have: •made numerous attempts to collect on these obligations, often using both their in-house collection staff and third-party collection agencies; and 15Table of Contents •subsequently deemed these obligations as uncollectible. These receivable portfolios are purchased at significant discounts to the amount the consumers owe. These receivables are difficult to collect andactual recoveries may be less than the amount expected. In addition, our collections may worsen in a weak economic cycle. We may not recover amountsin excess of our acquisition and servicing costs. Our ability to recover the purchase costs on our portfolios and produce sufficient returns can be negatively impacted by the quality of the purchasedreceivables. In the normal course of our portfolio acquisitions, some receivables may be included in the portfolios that fail to conform to certain terms ofthe purchase agreements and we may seek to return these receivables to the seller for payment or replacement receivables. However, we cannot guaranteethat any of such sellers will be able to meet their payment obligations to us. Accounts that we are unable to return to sellers may yield no return. If cashflows from operations are less than anticipated as a result of our inability to collect sufficient amounts on our receivables, our ability to satisfy our debtobligations, purchase new portfolios, and achieve future growth and profitability may be materially adversely affected. We may be subject to competition for the purchase of international consumer receivable portfolios which may result in an increase in prices of suchportfolios. We compete with other purchasers of consumer receivable portfolios, with third-party collection agencies and with financial services companies thatmanage their own consumer receivable portfolios. We compete on the basis of price, reputation, industry experience and performance. Some of ourcompetitors have greater capital, personnel and other resources than we have. The possible entry of new competitors, including competitors thathistorically have focused on the acquisition of different asset types, and the expected increase in competition from current market participants may reduceour access to consumer receivable portfolios. Aggressive pricing by our competitors has raised the price of consumer receivable portfolios above levelsthat we are willing to pay, which could reduce the number of consumer receivable portfolios suitable for us to purchase or if purchased by us, reduce theprofits, if any, generated by such portfolios. If we are unable to purchase receivable portfolios at favorable prices or at all, our finance income andearnings could be materially reduced. We depend upon third parties to service a significant portion of our domestic and international consumer receivable portfolios. The loss of certainservicers could have an adverse effect on our financial position and results of operation. As of September 30, 2017, 35% of our portfolio face value, which represents approximately 90% of our portfolio face value at all third partycollection agencies and attorneys, was serviced by five organizations domestically. We are dependent upon the efforts of these collection agencies andattorneys to service and collect our consumer receivables. Any failure by our third-party collection agencies and attorneys to adequately performcollection services for us or remit such collections to us could materially reduce our finance income and our profitability. In addition, our finance incomeand profitability could be materially adversely affected if we are not able to secure replacement third party collection agencies and attorneys and redirectpayments from the customers to our new third party collection agencies and attorneys promptly in the event our agreements with our third-partycollection agencies and attorneys are terminated, our third-party collection agencies and attorneys fail to adequately perform their obligations or if ourrelationships with such third-party collection agencies and attorneys adversely change. We may rely on third parties to locate, identify and evaluate consumer receivable portfolios available for purchase. We may rely on third parties, including brokers and third-party collection agencies and attorneys, to identify consumer receivable portfolios and, insome instances, to assist us in our evaluation and purchase of these portfolios. As a result, if such third parties fail to identify receivable portfolios or if ourrelationships with such third parties are not maintained, our ability to identify and purchase additional receivable portfolios could be materiallyadversely affected. In addition, if we, or such parties, fail to correctly or adequately evaluate the value or collectability of these consumer receivableportfolios, we may pay too much for such portfolios and suffer an impairment, which would negatively impact our earnings. We rely on our third party collectors to comply with all rules and regulations and maintain proper internal controls over their accounting andoperations. Because the receivables were originated and serviced pursuant to a variety of federal and/or state laws by a variety of entities and involvedconsumers in all 50 states, the District of Columbia, Puerto Rico, Columbia and Peru, there can be no assurance that all original servicing entities have, atall times, been in substantial compliance with applicable law. Additionally, there can be no assurance that we or our third-party collection agencies andattorneys have been or will continue to be at all times in substantial compliance with applicable law. The failure to comply with applicable law and notmaintain proper controls in accounting and operations could materially adversely affect our ability to collect our receivables and could subject us toincreased costs, fines and penalties. 16Table of Contents Our collections may decrease if bankruptcy filings increase. During times of economic uncertainty, the amount of defaulted consumer receivables generally increases, which contributes to an increase in theamount of personal bankruptcy filings. Under certain bankruptcy filings, a debtor’s assets are sold to repay credit originators, but since the defaultedconsumer receivables we purchase are generally unsecured, we may not be able to collect on those receivables. Our collections may decline with anincrease in bankruptcy filings. If our actual collection experience with respect to a defaulted consumer receivable portfolio is significantly lower than weprojected when we purchased the portfolio, our earnings could be negatively affected. We are subject to various risks in connection with our litigation funding business. Risks of the litigation funding business include the potential regulation or limitation of interest rates and other fees advanced by our litigationfunding subsidiaries under federal and/or state regulation, a change in statutory or case law which limits or restricts the ability of our litigation fundingsubsidiaries to charge or collect fees and interest at anticipated levels, claimants being unsuccessful in whole or in part in the personal injury claims ordivorce settlement upon which our funds are provided, the continued services of the senior management of our litigation funding subsidiaries to sourceand analyze cases in accordance with the subsidiaries’ respective underwriting guidelines. The loss of any of our executive officers may adversely affect our operations and our ability to successfully acquire receivable portfolios. Our executive officers are responsible for making substantially all management decisions, including determining which portfolios to purchase, thepurchase price and other material terms of such portfolio acquisitions. These decisions are instrumental to the success of our business. Significant lossesof the services of our executive officers or the inability to replace our officers with individuals who have experience in the industry or with the Companycould disrupt our operations and adversely affect our ability to successfully acquire receivable portfolios. The Stern family effectively controls the Company, substantially reducing the influence of our other stockholders. Members of the Stern family own directly or indirectly, approximately 59% of our outstanding shares of common stock as of September 30, 2017.Through January 2019, the Stern family, in conjunction with a voting agreement signed with an activist shareholder in January 2017; is limited to votingup to 49% of the outstanding shares. As a result, the Stern family is able to significantly influence the actions that require stockholder approval,including: •the election of our directors; and •the approval of mergers, sales of assets or other corporate transactions or matters submitted for stockholder approval. As a result, our other stockholders may have reduced influence over matters submitted for stockholder approval. In addition, the Stern family’sinfluence could discourage any unsolicited acquisition of the Company and, consequently, materially adversely affect the price of our common stock. Negative press regarding the debt collection industry may have a negative impact on a customer’s willingness to pay the debt we acquire. Consumers are exposed to information from a number of sources that may cause them to be more reluctant to pay their debts or to pursue legalactions against us. Online, print and other media publish stories about the debt collection industry which cite specific examples of abusive collectionpractices. These stories can lead to the rapid dissemination of the story, adding to the level of exposure to negative publicity about our industry. Variousinternet sites are maintained where consumers can list their concerns about the activities of debt collectors and seek guidance from other website posterson how to handle the situation. Advertisements by debt relief attorneys and credit counseling centers are becoming more common, adding to the negativeattention given to our industry. As a result of this negative publicity, customers may be more reluctant to pay their debts or could pursue legal actionagainst us regardless of whether those actions are warranted. These actions could impact our ability to collect on the receivables we acquire and affect ourrevenues and profitability. Class action suits and other litigation could divert our management’s attention from operating our business and increase our expenses. Originators, debt purchasers and third-party collection agencies and attorneys in the consumer credit industry are frequently subject to putativeclass action lawsuits and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive originationand servicing practices. Being a defendant in such class action lawsuits or other litigation could materially adversely affect our results of operations andfinancial condition. As of September 30, 2017, we had set up a reserve for settlement costs of $2.3 million to cover a class action lawsuit. 17Table of Contents Economic slowdowns increase our credit losses. During periods of economic slowdown or recession, we experience an increase in rates of delinquencies and frequency and severity of credit losses.Our actual rates of delinquencies and frequency and severity of credit losses may be comparatively higher during periods of economic slowdown orrecession than those experienced by more traditional providers of consumer credit because of our focus on the financially underserved consumer market,which may be disproportionately impacted. Because a significant portion of our reported income is based on management’s estimates of the future performance of our asset portfolios and feesreceivable, differences between actual and expected performance of the receivables may cause fluctuations in net income. Significant portions of our reported income (or losses) are based on management’s estimates of cash flows we expect to receive on our assetportfolios and fees receivable, particularly for such assets that we report based on fair value. The expected cash flows are based on management’sestimates of interest rates, default rates, payment rates, cardholder purchases, servicing costs, and discount rates. These estimates are based on a variety offactors, many of which are not within our control. Substantial differences between actual and expected performance of the receivables will occur andcause fluctuations in our net income. For instance, higher than expected rates of delinquencies and losses could cause our net income to be lower thanexpected. Similarly, levels of loss and delinquency can result in our being required to repay our lenders earlier than expected, thereby reducing fundsavailable to us for future growth. We may determine to incur near-term losses based on longer-term strategic considerations. We may consider long-term strategic considerations more important than near-term economic gains when assessing business arrangements andopportunities. For example, we expect the structure and pricing terms in near-term future securitization transactions, if any, to be substantially differentfrom our past transactions, including lower revenues and lower advance rates. We may nevertheless determine to participate in, or structure, futurefinancing transactions based on longer-term strategic considerations. As a result, net cash flows over the life of a future securitization trust, particularlyany trust that we may facilitate in the near-term as we re-enter the securitization market, could be negative as a result of transaction size, transactionexpenses or financing costs. We may experience losses on portfolios consisting of new types of receivables or receivables in new geographies due to our lack of collectionexperience with these receivables, which could harm our business, financial condition and operating results. We continually look for opportunities to expand the classes of assets that make up the portfolios we acquire. Therefore, we may acquire portfoliosconsisting of assets with which we have little or no collection experience or portfolios of receivables in new geographies where we do not historicallymaintain an operational footprint. Our lack of experience with these assets may hinder our ability to generate expected levels of profits from theseportfolios. Further, our existing methods of collections may prove ineffective for these new receivables, and we may not be able to collect on theseportfolios. Our inexperience with these receivables may have an adverse effect on our business, financial condition and operating results. We may not be able to manage our growth effectively, including the expansion of our foreign operations. Continued growth will place additional demands on our resources, and we cannot be sure that we will be able to manage our growth effectively. Forexample, continued growth could place strains on our management, operations, and financial resources that our infrastructure, facilities, and personnelmay not be able to adequately support. In addition, the recent expansion of our foreign operations subjects us to a number of additional risks anduncertainties, including: ■compliance with and changes in international laws, including regulatory and compliance requirements that could affect our business; ■increased exposure to U.S. laws that apply abroad, such as the Foreign Corrupt Practices Act; ■social, political and economic instability or recessions; ■fluctuations in foreign economies and currency exchange rates; 18Table of Contents ■difficulty in hiring, staffing and managing qualified and proficient local employees and advisors to run international operations; ■the difficulty of managing and operating an international enterprise, including difficulties in maintaining effective communications withemployees due to distance, language, and cultural barriers; ■difficulties implementing and maintaining effective internal controls and risk management and compliance initiatives; ■potential disagreements with our joint venture business partners; ■differing labor regulations and business practices; and ■foreign tax consequences. To support our growth and improve our international operations, we continue to make investments in infrastructure, facilities, and personnel in ouroperations; however, these additional investments may not be successful or our investments may not produce profitable results. If we cannot manage ourgrowth effectively, our business, financial condition and operating results may be adversely affected. We may seek to make acquisitions that prove unsuccessful or strain or divert our resources. We may seek to grow through acquisitions of related businesses in the financial services sector. Such acquisitions present risks that could materiallyadversely affect our business and financial performance, including: •the diversion of our management’s attention from our everyday business activities; •the assimilation of the operations and personnel of the acquired business; •the contingent and latent risks associated with the past operations of, and other unanticipated problems arising in, the acquired business; and •the need to expand management, administration and operational systems. If we make such acquisitions, we cannot predict whether: •we will be able to successfully integrate the operations of any new businesses into our business; •we will realize any anticipated benefits of completed acquisitions; or •there will be substantial unanticipated costs associated with acquisitions. In addition, future acquisitions by us may result in: •potentially dilutive issuances of our equity securities; •the incurrence of additional debt; and •the recognition of significant charges for depreciation and impairment charges related to goodwill and other intangible assets. 19Table of Contents If our technology infrastructure is not operational, our operations could be disrupted and our ability to successfully operate the business could becompromised. Our success depends, in part, on sophisticated telecommunications and computer systems. The temporary loss of our computer ortelecommunications systems, through casualty, operating malfunction or service provider failure, could disrupt our operations. In addition, we mustrecord and process significant amounts of data quickly and accurately to properly bid on prospective acquisitions of receivable portfolios and to access,maintain and expand the databases we use for our collection and monitoring activities. Any failure of our information systems and their backup systemscould interrupt our operations. We may not have adequate backup arrangements for all of our operations and we may incur significant losses if an outageoccurs. In addition, we rely on third-party collection agencies and attorneys who also may be adversely affected in the event of an outage in which thethird-party collection agencies and attorneys do not have adequate backup arrangements. Any interruption in our operations or our third-party collectionagencies’ and attorneys’ operations could have an adverse effect on our results of operations and financial condition. We have implemented a disasterrecovery program to mitigate this risk. A cyber security incident could have a negative effect on our business as we outsource a significant amount of the collection accounts with personalinformation electronically. A security breach could have a detrimental effect on our business as we maintain a significant amount of personal information in our electronic files.A breach of our system or a leak of the personal information we maintain could leave us vulnerable to, among other things, loss of information andpotential litigation each of which could have a material adverse effect on our business. Our organizational documents and Delaware law may make it harder for us to be acquired without the consent and cooperation of our board ofdirectors and management. Several provisions of our organizational documents and Delaware law may deter or prevent a takeover attempt, including a takeover attempt inwhich the potential purchaser offers to pay a per share price greater than the current market price of our common stock. Under the terms of our certificateof incorporation, our board of directors has the authority, without further action by the stockholders, to issue shares of preferred stock in one or moreseries and to fix the rights, preferences, privileges and restrictions thereof. The ability to issue shares of preferred stock could tend to discourage takeoveror acquisition proposals not supported by our current board of directors. In addition, we are subject to Section 203 of the Delaware General CorporationLaw, which restricts business combinations with some stockholders once the stockholder acquires 15% or more of our common stock. Future sales of our common stock by our affiliates or other stockholders may depress our stock price. Sales of a substantial number of shares of our common stock in the public market could cause a decrease in the market price of our common stock.We had 6,685,415 shares of common stock issued and outstanding as of October 11, 2018. Of these shares, 3,998,727 are owned by affiliates of thecompany, which are defined as in Rule 405 under the Act as a “person that directly, or indirectly through one or more intermediaries, controls, iscontrolled by, or is under common control with”, an issuer. In addition, options to purchase 555,100 shares of our common stock were outstanding as ofSeptember 30, 2017, of which 555,100 were exercisable. We may also issue additional shares in connection with our business and may grant additionalstock options or restricted shares to our employees, officers, directors and consultants under our present or future equity compensation plans or we mayissue warrants to third parties outside of such plans. As of September 30, 2017, there were 1,293,343 shares available for such purpose with such sharesavailable under the 2012 Stock Option and Performance Award Plan. If a significant portion of these shares were sold in the public market, the marketvalue of our common stock could be adversely affected. We have the ability to issue preferred shares, warrants, convertible debt and other securities without stockholder approval which could dilute therelative ownership interest of current stockholders and adversely affect our share price. Future sales of our equity-related securities in the public market, could adversely affect the trading price of our common stock and our ability toraise funds in new stock offerings. Our common shares may be subordinate to classes of preferred shares issued in the future in the payment of dividendsand other distributions made with respect to common shares, including distributions upon liquidation or dissolution. Our certificate of incorporationpermits our board of directors to issue preferred shares without first obtaining stockholder approval. If we issued preferred shares, these additionalsecurities may have dividend or liquidation preferences senior to our common shares. If we issue convertible preferred shares, a subsequent conversionmay dilute the current common stockholders’ interest. We have similar abilities to issue convertible debt, warrants and other equity securities. Climate change and related regulatory responses may adversely impact our business. Climate change as a result of emissions of greenhouse gases is a significant topic of discussion and may generate federal and other regulatoryresponses in the near future, including the imposition of a so-called “cap and trade” system. It is impracticable to predict with any certainty the impact onour business of climate change or the regulatory responses to it, although we recognize that they could be significant. The most direct impact is likely tobe an increase in energy costs, which would increase slightly our operating costs, primarily through increased utility and transportations costs. Inaddition, increased energy costs could impact consumers and their ability to incur and repay indebtedness. However, it is too soon for us to predict withany certainty the ultimate impact, either directionally or quantitatively, of climate change and related regulatory responses. Our quarterly operating results may fluctuate and cause our stock price to decline. Because of the nature of our business, our quarterly operating results may fluctuate, which may adversely affect the market price of our commonstock. Our results may fluctuate as a result of any of the following: •the timing and amount of collections on our consumer receivable portfolios; 20Table of Contents •our inability to identify and acquire additional consumer receivable portfolios; •a decline in the estimated future value of our consumer receivable portfolio recoveries; •increases in operating expenses associated with the growth of our operations; •general and economic market conditions; and within various jurisdictions; and •prices we are willing to pay for consumer receivable portfolios. Our financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies. Our primary exposure to movements in foreign currency exchange rates relates to non- U.S. dollar denominated sales and operating expensesworldwide. The Company does not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures tofluctuations in foreign currency exchange rates. Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of oursecurities. Responding to activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of management andour employees. Such activities could interfere with our ability to execute our strategic plan. In addition, a proxy contest for the election of directors at ourannual meeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by managementand our board of directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities. We are a “smaller reporting company” and, as such, are allowed to provide less disclosure than larger public companies. We are currently a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. As a “smaller reporting company,” we have certaindecreased disclosure obligations in our SEC filings, which may make it harder for investors to analyze our results of operations and financial prospectsand may result in less investor confidence. Continued delays in the filing of our periodic reports with the SEC could result in the delisting of our common stock, which would materially andadversely affect our stock price, financial condition and/or results of operations. As a result of the restatement of certain of our previously issued financial statements, we were unable to file this report with the SEC on a timelybasis. We also have yet to file our Quarterly Reports on Form 10-Q for the quarters ended December 31, 2017, March 31, 2018 and June 30, 2018, whichwere due in February, May and August of 2018, respectively. As a result, we remain non-compliant with NASDAQ listing rules requiring the timely filingof periodic reports, which may result in the delisting of our common stock should we fail to file such reports by November 30, 2018 (the deadline set forthin the extension granted to us by the Nasdaq hearings panel). In addition, the fact that we were not able to file the financial statements contained in thisreport on a timely basis has also caused us to delay our annual meeting of stockholders, which could serve as an additional basis for delisting ourcommon stock. Delisting would likely have a significant material adverse effect on us by, among other things, reducing: ●The liquidity of our common stock; ●The market price of our common stock; ●The number of institutional and other investors that will consider investing in our common stock; ●The number of market makers in our common stock; ●The availability of information concerning the trading prices and volume of our common stock; ●The number of broker-dealers willing to execute trades in shares of our common stock; ●Our ability to access the public markets to raise debt or equity capital; ●Our ability to use our equity as consideration in any merger transaction; and ●The effectiveness of equity-based compensation plans for our employees used to attract and retain individuals important to ouroperations. Item 2. Properties Our executive and administrative offices are located in Englewood Cliffs, New Jersey, where we lease approximately 13,400 square feet of generaloffice space. The lease was renewed September 1, 2015 and expires on August 31, 2020. 21Table of Contents Our office in Houston, Texas occupies approximately 900 square feet of general office space. The lease expires on August 31, 2019. We believe that our existing facilities are adequate for our current needs. Item 3. Legal Proceedings. In the ordinary course of our business, we are involved in numerous legal proceedings. We regularly initiate collection lawsuits, using third partylaw firms, against consumers. Also, consumers occasionally initiate litigation against us, in which they allege that we have violated a federal or state lawin the process of collecting on their account. We do not believe that these ordinary course matters are material to our business and financial condition. Asof the date of this report, we were not involved in any material litigation in which we were a defendant. Originators, debt purchasers and third-party collection agencies and attorneys in the consumer credit industry are frequently subject to putativeclass action lawsuits and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive originationand servicing practices. Being a defendant in such class action lawsuits or other litigation could materially adversely affect our results of operations andfinancial condition. Currently the Company has set up a reserve for settlement costs of $2.3 million to cover a class action lawsuit. Legal proceedings are subject to substantial uncertainties concerning the outcome of material factual and legal issues relating to the litigation.Accordingly, we cannot currently predict the manner and timing of the resolution of some of these matters and may be unable to estimate a range ofpossible losses or any minimum loss from such matters. Item 4. Mine Safety Disclosures. Not applicable. 22Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Our Common Stock Our common stock is quoted on the NASDAQ Global Select Market under the symbol “ASFI.” High and low sales prices of our common stock sinceOctober 1, 2015 as reported by NASDAQ are set forth below (such quotations reflect inter-dealer prices without retail markup, markdown, or commission,and may not necessarily represent actual transactions): High Low Fiscal Year 2016 October 1, 2015 to December 31, 2015 $8.85 $7.51 January 1, 2016 to March 31, 2016 9.25 6.82 April 1, 2016 to June 30, 2016 10.98 9.42 July 1, 2016 to September 30, 2016 11.97 9.35 Fiscal Year 2017 October 1, 2016 to December 31, 2016 $10.47 $8.65 January 1, 2017 to March 31, 2017 10.35 7.75 April 1, 2017 to June 30, 2017 9.05 6.15 July 1, 2017 to September 30, 2017 8.40 6.80 Dividends Future dividend payments will be at the discretion of our board of directors and will depend upon our financial condition, operating results, capitalrequirements and any other factors our board of directors deems relevant. In addition, our agreements with our lender may, from time to time, restrict ourability to pay dividends. Currently there are no restrictions in place. We did not declare any dividends during fiscal years 2017 and 2016. However, onFebruary 5, 2018, we declared a special cash dividend in the amount of $5.30 per share with respect to our common stock, which was paid on February 28,2018 to holders of record at the close of business on February 16, 2018. The aggregate payment to shareholders was approximately $35 million. Holders of Our Common Stock On September 28, 2018, there were 18 holders of record of our common stock. Issuer Purchases of Equity Securities The Company did not repurchase any shares of its common stock during the three months ended September 30, 2017. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation. Caution Regarding Forward-Looking Statements This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this Annual Report on Form 10-Kare based on information available to us on the date hereof, and except as required by law, we assume no obligation to update any such forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number offactors, including those set forth under the caption “Risk Factors” contained in this report and elsewhere herein. The following should be read inconjunction with our annual financial statements contained elsewhere in this report. Overview We are engaged in the businesses of acquiring, managing, servicing and recovering on portfolios of consumer receivables, funding of personalinjury claims through Simia and assisting claimants in the process of disability and social security claims through GAR Disability Advocates and FiveStar Veterans Disability LLC. For the periods covered by these financial statements, Pegasus, which engaged in the funding of personal injury claims prior to entering liquidationin April 2017, was 80% owned and 50% controlled, and accounted for under the equity method. On January 12, 2018, we acquired the remaining 20%minority shareholder’s interest in Pegasus, and now currently own 100% of Pegasus. Commencing in the quarter ending March 31, 2018, we willconsolidate the financial results of this entity. Pegasus remains in operation to liquidate its current portfolio of advances, but will not fund any newadvances. 23Table of Contents Consumer Receivables The consumer receivable portfolios generally consist of one or more of the following types of consumer receivables: •charged-off receivables — accounts that have been written-off by the originators and may have been previously serviced by collection agencies;and •semi-performing receivables — accounts where the debtor is making partial or irregular monthly payments, but the accounts may have beenwritten-off by the originators. We acquire these consumer receivable portfolios at a significant discount to the amount actually owed by the borrowers. We acquire these portfoliosafter a qualitative and quantitative analysis of the underlying receivables and calculate the purchase price so that our estimated cash flow offers us anadequate return on our investment after servicing expenses. After purchasing a portfolio, we actively monitor its performance and review and adjust ourcollection and servicing strategies accordingly. We purchase receivables from credit grantors and others through privately negotiated direct sales, brokered transactions and auctions in whichsellers of receivables seek bids from several pre-qualified debt purchasers. We pursue new acquisitions of consumer receivable portfolios on an ongoingbasis through: •our relationships with industry participants, financial institutions, collection agencies, investors and our financing sources; •brokers who specialize in the sale of consumer receivable portfolios; and •other sources. Personal Injury Claims In 2011, the Company purchased an 80% interest in Pegasus. Pegasus Legal Funding LLC (“PLF”), an unrelated third party, held the other 20%interest until we purchased the interest in January 2018. For the periods covered by this report, the Company and PLF each maintained 50% voting rightsin this entity. For the periods covered by this report, we accounted for our investment in Pegasus under the equity method of accounting. The Pegasus business model entails the outlay of non-recourse advances to a plaintiff with an agreed-upon fee structure to be repaid from theplaintiff’s recovery. Typically, such advances to a plaintiff approximate 10-20% of the anticipated recovery. These funds are generally used by theplaintiff for a variety of urgent necessities, ranging from surgical procedures to everyday living expenses. As of September 30, 2017 and 2016, the Company had a net invested balance of approximately $50.5 million and $48.3 million in Pegasus,respectively. On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC,Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas. The Company and PLF have decided not to renew thePegasus joint venture that, by its terms, terminated on December 28, 2016. The Term Sheet amends certain provisions to Pegasus’ operating agreementdated as of December 28, 2011 and governs the terms relating to the liquidation of the existing Pegasus portfolio. Pursuant to the Term Sheet, the parties thereto have agreed that Pegasus will continue in existence to collect advances on its Portfolio. TheCompany will fund overhead expenses relating to its Portfolio based on a budget agreed upon by the Company and PLF. Any cash received by Pegasuswill be distributed to its members in the order provided for in the operating agreement. The Company will be allocated an amount equal to 20% of allprincipal collected on each investment paid back beginning October 1, 2016 and continuing through the collection of the Portfolio, which will beapplied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. After January 2, 2017, additionaloverhead expenses advanced will be paid back monthly as incurred by the Company prior to the calculation and distribution of any profits. In connection with the Term Sheet, the parties thereto have also entered into a customary mutual release and non-disparagement agreement as wellas a release from the non-competition obligations under the operating agreement. The Company filed for arbitration with the American Arbitration Association ("AAA") against PLF in April 2017 for breaches in the Operating andTerm Sheet. On April 18, 2017, the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitration panel is confirmedand can review the case. As of June 30, 2017 there was approximately $24.7 million in cash that was restrained under the Emergent Award, and isclassified as restricted on the Company's consolidated balance sheet. The Company has as equity method investment in Pegasus. See Note 5 - LitigationFunding. 24Table of Contents On July 17, 2017, an arbitration panel was confirmed, and a hearing date has been scheduled for August 25, 2017 on the Company's motion to havePLF removed from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company inaccordance with the Operating and Liquidation Agreements. On January 12, 2018, the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by andamong the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo &Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into thePurchase Agreement. Additionally, on January 12, 2018, ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding,Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with PegasusLegal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests ofPegasus Funding, LLC (“Pegasus”), which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregatepurchase price of $1.8 million. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability companyinterests of Pegasus. As of January 12, 2018, the Company owns 100% of Pegasus, and commencing in the quarter ending March 31, 2018, the financial activity ofPegasus will be consolidated into the financial statements of the Company. As of January 12, 2018, the Company is entitled to 100% of all distributionsmade from Pegasus. On November 11, 2016, the Company formed Simia, a wholly owned subsidiary. Simia commenced funding personal injury settlement claims inJanuary 2017. Simia was formed in response to the Company’s decision not to renew its joint venture with PLF. As of September 30, 2017, Simia had apersonal injury claims portfolio of $3.4 million Divorce Funding On May 8, 2012, the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture withCalifornia-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”). The Venture provides non-recourse funding to a spouse in a matrimonialaction where the marital assets exceed $2,000,000. Such funds can be used for legal fees, expert costs and necessary living expenses. The Venture receivesan agreed percentage of the proceeds received by such spouse upon final resolution of the case. BP Divorce Funding's profits and losses will bedistributed 60% to BPCM and 40% to BP Divorce Funding, after the return of BPCM’s investment on a case by case basis and after a 15% preferred returnto us. BPCM’s initial investment in the Venture consisted of up to $15 million to fund divorce claims to be fulfilled in three tranches of $5 million each.Each investment tranche is contingent upon a minimum 15% cash-on-cash return to us. At BPCM’s option, there could be an additional $35 millioninvestment in divorce claims in tranches of $10 million, $10 million, and $15 million, also with a 15% preferred return and such investments may evenexceed a total of $50 million, at BPCM’s sole option. Should the preferred return be less than 15% on any $5 million tranche, the 60%/40% profit andloss split would be adjusted to reflect BPCM’s priority to a 15% preferred return. As of September 30, 2017, BPCM had fully reserved against its investedamount of $2.5 million, in cases managed by this Venture. In 2012, the Company provided a $1.0 million revolving line of credit to partially fund BP Divorce Funding’s operations with such loan bearinginterest at the prevailing prime rate with an initial term of twenty four months. In September 2014, the agreement was revised to extend the term of theloan to August 2016, increase the credit line to $1.5 million and include a personal guarantee of the principal of BP Divorce Funding. The revolving lineof credit is collateralized by BP Divorce Funding’s profits share in the venture and other assets. Effective August 14, 2016, BPCM extended its revolvingline of credit with BP Divorce Funding until March 31, 2017, at substantially the same terms as the September 2014 amendment. On April 1, 2017, BPDivorce Funding defaulted on this agreement, and as such, the loan balance of approximately $1.5 million was deemed uncollectible and was written offin general and administrative expenses in the consolidated statement of operations during the year ended September 30, 2017. Disability Advocacy Business GAR Disability Advocates and Five Star are disability advocacy groups, which for a fee obtains and represents individuals in their claims for socialsecurity disability, supplemental security income benefits from the Social Security Administration and veterans benefits with the Veteran'sAdministration. 25Table of Contents Structured Settlement Business- Discontinued Operations On December 13, 2017, we sold all of our issued and outstanding equity capital in CBC Settlement Funding, LLC (“CBC”), our wholly ownedsubsidiary engaging in structured settlements. As a result of this sale, all prior periods presented in our consolidated financial statements will account forCBC as a discontinued operation. This determination resulted in the reclassification of the assets and liabilities comprising our structured settlementbusiness to assets and liabilities related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to ourconsolidated statements of operations to reflect discontinued operations for all periods presented. As of September 30, 2017, the Company had totalassets related to discontinued operations of $92.2 million, and total liabilities related to discontinued operations of $81.8 million. Total revenues for theyears ended September 30, 2017 and 2016 were $7.2 million and $14.4 million, respectively. See Note 2 - Discontinued Operations in the Company'snotes to the consolidated financial statements. Critical Accounting Policies We may account for our investments in consumer receivable portfolios, using either: •The interest method; or •The cost recovery method. Our extensive liquidating experience in certain asset classes such as distressed credit card receivables, consumer loan receivables and mixedconsumer receivables has matured, we use the interest method when we believe we can reasonably estimate the timing of the cash flows. In thosesituations where we diversify our acquisitions into other asset classes in which we do not possess the same expertise or history, or we cannot reasonablyestimate the timing of the cash flows, we utilize the cost recovery method of accounting for those portfolios of receivables. The Company accounts for certain of its investments in finance receivables using the interest method under the guidance of FASB ASC Topic 310,Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality, (“ASC 310”). Under the guidance of ASC 310, static pools ofaccounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as asingle unit for the recognition of income, principal payments and loss provision. Due to the substantial reduction of portfolios reported under the interestmethod, and the inability to reasonably estimate cash collections required to account for those portfolios under the interest method, the Companyconcluded 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 staticpool is established for a quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool (unlesssold or returned to the seller). The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the costrecovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carryingbalance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. The Company accounts for its impairments in accordance with ASC 310, which provides guidance on how to account for differences betweencontractual and expected cash flows from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences areattributable, at least in part, to credit quality. The recognition of income under ASC 310 is dependent on the Company having the ability to developreasonable expectations of both the timing and amount of cash flows to be collected. In the event the Company cannot develop a reasonable expectationas 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 willrecognize income only after it has recovered its carrying value. If collection projections indicate the carrying value will not be recovered, an impairment is required. The impairment will be equal to the differencebetween the carrying value at the time of the forecast and the corresponding estimated remaining future collections. The Company believes it hassignificant experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the amount actually owed by underlyingcustomers. The Company invests in these portfolios only after both qualitative and quantitative analyses of the underlying receivables are performed anda 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 hasthe added benefit of soliciting its third party collection agencies and attorneys for their input on liquidation rates and, at times, incorporates such inputinto the estimates it uses for its expected cash flows. 26Table of Contents Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case bycase basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with third party research tools which monitor publicfilings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases areidentified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely.For cases that have not exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates ofthe Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. Inaddition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historicallyexperienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its feeincome. Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equitymethod of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of severalfactors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50%interest in voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within theCompany's consolidated balance sheets and statements of operations, however, the Company's share of the earnings of the investee company is reflectedas earnings and loss from equity method investment in the Company's consolidated statement of operations. The Company's carrying value in an equitymethod investee company is reflected on the Company's consolidated balance sheet, as equity method investment. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company'sconsolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When theinvestee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses notpreviously recognized. CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. TheCompany elected to carry structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using theeffective interest method over the life of the related settlement. Changes in fair value are recorded in unrealized gain (loss) in structured settlements in ourstatements of income. US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reportedas discontinued operations in the consolidated financial statements if the sale or disposition represents a strategic shift that has (or will have) a majoreffect on an entity’s operations and financial results. The Company recognizes revenue for GAR Disability Advocates when cases close and fees are collected. Results of Operations The following discussion of our operations and financial condition should be read in conjunction with our financial statements and notesthereto included elsewhere in this report. In these discussions, most percentages and dollar amounts have been rounded to aid in its presentation. Years Ended September 30, 2017 2016 Finance income, net $15,920,000 $18,890,000 Personal injury claim income (1) 434,000 - Disability fee income 5,085,000 4,011,000 Total revenues 21,439,000 22,901,000 Other (expense) income (94,000) 1,704,000 21,345,000 24,605,000 General and administrative expenses 31,900,000 29,308,000 Interest expense 240,000 - Impairments of consumer receivables acquired for liquidation 1,129,000 164,000 Earnings from equity method investment (2) (4,619,000) (10,551,000) 28,650,000 18,921,000 (Loss) income before income taxes from continuing operations (7,305,000) 5,684,000 Income tax expense 1,077,000 1,017,000 (Loss) income from continuing operations (8,382,000) 4,667,000 (Loss) income from discontinued operations, net of tax (4,620,000) 2,906,000 Net (loss) income attributable to Asta Funding, Inc. $(13,002,000) $7,573,000 (1) This line item is comprised of the personal injury claims revenue from Simia (2) This line item is comprised of the net earnings from Pegasus under the equity method of accounting. 27Table of Contents Year Ended September 30, 2017 Compared to the Year Ended September 30, 2016 Finance income. For the fiscal year ended September 30, 2017 (“fiscal year 2017”), finance income from consumer receivables decreased$3.0 million, or 15.7%, to $15.9 million from $18.9 million for the fiscal year ended September 30, 2016 (“fiscal year 2016”). During fiscal year 2017, weacquired $35.0 million in face value of new portfolios at a cost of $2.2 million as compared to $162.9 million of face value portfolios at a cost ofapproximately $8.2 million, during fiscal year 2016. The portfolios purchased during fiscal year 2017 and 2016 are accounted for on the cost recoverymethod. Net collections decreased $5.3 million, or 18.4%, to $23.5 million for fiscal year 2017 from $28.8 million for fiscal year 2016. During fiscal year2017, gross collections decreased 13.4% to $42.5 million from $49.0 million for fiscal year 2016, reflecting the lower level of purchases over the last fewyears. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $1.2 million, or 6.1% forfiscal year 2017, as compared to the same period in the prior year and averaged 44.6% of collections for fiscal year 2017 as compared to 41.1% in thesame prior year period. Disability Fee income. Disability fee income increased 26.8% or $1.1 million to $5.1 million in fiscal year 2017, compared to $4.0 million in fiscalyear 2016 as a result of a significant increase in disability claimants cases being settled in the current year, translating into a significant increase in closedcases. Other income. The following table summarizes other income for the years ended September 30, 2017 and 2016: 2017 2016 Interest and dividend income $765,000 $1,302,000 Realized gains (833,000) 29,000 Other (26,000) 373,000 $(94,000) $1,704,000 General and administrative expenses. For fiscal year 2017, general and administrative expenses increased $2.6 million, or 8.8%, to $31.9 millionfrom $29.3 million for the prior year. The increase in general and administrative expenses is related to increased bad debt expenses related to ourinvestment in BP Case Management of $2.6 million and the write off our investment in the Topaz fund of $3.4 million and, increased professional feesprimarily related to the Mangrove matter of $3.5 million, partially offset by a decrease in collection expenses of $2.0 million, reduction in stockcompensation expenses of $0.6 million and various cost reductions in GAR (office salaries $2.5 million, advertising $1.4 million, rent expense $0.2million and postage $0.2 million). Impairments. For fiscal year 2017, the Company recorded an impairment of $1.1 million of its consumer receivable portfolio, compared to $0.2million for fiscal year 2016. Earnings from equity method investment. For the fiscal year 2017, earnings from equity method investment decreased $6.0 million to $4.6 million,compared to earnings from equity method of $10.6 million for fiscal year 2016, due to increased bad debt write offs, and reduced interest income earnedon personal injury claim advances as the underlying portfolios are being liquidated. Net income before taxes — Consumer Receivables. Net income before taxes decreased $1.7 million, to $12.5 million for fiscal year 2017, ascompared to $14.2 million for fiscal year 2016, primarily due to decreased revenue of $3.0 million, and increased impairment charges of $0.9 million,partially offset by a class action suit settlement of $2.0 million during fiscal year 2017. Net loss before taxes — GAR Disability Advocates. Net loss before taxes decreased $5.6 million to $1.7 million for fiscal year 2017, compared to anet loss of $7.3 million for fiscal year 2016, as a result of increased revenues of $1.1 million, and various planned cost reduction measures (office salaries$2.5 million, advertising $1.4 million, rent expense $0.2 million and postage of $0.2 million) . Income tax expense (benefit). Income tax benefit of $2.3 million was recorded for fiscal year 2017, consisting of a $5.0 million current income taxbenefit and a $2.7 million deferred income tax expense. The tax benefit on discontinued operations was $3.4 million, and there was income tax of $1.1million on continuing operations. The state portion of the income tax provision for the fiscal year 2016 has been offset against state net operating losscarry forwards, and, as a result, no state taxes were payable. 28Table of Contents Discontinued operations. Earnings from discontinued operations, net of tax, decreased $7.5 million or 259.0% to a loss from discontinuedoperations of $4.6 million in fiscal year 2017, compared to earnings from discontinued operations of $2.9 million in fiscal year 2016. The current yearloss was primarily attributed to a loss on sale of CBC, as well as a loss on sale of various structured settlements. Net(loss) income. As a result of the above, the Company had net loss of $13.0 million for fiscal year 2017, compared to net income of $7.6 millionfor fiscal year 2016. Liquidity and Capital Resources At September 30, 2017, the Company had $17.6 million in cash and cash equivalents, as well as $5.5 million in level 1 securities that are classifiedas available for sale, on hand. In addition, the Company had working capital of $114.8 million at September 30, 2017. On December 13, 2017, the Company sold all of the issued and outstanding equity capital of CBC for an aggregate purchase price of approximately$10.5 million. Additionally, on January 12, 2018, the Company acquired the remaining 20% controlling interest in Pegasus Funding, LLC. As a result ofthis transaction, and the related settlement agreement, the $35.4 million of restricted cash on hand at Pegasus at September 30, 2017 became unrestrictedand was available to the Company. See Note 5 - Litigation Funding and Note 21 - Subsequent Events in the Company's notes to its consolidated financialstatements. On February 5, 2018, the Board of Directors of the Company declared a special cash dividend in the amount of $5.30 per share with respect to itsCommon Stock, payable on February 28, 2018 to holders of record of the Company’s Common Stock at the close of business on February 16, 2018, withan ex-dividend date of March 1, 2018. The aggregate payment to shareholders was approximately $35 million. We believe that our available cash resources and expected cash inflows from operations will be sufficient to fund operations for the next twelvemonths. Receivables Financing Agreement In March 2007, Palisades XVI borrowed approximately $227 million under the Receivables Financing Agreement, as amended in July2007, December 2007, May 2008, February 2009, October 2010 and August 2013 from BMO, in order to finance the Great Seneca Portfolio Purchase (the“Portfolio Purchase”) which had a purchase price of $300 million. The original term of the agreement was three years. This term was extended by each ofthe Second, Third, Fourth, Fifth Amendments and the most recent agreement signed in August 2013, discussed below. Financing Agreement. The Settlement Agreement and Omnibus Amendment (“Settlement Agreement”) was in effect on August 7, 2013, PalisadesXVI, a 100% owned bankruptcy remote subsidiary, entered into a Settlement Agreement with BMO as an amendment to the Receivables FinancingAgreement. In consideration for a $15 million prepayment funded by the Company, BMO has agreed to significantly reduce minimum monthlycollection requirements and the interest rate. If and when BMO were to receive the next $15 million of collections from the Portfolio Purchase, (the“Remaining Amount”) less certain credits for payments made prior to the consummation of the Settlement Agreement, the Company would be entitled torecover from future net collections the $15 million prepayment that it funded. Thereafter, BMO would have the right to receive 30% of future netcollections. Upon repayment of the Remaining Amount to BMO, the Company would be released from the remaining contractual obligation of theReceivables Financing Agreement (“RFA”) and the Settlement Agreement. On June 3, 2014, Palisades XVI finished paying the Remaining Amount. The final principal payment of $2.9 million included a voluntaryprepayment of $1.9 million provided from funds of the Company. Accordingly, Palisades XVI was entitled to receive $16.9 million of future collectionsfrom the Portfolio Purchase before BMO is entitled to receive any payments with respect to its Income Interest. During the month of June 2016, theCompany received the balance of the $16.9 million, and, as of September 30, 2017, the Company recorded a liability to BMO of approximately$148,000. The funds were subsequently remitted to BMO on October 10, 2017. The liability to BMO is recorded when actual collections are received. With the payment of the Remaining Amount and upon completion of the documents granting the Palisades XVI Income Interest, including awritten confirmation from BMO that the obligation has been paid in full, Palisades XVI has been released from further debt obligations from the RFA. 29Table of Contents Bank Hapoalim B.M. (“Bank Hapoalim”) Line of Credit On May 2, 2014, the Company obtained a $20 million line of credit facility from Bank Hapoalim, pursuant to a Loan Agreement (the “LoanAgreement”) among the Company and its subsidiary, Palisades Collection, LLC, as borrowers, and Bank Hapoalim, as agent and lender. The LoanAgreement provides for a $20.0 million committed line of credit and an accordion feature providing an increase in the line of credit of up to $30 million,at the discretion of the lenders. The facility is for a term of three years at an interest rate of either LIBOR plus 275 basis points or prime, at the Company’soption. The Loan Agreement includes covenants that require the Company to maintain a minimum net worth of $150 million and pay an unused line fee.The facility is secured pursuant to a Security Agreement among the parties to the Loan Agreement. On March 30, 2016, the Company signed the FirstAmendment to the Loan Agreement (the “First Amendment”) with Bank Hapoalim which amended certain terms of their banking arrangement. The FirstAmendment includes (a) the reduction of the interest rate to LIBOR plus 225 basis points; (b) a decrease in the Net Equity requirement by $50 million, to$100 million and (c) modifies the No Net Loss requirement from a quarterly to an annual basis. All other terms of the original agreement remain in effect.The Company borrowed $9.6 million in February 2017 against the facility. There was a $10.0 million aggregate balance on deposit at Bank Hapoalimwhich served as collateral for the line of credit. On April 28, 2017, the Company renewed the line of credit facility with the new maturity date of August 2,2017, under the existing terms and conditions. On August 2, 2017, the Bank Hapoalim $9.6 million line of credit expired and the Company satisfied thedebt with cash that was held in deposit as collateral with the bank. As of September 30, 2017, there were no outstanding balances on this facility. Personal Injury Claims Pegasus - Equity Method Investment On December 28, 2011, we formed the joint venture Pegasus. Pegasus purchased interests in personal injury claims from claimants who are a partyto personal injury litigation with the expectation of a settlement in the future. Pegasus advanced to each claimant funds on a non-recourse basis at anagreed upon interest rate in anticipation of a future settlement. The interest purchased by Pegasus in each claim consists of the right to receive from suchclaimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’sclaim. The profits from the joint venture are distributed based on the ownership percentage of the parties, with Asta Funding, Inc. receiving 80% and PLFreceiving 20%. Each of the entities maintains 50% voting rights. On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with Pegasus and PLF. The Company and PLF havedecided not to renew the Pegasus joint venture that by its terms terminated on December 28, 2016. The Term Sheet amends certain provisions of Pegasus’operating agreement dated as of December 28, 2011 (as amended, the “Operating Agreement”) and governs the terms relating to the collection of itsexisting Pegasus portfolio (the “Portfolio”). Pursuant to the Term Sheet, the parties thereto have agreed that Pegasus will continue in existence in order to collect advances on itsexisting Portfolio. The Company will fund overhead expenses relating to the collection of the Portfolio based on a budget agreed upon by the Companyand PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will beallocated an amount equal to 20% of all principal collected on each investment paid back beginning October 1, 2016 and continuing through thecollection of the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus.After January 2, 2017, additional overhead expenses advanced will be paid back monthly as incurred by the Company prior to the calculation anddistribution of any profits. The Company filed for arbitration with the American Arbitration Association ("AAA") against PLF in April 2017 for breaches in the OperatingAgreement and Term Sheet. On April 18, 2017, the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitrationpanel is confirmed and can review the case. As of September 30, 2017 there was approximately $24.7 million in cash that was restrained under theEmergent Award. The Company has as equity method investment in Pegasus for the periods covered by this report. See Note 5 - Litigation Funding. On July 17, 2017, an arbitration panel was confirmed, and a hearing date was scheduled for August 25, 2017 on the Company's motion to have PLFremoved from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company inaccordance with the Operating and Liquidation Agreements. On January 12, 2018, the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by andamong the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo &Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into thePurchase Agreement. Additionally, on January 12, 2018, ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding,Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with PegasusLegal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests ofPegasus Funding, LLC (“Pegasus”), which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregatepurchase price of $1,800,000. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability companyinterests of Pegasus. 30Table of Contents As a result of the purchase of the Seller’s 20% interest in Pegasus on January 12, 2018 under the Purchase Agreement, beginning with the quarterended March 31, 2018, the Company will consolidate the financial statements of Pegasus. The Company currently accounts for its investment in Pegasusunder the equity method of accounting. Simia On November 11, 2016, the Company announced that it will continue its personal injury claims funding business through the formation of awholly owned subsidiary, Simia. On March 24, 2017, Simia purchased a portfolio of personal injury claims from a third party for approximately $3.0 million, The Company plans togrow the business organically, but may from time to time purchase portfolios of personal injury claims from third parties if the opportunity presentedaligns with the Company's strategic growth plans. Divorce Funding On May 8, 2012, the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture withCalifornia-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create BP Case Management, LLC (“BPCM”). BPCM is 60% owned bythe Company and 40% owned by BP Divorce Funding. BPCM provides non-recourse funding to a spouse in a matrimonial action. The Companyprovided a $1.5 million revolving line of credit to partially fund BP Divorce Funding’s operations, with such loan bearing interest at the prevailing primerate, with an initial term of twenty-four months. The term of the loan was to end in May 2014, but had been extended to August 2016. Effective August14, 2016, the Company extended its revolving line of credit with BP Divorce Funding until March 31, 2017, at substantially the same terms as theSeptember 14, 2014 amendment. The revolving line of credit is collateralized by BP Divorce Funding’s profit share in BPCM and other assets. On April 1,2017, this loan was in default as BPCM failed to make the required payments due under the loan agreement. Accordingly, the loan balance of $1.5million was deemed uncollectible and written off during the second quarter of fiscal 2017 with a charge to general and administrative expenses. Structured Settlements- Discontinued Operations On December 31, 2013, the Company acquired 80% ownership of CBC and its affiliate, CBC Management Services, LLC for approximately $5.9million. At the closing, the operating principals of CBC, namely William J. Skyrm, Esq. and James Goodman, were each issued a 10% interest in CBC. Inaddition, the Company agreed to provide financing to CBC of up to $5 million, amended to $7.5 million in March 2015. Through the transaction weacquired structured settlements valued at $30.4 million and debt that totaled $23.4 million, consisting of $9.6 million of a revolving line of credit with afinancial institution and $13.8 million of non-recourse notes issued by CBC’s subsidiaries. On December 31, 2015, the Company acquired the remaining20% ownership of CBC for $1.8 million, through the issuance of restricted stock valued at approximately $1.0 million and $0.8 million in cash. Each ofthe two original principals received 61,652 shares of restricted stock at fair market value of $7.95 per share and $400,000 in cash. An aggregate of123,304 shares of restricted stock was issued. As of September 30, 2017, CBC had structured settlements valued at $87.0 million and debt of $78.9million, consisting of a $8.6 million line of credit and an aggregate of $70.3million of non-recourse notes. On April 28, 2017, CBC entered into an Assignment Agreement (the “Assignment Agreement”) by and among CBC and an unrelated third party(“Assignee”). The Assignment Agreement provided for the sale of the Company’s entire life contingent asset portfolio included in the Company’sstructured settlements to the Assignee for a purchase price of $7.7 million. The Company realized a loss from the sale of $5.4 million for the year endedSeptember 30, 2017. On December 13, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement) with CBC Holdings LLC, a Delawarelimited liability company (the “Buyer”). Under the Purchase Agreement, the Company sold all of the issued and outstanding equity capital of CBC for anaggregate purchase price of approximately $10.3 million. Of the aggregate purchase price, approximately $4.5 million was paid in cash, and $5.8 millionwas paid under a promissory note at an annual interest rate of 7% to be paid quarterly to the Company and secured by a first priority security interest inand lien on such Buyer’s affiliates’ rights to certain servicing fees. The remaining amount of the aggregate purchase price was paid as reimbursement ofcertain invoices of CBC. The Company recognized a loss of approximately $2.4 million on the above sale of CBC as of September 30, 2017. Cash Flow As of September 30, 2017, our cash, cash equivalents and restricted cash increased $1.3 million to $17.6 million, from $16.3 million atSeptember 30, 2016. 31Table of Contents Net cash used in operating activities was $11.9 million during the fiscal year ended September 30, 2017, as compared to $9.3 million used inoperating activities for the fiscal year ended September 30, 2016. Net cash provided by investing activities was $55.6 million during the fiscal year endedSeptember 30, 2017, as compared to $0.5 million used in investing activities during the fiscal year ended September 30, 2016. The increase in cashprovided by investing activities is primarily due to proceeds from sales of available-for-sale securities. Net cash used in financing activities was$42.7 million during the fiscal year ended September 30, 2017, as compared to net cash provided by financing activities of $5.9 million during the fiscalyear ended September 30, 2016. The increase in cash used in financing activities during the current year was primarily due to the purchase of Companystock, partially offset by an increase in the cash provided by financing activities of the discontinued operations. Our cash requirements have been and will continue to be significant and include external financing to operate various lines of business. Significantrequirements include investment in personal injury claims, costs involved in the collections of consumer receivables and investment in consumerreceivable portfolios. In addition, dividends could be paid if and when approved by the Board of Directors. Acquisitions recently have been financedthrough cash flows from operating activities. We believe we will be less dependent on a credit facility in the short-term, as our cash balances will besufficient to invest in personal injury claims, purchase portfolios and finance the disability advocacy business. We believe our available cash resources and expected cash flows from operations will be sufficient to fund operations for the next twelve months.We do not expect to incur any material capital expenditures during the next twelve months. We are cognizant of the current market fundamentals in the debt purchase and company acquisition markets which, because of significant supplyand tight capital availability, could result in increased buying opportunities. The outcome of any future transaction(s) is subject to market conditions. Inaddition, due to these opportunities, we continue to seek opportunities with banking organizations and others on a possible financing loan facility. Share Repurchase Program On August 11, 2015, the Board approved the repurchase of up to $15,000,000 of the Company’s common stock and authorized management of theCompany to enter into the Shares Repurchase Plan under Sections 10b-18 and 10b5-1 of the Exchange Act (the “Shares Repurchase Plan”). The SharesRepurchase Plan was to have been effective to December 31, 2015. On December 17, 2015 the Board approved the extension of the Shares RepurchasePlan to March 31, 2016 and reset the maximum to an additional $15 million in repurchases. On March 17, 2016, having repurchased approximately $9.9million of the Company’s common stock, the Board approved further extension of the Shares Repurchase Plan to December 31, 2016 and reset themaximum to $15 million in repurchases. On March 22, 2016, a Company shareholder commenced a tender offer on the Company’s common stock. Per theprovisions of the Shares Repurchase Plan, it terminated immediately, and no further purchases were permitted under the Shares Repurchase Plan. ThroughSeptember 30, 2016, the Company purchased approximately 1,186,000 shares at an aggregate cost of approximately $10.1 million under the SharesRepurchase Plan. On May 25, 2016, the Company entered into a Mutual Confidentiality Agreement (the “Agreement”) with MPF InvestCo 4, LLC, a wholly ownedsubsidiary of The Mangrove Partners Master Fund, Ltd. (“Mangrove”), pursuant to which Mangrove and the Company agreed to (1) provide certainConfidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (2) the confidentiality of theConfidential Information, and (3) certain restrictions on the activities of the parties to the Agreement. Pursuant to the Agreement, the Company made available to Mangrove and its representatives certain confidential information relating to theCompany or its subsidiaries, and Mangrove agreed to make available to the Company and its representatives certain confidential information relating toMangrove and its affiliates (collectively, the “Confidential Information”). The Company and Mangrove agreed not to disclose the ConfidentialInformation, and to cause each of their representatives, respectively, not to disclose the Confidential Information, except as required by law. Pursuant tothe Agreement, the Company provided information requested by Mangrove to one or more of Mangrove’s representatives and such representativesprepared summaries of such information (the “Summaries”). The Company approved the Summaries, and the approved Summaries were provided toMangrove. The Company agreed to release the approved Summaries publicly on or prior to the end of the Extended Period (as defined in the Agreement),to the extent that the information contained in the Summaries has not already been disclosed. Further, under the terms of the Agreement, Mangrove and the Company had agreed to certain restrictions during the Discussion Period, whichbegan on May 25, 2016 and the Extended Period, including that, unless consented to by the other party to the Agreement or required by applicable law,neither party will, and shall cause its affiliates and representatives not to, (i) commence any litigation against the other party, (ii) make any filing with theSEC of proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise or call any annual or special meeting ofstockholders of the Company, (iii) publicly refer to: (a) the Confidential Information or Discussion Information (as defined in the Agreement), (b) anyannual or special meetings of stockholders of the Company or (c) any prior discussions between the parties, including in any filing with the SEC(including any proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise), in any press release or in any otherwritten or oral disclosure to a third party, (iv) make any purchases of the Company’s securities, including, but not limited to, pursuant to any stockbuyback plans, tender offers, open-market purchases, privately negotiated transactions or otherwise, (v) make any demand under Section 220 of theDelaware General Corporation Law, (vi) make or propose to make any amendments to the Company’s Certificate of Incorporation, as amended, or By-laws, as amended, (vii) adopt, renew, propose or otherwise enter into a Shareholder Rights Plan with respect to the Company’s securities, (viii) adopt orpropose any changes to the Company’s capital structure or (ix) negotiate, discuss, enter into, propose or otherwise transact in any extraordinarytransactions with respect to the Company, outside the ordinary course of business, including, but not limited to, any mergers, asset sales or assetpurchases. 32Table of Contents On November 21, 2016, Mangrove notified the Company that Mangrove was terminating the Agreement with the Company. Under the Agreement,the Company and Mangrove agreed to (1) provide certain Confidential Information (as defined below) to the other party to the Agreement and the otherparty’s representatives, (2) maintain the confidentiality of the Confidential Information, and (3) certain restrictions on the activities of the parties to theAgreement. Upon termination of the Discussion Period, the agreement provides for a period of 30 days thereafter (the “Extended Period”). Throughout theExtended Period of the Agreement, the parties are subject to the standstill provisions of the Agreement. Following the Discussion Period and theExtended Period, nothing in the Agreement shall prohibit any party from taking any of the activities referred to as the Restricted Activities, andspecifically nothing shall restrict Mangrove or its representatives from calling a special meeting, nominating one or more candidates to serve as directorsof the Company or commencing, or announcing its intention to commence, a “solicitation” of “proxies” (as such terms are used in Regulation 14A of theExchange Act) to vote with respect to any meeting of stockholders of the Company. The effective termination date of this Agreement was January 6,2017. On January 6, 2017, the Company entered into a settlement agreement (the “ Settlement Agreement ”) with Mangrove and, for limited purposesstated therein, Gary Stern, Ricky Stern, Emily Stern, Arthur Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ SternFamily ”). The Settlement Agreement provided that, within ten business days following the date of the Settlement Agreement, the Company would commence aself-tender offer (“ Tender Offer ”) to repurchase for cash 5,314,009 shares of its common stock at a purchase price of $10.35 per share. Pursuant to theSettlement Agreement, Mangrove tendered its 4,005,701 shares for purchase by the Company. The Stern Family has agreed not to tender any of theirshares in the Tender Offer. In addition, pursuant to a securities purchase agreement dated January 6, 2017 between Mangrove and Gary Stern (the“Purchase Agreement”), Gary Stern purchased the remaining shares owned by Mangrove eleven business days following the closing of the Tender Offerfor $10.35 per share. The Settlement Agreement includes customary standstill and related provisions. Mangrove and the Company also agreed on a mutual release ofclaims. Additionally, the Company indemnified Mangrove from and against any excise tax imposed as a result of this Settlement Agreement. In connection with the Settlement Agreement, the Company also entered into a Voting Agreement dated January 6, 2017 (the “ Voting Agreement ”)with Gary Stern, Ricky Stern, Emily Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Stockholders ”). TheVoting Agreement provides that the Stern Stockholders will not have the right to vote more than 49% of the Company’s total outstanding shares, and anyadditional shares held by the Stern Stockholders will be voted in a manner proportionate to the votes of the outstanding shares not held by the SternStockholders. The tender offer expired on February 15, 2017, at 11:59 p.m., New York City time. Based on the final count by American Stock Transfer & TrustCompany, LLC ("AMSTOCK"), the depositary for the tender offer, a total of approximately 6,022,253 shares of the Company’s common stock werevalidly tendered and not validly withdrawn. Because the tender offer was oversubscribed by 708,244 shares, the Company purchased only a proratedportion of the shares properly tendered by each tendering stockholder. The depositary had informed the Company that the final proration factor for thetender offer was approximately 88.24% of the shares validly tendered and not validly withdrawn. AMSTOCK promptly issued payment for the 5,314,009shares accepted pursuant to the tender offer and returned all other shares tendered and not purchased. The shares acquired represented approximately44.7% of the total number of shares of the Company’s common stock issued and outstanding as of February 6, 2017. As a result of this tender offer, theCompany recorded during the second quarter an additional $54.2 million in treasury stock, and $797,000 was charged to general and administrativeexpenses in the consolidated statements of operations which represent the excess of the current market price of the Company’s common stock on January18, 2017 of $10.20 per share. Additionally, the Ricky Stern Family 2012 Trust (as Gary Stern's permitted assignee), acquired 471,086 Shares under thePurchase Agreement on March 10, 2017 for $4.9 million. As of December 31, 2016 and for the three months ended December 31, 2016 and 2015, through February 14, 2017, Mangrove due to theirownership in the Company's common stock, which was acquired in a series of OTC transactions, was deemed to be a related party. Effective on February15, 2017, the date Mangrove tendered its shares, they were no longer deemed to be a related party. Off-Balance Sheet Arrangements As of September 30, 2017, we did not have any off balance sheet arrangements. 33Table of Contents Recent Accounting Pronouncements In May 2014, the FASB issued an update to ASC 606, “Revenue from Contracts with Customers,” that will supersede virtually all existing revenueguidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount thatreflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature,amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periodsbeginning after December 15, 2017 including interim periods within that reporting period. Early application is permitted for annual reporting periodsbeginning after December 15, 2016, including interim periods within that reporting period. Given the changes in the Company's business management iscontinuing to assess this new standard and the impact it will have on accounting for its revenues. In January 2016, the FASB issued Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The mainobjective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with moredecision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financialinstruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017, including interim periods within thatreporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which requires lessees to recognize right-of-use assets and lease liabilities onthe 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 accountingpolicy election by class of underlying asset not to recognize a right-of-use asset and lease liability. Additionally, when measuring assets and liabilitiesarising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise apurchase option or not exercise an option to terminate the lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land EasementPractical Expedient for Transition to Topic 842. ASU 2018-01 was issued to address concerns about the cost and complexity of complying with thetransition provisions of ASU 2018-01. The standard becomes effective in for fiscal years beginning after December 15, 2019 and interim periods withinthose years and early adoption is permitted. The Company is in the process of reviewing its existing leases, including service contracts for embeddedleases to evaluate the impact of this standard on its consolidated financial statements and the impact on regulatory capital. In March 2016, the FASB issued Update No. 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify and improve areasof generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of theinformation provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after December 15,2016, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidatedfinancial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historicalexperience, 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 annualperiods beginning after December 15, 2019. Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements. In August 2016 the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and CashPayments." This ASU will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cashflows. The new standard is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The new standard will requireadoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendmentsprospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have amaterial effect on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of FinancialAssets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide usersof financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement,presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017,including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidatedfinancial statements. 34Table of Contents In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Theobjective of this update is to simplify the subsequent measurement of goodwill, by eliminating step 2 from the goodwill impairment test. Theamendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. TheCompany does not believe this update will have a material impact on its consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share BasedPayment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced whilemaintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annualreporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating theimpact this update will have on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, whichallows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts andJobs Act enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. ASU 2018-02 will be effective for the Company'sfiscal year beginning October 1, 2019, with early adoption permitted, and should be applied either in the period of adoption or retrospectively to eachperiod (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The adoption of this ASU is notexpected to have a material impact on the Company's its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the DisclosureRequirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirementto 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 betweenlevels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for theperiod included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the rangeand weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for fiscal years, andinterim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact this guidance will have onits consolidated financial statements. Item 8. Financial Statements and Supplementary Data. The information called for by Item 8 is included following the index to the financials statements of the Company on page F-1 of this Form 10-K. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. On March 9, 2017, the Audit Committee approved the dismissal of Mazars USA LLP (“Mazars”) as the Company’s independent registered publicaccounting firm. Such dismissal was effective after Mazars’s review of the Company’s unaudited quarterly financial statements for the fiscal quarter endedDecember 31, 2016 and the filing of the related Quarterly Report on Form 10-Q with the SEC on May 10, 2017. Also on March 9, 2017, after reviewingproposals from several accounting firms, the Audit Committee selected EisnerAmper LLP (“EisnerAmper”) to be appointed following the filing of theForm 10-Q related to the fiscal quarter ended December 31, 2016 to serve as the Company’s independent registered public accounting firm for the fiscalyear ended September 30, 2017. The audit report of Mazars on the Company’s consolidated financial statements as of and for the year ended September 30, 2016, did not containany adverse opinion or disclaimer of opinion with respect to the Company’s financial statements, nor was such report qualified or modified as touncertainty, audit scope, or accounting principles. During the fiscal years ended September 30, 2015 and 2016, and the subsequent interim period through May 10, 2017, there were no disagreementswith Mazars on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, ifnot resolved to its satisfaction, would have caused it to make reference in connection with its opinion to the subject matter of the disagreement. During the Company’s fiscal years ended September 30, 2015 and 2016, and the subsequent interim period through May 10, 2017, were no“reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K. However, on September 18, 2018, the Company filed Amendment No. 1 on Form10-K/A for the fiscal year ended September 30, 2016, for the purpose of amending and restating certain of the Company’s previously issued financialstatements. In connection with the restatement, Mazars re-audited the Company’s internal control over financial reporting as of September 30, 2015 and2016, and expressed an adverse opinion thereon due to the presence of several material weaknesses, each as described more fully therein. Such materialweaknesses constituted “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K. The Audit Committee has discussed these materialweaknesses with Mazars and EisnerAmper, and has authorized Mazars to respond fully to the inquiries of EisnerAmper concerning such materialweaknesses. During the Company’s fiscal years ended September 30, 2015 and 2016, and the subsequent interim period through May 10, 2017, the Companydid not consult with EisnerAmper regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K. The Company provided Mazars a copy of the foregoing disclosures and requested that Mazars furnish the Company with a letter addressed to theSEC stating whether or not Mazars agrees with the statements made herein. A copy of that letter dated, October 12, 2018, furnished by Mazars is filed asExhibit 16.1 to this report. 35Table of Contents Item 9A. Controls and Procedures. (a) Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure thatinformation required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported withinthe time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including ourChief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated theeffectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017. Based on that evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2017 dueto the existence of the material weaknesses in internal control over financial reporting described below (which we view as an integral part of ourdisclosure controls and procedures). (b) Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f)under the Exchange Act). Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d(f) under the Exchange Act) is a processdesigned to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalreporting purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (a) pertain tothe maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, (b) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, (c) providereasonable assurance that receipts and expenditures are being made only in accordance with appropriate authorization of management and the boardof directors, and (d) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assetsthat could have a material effect on the financial statements. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted anassessment of the effectiveness of our internal control over financial reporting as of September 30, 2017. In making this assessment, management usedthe criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 2013”) in Internal Control — IntegratedFramework, issued in 2013. Based on management’s assessment, and based on the criteria in COSO 2013, management concluded that we did notmaintain effective internal control over financial reporting as of September 30, 2017 due to the material weaknesses identified below. (c) Management Identified Material Weaknesses In Internal Control Over Financial Reporting Management identified material weaknesses resulting from the lack of timely and effective review of the Company’s period-end closing process.Specifically, management concluded that the material weakness relates to the Company not having adequate personnel and resources in place toperform a timely and effective review of our period-end closing process. Additionally, management identified material weaknesses resulting from thefollowing: 1. The Company lacked a process to review key inputs into the period end valuation using underlying benchmark interest rates in determiningfair value of the Company’s structured settlements. The material weakness was first reported by the Company in its Quarterly Report on Form 10-Q/A(Amendment No. 1) for the quarter ended December 31, 2016, which was filed with the SEC on May 26, 2017, and was also identified as a materialweakness in connection with the preparation of this report. 36Table of Contents Planned Remedial Actions: ●Since the original determination regarding this material weakness, the Company retained and intends to continue to retain third-party specialists to perform independent valuations of its assets and liabilities, when warranted, particularly with respect to, thoseassets and liabilities which involve specific complex or intricate valuation techniques, and/or are outside the Company's traditionalbusiness model. ●The Company plans on hiring additional personnel with financial reporting experience to supplement its existingaccounting/finance department. Additionally, management will develop and train accounting/finance personnel in the use offormalized checklists, to identify key inputs associated with period end valuations. 2. The Company did not maintain effective internal controls over financial reporting disclosures specifically associated with concentrations,foreign transactions, significant entities and related party transactions. The material weaknesses related to financial reporting disclosures associatedwith significant and related party transactions at the subsidiary level, were first reported by the Company in its Quarterly Report on Form 10-Q for thequarter ended June 30, 2017, which was filed with the SEC on August 9, 2017, and was also identified as a material weakness in connection with thepreparation of this report . Planned Remedial Actions: ●The Company has retained and intends to continue to retain the services of outside consultants, with relevant accountingexperience, skills and knowledge, working under the supervision and direction of the Company’s management, to supplement theCompany’s existing accounting personnel. ●The Company plans to develop policies, procedures, and controls for the specific areas identified in this material weakness. TheCompany will also hire additional accounting and finance personnel with significant accounting and SEC reporting experience tojoin its finance team to ensure consistent application of these accounting principles and adherence to the Company’s newlyadopted policies, procedures, and controls. The Company plans to review the current financial controls to assess if additionalmanagement review controls are necessary and work with all finance personnel to establish the appropriate documentation criteriafor the existing controls including evidence of review, timeliness and variance thresholds. ●The Company plans to have the Disclosure Committee, which now meets on a quarterly basis, meet more frequently throughout theyear to assure that our SEC filings and other public disclosures are complete, accurate, and otherwise comply with applicableaccounting principles and regulations. The Company’s Disclosure Committee reports to our Chief Executive Officer with oversightprovided by our Audit Committee, and includes individuals knowledgeable about, among other things, SEC rules and regulations,financial reporting, and internal control matters. The Company will also document a formal disclosure policy and procedures togovern the work of the Disclosure Committee. ●Since the original determination regarding the material weakness associated with significant and related party transactions at thesubsidiary level, the Company has installed contract management software to manage all of its contracts and associated obligationsunder those contracts. Management from each department has been trained on the software, and all contracts require approvals ofdesignated managers and the accounting department prior to execution. All contracts are reviewed by accounting personnel withrequisite experience in identifying complex accounting transactional and disclosure issues, 3. The Company did not maintain effective internal controls over regulatory compliance; specifically the Company did not have an effectivewhistleblower hotline or a formalized Foreign Corrupt Practices Act Policy. Planned Remedial Actions: ●In 2018, the Company implemented a whistleblower hotline it believes will be effective. Management will develop a formalized plan totest the independent system on a regular basis to ensure regulatory compliance. ●The Company will formalize its Foreign Corrupt Practices Act Policy, and will ensure all employees are trained on, and adhere to thepolicy. 4. The Company lacks a formal policy to assess the adequacy of the design and operating effectiveness of controls related to certain of theCompany’s subsidiaries, third party service providers and third party advocates. Planned Remedial Actions: The Company will increase the frequency of onsite inspections of third party servicers and advocates throughout the year, utilizingexisting accounting/finance personnel familiar with the specific accounting processes involved at each location. The Company willprovide training to accounting personnel at subsidiary locations, and will develop detailed checklist and processes that can be used,and reviewed by management during period ends. Additionally, management will routinely visit subsidiary locations to ensure thatthe processes and guidelines developed are being strictly adhered to. 37Table of Contents 5. The Company did not maintain effective internal controls over accounting for complex transactions specifically associated with equity methodinvestment. Planned Remedial Actions: ●The Company plans to develop policies, procedures, and controls to ensure the proper accounting for complex technical issues areidentified, researched and brought to management's attention. The Company will also ensure that the appropriate personnel areappropriately trained on new and existing accounting pronouncements, Company policies, procedures, and controls. 6. The Company did not maintain effective internal controls over accounting for foreign transactions specifically associated with accounting fortransaction and translation adjustments, unallocated payments and cutoff. Planned Remedial Actions: ●The Company plans to develop and implement improved policies, procedures, processes and controls, as well as, conduct trainings toensure the proper accounting for foreign currency matters in accordance with ASC 830, Foreign Currency Matters . ●The Company plans to utilize an accounting system to ensure that all transactions are systematically re-measured and translated at theapplicable foreign currency exchange rate and the associated gain or loss is appropriately recognized in earnings. ●The Company plans to appropriately reconcile the AOCI account in a timely manner to ensure that the proper amounts for foreigncurrency transactions are being recorded in the Company's financial statements. (d) Changes in Internal Controls over Financial Reporting. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated ourinternal control over financial reporting to determine whether any changes occurring during the fourth quarter of fiscal year 2017 that have materiallyaffected, or are reasonably likely to affect, our internal control over financial reporting, and have concluded that there have been no changes thatoccurred during such quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 38Table of Contents PART III Item 10.Directors, Executive Officers and Corporate Governance. Board of Directors The members of our Board of Directors as of October 8, 2018, positions and their respective ages on that date were: Name Age PositionGary Stern 65 Chairman, President and Chief Executive OfficerMark Levenfus 68 Director, Audit Committee Chair, Compensation Committee Member, Nominating andCorporate Governance Committee Member and Special Committee MemberLouis A. Piccolo 66 DirectorTimothy H. Bishop 68 Director, Audit Committee Member, Nominating and Corporate Governance Committee Chairand Special Committee MemberDavid Slackman 71 Director, Audit Committee Member, Compensation Committee Chair, Nominating andCorporate Governance Committee Member and Special Committee Chair The Business Experience and Qualifications of Each Director We believe that our Board of Directors should be composed of individuals with sophistication and experience in many substantive areas that impact ourbusiness. We believe that experience, qualifications, or skills in the following areas are most important: experience in the distressed consumer creditindustry; regulatory; accounting and finance; capital markets; strategic planning; human resources and development practices; and board practices ofother corporations. These areas are in addition to the personal qualifications described in this section. We believe that all of our current Board memberspossess the professional and personal qualifications necessary for board service, and have highlighted particularly noteworthy attributes for each Boardmember in the individual biographies below. The principal occupation and business experience, for at least the past five years, of each current director isas follows: Gary Stern has been a director and the President and Chief Executive Officer of the Company since our inception in July 1994. Mr. Stern assumed therole of Chairman in January 2009. Mr. Stern had been Vice President, Secretary, Treasurer and a director of Asta Group since 1980 and held otherpositions with Asta Group prior thereto. In such capacities, he has obtained substantial experience in distressed consumer credit analysis and receivablescollections. As a result of these and other professional experiences, Mr. Stern possesses particular knowledge and experience in financial management andcollections which strengthens the Board’s collective qualifications, skills, and experience. Mark Levenfus has been a director of the Company since August 2016. Mr.Levenfus is Managing Partner Emeritus of Marks Paneth LLP, a nationallyrecognized accounting and advisory firm, and is Chairman of Morison KSi Limited, a global association of independent accounting firms. From 2008until December 31, 2015, he was Managing Partner of Marks Paneth LLP. During his tenure, he oversaw the firm's operations, managed businessdevelopment efforts and consulted on key accounts. He also played a major role in developing strategy, setting policy and overseeing acquisitions. Mr.Levenfus has extensive experience in the financial, media and entertainment, and professional services industries. Mr. Levenfus currently serves as amember of the board of directors of several nonprofit organizations including: Delivering Good, Inc., Pardes Institute of Jewish Studies, New York RoadRunners Club and Friends of Israel Sci-Tech Schools. As a result of these and other professional experiences, Mr. Levenfus possesses particularknowledge and experience in accounting and management which strengthens the Board’s collective qualifications, skills, and experience. Louis A. Piccolo has been a director of the Company since June 2004. Mr. Piccolo has served as President of A.L. Piccolo & Co., Inc., a businessconsulting firm specializing in management and financial consulting, since 1988. Mr. Piccolo was an Executive Vice President and Chief FinancialOfficer of Alfred Dunhill of London, Inc. from 1983 to 1988, and held the same positions at Debenham’s PLC, from 1981 to 1983. From 1977 to 1981,Mr. Piccolo was a senior accountant at KPMG Peat Marwick. As a result of these and other professional experiences, Mr. Piccolo possesses particularknowledge and experience in accounting and management which strengthens the Board’s collective qualifications, skills, and experience. Timothy H. Bishop has been a director of the Company since July 2018. Mr. Bishop has served Southampton College for 29 years, leaving the positionof Provost in 2002 to make his first-ever run for office, when he was elected to represent New York's 1st Congressional District in one of the closestelections in the nation. He was re-elected to the House of Representatives five times. Congressman Bishop graduated from Southampton High School andholds a BA in History from Holy Cross College in Worcester, Massachusetts and a Masters Degree in Public Administration from Long Island University.During his time in Congress, Mr. Bishop served on the House Budget Committee for 4 years, and served as either the Vice-Chair or Co-Chair of theDemocratic Budget group for all twelve years he was in Congress. Additionally, Mr. Bishop served as the budget officer for Southampton College forapproximately 22 years. As a result of these and other professional experiences, Mr. Bishop possesses particular knowledge and experience in budgetpreparation, control and analysis, which strengthens the Board’s collective qualifications, skills, and experience. 39Table of Contents David Slackman has been a director of the Company since May 2002. Mr. Slackman has served as Managing Director at HT Capital Advisors LLC fromAugust 2008 to present. Mr. Slackman served as President, Manhattan Market (New York) of Commerce Bank from January 2001 through June 2008.Mr. Slackman was an Executive Vice President of Atlantic Bank of New York from 1994 to 2001 and a Senior Vice President of the Dime Savings Bankfrom 1986 to 1994. Since 2012, Mr. Slackman has served as Chairman of the New York City Advisory Board of Sterling National Bank. In 2015,Mr. Slackman was appointed President and Chief Executive Officer of the New York League of Independent Bankers until September 2016, a non-profittrade association for commercial banks in the New York metropolitan area.As a result of these and other professional experiences, Mr. Slackman possessesparticular knowledge and experience in financial services and management which strengthens the Board’s collective qualifications, skills, andexperience. No director serves or has served in the prior five years as a director of a company with a class of securities registered pursuant to Section 12 or Section15(d) of the Exchange Act or a company registered as an investment company under the Investment Company Act. Our executive officers as of September 28, 2018, who are not directors of the Company, their positions and their respective ages on that date are: Name Age PositionBruce R. Foster 58 Executive Vice President and Chief Financial OfficerRicky Stern 34 Senior Vice PresidentSeth Berman 55 Secretary and General Counsel Our executive officers serve at the discretion of the board of directors, subject to rights, if any, under contracts of employment. Bruce R. Foster, CPA serves as Executive Vice President and Chief Financial Officer of the Company since March 2016. Prior to joining the Company,Mr. Foster served as Chief Financial Officer from January 2014 to February 2016 of 4Licensing Corporation, formerly known as 4Kids Entertainment,Inc., a NYSE traded company, where he was employed since 2002. He also worked in public accounting for 15 years with Deloitte, an international publicaccounting firm, as well as other regional public accounting firms. Ricky Stern was appointed as Senior Vice President in March 2014. Prior to this appointment, Ricky served as our Assistant Treasurer from 2011 to 2014.Prior to joining the Company he was an analyst with a brokerage firm from 2008 to 2009. From 2009 to 2011 he earned his Master’s Degree. He is aCertified Financial Planner, Certified Investment Management Analyst, licensed health insurance producer in both New York and New Jersey and hasattained the Accredited Disability Representative designation. Seth Berman has served as our General Counsel since 2005, was named Chief Compliance Officer in April 2013 and became Secretary of the Company inMay 2016. From 1997 through 2004, Mr. Berman was an associate at Weil Gotshal &Manges LLP. There are no events or legal proceedings material to an evaluation of the ability or integrity of any director or executive officer, or any nominee therefore,of the Company. Moreover, no director or executive officer of the Company, nor any nominee, is a party adverse to the Company or has a material interestadverse to the Company in any legal proceeding. Family Relationships Gary Stern is the father of Ricky Stern. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of aregistered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and otherequity securities of Asta Funding, Inc. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us withcopies of all Section 16(a) forms they file. 40Table of Contents To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required,during the fiscal year ended September 30, 2017 all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percentbeneficial owners were filed in a timely manner. Code of Business Conduct and Ethics We have adopted a written code of ethics that applies to our directors, officers and employees, including our principal executive officer, principalfinancial officer, principal accounting officer or controller, or persons performing similar functions. Our Code of Ethics is available without charge uponwritten request directed to Asta Funding, Inc., Attn: Bruce R. Foster, 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632. Additionally, our code ofethics is available on our website at www.astafunding.com. Any amendment to, or waiver of, a provision of our code of ethics that applies to our directorsor executive officers will be disclosed on our website. Changes in Governance and Nominating Committee Procedures There have been no material changes to the procedures by which stockholders may recommend individuals for consideration by the Governance andNominating Committee as potential nominees for director since such procedures were last described in our proxy statement, filed with the SEC onApril14, 2017. Audit Committee We have a separately-designated standing audit committee established in accordance with the Exchange Act. Our Audit Committee generally assists ourboard of directors in its oversight of our accounting, financial reporting and internal control functions. The Audit Committee currently consists of Mr.Levenfus, who serves as Chairman, Mr. Bishop and Mr. Slackman. Mr. Celano previously served as the third member of our Audit Committee prior hispassing in June 2018. As required by Nasdaq rules, the members of the Audit Committee each qualify as “independent” under special standardsestablished for members of audit committees. To qualify as “independent” to serve on the Audit Committee, the Nasdaq rules and the applicable rules ofthe SEC require that a director does not accept any consulting, advisory, or other compensatory fee from us, other than for service as a director, or be anaffiliated person of us. Our board of directors has concluded that the current composition of the Audit Committee meets the requirements forindependence under the rules and regulations of Nasdaq and of the SEC. In accordance with SEC rules, the Audit Committee also includes at least onemember who is determined by the board of directors to meet the qualifications of an “audit committee financial expert.” Mr. Levenfus and Mr. Slackmanare the directors who have been determined by the board of directors to be the audit committee financial experts. Director Independence Nasdaq’s listing standards require that our board of directors consist of a majority of independent directors, subject to certain cure periods, as determinedunder the applicable Nasdaq listing standards. Our board of directors, consistent with the determination of its Nominating and Corporate GovernanceCommittee, has determined that each of Mr. Levenfus, Mr. Bishop and Mr. Slackman qualify as independent directors. In addition, as further required byNasdaq rules, the board of directors, consistent with the determination of its Nominating and Corporate Governance Committee, has made a subjectivedetermination as to each independent director that no relationships exist which, in the opinion of the board of directors, would interfere with the exerciseof independent judgment in carrying out the responsibilities of a director. In making these determinations, our directors reviewed and discussedinformation provided by our directors and us with regard to each director’s business and personal activities as they may relate to us and our management. Item 11.Executive Compensation Executive Compensation Table We are currently considered a smaller reporting company for purposes of the SEC’s executive compensation disclosure rules. In accordance with suchrules, we are required to provide a Summary Compensation Table (reporting two fiscal years of compensation) and an Outstanding Equity Awards atFiscal Year-End Table, as well as limited narrative disclosures. Further, current reporting obligations extend only to our “Named Executive Officers” withrespect to the 2017 year, which included Mr. Gary Stern, our President and Chief Executive Officer, and our two most highly compensated executiveofficers other than Mr. Gary Stern, Messrs. Foster and Berman, who were serving as of September 30, 2017. Additionally, while we are not required todisclose compensation for any other executive officers, we are choosing to voluntarily report compensation paid to Ricky Stern because he is consideredan integral part of our executive management team as the manager of GAR Disability Advocacy, LLC, one of our wholly owned subsidiaries. 41Table of Contents Summary Compensation Table The following table shows for the years ended September 30, 2017 and 2016 compensation awarded to or paid to our Named Executive Officers. Name and principal positionYear Salary($) Bonus($) StockAwards($) OptionAwards($) Non-EquityIncentive PlanCompensation($) All OtherCompensation($)(*) Total ($) Gary Stern2017 $600,000 $— $— $— $— $51,395 $651,295 President and Chief ExecutiveOfficer2016 $600,000 $— $— $— $— $75,488 $675,488 Bruce Foster2017 $275,000 $150,000 $— $— $— $32,398 $457,398 Chief Financial Officer andChief Accounting Officer2016 $158,655 $— $— $— $— $9,808 $168,463 Ricky Stern2017 $280,000 $— $— $— $— $27,636 $307,636 Senior Vice President andPresident of GAR Disability2016 $280,000 $— $— $— $— $39,118 $319,118 Seth Berman2017 $275,000 $20,000 $— $— $— $34,241 $329,241 General Counsel and ChiefCompliance Officer andSecretary2016 $275,000 $7,500 $— $— $— $34,963 $317,463 (*)The following table summarizes "All Other Compensation" for purposes of the Summary Compensation Table above. NameYear 401(k)CompanyMatch($) LifeInsurancePremium($) HealthInsurancePremiums($)(1) Auto Fringe($) Severance($) Total ($) Gary Stern2017 $10,600 $12,491 $23,641 $4,563 $— $51,295 Bruce R Foster2017 $4,653 $— $23,641 $4,104 $— $32,398 Ricky Stern2017 $10,600 — $10,137 $6,899 $— $27,636 Seth Berman2017 $10,600 $— $23,641 $— $— $34,241 Narrative Following Summary Compensation Table Total compensation paid to our Named Executive Officers is generally divided among three principal components. Base salary is generally fixed anddoes not vary based on our financial and other performance. Other components, such as cash bonuses and stock options or other equity or equity-basedawards, are variable and dependent upon our market performance. Historically, judgments about these elements have been made subjectively. In the caseof stock options, the value is dependent upon our future stock price and, accordingly, such awards are intended to reward the Named Executive Officersfor favorable Company-wide performance. Our Compensation Committee reviews total compensation to see if it falls in line with peer companies and mayalso look at overall market data. For fiscal year 2017, the Compensation Committee determined that our compensation program was generallycompetitive with the members of our peer group. Our goal to promote pay for performance emphasizes the variable elements of overall compensation overfixed base salaries. In this regard, it is our policy to emphasize long-term equity awards over short-term cash bonuses, as the long-term awards are intendedto align with goals such as total shareholder return. In previous years, the Compensation Committee engaged a professional compensation consultant,Adams Consulting Group, LLC (“Adams”) to provide benchmarking data and assist in the compensation process. Adams issued a report to theCompensation Committee in October 2015 (the “2015 Adams Report”). Each of the three elements of executive compensation has been determined byevaluating the recommendations set forth in the 2015 Adams Report, as well as our analysis of our financial performance, overall economic conditionsand certain individual achievements, such as successful completion of assigned tasks. With respect to the 2017 year, we held base salaries consistent with 2016 levels. We did not grant stock options or other equity-based compensationawards to our Named Executive Officers during the 2017 year, although each of our Named Executive Officers held outstanding stock option awards asdetailed below. Our executive bonuses are dependent on meeting corporate objectives. Our annual performance-based bonus opportunities for all of ourNamed Executive Officers are dependent upon our achievement of annual corporate objectives established each year and, in the case of our NamedExecutive Officers other than our Chief Executive Officer, the individual officer’s contributions towards such corporate objectives. Our Board ofDirectors may choose to award additional bonuses based on significant corporate achievements that occur during the year. We maintain a reasonable limiton the maximum performance bonus that may be paid. 42Table of Contents Severance and Change-in-Control Benefits. Currently, we have an employment agreement with our Chief Financial Officer, Bruce R. Foster. None of ourother Named Executive Officers are providing services under an employment agreement, and would not receive severance benefits pursuant to any formalplan or program. Under his agreement, Mr. Foster will receive a base salary of $275,000, subject to annual increase, and be eligible to receive cash andnon-cash bonuses at the discretion of the Board of Directors or a duly constituted committee of the Board. He will also be entitled to participate in anyother benefit plans established by the Company for executive employees. Mr. Foster’s agreement has an 18 month non-compete and non-solicitationprovision. The agreement has a one (1) year term, and the term will be extended by one year on each anniversary date of the agreement unless either party,at least 90 days prior to an anniversary dates, provides the other party with notice of its intention not to extend the term of the agreement. Under theagreement, Mr. Foster can be terminated with or without “cause,” as defined in the Agreement. In the event he is terminated without “cause,” he willreceive severance equal to three (3) months of his then current base salary. In the event of a change in control of the Company, Mr. Foster will receive alump sum payment equal to two times his then current base salary. Outstanding Option Awards at Fiscal Year-End The following table provides information on exercisable options held by the named executive officers on September 30, 2017. As of September 30, 2017none of the Named Executive Officers held unvested stock option or stock awards. Option Awards Stock Awards Name Number ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable OptionExercisePrice($) OptionExpirationDate Number of Shares orUnits of Stock ThatHave Not Vested (#) Market Value ofShares or Units ofStock ThatHave Not Vested($) Gary Stern 60,000 — $7.63 12/15/20 — $— 100,000 — $7.77 12/13/21 — — 50,000 — $8.49 12/12/23 — — Ricky Stern 10,000 — $8.36 12/22/21 — — 20,000 — $9.57 12/18/22 — — 20,000 — $8.49 12/12/23 — — Seth Berman 2,500 — $2.95 5/5/19 — — 100 — $8.07 12/11/19 — — 30,000 — $7.63 12/15/20 — — 30,000 — $7.77 12/13/21 — — 20,000 — $9.57 12/18/22 — — 20,000 — $8.49 12/12/23 — — Director Compensation Mr. Gary Stern received no compensation for serving as a director, except that he, like all directors, is eligible to be reimbursed for any expensesincurred in attending Board and committee meetings. All compensation that Mr. Gary Stern received during 2017 has been reported above in hisemployee capacity within the Summary Compensation Table. For fiscal year 2017, the total annual fees that a director, other than Mr. Gary Stern, couldhave received for serving on our Board of Directors and committees of the Board of Directors were set as follows: •$45,000 for each member of the Board of Directors; •$35,000 for the Chairman of the Audit Committee; •$10,000 for Audit Committee Members; •$15,000 for Chairman of the Compensation Committee; •$7,500 for Compensation Committee Members; •$15,000 for Chairman of the Nominating and Governance Committee; •$7,500 for Nominating and Governance Committee Members. 43Table of Contents •$35,000 for Chairman of the Special Committee of the Board of Directors (serving on a non-recurring basis); and •$15,000 for Special Committee Members of the Board of Directors (serving on a non-recurring basis). The following table summarizes compensation paid to outside directors in fiscal 2017: Name FeesEarned orPaid inCash($) OptionAwards($)(1) Total ($) Edward Celano (7) $93,750 (2) $— $93,750 Mark Levenfus $120,625 (3) $— $120,625 Louis Piccolo $45,000 (4) $— $45,000 David Slackman $112,500 (5) $— $112,500 Harvey Leibowitz $117,403 (6) $— $117,403 (1)No stock option awards were granted in fiscal year 2017.(2)Includes, in addition to $45,000 director retainer, $10,000 for being a member of the Audit Committee, $7,500 for being a member of theCompensation Committee, $7,500 for being a member of the Governance Committee, and $23,750 for being member of the Special Committee ofthe Board of Directors.(3)Includes, in addition to $45,000 director retainer, $35,000 for being Chairman of the Audit Committee, $3,750 for his prorated fee for being amember of the Compensation Committee, $15,000 for being Chairman of the Governance Committee, and $21,875 for being member of theSpecial Committee of the Board of Directors.(4)Mr. Piccolo is not an independent director.(5)Includes, in addition to $45,000 director retainer, $10,000 for being a member of the Audit Committee, $3,750 for his prorated fee for being amember of the Governance Committee, $15,000 for being Chairman of the Compensation Committee, and $38,750 for being the Chairman of theSpecial Committee of the Board of Directors.(6)Mr. Leibowitz did not seek re-election to the Board for fiscal 2017. Includes, $28,350 for his prorated share of the director retainer, $7,623 for hisprorated share for being a member of the Audit Committee, $5,715 for his prorated share for being a member of the Governance Committee, $5,715for his prorated share for being a member of the Compensation Committee. Additionally, Mr. Leibowitz was awarded a payment of $70,000 for his18 years of distinguished service to the Board of Directors.(7)Mr. Celano passed away unexpectedly on June 4, 2018. Item 12.Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information as of October 1, 2018 with respect to beneficial ownership of our Common Stock by (i) each director andexecutive officer, including any person holding the position of CEO or CFO at any time during the fiscal year of 2016, (ii) each person known by us toown beneficially more than five percent of our outstanding Common Stock, and (iii) all directors and executive officers as a group. This table has beenprepared based on 6,685,415 shares of Common Stock outstanding on October 11, 2018. Unless otherwise indicated, the address of each beneficial owneris c/o Asta Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632. All persons listed have sole voting and investment power withrespect to their shares unless otherwise indicated. Name and Address of Beneficial Owner Amount andNature ofBeneficialOwnership Percentage(1) GMS Family Investors LLC 862,000 (2)(10) 12.9%Asta Group, Incorporated 842,000 (3)(10) 12.6%Officers and Directors: Ricky Stern 2,521,250 (4)(10) 37.4%Gary Stern 2,212,657 (5)(10) 32.1%Louis A. Piccolo 138,500 (6) 2.0%Seth Berman 102,600 (7) 1.5%David Slackman 82,000 (8) 1.2%Mark Levenfus 3,000 — Timothy H. Bishop — — Bruce R. Foster — — All executive officers and directors as a group (8 persons) 4,553,827 (9) 62.9% 44Table of Contents (1)Any shares of Common Stock that any person named above has the right to acquire within 60 days of October 1, 2018, are deemed to be outstandingfor purposes of calculating the ownership percentage of such person, but are not deemed to be outstanding for purposes of calculating the beneficialownership percentage of any other person not named in the table above. (2)A limited liability company over which Ricky Stern has sole voting and investment power. Gary Stern has a 79.46% beneficial interest in the LLC,trusts for the benefit of the children of Gary Stern and of which Ricky Stern is the trustee have a combined 20.43% beneficial interest (10.215%each), and Arthur Stern has a .11% beneficial interest in the LLC. (3)Asta Group, Incorporated (“Asta Group”) is owned by Arthur Stern, our former Chairman Emeritus and Director, Gary Stern, our Chairman, Presidentand Chief Executive Officer, and other members of the Stern family. (4)Includes 50,000 shares of Common Stock issuable upon exercise of options. Includes 145,428 shares directly owned and 318,590 shares held in theRicky Stern 2012 GST Trust for which he serves as co-trustee with Gary Stern, and has joint voting and investment power, and which are alsoreported as beneficially owned by Gary Stern. Includes 862,000 shares owned by GMS Family Investors LLC. Ricky Stern is the Manager of the LLCand as such has sole voting and investment power of such shares. Also includes 243,278 shares held in the Emily Stern Family 2012 Trust for whichhe is trustee, and has sole voting and investment power over such shares, and 714,364 shares held in the Ricky Stern Family 2012 Trust, for which heis trustee, and has sole voting and investment power over such shares. Also includes 187,590 shares held in the Emily Stern 2012 GST Trust forwhich he is co-trustee with Gary Stern, and which are also reported as beneficially owned by Gary Stern, and has joint voting and investment powerover such shares. (5)Includes 210,000 shares of Common Stock issuable upon exercise of options, 509,049 shares directly owned, and 842,000 shares of Common Stockowned by Asta Group, which shares are attributable to Gary Stern based on his role as an officer, director, and stockholder of Asta Group. Gary Sterndisclaims beneficial ownership of the shares owned by Asta Group. Also includes 145,428 shares of Common Stock held by Mr. Stern’s adult childwho shares his home, and for which he disclaims beneficial ownership, as well as 187,590 shares held in the Emily Stern 2012 GST Trust for which heis co-trustee with Ricky Stern, and which are also reported as beneficially owned by Ricky Stern, and has joint voting and investment power oversuch shares. Also includes 318,590 shares held in the Ricky Stern 2012 GST Trust for which he serves as co-trustee with Ricky Stern and has jointvoting and investment power, and which are also reported as beneficially owned by Ricky Stern. (6) Includes 127,500 shares of Common Stock issuable upon exercise of options that are exercisable within 60 days of October1, 2018. (7)Includes 100,100 shares of Common Stock issuable upon exercise of options that are exercisable within 60 days of October1, 2018. (8)Includes 67,500 shares of Common Stock issuable upon exercise of options that are exercisable within 60 days of October1, 2018. (9)Includes 555,100 shares of Common Stock issuable upon exercise of options that are exercisable within 60 days of October1, 2018. (10)On January 6, 2017, the Company entered into a settlement agreement (the “Settlement Agreement”) with The Mangrove Partners Master Fund Ltdand its affiliates (collectively, “Mangrove”). The Settlement Agreement provided that, within ten business days of the Settlement Agreement, theCompany would commence a self-tender offer (“Tender Offer”) to repurchase for cash up to 5,314,009 shares of its Common Stock at a purchase priceof $10.35 per share. Pursuant to the Settlement Agreement, Mangrove tendered its 4,005,701 shares for purchase by the Company. In addition,pursuant to a securities purchase agreement dated January 6, 2017 between Mangrove and Gary Stern, Gary Stern purchased the remaining sharesowned by Mangrove eleven business days following the close of the Tender Offer for $10.35 per share. In connection with the Settlement Agreement,the Company entered into a Voting Agreement on January 6, 2017, with Gary Stern, Ricky Stern, Emily Stern, Asta Group, Incorporated and GMSFamily Investors LLC, collectively known as the "Voting Group", who are subject to a Share Voting Cap (the “Cap”). Under the Cap, the VotingGroup is subject to a voting threshold constituting no more than forty-nine percent (49%) of the issued and outstanding shares of the Company'sCommon Stock at the time any matters are to be voted on by the Stockholders of the Company. The Voting Agreement expires on January 6, 2019.45Table of Contents Equity Compensation Plan Information The following table gives information about our Common Stock that may be issued upon the exercise of options, warrants and rights under our2012 Stock Option and Performance Award Plan, our Equity Compensation Plan and our 2002 Stock Option Plan, as of September 30, 2017. PlanCategory (a)Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights (b)Weighted-AverageExercise Price ofOutstanding Options,Warrants and Rights (c)Number of SecuritiesRemaining AvailableforFuture IssuanceUnderEquity CompensationPlans (ExcludingSecurities ReflectedInColumn(a)) Equity Compensation Plans Approved by Stockholders 880,567 $8.05 1,293,343 Equity Compensation Plans Not Approved by Stockholders — — — Total 880,567 $8.05 1,293,343 Item 13.Certain Relationships and Related Transactions, and Director Independence. On December 28, 2011, the Company, through a newly-formed indirect subsidiary, ASFI Pegasus Holdings, LLC (“APH”), entered into a jointventure (the “Venture”) with Pegasus Legal Funding, LLC (“PLF”) to form Pegasus Funding, LLC (“Pegasus”) for a period of five (5) years (the “Term”) inaccordance with an Operating Agreement between PLF and APH. The Venture purchases interests in personal injury claims from claimants who are a partyto a personal injury litigation with the expectation of a settlement in the future. In connection with the Venture, Piccolo Business Advisory, which isowned by Louis Piccolo, a non-independent director of the Company, receives a fee from Pegasus, which is calculated at $350,000 per $10,000,000loaned to Pegasus by Fund Pegasus, LLC, a subsidiary of the Company, up to a maximum of $700,000, including interest at 4% per annum, payable oversix years with payments being made in part from Pegasus’s operating expenses during the Term and thereafter by PLF and its affiliates. Piccolo BusinessAdvisory has been paid $690,000 as of September 30, 2017. One of the Company’s subsidiaries is advancing to Pegasus funds to cover Pegasus’soperating expenses, which include payments to Piccolo Business Advisory. During the fiscal years ended September 30, 2017 and 2016, the Companypaid Piccolo Business Advisory $133,000 in each year. The Company paid its final payment to Piccolo Business Advisory in March 2018, and has nofurther obligations under this arrangement. On September 17, 2015, the Company agreed to terms on a consulting agreement (the “Consulting Agreement”) for a two-year, $80,000 contract withPiccolo Business Advisory. The Consulting Agreement provides that Piccolo Business Advisory will provide consulting services to the Company, whichincludes analysis of proposed debt and equity transactions, due diligence and financial analysis and management consulting services. The compensationis paid quarterly. For the fiscal year ended September 30, 2017 and 2016, the Company paid Mr. Piccolo approximately $80,000 each year for suchservices. The Consulting Agreement expired on September 30, 2017, and was not renewed by the Company. On July 1, 2015, Mr. Arthur Stern, former Chairman Emeritus of the Company, retired from the Board of Directors of the Company and became aconsultant to the Company. As of April 30, 2016, the consulting agreement with Mr. Stern was terminated. There were no amounts paid to Mr. Stern forthe fiscal year ended September 30, 2017. For the fiscal year ended September 30, 2016, Mr. Stern was paid $88,000. Item 14.Principal Accounting Fees and Services. On March 9, 2017, we dismissed Mazars as our independent registered public accounting firm. The decision to change independent registered publicaccounting firms was approved by the audit committee of our board of directors. Such dismissal was effective after Mazars review of our unauditedquarterly financial statements for the fiscal quarter ended December 31, 2016 and the filing of the related Quarterly Report on Form 10-Q with theSEC on May 10, 2017. Also on March 9, 2017, after reviewing proposals from several accounting firms, the audit committee of our board of directors selected EisnerAmper tobe appointed following the filing of the Form 10-Q related to the fiscal quarter ended December 31, 2016 to serve as our independent registeredpublic accounting firm for the fiscal year ended September 30, 2017. 46Table of Contents The fees billed by EisnerAmper for professional services rendered for the period from March 9, 2017, the date of its appointment, through the fiscalyear ended September 30, 2017 are reflected in the following table: March 9, 2017 throughSeptember 30, 2017 Audit Fees: $158,000 Audit-Related Fees: - Tax Fees: - All Other Fees: - Total Fees: $158,000 The fees billed by Mazars for professional services rendered for: (i) the period from October 1, 2016, the beginning of our 2017 fiscal year, throughMarch 9, 2017 the date that Mazars was dismissed as our independent registered public accounting firm, and (ii) the 2016 fiscal year are reflected in thefollowing table: October 1, 2016through March9, 2017 2016 Audit Fees: $132,000 $477,000 Audit-Related Fees: - — Tax Fees: - — All Other Fees: - — Total Fees: $132,000 $477,000 All of the services described above were pre-approved by the Audit Committee. 47Table of Contents Part IV Item 15. Exhibits, Financial Statement Schedules. (a) The following documents are filed or furnished as part of this report: ExhibitNumber 2.1#Membership Interest Purchase Agreement, dated December 31, 2013, by and among CBC Settlement Funding, LLC, CBC ManagementServices Group, LLC, Asta Funding, Inc. and the other parties thereto (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’sCurrent Report on Form 8-K filed January 7, 2014). 2.2Securities Purchase Agreement, dated December 13, 2017, by and between Asta Funding, Inc., and CBC Holdings LLC (incorporated byreference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed December 19, 2017). 2.3Membership Interest Purchase Agreement, dated January 12, 2018, by and between ASFI Pegasus Holdings, LLC and Pegasus LegalFunding, LLC (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 18, 2018). 2.4Term Sheet, dated November 8, 2016, by and among Asta Funding, Inc., ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, PegasusFunding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas (incorporated by reference to Exhibit 10.1 to AstaFunding, Inc.’s Current Report on Form 8-K filed November 15, 2016). 3.1Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’s Quarterly Report on Form10-Q filed August 9, 2016). 3.2Certificate of Amendment to Certificate of Incorporation of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1(a) to Asta Funding,Inc.’s Quarterly Report on Form 10-QSB filed May 15, 2002). 3.3Certificate of Designation of Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding,Inc.’s Current Report on Form 8-K filed August 24, 2012). 3.4Certificate of Elimination of the Series A Junior Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to AstaFunding, Inc.’s Current Report on Form 8-K filed on May 5, 2017). 3.5Certificate of Designation of Series A Junior Participating Preferred Stock of Asta Funding, Inc. (incorporated by reference to Exhibit 3.2 toAsta Funding, Inc.’s Current Report on Form 8-K filed on May 5, 2017). 3.6Amended and Restated By-laws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.3 to Asta Funding, Inc.’s Quarterly Report onForm 10-Q filed August 9, 2016). 3.7Amendment to Amended and Restated Bylaws of Asta Funding, Inc. (incorporated by reference to Exhibit 3.1 to Asta Funding, Inc.’sCurrent Report on Form 8-K filed January 9, 2017). 4.1Rights Agreement, dated May 5, 2017, by and between Asta Funding, Inc. and American Stock Transfer & Trust Company, LLC.(incorporated by reference to Exhibit 4.1 to Asta Funding Inc.’s Current Report on Form 8-K filed on May 5, 2017). 10.1+Asta Funding, Inc. 2002 Stock Option Plan (incorporated by reference to Exhibit 10.10 to Asta Funding, Inc.’s Quarterly Report on Form 10-QSB filed May 15, 2002). 10.2+Asta Funding, Inc. Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed March 3, 2006). 10.3+Asta Funding, Inc. 2012 Stock Option and Performance Award Plan (incorporated by reference to Appendix A to Asta Funding, Inc.’sDefinitive Proxy Statement filed February 17, 2012 for the March 21, 2012 Annual Meeting of Stockholders). 10.4Form of Subordination and Intercreditor Agreement (incorporated by reference to Exhibit 10.26 to Asta Funding, Inc.’s Annual Report onForm 10-K for the year ended September 30, 2008). 10.5Amended and Restated Management Agreement, dated January 16, 2009, by and between Palisades Collection, L.L.C. and the other partythereto (incorporated by reference to Exhibit 10.27 to Asta Funding, Inc.’s Annual Report on Form 10-K for the year ended September 30,2008). 10.6Amended and Restated Master Servicing Agreement, dated January 16, 2009, by and between Palisades Collection, L.L.C. and the otherparty thereto (incorporated by reference to Exhibit 10.28 to Asta Funding, Inc.’s Annual Report on Form 10-K for the year ended September30, 2008). 48Table of Contents 10.7First Amendment to Amended and Restated Master Servicing Agreement, by and among Palisades Collection and the other parties thereto(incorporated by reference to Exhibit 10.29 to Asta Funding, Inc.’s Annual Report on Form 10-K for the year ended September 30, 2008). 10.8Indemnification Agreement, by and among Asta Funding, Inc., GMS Family Investors LLC and Judith R. Feder (incorporated by reference toExhibit 10.32 to Asta Funding, Inc.’s Annual Report on Form 10-K for the year ended September 30, 2009). 10.9Settlement Agreement and Omnibus Amendment, dated August 7, 2013, by and among Asta Funding, Inc., Palisades Acquisition XVI, LLC,Palisades Collection, L.L.C., Palisades Acquisition XV, LLC, BMO Capital Markets Corp., Fairway Finance Company, LLC and Bank ofMontreal (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed August 9, 2013). 10.10Revolving Credit Agreement, dated December 28, 2011, by and between Pegasus Funding, LLC and Fund Pegasus, LLC (incorporated byreference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 4, 2012). 10.11Security Agreement, dated December 28, 2011, by and between Pegasus Funding, LLC and Fund Pegasus, LLC (incorporated by reference toExhibit 10.2 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 4, 2012). 10.12Secured Revolving Credit Note, dated December 28, 2011, by Pegasus Funding, LLC in favor of Fund Pegasus, LLC (incorporated byreference to Exhibit 10.3 to Asta Funding, Inc.’s Current Report on Form 8-K filed January 4, 2012). 10.13Limited Liability Company Operating Agreement of Pegasus Funding, LLC (incorporated by reference to Exhibit 10.4 to Asta Funding,Inc.’s Current Report on Form 8-K filed January 4, 2012). 10.14#Amended and Restated Operating Agreement of CBC Settlement Funding, LLC (incorporated by reference to Exhibit 10.2 to Asta Funding,Inc.’s Current Report on Form 8-K filed January 7, 2014). 10.15Lease Agreement, dated October 27, 2015, by and between ESL 200, LLC and Asta Funding, Inc. (incorporated by reference to Exhibit 10.1to Asta Funding, Inc.’s Current Report on Form 8-K filed October 29, 2015). 10.16First Amendment to Loan Documents, dated March 30, 2016, by and among Asta Funding, Inc., Palisades Collection, L.L.C. and BankHapoalim B.M. (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed March 31, 2016). 10.17Loan Agreement, dated May 2, 2014, by and among Asta Funding, Inc., Palisades Collection, L.L.C. and Bank Hapoalim B.M., dated May 2,2014 (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 8, 2014). 10.18Security Agreement, dated May 2, 2014, by among Asta Funding, Inc., Palisades Collection, L.L.C., and Bank Hapoalim B.M. (incorporatedby reference to Exhibit 10.2 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 8, 2014). 10.19Mutual Confidentiality Agreement, dated May 25, 2016, by and between Asta Funding, Inc. and Mangrove Partners (incorporated byreference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 26, 2016). 10.20+Employment Agreement, dated March 15, 2016, by and between Asta Funding, Inc. and Bruce Foster (incorporated by reference to Exhibit10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed March 15, 2016). 10.21Settlement Agreement, dated January 6, 2017, by and among Asta Funding. Inc., The Mangrove Partners Master Fund Ltd., The MangrovePartners Fund, L.P., Mangrove Partners Fund (Cayman), Ltd., Mangrove Partners, Mangrove Capital and Nathaniel August and, solely forpurposes of Section 1(c), 1(d), 2 and 8 thereof, Gary Stern, Ricky Stern, Emily Stern, Arthur Stern, Asta Group, incorporated and GMS FamilyInvestors LLC (incorporated by reference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed on January 9, 2017). 10.22Voting Agreement, dated January 6, 2017, by and among Asta Funding, Inc., Gary Stern, Ricky Stern, Emily Stern, Asta Group, incorporatedand GMS Family Investors LLC (incorporated by reference to Exhibit 10.2 to Asta Funding, Inc.’s Current Report on Form 8-K filed onJanuary 9, 2017). 10.23Assignment Agreement, dated April 28, 2017, by and between CBC Settlement Funding, LLC and the other party thereto (incorporated byreference to Exhibit 10.1 to Asta Funding, Inc.’s Current Report on Form 8-K filed May 4, 2017). 10.24*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and Bruce Foster. 10.25*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and Seth Berman. 49Table of Contents 10.26*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and Mark Levenfus. 10.27*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and Louis A. Piccolo. 10.28*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and David Slackman. 10.29*Indemnification Agreement, dated September 11, 2017, by and between Asta Funding Inc. and Ricky Stern. 16.1*Letter, dated October 11, 2018, addressed to the Securities and Exchange Commission from Mazars USA LLP. 21.1*Subsidiaries of Asta Funding, Inc. 23.1*Consent of Independent Registered Public Accounting Firm. 23.2*Consent of Independent Registered Public Accounting Firm 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 theSarbanes-Oxley Act of 2002. 31.2*Certification of Bruce R. Foster, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002. 32.1**Certification of the Gary Stern, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002. 32.2**Certification of Bruce R. Foster, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002. 101.INSXBRL Instance. 101.SCHXBRL Taxonomy Extension Schema. 101.CALXBRL Taxonomy Extension Calculation. 101.DEFXBRL Taxonomy Extension Definition. 101.LABXBRL Taxonomy Extension Labels. 101.PREXBRL Taxonomy Extension Presentation. *Filed herewith **This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), orotherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933,as amended or the Exchange Act.+Indicates management contract or compensatory plan.#Indicates schedules have been omitted pursuant to Item 6.01(b)(2) of Regulation S-K. Asta Funding Inc. agrees to furnish supplementally a copyof any omitted schedule or exhibit to the SEC upon request. 50Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Contents Page Reports of Independent Registered Public Accounting Firms F-2Consolidated Balance Sheets as of September 30, 2017 and 2016 F-4Consolidated Statements of Operations for the years ended September 30, 2017 and 2016 F-5Consolidated Statements of Comprehensive Income for the years ended September 30, 2017 and 2016 F-6Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2017 and 2016 F-7Consolidated Statements of Cash Flows for the years ended September 30, 2017 and 2016 F-8Notes to Consolidated Financial Statements F-9 F-1Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders ofAsta Funding, Inc. We have audited the accompanying consolidated balance sheet of Asta Funding, Inc. and subsidiaries (the “Company") as of September 30, 2017, and therelated consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the year ended September 30, 2017. Thefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration ofinternal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Asta Funding, Inc.and subsidiaries as of September 30, 2017, and the consolidated results of their operations and their cash flows for the year ended September 30, 2017, inconformity with accounting principles generally accepted in the United States of America. /s/ EisnerAmper LLP Iselin, New JerseyOctober 12, 2018 F-2Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Asta Funding, Inc. We have audited the accompanying consolidated balance sheet of Asta Funding, Inc. and subsidiaries (the “Company”) as of September 30, 2016, and therelated consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended. These consolidatedfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financialstatements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of theCompany as of September 30, 2016, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S.generally accepted accounting principles. /s/ Mazars USA LLP Edison, New Jersey September 17, 2018 F-3Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2017 2016 ASSETS Cash and cash equivalents $17,591,000 $6,282,000 Restricted cash — 10,000,000 Available-for-sale investments (at fair value) 5,511,000 56,763,000 Consumer receivables acquired for liquidation (at net realizable value) 6,841,000 13,427,000 Investment in personal injury claims, net 3,704,000 — Other investments, net — 3,590,000 Due from third party collection agencies and attorneys 819,000 1,050,000 Prepaid and income taxes receivable 9,090,000 714,000 Furniture and equipment (net of accumulated depreciation of $1,759,000 at September 30, 2017 and$1,662,000 at September 30, 2016) 124,000 196,000 Equity method investment 50,474,000 48,582,000 Deferred income taxes 12,696,000 14,903,000 Goodwill 1,410,000 1,410,000 Other assets 1,043,000 6,585,000 Assets related to discontinued operations 92,235,000 91,506,000 Total assets $201,538,000 $255,008,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Other liabilities $4,980,000 $3,987,000 Liabilities related to discontinued operations 81,751,000 69,238,000 Total liabilities 86,731,000 73,225,000 Commitments and contingencies STOCKHOLDERS’ EQUITY Preferred stock, $.01 par value; authorized 5,000,000; issued and outstanding — none — — Preferred stock, Series A Junior Participating, $.01 par value; authorized 30,000 shares; issued andoutstanding — none — — Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,398,108 at September 30, 2017and 13,336,508 at September 30, 2016; and outstanding 6,623,815 at September 30, 2017 and11,876,224 at September 30, 2016 134,000 133,000 Additional paid-in capital 68,047,000 67,034,000 Retained earnings 113,736,000 126,738,000 Accumulated other comprehensive income, net of income taxes 18,000 803,000 Treasury stock (at cost), 6,774,293 shares at September 30, 2017 and 1,460,284 shares at September 30,2016 (67,128,000) (12,925,000)Total stockholders’ equity 114,807,000 181,783,000 Total liabilities and stockholders’ equity $201,538,000 $255,008,000 See notes to accompanying consolidated financial statements F-4Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Consolidated Statements of Operations 2017 2016 Revenues: Finance income, net $15,920,000 $18,890,000 Personal injury claims income 434,000 — Disability fee income 5,085,000 4,011,000 Total revenues 21,439,000 22,901,000 Other income (expense) (includes ($1,011,000) and ($63,000) during the years ended September 30, 2017and 2016, respectively, of accumulated other comprehensive income reclassifications for realized netlosses on securities) (94,000) 1,704,000 21,345,000 24,605,000 Expenses: General and administrative expenses 31,900,000 29,308,000 Interest expense 240,000 — Impairments of consumer receivables acquired for liquidation 1,129,000 164,000 Earnings from equity method investment (4,619,000) (10,551,000) 28,650,000 18,921,000 (Loss) income before income tax from continuing operations (7,305,000) 5,684,000 Income tax expense (includes tax (benefit) expense of $404,000 and $24,000 during the years endedSeptember 30, 2017 and 2016, respectively, of accumulated other comprehensive incomereclassifications for realized net (losses) gains on available for sales securities) 1,077,000 1,017,000 (Loss) income from continuing operations (8,382,000) 4,667,000 (Loss) income from discontinued operations, net of income taxes (4,620,000) 2,906,000 Net (loss) income $(13,002,000) $7,573,000 Net (loss) income per basic shares: Continuing operations $(0.97) $0.39 Discontinued operations $(0.53) $0.24 $(1.50) $0.63 Net (loss) income per diluted shares: Continuing operations $(0.97) $0.37 Discontinued operations $(0.53) $0.24 $(1.50) $0.61 Weighted average number of common shares outstanding: Basic 8,692,668 11,996,500 Diluted 8,692,668 12,508,561 See notes to accompanying consolidated financial statements F-5Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) Year Ended September 30, 2017 2016 Comprehensive (loss) income is as follows: Net (loss) income $(13,002,000) $7,573,000 Net unrealized securities gain/ (loss), net of tax benefit / (expense) of $8,000 and ($528,000) during theyears ended September 30, 2017and 2016 respectively. (10,000) 867,000 Reclassification adjustments for securities sold, net of tax benefit of $404,000 and $25,000, during theyears ended September 30, 2017and 2016 respectively. (607,000) (38,000) Foreign currency translation, net of tax (expense) benefit of $112,000, and $31,000, during the yearsended September 30, 2017and 2016 respectively. (168,000) (46,000) Other comprehensive (loss) income (785,000) 783,000 Total comprehensive (loss) income $(13,787,000) $8,356,000 See notes to accompanying consolidated financial statements F-6Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity For the years ended September 30, 2017 and 2016 Common Stock AdditionalPaid-inCapital RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock Non-ControllingInterests TotalStockholders’Equity IssuedShares Amount Balance, September 30,2015 13,061,673 $131,000 $65,049,000 $119,165,000 $20,000 $(1,751,000) $793,000 $183,407,000 Exercise of options 146,531 1,000 1,203,000 — — — — 1,204,000 Stock basedcompensation expense — — 686,000 — — — — 686,000 Restricted stock 5,000 — — — — — — — Net income — — — 7,573,000 — — — 7,573,000 Unrealized gain onmarketable securities — — — — 867,000 — — 867,000 Amount reclassified fromother comprehensive(loss) income — — — — (38,000) — — (38,000)Purchase of treasurystock — — — — — (11,174,000) — (11,174,000)Foreign currencytranslation, net — — — — (46,000) — — (46,000)Purchase of subsidiaryshares from non-controlling interest 123,304 1,000 96,000 — — — (793,000) (696,000)Balance, September 30,2016 13,336,508 $133,000 $67,034,000 $126,738,000 $803,000 $(12,925,000) $— $181,783,000 Stock basedcompensation expense — — 58,000 — — — — 58,000 Net loss — — — (13,002,000) — — — (13,002,000)Amount reclassified fromother comprehensive(loss) income — — — — (607,000) — — (607,000)Unrealized loss onmarketable securities,net — — — — (10,000) — — (10,000)Purchase of treasurystock — — — — — (54,203,000) — (54,203,000)Foreign currencytranslation, net — — — — (168,000) — — (168,000)Forgiveness of debt — — 552,000 — — — — 552,000 Issuance of unrestrictedstock 61,600 1,000 403,000 — — — — 404,000 Balance, September 30,2017 13,398,108 $134,000 $68,047,000 $113,736,000 $18,000 $(67,128,000) $— $114,807,000 See notes to accompanying consolidated financial statements F-7Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Year Ended September 30, 2017 2016 Cash flows from operating activities: Net (loss) from continuing operations $(8,382,000) $4,667,000 Net (loss) income from discontinued operations (4,620,000) 2,906,000 Net (loss) income (13,002,000) 7,573,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 97,000 377,000 Deferred income taxes 2,619,000 (1,972,000)Impairments of consumer receivables acquired for liquidation 1,129,000 164,000 Stock based compensation 101,000 686,000 Loss on sale of available-for-sale securities 1,011,000 63,000 Unrealized gain on other investments — (359,000)Unrealized foreign exchange loss on other investments — 8,000 Loss on other investment 3,590,000 1,000,000 Forgiveness of debt 552,000 — Operating lease adjustment — 21,000 Earnings from equity method investment (4,619,000) (10,551,000)Changes in: Prepaid and income taxes receivable (8,376,000) 6,398,000 Due from third party collection agencies and attorneys 228,000 297,000 Other assets 5,550,000 (1,582,000)Other liabilities 825,000 1,566,000 Changes in net assets related to discontinued operations (1,568,000) (13,007,000) Net cash used in operating activities (11,863,000) (9,318,000) Cash flows from investing activities: Purchase of consumer receivables acquired for liquidation (2,214,000) (8,162,000)Principal collected on consumer receivables acquired for liquidation 7,624,000 9,628,000 Principal collected on consumer receivable accounts represented by account sales 197,000 — Purchase of available-for-sale securities (13,193,000) (12,019,000)Proceeds from sales of available-for-sale securities 62,406,000 16,302,000 Change in equity method investment 2,727,000 2,720,000 Purchase of non-controlling interest — (800,000)Investments in personal injury claims — advances (4,369,000) — Investments in personal injury claims — receipts 665,000 — Capital expenditures (25,000) (168,000)Change in investing activities related to discontinued operations 1,793,000 (8,002,000) Net cash provided by (used in) investing activities 55,611,000 (501,000) Cash flows from financing activities: Proceeds from exercise of stock options — 1,204,000 Purchase of treasury stock (54,203,000) (11,174,000)Change in financing activities related to discontinued operations 11,500,000 15,824,000 Net cash (used in) provided by financing activities (42,703,000) 5,854,000 Foreign currency effect on cash (155,000) — Net increase (decrease) in cash, cash equivalents and restricted cash including cash, cash equivalents andrestricted cash classified within assets related to discontinued operations 890,000 (3,965,000)Less: net increase in cash, cash equivalents and restricted cash classified within assets related todiscontinued operations 419,000 300,000 Net increase (decrease) in cash, cash equivalents and restricted cash 1,309,000 (3,665,000)Cash, cash equivalents and restricted cash at beginning of year 16,282,000 19,947,000 Cash, cash equivalents and restricted cash at end of year $17,591,000 $16,282,000 Supplemental disclosure of cash flow information: Continuing operations: Cash paid for: Interest $149,000 $— Income taxes $6,200,000 $307,000 Discontinued operations: Cash paid for: Interest $3,929,000 $3,252,000 Supplemental disclosures of non-cash investing and financing activities: Continuing operations: Issuance of restricted stock to purchase subsidiary shares from non-controlling interest $— $1,000,000 Discontinued operations: Issuance of unrestricted stock $404,000 $— See notes to accompanying consolidated financial statements F-8Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES [1] The Company: Asta Funding, Inc., a Delaware corporation (“Asta”), was formed in August 1995. Asta together with its wholly owned significant operatingsubsidiaries Palisades Collection, LLC, Palisades Acquisition XVI, LLC (“Palisades XVI”), Palisades Acquisition XIX, LLC (“Palisades XIX”), PalisadesAcquisition 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”), Simia Capital, LLC(“Simia”) and other subsidiaries, which are not all wholly owned (the “Company,” “we” or “us”), is engaged in several business segments in the financialservices industry including funding of personal injury claims, through our 80% owned, 50% controlled equity investment in Pegasus and our whollyowned subsidiary, Simia, social security and disability advocacy through our wholly owned subsidiaries GAR Disability Advocates and Five Star and thebusiness of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables. For the period covered by these financial statements, Pegasus was 80% owned, and accounted for under the equity method. On January 12, 2018, theCompany acquired the remaining 20% minority shareholder's interest in Pegasus, and now currently owns 100% of Pegasus. Commencing in the quarterending March 31, 2018, the Company will consolidate the financial results of this entity. We operate principally in the United States in three reportable business segments: consumer receivables, GAR disability advocates and personalinjury claims. We previously operated a fourth segment when we engaged in the structured settlements business through our wholly owned subsidiaryCBC Settlement Funding, LLC (“CBC”), which we sold on December 13, 2017. As a result of the sale of CBC all prior periods presented in the Company's consolidated financial statements account for CBC as a discontinuedoperation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets andliabilities related to discontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements ofoperations to reflect discontinued operations for all periods presented. See Note 2 - Discontinued Operations. Consumer receivables The Company started out in the consumer receivable business in 1995. Recently, our effort has been in the international areas (mainly SouthAmerica), as we have curtailed our active purchasing of consumer receivables in the United States. We define consumer receivables as primary charged-off, semi-performing and distressed depending on their collectability. We acquire these consumer receivables at substantial discounts to their face values,based on the characteristics of the underlying accounts of each portfolio. Personal injury claims Simia commenced operations in January 2017, and conducts its business solely in the United States. Simia obtains its business from external brokersand internal sales professionals soliciting individuals with personal injury claims. Business is also obtained from its website and through attorneys. Ourequity method investment in Pegasus operates in the personal injury claims business. Social security benefit advocacy GAR Disability Advocates and Five Star provide disability advocacy services throughout the United States. It relies upon search engineoptimization (“SEO”) to bring awareness to its intended market. [2] Basis of Presentation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, and are prepared in accordance withaccounting principles generally accepted in the United States (“U.S. GAAP”) and industry practices. All intercompany accounts have been eliminated inconsolidation. F-9Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [3] Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. With respect to income recognitionthe Company takes into consideration the relative credit quality of the underlying receivables constituting the portfolio acquired, the strategy involvedto maximize the collections thereof, the time required to implement the collection strategy as well as other factors to estimate the anticipated cash flows.Actual results could differ from those estimates including management’s estimates of future cash flows and the resultant allocation of collections betweenprincipal and interest resulting there from. Downward revisions to estimated cash flows will result in impairments. [4] Liquidity: At September 30, 2017, the Company had $17.6 million in cash and cash equivalents, as well as $5.5 million in level 1 securities that are classifiedas available for sale, on hand. In addition, the Company had working capital of $114.8 million at September 30, 2017. As discussed in Note 2, on December 13, 2017, the Company sold all of the issued and outstanding equity capital of CBC for an aggregate purchaseprice of approximately $10.5 million. Additionally, as discussed in Note 5, on January 12, 2018, the Company acquired the remaining 20% controllinginterest in Pegasus Funding, LLC (see Note 5). As a result of this transaction, and the related settlement agreement (see note 21), the $35.4 million ofrestricted cash on hand at Pegasus at September 30, 2017 became unrestricted and was available to the Company. On February 5, 2018, the Board of Directors of the Company declared a special cash dividend in the amount of $5.30 per share with respect to itsCommon Stock, payable on February 28, 2018 to holders of record of the Company’s Common Stock at the close of business on February 16, 2018, withan ex-dividend date of March 1, 2018. The aggregate payment to shareholders was approximately $35 million. We believe that our available cash resources and expected cash inflows from operations will be sufficient to fund operations for the next twelvemonths. [5] Concentration of Credit Risk — Cash and Restricted Cash: The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash balances are maintained at various depository institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”). TheCompany had cash balances with 11 banks that exceeded the balance insured by the FDIC by approximately $11.1 million at September 30, 2017.Additionally, three foreign banks with an aggregate $3.4 million balances are not FDIC insured. As of September 30, 2017 and 2016 there is $0.5 million, of cash in a domestic bank that is classified as restricted. These amounts are included innet assets related to discontinued operations on the Company's consolidated balance sheets. The Company does not believe it is exposed to anysignificant credit risk due to concentration of cash. As of September 30, 2016, there was a $10.0 million aggregate balance in a domestic bank that is also not FDIC insured and has been reflected asrestricted cash in the balance sheet since these assets serve as collateral for the line of credit (see Note 8 – Non-Recourse Debt). F-10Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position thatsum to the total of the same such amounts shown in the consolidated statement of cash flows. Year Ended September 30 2017 2016 Cash and cash equivalents $17,591,000 $6,282,000 Restricted cash - 10,000,000 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $17,591,000 $16,282,000 The amount included in restricted cash represents a $10.0 million deposit at Bank Hapoalim that served as collateral for the line of credit - (see Note8 – Non-Recourse Debt). On April 28, 2017, the Company renewed the line of credit facility with the new maturity date of August 2, 2017, under theexisting terms and conditions as of June 30, 2017. On August 2, 2017, the Bank Hapoalim $9.6 million line of credit expired and the Company satisfiedthe debt with cash that was held in deposit as collateral with the bank. [6] Available-for-Sale Investments: Investments that the Company intends to hold for an indefinite period of time, but not necessarily to maturity, are classified as available-for-sale andare carried at fair value. Unrealized gains and losses on available-for-sale securities are determined using the specific-identification method. Declines in the fair value of individual available-for-sale 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 another-than-temporary impairment has occurredinclude: a downgrading of the security by a rating agency, a significant deterioration in the financial condition of the issuer, or that management wouldnot have the ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value. [7] Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination, and is accounted forunder ASC 350. Goodwill has an indefinite useful life and is evaluated for impairment at the reporting-unit level on an annual basis during the fourthquarter or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. The Company has theoption of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. Thequalitative approach assesses whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value ofa reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely thannot that the fair value is less than carrying value, a two step quantitative impairment test is performed. A step 1 analysis involves calculating the fair valueof the associated reporting unit and comparing it to the reporting unit’s carrying value. If the fair value of the reporting unit exceeds the carrying value ofthe reporting unit including goodwill and the carrying value of the reporting unit is positive, goodwill is considered not to be impaired and no furtheranalysis is required. If the fair value of the reporting unit is less than its carrying value, step 2 of the impairment test must be performed. Step 2 involvescalculating and comparing the implied fair value of the reporting unit’s goodwill with its carrying value. Impairment is recognized if the estimated fairvalue of the reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated impaired fair value of goodwilland its carrying amount. The goodwill of the Company consists of $1.4 million from the purchase of VATIV. Additionally, the Company has goodwill of$1.4 million from the purchase of CBC, which is included under assets related to discontinued operations on the consolidated balance sheet. [8] Income recognition, Impairments and Accretable yield adjustments: Income Recognition The Company accounts for certain of its investments in finance receivables using the guidance of Financial Accounting Standards Board (“FASB”)Accounting Standards Codification (“ASC”), Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310”). Underthe guidance of ASC 310, static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool isrecorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Due to the substantialreduction of portfolios reported under the interest method, and the inability to reasonably estimate cash collections required to account for thoseportfolios under the interest method the Company concluded the cost recovery method is the appropriate accounting method under the circumstances. F-11Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [8] Income recognition, Impairments and Accretable yield adjustments (Continued): Under the guidance of ASC 310-30, the Company must analyze a portfolio upon acquisition to ensure which method is appropriate, and once astatic pool is established for a quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool(unless sold or returned to the seller). The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the costrecovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carryingbalance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. The Company accounts for its investments in personal injury claims at an agreed upon interest rate, in anticipation of a future settlement. Theinterest purchased by Pegasus in each claim will consist of the right to receive from such claimant part of the proceeds or recoveries which such claimantreceives by reason of a settlement, judgment or reward with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at arate based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims arenon-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractuallyagreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant. The funding of matrimonial actions is on a non-recourse basis. Revenue from matrimonial actions is recognized under the cost recovery method. The Company recognizes revenue for GAR Disability Advocates and Five Star Veterans when disability claimants cases close with the socialsecurity administration and the applicable fees are collected. Impairments and accretable yield adjustments The Company accounts for its impairments in accordance with ASC 310, which provides guidance on how to account for differences betweencontractual and expected cash flows from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences areattributable, at least in part, to credit quality. The recognition of income under ASC 310 is dependent on the Company having the ability to developreasonable expectations of both the timing and amount of cash flows to be collected. In the event the Company cannot develop a reasonable expectationas 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 willrecognize income only after it has recovered its carrying value. If collection projections indicate the carrying value will not be recovered, an impairment is required. The impairment will be equal to the differencebetween the carrying value at the time of the forecast and the corresponding estimated remaining future collections. The Company believes it hassignificant experience in acquiring certain distressed consumer receivable portfolios at a significant discount to the amount actually owed by underlyingcustomers. The Company invests in these portfolios only after both qualitative and quantitative analyses of the underlying receivables are performed anda 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 hasthe added benefit of soliciting its third party collection agencies and attorneys for their input on liquidation rates and, at times, incorporates such inputinto the estimates it uses for its expected cash flows. In October 2014, the Company invested $5.0 million in Class A shares of the Topaz MP Fixed Income Fund (“Topaz Fund”), a closed end fund. TheTopaz Fund invests indirectly in various portfolios of Non-Performing Small Consumer Loans. The objective of the fund is to obtain a fixed return cashflow representing interest on the invested capital. According to the investment memorandum of the fund, the Topaz Fund proposed to make semi-annualdistributions of 14% annual compounded interest on June and December of each year. Since December 2015, no distribution has been received by theCompany. The Company received letters from the fund’s General Partner explaining that the distributions were not made due to the negative performanceof the fund for the periods. During the fiscal year 2016, the Company recorded an impairment loss on this investment of $1.0 million, which was included in general andadministrative expenses in the consolidated statements of operations. In fiscal year 2017, the Company received an announcement that the investmentwas being liquidated. After careful consideration, the $3.4 million carrying value of this investment was written off as of March 31, 2017. F-12Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [9] Equity method investment Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equitymethod of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of severalfactors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50%interest in voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within theCompany's consolidated balance sheets and statements of operations, however, the Company's share of the earnings of the investee company is reflectedas earnings and loss from equity method investment in the Company's consolidated statement of operations. The Company's carrying value in an equitymethod investee company is reflected on the Company's consolidated balance sheet, as equity method investment. Pegasus is the Company's 50% controlled equity investment with Pegasus legal Funding (“PLF”). Under the operating agreement, the Company andPLF, each maintain 50% voting rights of the entity, and is 80% owned by Asta. Based on these shared voting rights with PLF, the Company lacksrequisite control of Pegasus, and therefore accounts for its investment in Pegasus under the equity method of accounting. On January 12, 2018, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with PLF. Under thePurchase Agreement, the Company bought PLF's interest in Pegasus, which was 20% of the issued and outstanding limited liability company interests ofPegasus, for an aggregate purchase price of $1.8 million. As a result of this purchase, the Company owns 100% of Pegasus. Accordingly, based on thepurchase of PLF's interest, the Company now has full voting control of the entity. Therefore, commencing on January 12, 2018, the Company will nolonger account for this entity under the equity method, but instead will consolidate the entity into its financial statements. Serlefin BPO&O Peru S.A.C. (“Serlefin Peru”) is the Company's 49% owned joint venture. The other 51% is owned by three individuals who sharecommon ownership with Serlefin BPO&O Serlefin S.A. (“Serlefin”). Each owner maintains voting rights equivalent to their share ownership, and the 51%shareholders collectively manage the operations of the business. Based on the Company's ownership and voting rights, the Company lacks requisitecontrol of Serlefin Peru, and therefore accounts for its investment in Serlefin Peru under the equity method of accounting. Additionally, the Company and Serlefin jointly purchase international consumer debt portfolios under a purchase agreement. The Company andSerlefin purchase the portfolios on a pro-rata basis of 80% and 20%, respectively. The purchased portfolios are transferred to an administrative andpayment trust, where the Company and Serlefin are trustees. Serlefin provides collection services to the trust, and receives a performance fee determinedby the parties for each loan portfolio acquired. Serlefin received approximately $554,000 and $268,000 in performance fees for the years endedSeptember 30, 2017 and 2016, respectively. The carrying value of the investment in Serlefin Peru was $0.2 million as of September 30, 2017 and September 30, 2016. The Company hasincluded the carrying value of this investment in other assets on its consolidated balance sheets. The cumulative net loss from our investment in SerlefinPeru through September 30, 2017 was approximately $0.1 million, and was not significant to the Company's consolidated statement of operations. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company'sconsolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When theinvestee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses notpreviously recognized. There were no impairment losses recorded on our equity method investments for the years ended September 30, 2017 and 2016. [10] Personal Injury Claim Advances Management assesses the quality of the personal injury claims portfolio through an analysis of the underlying personal injury fundings on a case bycase basis. Cases are reviewed through periodic updates with attorneys handling the cases, as well as with third party research tools which monitor publicfilings, such as motions or judgments rendered on specific cases. The Company specifically reserves for those fundings where the underlying cases areidentified as uncollectible, due to anticipated non-favorable verdicts and/or settlements at levels where recovery of the advance outstanding is unlikely.For cases that have not exhibited any specific negative collection indicators, the Company establishes reserves based on the historical collection rates ofthe Company’s fundings. Fee income on advances is reserved for on all cases where a specific reserve is established on the initially funded amount. Inaddition, management also monitors its historical collection rates on fee income and establishes reserves on fee income consistent with the historicallyexperienced collection rates. Management regularly analyzes and updates the historical collection rates of its initially funded cases as well as its feeincome. F-13Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [11] Commissions and fees: Commissions and fees are the contractual commissions earned by third party collection agencies and attorneys, and direct costs associated with thecollection effort- generally court costs. The Company expects to continue to purchase portfolios and utilize third party collection agencies and attorneynetworks. [12] Furniture and equipment: Furniture and equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimateduseful lives of the assets (3 to 7 years). Amortization on leasehold improvements is provided by the straight line-method of the remaining life of therespective lease. An accelerated depreciation method is used for tax purposes. [13] Income taxes: Deferred federal and state taxes arise from (i) recognition of finance income collected for tax purposes, but not yet recognized for financialreporting; (ii) provision for impairments/credit losses, all resulting in timing differences between financial accounting and tax reporting; (iii) amortizationof leasehold improvements resulting in timing differences between financial accounting and tax reporting; (iv) stock based compensation; and (v)partnership investments. [14] Fair Value of Financial Instruments: FASB ASC 825, Financial Instruments, (“ASC 825”), requires disclosure of fair value information about financial instruments, whether or notrecognized on the balance sheet, for which it is practicable to estimate that value. Because there are a limited number of market participants for certain ofthe 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 andinvolve uncertainties and matters of judgment, which significantly affect the estimates. The Company recorded its available-for-sale investments at estimated fair value on a recurring basis. The accompanying consolidated financialstatements include estimated fair value information regarding its available-for-sale investments as of September 30, 2017, as required by FASB ASC 820,Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfera liability (an exit price) in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchywhich requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financialinstrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement. Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to assess at themeasurement date. Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices inmarkets that are not active for identical or similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market datafor substantially the full term of the asset or liability. Level 3 — Unobservable inputs that are supported by little or no market activity and significant to the fair value of the assets or liabilities that aredeveloped using the reporting entities’ estimates and assumptions, which reflect those that market participants would use. [15] Discontinued Operations: US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reportedas discontinued operations in the consolidated financial statements if the sale or disposition represents a strategic shift that has (or will have) a majoreffect on an entity’s operations and financial results. F-14Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [16] Net income (loss) per share: Basic per share data is determined by dividing net income (loss) by the weighted average shares outstanding during the period. Diluted per sharedata is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.The assumed proceeds from the exercise of dilutive options are calculated using the treasury stock method based on the average market price for theperiod. [17] Stock-based compensation: The Company accounts for stock-based employee compensation under FASB ASC 718, Compensation — Stock Compensation, (“ASC 718”). ASC718 requires that compensation expense associated with stock options and vesting of restricted stock awards be recognized in the statement ofoperations. [18] Reclassifications Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current yearpresentation. These reclassifications had no effect on previously reported net income or stockholders' equity. [19] Impact of Recently Issued Accounting Standards: In May 2014, the FASB issued an update to ASC 606, “Revenue from Contracts with Customers,” that will supersede virtually all existing revenueguidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount thatreflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature,amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periodsbeginning after December 15, 2017 including interim periods within that reporting period. Early application is permitted for annual reporting periodsbeginning after December 15, 2016, including interim periods within that reporting period. Given the changes in the Company's business management iscontinuing to assess this new standard and the impact it will have on accounting for its revenues. In January 2016, the FASB issued Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The mainobjective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with moredecision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financialinstruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017, including interim periods within thatreporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which requires lessees to recognize right-of-use assets and lease liabilities onthe 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 accountingpolicy election by class of underlying asset not to recognize a right-of-use asset and lease liability. Additionally, when measuring assets and liabilitiesarising from a lease, optional payments should be included only if the lessee is reasonably certain to exercise an option to extend the lease, exercise apurchase option or not exercise an option to terminate the lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land EasementPractical Expedient for Transition to Topic 842. ASU 2018-01 was issued to address concerns about the cost and complexity of complying with thetransition provisions of ASU 2018-01. The standard becomes effective in for fiscal years beginning after December 15, 2019 and interim periods withinthose years and early adoption is permitted. The Company is in the process of reviewing its existing leases, including service contracts for embeddedleases to evaluate the impact of this standard on its consolidated financial statements and the impact on regulatory capital. In March 2016, the FASB issued Update No. 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify and improve areasof generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of theinformation provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after December 15,2016, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidatedfinancial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historicalexperience, 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 annualperiods beginning after December 15, 2019. Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements. F-15Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 1 — THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): [19] Impact of Recently Issued Accounting Standards (continued): In August 2016 the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and CashPayments." This ASU will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cashflows. The new standard is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The new standard will requireadoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendmentsprospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have amaterial effect on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of FinancialAssets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide usersof financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement,presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017,including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidatedfinancial statements. In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.The objective of this update is to simplify the subsequent measurement of goodwill, by eliminating step 2 from the goodwill impairment test. Theamendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. TheCompany does not believe this update will have a material impact on its consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share BasedPayment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced whilemaintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annualreporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating theimpact this update will have on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allowsa reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and JobsAct enacted on December 22, 2017, and requires certain disclosures about stranded tax effects. ASU 2018-02 will be effective for the Company's fiscalyear beginning October 1, 2019, with early adoption permitted, and should be applied either in the period of adoption or retrospectively to each period(or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The adoption of this ASU is notexpected to have a material impact on the Company's its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the DisclosureRequirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirementto 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 betweenlevels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for theperiod included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the rangeand weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for fiscal years, andinterim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact this guidance will have onits consolidated financial statements. [20] Foreign Currency Translation Most of the Company's operations use their local currency as their functional currency. Financial statements of subsidiaries are translated intoU.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange rate for each period for revenues,expenses, gains and losses. Translation adjustments for subsidiaries whose local currency is their functional currency are recorded as a component ofaccumulated other comprehensive income (loss) within equity. Transaction gains and losses resulting from fluctuations in currency exchange rates ontransactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying consolidated statements ofoperations. F-16Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 2 — DISCONTINUED OPERATIONS On December 31, 2013, the Company acquired 80% ownership of CBC and its affiliate, CBC Management Services, LLC for approximately $5.9million. On December 31, 2015, the Company acquired the remaining 20% ownership of CBC for $1,800,000, through the issuance of restricted stockvalued at approximately $1,000,000 and $800,000 in cash. Each of the two original principals received 61,652 shares of restricted stock at a fair marketvalue of $8.11 per share and $400,000 in cash. An aggregate of 123,304 shares of restricted stock were issued as part of the transaction. On January 1, 2016, the Company renewed the expiring two-year employment agreements of the two CBC principals for one year terms. Theemployment contracts of the original two principals expired at the end of December 2016. The Company did not renew those contracts. Ryan Silvermanhas been appointed CEO/General Counsel effective January 1, 2017. During November 2017, a competitor of CBC alleged that CBC had unlawfully purchased certain of the competitor's trade secrets and customer listsfrom intermediaries who allegedly arranged and/or paid for said materials from the competitor. CBC denied any wrongdoing and disclaimedliability. The parties settled the matter for a payment of $0.5 million on or about November 22, 2017, in exchange for a complete release. On December 13, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement) with CBC Holdings LLC, a Delawarelimited liability company (the “Buyer”). Under the Purchase Agreement, the Company sold all of the issued and outstanding equity capital of CBC for anaggregate purchase price of approximately $10.3 million. Of the aggregate purchase price, approximately $4.5 million was paid in cash, and $5.8 millionwas paid under a promissory note at an annual interest rate of 7% to be paid quarterly to the Company and secured by a first priority security interest inand lien on such Buyer’s affiliates’ rights to certain servicing fees. The remaining amount of the aggregate purchase price was paid as reimbursement ofcertain invoices of CBC. The Company subsequently recognized a loss of approximately $2.4 million on the above sale of CBC as of September 30,2017. As a result of the sale of CBC all prior periods presented in the Company's consolidated financial statements will account for CBC as a discontinuedoperation. This determination resulted in the reclassification of the assets and liabilities comprising the structured settlement business to assets related todiscontinued operations in the consolidated balance sheets, and a corresponding adjustment to our consolidated statements of operations to reflectdiscontinued operations for all periods presented. As of September 30, 2017, the components of the Company designated as discontinued operations had assets and liabilities of $92.2 million and$81.8 million, respectively. As of September 30, 2016, the components of the Company designated as discontinued operations had assets and liabilitiesof $91.5 million and $69.2 million respectively. For the years ended September 30, 2017 and 2016, the Company designated as discontinued operationsreported a income (loss), net of income tax benefit of $3.4 million and income tax expense of $2.6 million, respectively, of ($4.6) million and $2.9million, respectively. F-17Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 2 — DISCONTINUED OPERATIONS (CONTINUED): The major components of assets and liabilities of the discontinued operations are as follows: September 30, 2017 2016 ASSETS Cash and cash equivalents $1,617,000 (1) $1,198,000 Restricted cash 499,000 499,000 Structured Settlements 86,971,000 86,091,000 Furniture and equipment (net of accumulated depreciation of $111,000 at September 30, 2017 and$96,000 at September 30, 2016) 34,000 47,000 Goodwill — 1,405,000 Other assets 3,114,000 2,266,000 Total assets related to discontinued operations $92,235,000 $91,506,000 LIABILITIES AND MEMBERS’ EQUITY Other debt - CBC $78,935,000 $67,435,000 Other liabilities 2,816,000 1,803,000 Total liabilities related to discontinued operations $81,751,000 $69,238,000 (1) Cash balance with one bank at September 30, 2017 that exceeded the balance insured by the FDIC by approximately $0.5 million. The following table presents the operating results, for the years ended September 30, 2017 and 2016, for the components of the Companydesignated as discontinued operations: 2017 2016 Revenues: Unrealized gain on structured settlements $4,326,000 $8,384,000 Interest income on structured settlements 8,224,000 6,062,000 Loss on sale of structured settlements (5,353,000) — Total revenues 7,197,000 14,446,000 Other income 58,000 — 7,255,000 14,446,000 Expenses: General and administrative expenses 9,954,000 5,623,000 Interest expense 3,927,000 3,214,000 Impairment 1,405,000 — 15,286,000 8,837,000 (Loss) income from discontinued operations before income tax (8,031,000) 5,609,000 Income tax (benefit) expense from discontinued operations (3,411,000) 2,599,000 Net (loss) income from discontinued operations before non-controlling interest (4,620,000) 3,010,000 Non-controlling interest — 104,000 Net (loss) income from discontinued operations, net of income tax $(4,620,000) $2,906,000 Prior to its sale, we, through CBC purchased periodic payments under structured settlements and annuity policies from individuals in exchange for alump sum payment. The Company elected to carry the structured settlements at fair value. Unearned income on structured settlements is recognized asinterest income using the effective interest method over the life of the related structured settlement. Changes in fair value are recorded in unrealized gain(loss) on structured settlements in the Company’s statements of operations. Unrealized gains on structured settlements is comprised of both unrealizedgains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting fromthe change in the discount rate. Of the $4.3 million of unrealized gains recognized in the fiscal year ended September 30, 2017, approximately $6.9million is due to day one gains on new structured settlements financed during the period, $0.2 million due to a change in the discount rate, offset by adecrease of $2.1 million in realized gains recognized as realized interest income on structured settlements during the period and a fair value adjustment of$0.7 million. There were no other changes in assumptions during the period. F-18Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 2 — DISCONTINUED OPERATIONS (CONTINUED): We elected the fair value treatment under ASC 825-10-50-28 through 50-32 to be transparent to the user regarding the underlying fair value of thestructured settlement which collateralizes the debt of CBC. The Company believes any change in fair value is driven by market risk as opposed to creditrisk associated with the underlying structured settlement annuity issuer. The purchased personal injury structured settlements result in payments over time through an annuity policy. Most of the annuities acquiredinvolve guaranteed payments with specific defined ending dates. CBC also purchases a small number of life contingent annuity payments with specificending dates but the actual payments to be received could be less due to the mortality risk associated with the measuring life. CBC records a provision forloss each period. The life contingent annuities are not a material portion of assets at June 30, 2017. CBC purchased structured settlement and annuity policies through privately negotiated direct consumer purchases and brokered transactions acrossthe United States. CBC funds the purchases primarily from cash, its revolving line of credit, and its securitized debt, issued through its Blue BellReceivables (“BBR”) subsidiaries. On April 7, 2017, CBC, through its subsidiary BBRVII, LLC, issued approximately $18,340,000 of fixed rate asset backed notes with a yield of5.0% and a stated maturity date of January 15, 2069. On April 28, 2017, CBC entered into an Assignment Agreement (the “Assignment Agreement”) by and among CBC and an unrelated third party(“Assignee”). The Assignment Agreement provided for the sale of a portion of the Company’s life contingent asset portfolio included in the Company’sstructured settlements to the Assignee for a purchase price of $7.7 million. The Company realized a loss from the sale of $5.4 million for the three monthsand nine months ended June 30, 2017. On April 28, 2017, CBC entered into the Tenth Amendment, extending the line of credit to June 30, 2017. Other terms and conditions of the NinthAmendment, in effect as of March 31, 2017, remains unchanged. Structured settlements consist of the following as of September 30, 2017 and 2016: September 30,2017 September 30,2016 Maturity(1)(2) $139,107,000 $133,059,000 Unearned income (52,136,000) (46,968,000) Net carrying value $86,971,000 $86,091,000 (1)The maturity value represents the aggregate unpaid principal balance at September 30, 2017 and 2016. (2)There is approximately $0.3 million of structured settlements that are past due, or in non-accrual status at September 30, 2017. F-19Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 2 — DISCONTINUED OPERATIONS (CONTINUED): Encumbrances on structured settlements as of September 30, 2017 and 2016 are as follows: Interest Rate September 30,2017 September 30,2016 Notes payable secured by settlement receivables with principal and interestoutstanding payable until June 2025 8.75% $1,607,000 $1,862,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until August 2026 7.25% 3,612,000 4,242,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until April 2032 7.125% 3,891,000 3,987,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until February 2037 5.39% 17,390,000 18,979,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until March 30, 2034 5.07% 13,389,000 14,507,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until February 2043 4.85% 13,001,000 13,705,000 Notes payable secured by settlement receivables with principal and interestoutstanding payable until January 2069 5.00% 17,456,000 — $25,000,000 revolving line of credit 4.25% 8,589,000 10,153,000 Encumbered structured settlements 78,935,000 67,435,000 Structured settlements not encumbered 8,036,000 18,656,000 Total structured settlements $86,971,000 $86,091,000 At September 30, 2017, the expected cash flows of structured settlements based on maturity value are as follows: September 30, 2018 $9,233,000 September 30, 2019 9,757,000 September 30, 2020 9,474,000 September 30, 2021 9,727,000 September 30, 2022 9,401,000 Thereafter 91,515,000 Total $139,107,000 The Company assumed $25.9 million of debt related to the CBC acquisition on December 31, 2013, including a $12.5 million line of credit with aninterest rate floor of 5.5%. Between March 27, 2014 and September 29, 2014, CBC entered into three amendments (Sixth Amendment through EighthAmendment), resulting in the line of credit increasing to $22.0 million and the interest rate floor reduced to 4.75%. On March 11, 2015, CBC entered intothe Ninth Amendment. This amendment, effective March 1, 2015, extended the maturity date on its credit line from February 28, 2015 to March 1, 2017.Additionally, the credit line was increased from $22.0 million to $25.0 million and the interest rate floor was decreased from 4.75% to 4.1%. Other termsand conditions were materially unchanged. In March 2017, the credit line was extended to April 28, 2017. On April 28, 2017, CBC entered into the TenthAmendment, extending the credit line maturity date to June 30, 2017. On July 27, 2017 CBC entered into the Eleventh Amendment, extending the creditline maturity date to June 30, 2019. On November 26, 2014, CBC completed its fourth private placement, backed by structured settlement and fixed annuity payments. CBC issued,through its subsidiary, BBR IV, LLC, approximately $21.8 million of fixed rate asset-backed notes with a yield of 5.4%. On September 25, 2015, CBCcompleted its fifth private placement, backed by structured settlement and fixed annuity payments. CBC issued, through its subsidiary, BBR V, LLC,approximately $16.6 million of fixed rate asset-backed notes with a yield of 5.1%. On July 8, 2016, CBC issued, through its subsidiary, BBR VI,approximately $14.8 million of fixed rate asset-backed notes with a yield of 4.85%. On April 7, 2017, CBC completed its seventh private placement,through its subsidiary, BBR VII, and issued approximately $18.3 million of fixed rate asset-backed notes with a yield of 5.0%. F-20Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 2 — DISCONTINUED OPERATIONS (CONTINUED): As of September 30, 2017, the remaining debt amounted to $78.9 million, which consisted of $8.6 million drawdown from a line of credit from aninstitutional source and $70.3 million notes issued by entities 100%-owned and consolidated by CBC. These entities are bankruptcy-remote entitiescreated to issue notes secured by structured settlements. CBC leases its facility in Conshocken, PA. The lease is an operating leases, and the Company incurred related rent expense in the amount of$163,000, for the years ended September 30, 2017 and 2016. The future minimum lease payments are as follows: Year Ending September 30, 2018 $181,000 2019 185,000 2020 63,000 $429,000 NOTE 3 — AVAILABLE - FOR - SALE INVESTMENTS Investments classified as available-for-sale at September 30, 2017 and 2016 consist of the following: AmortizedCost UnrealizedGains UnrealizedLosses Fair Value 2017 $5,500,000 $11,000 $— $5,511,000 2016 $55,724,000 $1,088,000 $(49,000) $56,763,000 The available-for-sale investments do not have any contractual maturities. The Company sold six investments during the year ended September 30,2017, with an aggregate realized loss of $1,011,000. Additionally, the Company received $177, 000 in capital gains distributions during fiscal year 2017.The Company sold three investments during the year ended September 30, 2016, with an aggregate realized loss of $63,000. Additionally, the Companyreceived $92,000 in capital gains distributions during fiscal year 2016. At September 30, 2017 there was one investment, which was in unrealized gain position. At September 30, 2016, there were six investments, two ofwhich were in an unrealized loss position that had existed for 12 months or more. Based on the evaluation of the available evidence at that time,including changes in market rates and credit rating information, management believed that any decline in fair value for these instruments would betemporary. In addition, management had the ability but did not believe it would be required to sell those investment securities for a period of timesufficient to allow for an anticipated recovery or maturity. Should the impairment of any of those securities become other than temporary, the cost basis oftheinvestment will be reduced and the resulting loss recognized in net income in the period in which the other-than-temporary impairment were identified. Unrealized holding gains and losses on available-for-sale securities are included in other comprehensive income (loss) within stockholders’ equity.Realized gains (losses) on available-for-sale securities are included in other income (loss) and, when applicable, are reported as a reclassificationadjustment in other comprehensive income (loss). NOTE 4 — CONSUMER RECEIVABLES ACQUIRED FOR LIQUIDATION Accounts acquired for liquidation are stated at their net estimated realizable value and consist primarily of defaulted consumer loans to individualsprimarily throughout the United States. F-21Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 4 — CONSUMER RECEIVABLES ACQUIRED FOR LIQUIDATION (CONTINUED): The Company may account for its investments in consumer receivable portfolios, using either: •the interest method; or •the cost recovery method. Prior to October 1, 2013 the Company accounted for certain of its investments in finance receivables using the interest method in accordance withthe guidance of ASC 310-30. Under the guidance of ASC 310-30, static pools of accounts are established. These pools are aggregated based on certaincommon 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 lossprovision. Effective October 1, 2013, due to the substantial reduction of portfolios reported under the interest method, and the ability to reasonablyestimate cash collections required to account for those portfolios under the interest method, the Company concluded the cost recovery method is theappropriate accounting method in the circumstances. Although the Company has switched to the cost recovery method on its current inventory of portfolios, the Company must still analyze a portfolioupon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are not addedto the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller). The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the costrecovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carryingbalance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. The Company has extensive liquidating experience is in the field of distressed credit card receivables, telecommunication receivables, consumerloan receivables, retail installment contracts, consumer receivables, and auto deficiency receivables. The Company aggregates portfolios of receivables acquired sharing specific common characteristics which were acquired within a given quarter. Inaddition, the Company uses a variety of qualitative and quantitative factors to estimate collections and the timing thereof. The Company obtains andutilizes, as appropriate, input, including but not limited to, monthly collection projections and liquidation rates, from third party collection agencies andattorneys, as further evidentiary matter, to assist in evaluating and developing collection strategies and in evaluating and modeling the expected cashflows for a given portfolio. The following tables summarize the changes in the balance sheet account of consumer receivables acquired for liquidation during the followingperiods: For the Year Ended September 30, 2017 2016 Balance, beginning of period $13,427,000 $15,057,000 Acquisitions of receivable portfolio 2,213,000 8,207,000 Net cash collections from collection of consumer receivables acquired for liquidation (23,331,000) (28,756,000)Net cash collections represented by account sales of consumer receivables acquired for liquidation (197,000) (84,000)Impairment (1,129,000) (166,000)Effect of foreign currency translation (62,000) 279,000 Finance income recognized 15,920,000 18,890,000 Balance, end of period $6,841,000 $13,427,000 Finance income as a percentage of collections 67.7% 65.5% F-22Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 4 — CONSUMER RECEIVABLES ACQUIRED FOR LIQUIDATION (CONTINUED): During the year ended September 30, 2017, the Company purchased $35.0 million in face value receivables at a cost of $2.2 million. During theyear ended September 30, 2016, the Company purchased $162.9 million in face value receivables at cost of $8.2 million. As of September 30, 2017, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $3.3 million and $2.9million, respectively. The total amount of foreign consumer receivables acquired for liquidation was $6.2 million, or 89.9% of the total consumerreceivables held of $6.8 million at September 30, 2017. Of the total consumer receivables 3 individual portfolios comprise 18%, 10% and 10% of theoverall asset balance at September 30, 2017. As of September 30, 2016, the Company held consumer receivables acquired for liquidation from Peru and Colombia of $4.8 million and $3.5million, respectively. The total amount of foreign consumer receivables acquired for liquidation was $8.3 million, or 61.4% of the total consumerreceivables held of $13.4 million at September 30, 2016. As of September 30, 2017 and 2016, 5.0% and 3.8% of the Company's total assets were related to its international operation, respectively. For theyears ended September 30, 2017 and 2016, 2.6% and 0.8% of the Company's total revenue related to its international operation, respectively. The following table summarizes collections received by the Company’s third-party collection agencies and attorneys, less commissions and direct costsfor the years ended September 30, 2017 and 2016, respectively. 2017 2016 Gross collections(1) $42,456,000 $49,002,000 Less: commissions and fees(2) 18,928,000 20,162,000 Net collections $23,528,000 $28,840,000 (1)Gross collections include collections from third-party collection agencies and attorneys, collections from in-house efforts and collectionsrepresented by account sales. (2)Commissions are earned by third party collection agencies and attorneys, and include direct costs associated with the collection effort, generallycourt costs. In December 2007 an arrangement was consummated with one servicer who also received a 3% fee on gross collections received by theCompany in connection with the related portfolio purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors inconnection with this portfolio purchase. NOTE 5 — LITIGATION FUNDING Equity Method Investment On December 28, 2011, the Company entered into a joint venture, Pegasus Funding, LLC ("Pegasus") with Pegasus Legal Funding, LLC (“PLF”).Until 2018, the Company had an 80% non-controlling interest and 50% voting control in the joint venture. Pegasus purchases interests in claims fromclaimants who are a party to personal injury litigation. Pegasus advances, to each claimant, funds, on a non-recourse basis at an agreed upon interest rate,in anticipation of a future settlement. The interest in each claim purchased by Pegasus consists of the right to receive, from such claimant, part of theproceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claims. Pegasus, earned$11.4 million and $20.3 million in interest and fees for the years ended September 30, 2017 and 2016, respectively. Equity method investments as of September 30, 2017 and September 30, 2016 are as follows: September 30, 2017 September 30, 2016 CarryingValue OwnershipPercentage CarryingValue OwnershipPercentage Pegasus Funding, LLC 50,474,000 80% 48,582,000 80% F-23Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 5 — LITIGATION FUNDING(CONTINUED): Equity Method Investment (continued) The carrying value of the Company's equity investment at September 30, 2017 was $50,474,000, an increase of $1,892,000 over the prior year'scarrying value of $48,582,000. The increase in carrying value was attributed to current year equity earnings of $4,619,000, less net distributions of$2,727,000 during fiscal 2017. The carrying value of the Company's equity investment at September 30, 2016 was $48,582,000, an increase of $7,831,000 over the prior year'scarrying value of $40,751,000. The increase in carrying value was attributed to current year equity earnings of $10,551,000, less net distributions of$2,720,000 during fiscal 2016. On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC,Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas. Pegasus is currently the Company’s personal injury claimsfunding business and is a joint venture that is 80% owned by the Company and 20% owned by PLF. The Company and PLF have decided not to renewthe Pegasus joint venture that, by its terms, terminates on December 28, 2016. The Term Sheet amends certain provisions to Pegasus’ operating agreementdated as of December 28, 2011 (as amended, the “Operating Agreement”) and governs the terms relating to the collection of its existing Pegasus portfolio(the “Portfolio”). Pursuant to the Term Sheet, the parties thereto have agreed that Pegasus will continue in existence in order to collect advances on itsexisting Portfolio. The Company will fund overhead expenses relating to the collection of its Portfolio based on a budget agreed upon by the Companyand PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will berepaid an amount equal to 20% of all principal collected on each investment paid back beginning October 1, 2016 and continuing through the collectionof the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. AfterJanuary 2, 2017, additional overhead expenses advanced will be paid back monthly as incurred by the Company prior to the calculation and distributionof any profits. In connection with the Term Sheet, the parties thereto have also entered into a customary mutual release and non-disparagement agreement as wellas a release from the non-competition obligations under the Operating Agreement. On January 12, 2018, the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by andamong the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo &Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into thePurchase Agreement. Additionally, on January 12, 2018, ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding,Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with PegasusLegal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests ofPegasus Funding, LLC (“Pegasus”), which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregatepurchase price of $1.8 million. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability companyinterests of Pegasus. As a result of the purchase of the Seller’s 20% interest in Pegasus on January 12, 2018 under the Purchase Agreement, beginning with the quarterended March 31, 2018, the Company will consolidate the financial statements of Pegasus. The Company currently accounts for its investment in Pegasusunder the equity method of accounting. See Note 21 - Subsequent Events. F-24Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 5 — LITIGATION FUNDING (CONTINUED): Equity Method Investment (Continued) The results of operations and financial position of the Company’s equity investment in Pegasus are summarized below: Condensed Statement of Operations Information 2017 2016 Personal injury claims income $11,554,000 $20,339,000 Operating expenses 5,780,000 7,151,000 Income from operations $5,774,000 $13,188,000 Earnings from equity method investment $4,619,000 $10,551,000 Condensed Balance Sheet Information September 30,2017 September 30,2016 Cash $35,631,000 (1) $539,000 Investment in personal injury claims 16,855,000 48,289,000 Other assets 109,000 188,000 Total Assets $52,595,000 $49,016,000 Due to Asta $31,677,000 $34,404,000 Other liabilities 1,952,000 1,053,000 Equity 18,966,000 13,559,000 Total Liabilities and Equity $52,595,000 $49,016,000 (1) Included in cash is $35.4 million in restricted cash. The restriction has been put in place during the Company’s arbitration with PLF, see Note 21 –Subsequent Events. Simia On November 11, 2016, the Company formed Simia, a wholly owned subsidiary, to continue its personal injury claims funding business. Simiacommenced operation in January 2017, and conducts its business solely in the United States. As of September 30, 2017, Simia had a personal injuryclaims portfolio of $3.4 million, and recognized revenue for the year then ended of $0.4 million. NOTE 6 — MATRIMONIAL CLAIMS On May 8, 2012, the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture withCalifornia-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create the operating subsidiary BP Case Management, LLC (“BPCM”).BPCM is 60% owned by the Company and 40% owned by BP Divorce Funding. BPCM provides non-recourse funding to a spouse in a matrimonialaction. In 2012, the Company provided a $1.0 million revolving line of credit to partially fund BPCM’s operations, with such loan bearing interest at theprevailing prime rate, with an initial term of twenty-four months. In September 2014, the agreement was revised to extend the term of the loan to August2016, increase the credit line to $1.5 million and include a personal guarantee of the principal of BP Divorce Funding. Effective August 14, 2016, theCompany extended its revolving line of credit with BP Divorce Funding until March 31, 2017, at substantially the same terms as the September 2014amendment. On April 1, 2017, BP Divorce Funding defaulted on this agreement, and as such, the loan balance of approximately $1.5 million was deemeduncollectible and was written off in general and administrative expenses on the consolidated statement of operations during the second quarter of fiscal2017. As of September 30, 2017, the Company’s investment in cases through BPCM was approximately $1.7 million. There was no income recognizedfor the years ended September 30, 2017 and 2016 and the Company recorded bad debt expense of $0.7 million during the year ended September 30,2017. F-25Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 6 — MATRIMONIAL CLAIMS (CONTINUED): As of September 30, 2017, BPCM had fully reserved against its invested amount of $2.5 million, in cases managed by this Venture. A net loss ofapproximately $4.0 has been recognized by BPCM during the year ended September 30, 2017, which included bad debt expense of approximately $4.0million. There was no income recognized for the fiscal years ended September 30, 2017 and 2016. NOTE 7 — FURNITURE AND EQUIPMENT Furniture and equipment as of September 30, 2017 and 2016 consist of the following: 2017 2016 Furniture $273,000 $273,000 Equipment 241,000 235,000 Software 1,369,000 1,350,000 1,883,000 1,858,000 Less accumulated depreciation and amortization 1,759,000 1,662,000 $124,000 $196,000 Depreciation expense for the years ended September 30, 2017 and 2016 was $97,000, and $377,000, respectively. NOTE 8 — NON RECOURSE DEBT Non-Recourse Debt — Bank of Montreal (“BMO”) In March 2007, Palisades XVI borrowed approximately $227 million under the Receivables Financing Agreement, as amended in July 2007, December 2007, May 2008, February 2009, October 2010 and August 2013 (the “RFA”) from Bank of Montreal (“BMO”), in order to finance thePortfolio Purchase which had a purchase price of $300 million. The original term of the agreement was three years. This term was extended by each of theSecond, Third, Fourth and Fifth Amendments and the most recent agreement signed in August 2013. On August 7, 2013, Palisades XVI, a 100% owned bankruptcy remote subsidiary, entered into a Settlement Agreement and Omnibus Amendment(the “Settlement Agreement”) with BMO as an amendment to the RFA. In consideration for a $15 million prepayment funded by the Company, BMOagreed to significantly reduce minimum monthly collection requirements and the interest rate. If and when BMO receives the next $15 million ofcollections from the Portfolio Purchase or from voluntary prepayments by Asta Funding, Inc., less certain credits for payments made prior to theconsummation of the Settlement Agreement (the “Remaining Amount”), Palisades XVI and its affiliates would be automatically released from liability inconnection with the RFA (subject to customary exceptions). A condition to the release was Palisade XVI’s agreement to grant BMO, as of the time of thepayment of the Remaining Amount, the right to receive 30% of net collections from the Portfolio Purchase once Palisades XVI has received from futurenet collections, the sum of $15 million plus voluntary prepayments included in the payment of the Remaining Amount (the “Income Interest”). OnJune 3, 2014, Palisades XVI paid the Remaining Amount. The final principal payment of $2,901,199 included a voluntary prepayment of $1,866,036provided from funds of the Company. Accordingly, Palisades XVI was entitled to receive $16.9 million of future collections from the Portfolio Purchasebefore BMO would be entitled to receive any payments with respect to its Income Interest. During the month of June 2016, the Company received the balance of the $16.9 million, and, as of September 30, 2017 and 2016, the Companyrecorded a liability to BMO of approximately $148,000 and $159,000, respectively. The funds were subsequently remitted to BMO in October 2017 and2016, respectively. The liability to BMO is recorded when actual collections are received. F-26Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 8 — NON RECOURSE DEBT (CONTINUED) Bank Hapoalim B.M. (“Bank Hapoalim”) Line of Credit On May 2, 2014, the Company obtained a $20 million line of credit facility from Bank Hapoalim, pursuant to a Loan Agreement (the “LoanAgreement”) among the Company and its subsidiary, Palisades Collection, LLC, as borrowers (“the Borrowers”), and Bank Hapoalim, as agent and lender.The Loan Agreement provides for a $20.0 million committed line of credit and an accordion feature providing an increase in the line of credit of up to$30 million, at the discretion of the lenders. The facility was for a term of three years at an interest rate of either LIBOR plus 275 basis points or prime, atthe Company’s option. The Loan Agreement included covenants that require the Company to maintain a minimum net worth of $150 million and pay anunused line fee. The facility was secured pursuant to a Security Agreement among the parties to the Loan Agreement, with property of the borrowersserving as collateral. On March 30, 2016, the Company signed the First Amendment to the Loan Agreement (the “First Amendment”) with BankHapoalim which amended certain terms of their banking arrangement. The First Amendment includes (a) the reduction of the interest rate to LIBOR plus225 basis points; (b) a decrease in the Net Equity requirement by $50 million, to $100 million and (c) modifies the No Net Loss requirement from aquarterly to an annual basis. All other terms of the original agreement remain in effect. The Company borrowed $9.6 million in February 2017 against thefacility. There was a $10.0 million aggregate balance on deposit at Bank Hapoalim which served as collateral for the line of credit, and was reflected asrestricted cash. On April 28, 2017, the Company renewed the line of credit facility with the new maturity date of August 2, 2017, under the existing termsand conditions. On August 2, 2017, the $9.6 million line of credit expired and the Company satisfied the debt with cash that was held in deposit ascollateral with the bank. As of September 30, 2017, there was no outstanding facility. NOTE 9 — OTHER LIABILITIES Other liabilities as of September 30, 2017 and 2016 are as follows: 2017 2016 Accounts payable and accrued expenses $1,835,000 $1,638,000 Lawsuit reserve (see Note 12 – Commitments and Contingencies – Legal Matters) 3,145,000 2,345,000 Other — 4,000 Total other liabilities $4,980,000 $3,987,000 NOTE 10 — INCOME TAXES The components of the provision for income taxes for the years ended September 30, 2017 and 2016 are as follows: 2017 2016 Current: Federal $(5,065,000) $5,385,000 State — 645,000 Interest on IRS payment — 9,000 (5,065,000) 6,039,000 Deferred: Federal 2,322,000 (3,256,000)State 409,000 833,000 2,731,000 (2,423,000) Sub-total (2,334,000) 3,616,000 Less: income tax (benefit) expense on discontinued operations (3,411,000) 2,599,000 Provision for income taxes $1,077,000 $1,017,000 F-27Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 10 — INCOME TAXES (CONTINUED) The difference between the statutory federal income tax rate on the Company’s pre-tax income and the Company’s effective income tax rate issummarized for the years ended September 30, 2017 and 2016 as follows: 2017 2016 Statutory federal income tax rate 35.0% 35.0%State income tax, net of federal benefit (2.7) 8.6 State tax rate change — (21.4)Permanent difference in municipal interest 1.3 (6.9)Permanent difference other (4.1) 3.1 Federal prior year provision to return difference — (1.7)Deferred adjustments — 12.5 Change in valuation allowance (14.0) (10.4)Other (0.3) (0.9) Effective income tax rate 15.2% 17.9% The Company recognized a net deferred tax asset of $12,696,000 and $14,903,000 as of September 30, 2017 and 2016, respectively. Thecomponents are as follows: September 30,2017 September 30,2016 Impairments/bad debt reserves $4,380,000 $3,353,000 Revenue recognition pertaining to the cost over estimated collections method 8,572,000 13,514,000 State tax net operating loss carry forward 9,603,000 7,793,000 Stock based compensation 3,520,000 3,477,000 Unrealized gain on structured settlements (5,187,000) (6,496,000)Capital loss carry forward 2,597,000 — Foreign currency 472,000 515,000 Depreciation, amortization and other 193,000 (129,000) Deferred income taxes 24,150,000 22,027,000 Deferred tax valuation allowance (11,454,000) (7,124,000) Deferred income taxes $12,696,000 $14,903,000 The Company files consolidated Federal and state income tax returns. Substantially all of the Company’s subsidiaries are single member limitedliability companies and, therefore, do not file separate tax returns. Majority and minority owned subsidiaries file separate partnership tax returns. Theexpiration date for state net operating loss (“NOL”) carry forwards (from September 30, 2009) is September 30, 2029. The New Jersey NOL carry forwardbalance as of September 30, 2017 is approximately $88.5 million. In addition, the Company has New York State and City NOL of approximately $19.4million and $4.3 million as of September 30, 2017, respectively. The Company has generated approximately $2.0 million of foreign NOL’s, all of whichare fully valued, due to cummulative losses in those jurisdictions. Included in the Federal current tax provision is the effect of an IRS audit, taking intoconsideration the adjustment affected in fiscal year 2013 for the tax periods 2009 through 2013, coupled with the Federal tax refund carry back claimresulting from the carry back of the current net operating loss. This current tax provision was offset by a deferred tax provision of the same amountbecause the IRS adjustment was temporary in nature. The Company has a federal capital loss carry forward of $6.1 million expiring in 2022 that has beenfully reserved. F-28Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 10 — INCOME TAXES (CONTINUED): The Company accounts for income taxes using the asset and liability method which requires the recognition of deferred tax assets and, if applicable,deferred tax liabilities, for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and, ifapplicable, liabilities. Additionally, the Company would adjust deferred taxes to reflect estimated tax rate changes, if applicable. The Company conductsperiodic evaluations to determine whether it is more likely than not that some or all of its deferred tax assets will not be realized. Among the factorsconsidered in this evaluation are estimates of future earnings, the future reversal of temporary differences and the impact of tax planning strategies thatthe Company can implement, if warranted. The Company is required to provide a valuation allowance for any portion of our deferred tax assets that, morelikely than not, will not be realized at September 30, 2017. Based on this evaluation, the Company has recorded a deferred tax asset valuation allowanceon their state NOL’s and capital loss carryforwards of approximately $11.5 million as of September 30, 2017 as compared to $7.1 million reported onSeptember 30, 2016. Although the carry forward period for state income tax purposes is up to twenty years, given the economic conditions, sucheconomic environment could limit growth over a reasonable time period to realize the deferred tax asset. The Company determined the time periodallowance for carry forward is outside a reasonable period to forecast full realization of the deferred tax asset, therefore recognized the deferred tax assetvaluation allowance. The Company continually monitors forecast information to ensure the valuation allowance is at the appropriate value. As requiredby FASB ASC 740, Income Taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant taxauthority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amountrecognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement withthe relevant tax authority. Interest and penalties are presented as a component of income taxes. $0 and $9,000 of interest was recognized in the Company’s consolidatedfinancial statements for 2017 and 2016 respectively. The Company's amended federal tax return for the year ended September 30, 2014 and 2015 is currently being audited by the Internal RevenueService. The tax returns for the 2016 fiscal year is subject to examination. The Company does not have any uncertain tax positions. On December 22, 2017 the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces the Federal statutorycorporate income tax rate from 35% to 21%. This rate reduction is expected to have a significant impact on our provisions for income taxes for periodsbeginning after September 30, 2017, including a one-time impact resulting from the revaluation of our deferred tax assets and liabilities to reflect the newlower rate. While we have not yet determined the net amount of the revaluation, we expect that it will be a significant component of our income taxprovision for the first quarter of fiscal 2018. NOTE 11 — NET INCOME PER SHARE: The following table presents the computation of basic and diluted per share data for the fiscal years ended September 30, 2017 and 2016: 2017 2016 (Loss) income from continuing operations $(8,382,000) $4,667,000 (Loss) income from discontinued operations (4,620,000) 2,906,000 Net (loss) income $(13,002,000) $7,573,000 Basic (loss) earnings per common share from continuing operations $(0.97) $0.39 Basic (loss) earnings per common share from discontinued operations (0.53) 0.24 Basic (loss) earnings per share $(1.50) $0.63 Diluted (loss) earnings per common share from continuing operations $(0.97) $0.37 Diluted (loss) earnings per common share from discontinuing operations (0.53) 0.24 Diluted (loss) earnings per share $(1.50) $0.61 Weighted average number of common shares outstanding: Basic 8,692,668 11,996,500 Dilutive effect of stock options — 512,061 Diluted 8,692,668 12,508,561 At September 30, 2016, 300,470 options at a weighted average exercise price of $9.82 were not included in the diluted earnings per sharecalculation as they were anti-dilutive. F-29Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 12 — COMMITMENTS AND CONTINGENCIES Leases The Company leases its facilities in (i) Englewood Cliffs, New Jersey, (ii) Houston, Texas, and (iii) Louisville, Kentucky. The leases are operatingleases, and the Company incurred related rent expense in the amounts of $360,000, and $516,000 during the years ended September 30, 2017 and 2016,respectively. The future minimum lease payments are as follows: Year Ending September 30, 2018 $282,000 2019 265,000 2020 224,000 $771,000 Employment Agreement On March 10, 2016, the Company entered into an employment agreement with an executive of the Company. Under this Agreement, he will receivea base salary of $275,000, subject to annual increases, and will be eligible to receive cash and non-cash bonuses. The Agreement has an 18 month non-compete and non-solicitation provision and has a one (1) year term, and the term will be extended by one year on each anniversary date of the Agreement. On November 11, 2016, the Company announced that it would continue its personal injury claims funding business through the formation of awholly owned subsidiary Simia. In connection with its formation, Simia entered into an employment agreement (the “Employment Agreement”) withPatrick F. Preece to serve as its Chief Executive Officer. Under the Employment Agreement, Mr. Preece received an annual base salary of $250,000,subject to annual increases at the discretion of the compensation committee (the “Compensation Committee”) of the Board of Directors of the Company(the “Board”). Mr. Preece was eligible to receive an annual cash or non-cash bonus in the sole and exclusive discretion of the Compensation Committee.Mr. Preece was also eligible to receive a cash or non-cash profit bonus of an aggregate amount up to 15% of the profit of the business of Simia (the“Business”) for each fiscal year in which the Business achieves an internal rate of return of at least 18%. In the event that the Business was sold to a thirdparty solely for cash consideration during Mr. Preece’s employment period, he was eligible to receive a cash or non-cash sale profit bonus of up to 15% ofthe closing consideration received by the Company. He was also entitled to participate in any other benefit plans established by the Company formanagement employees. The Employment Agreement had a five year term. Under the Employment Agreement, Mr. Preece could be terminated with orwithout “cause” (as defined in the Employment Agreement) and may resign with or without “good reason” (as defined in the Employment Agreement). IfMr. Preece was terminated without “cause” or resigns for “good reason” he would receive severance equal to two years of his base salary. He was alsoentitled to a pro-rata share of the profit bonus and his deferred compensation would vest immediately. Mr. Preece was also subject to a non-compete andnon-solicitation provision during the term of his employment and, unless his employment was terminated without “cause” or he resigns for “goodreason,” for two years thereafter. As of July 17, 2017, Patrick F. Preece is no longer employed as Chief Executive Officer of Simia. Gary Stern, Chairman, Chief Executive Officer andPresident of the Company, assumed the responsibilities of Simia’s Chief Executive Officer. No amounts were paid for any severance or bonus under hiscontract. On January 1, 2016, the Company renewed the expiring two-year employment agreements of the two CBC principals for one year terms. The newagreements provide each of the two CBC principals with a base salary of $250,000. Other terms remain unchanged from the original agreement,including: ●Sixty day notification required by either party to terminate the employment agreement; and ●Standard non-compete clause during the term of the employment agreement and for two years thereafter. The employment contracts of the original two principals expire at the end of December 2016. The Company did not renew those contracts. RyanSilverman was appointed CEO/General Counsel, effective January 1, 2017. F-30Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 12 — COMMITMENTS AND CONTINGENCIES (CONTINUED): Legal Matters In June 2015, a punitive class action complaint was filed against the Company, and one of its third-party law firm servicers, alleging violation ofthe federal Fair Debt Collection Practice Act and Racketeer Influenced and Corrupt Organization Act (“RICO”) and state law arising from debt collectionactivities and default judgments obtained against certain debtors. The Company filed a motion to strike the class action allegations and compel arbitration or, to the extent the court declines to order arbitration, todismiss the RICO claims. On or about March 31, 2015, the court denied the Company’s motion. The Company filed an appeal with the United StatesCourt of Appeals for the Second Circuit. A mediation session was held in July 2015, at which the Company agreed to settle the action on an individualbasis for a payment of $13,000 to each named plaintiff, for a total payment of $39,000. Payment was made on or about July 24, 2015. The third-party lawfirm servicer has not yet settled and remains a defendant in the case. The plaintiffs’ attorneys advised that they are contemplating the filing of another punitive class action complaint against the Company allegingsubstantially the same claims as those that were asserted in this matter. In anticipation of such an eventuality, the Company agreed to non-bindingmediation in order to reach a global settlement with other putative class members, which would avert the possibility of further individual or classactions with respect to the affected accounts. Through March 31, 2016, the parties had attended two mediation sessions and were continuing to discussa global settlement. In connection with such discussions, the settlement demand from plaintiffs was $4 million and the counteroffer from the Companyand its third-party law firm servicer was $3.875 million (which would be split equally between the Company and the law firm servicer). The Companyand law firm servicer had also offered, as part of the counteroffer, to cease collection activity on the affected accounts. Accordingly, the Company set upa reserve for settlement costs of $2.0 million during the three months ended March 31, 2016, which was included in general and administrativeexpenses in the Company’s statement of operations. The Company reassessed the situation as of September 30, 2016 and deemed that an additional $0.3 million was necessary to account for legalexpenses, which were made during the three month period ended September 30, 2016 (see Note 9 – Other Liabilities). See Note 21 - Subsequent Events. The Company is a defendant in a lawsuit filed in Montana state court alleging fraud and abuse of process arising from the Company’s businessrelationship with an entity that finances divorce litigation proceedings. As of September 30, 2017, and based on its assessments of current facts andcircumstances, the Company believes that it has recorded adequate reserves to cover future obligations associated with this lawsuit. See Note 21 -Subsequent Events. The Company filed a lawsuit in Delaware state court against a third party servicer arising from the third party servicer’s failure to pay the Companycertain amounts that are due the Company under a servicing agreement. The third party servicer filed a counterclaim in the Delaware action alleging thatthe Company owes certain amounts to the third party servicer for court costs pursuant to an alleged arrangement between the companies. The Companybelieves that it has meritorious defenses against this counterclaim and will continue to vigorously defend itself against any such action. See Note 21 -Subsequent Events. In the ordinary course of the Company’s business, it is involved in numerous legal proceedings. The Company regularly initiates collectionlawsuits, using its network of third party law firms, against consumers. Also, consumers occasionally initiate litigation against the Company, in whichthey allege that the Company has violated a federal or state law in the process of collecting their account. The Company does not believe that theseordinary course matters are material to its business and financial condition. The Company is not involved in any other material litigation in which it is adefendant. F-31Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 13 — CONCENTRATIONS At September 30, 2017, approximately 35% of the Company’s portfolio face value was serviced by 5 collection organizations. The Company hasservicing agreements in place with these 5 collection organizations, as well as all of the Company’s other third party collection agencies and attorneysthat cover standard contingency fees and servicing of the accounts. While the 5 collection organizations represent only 35% of the Company’s portfolioface value, it does represent approximately 90% of the Company’s portfolio face value at all third party collection agencies and attorneys. At September 30, 2016, approximately 14% of the Company’s portfolio face value was serviced by 3 collection organizations. The Company hasservicing agreements in place with these 3 collection organizations, as well as all of the Company’s other third party collection agencies and attorneysthat cover standard contingency fees and servicing of the accounts. While the 3 collection organizations represent only 14% of the Company’s portfolioface value, it does represent approximately 84% of the Company’s portfolio face value at all third party collection agencies and attorneys. NOTE 14 — STOCK OPTION PLANS 2012 Stock Option and Performance Award Plan On February 7, 2012, the Board of Directors adopted the Company’s 2012 Stock Option and Performance Award Plan (the “2012 Plan”), which wasapproved by the stockholders of the Company on March 21, 2012. The 2012 Plan replaces the Equity Compensation Plan (as defined below). The 2012 Plan provides the Company with flexibility with respect to equity awards by also providing for grants of stock awards (i.e., restricted orunrestricted), stock purchase rights and stock appreciation rights, in addition to the granting of stock options. The Company authorized 2,000,000 shares of Common Stock for issuance under the 2012 Plan. As of September 30, 2017, the Company hasgranted 540,800 options and 245,625 shares of restricted stock since inception of the 2012 Plan. Additionally, 78,768 options have been cancelledduring that time period, leaving 1,293,343 shares available as of September 30, 2017. As of September 30, 2017, approximately 86 of the Company’semployees were eligible to participate in the 2012 Plan. Equity Compensation Plan On December 1, 2005, the board of directors adopted the Company’s Equity Compensation Plan (the “Equity Compensation Plan”), which wasapproved by the stockholders of the Company on March 1, 2006. The Equity Compensation Plan was adopted to supplement the Company’s 2002 StockOption Plan (as defined below). In addition to permitting the grant of stock options as are permitted under the 2002 Stock Option Plan, the Equity Compensation Plan allows theCompany flexibility with respect to equity awards by also providing for grants of stock awards (i.e., restricted or unrestricted), stock purchase rights andstock appreciation rights. The Company authorized 1,000,000 shares of Common Stock for issuance under the Equity Compensation Plan. As of March 21, 2012, no moreawards could be issued under this plan. 2002 Stock Option Plan On March 5, 2002, the board of directors adopted the Company’s 2002 Stock Option Plan (the “2002 Plan”), which was approved by theCompany’s stockholders on May 1, 2002. The 2002 Plan was adopted in order to attract and retain qualified directors, officers and employees of, andconsultants to, the Company. The 2002 Plan authorized the granting of incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended(“the “Code”)) and non-qualified stock options to eligible employees of the Company, including officers and directors of the Company (whether or notemployees) and consultants of the Company. The Company authorized 1,000,000 shares of Common Stock for issuance under the 2002 Plan. As of March 5, 2012, no more awards could beissued under this plan. Stock Based Compensation The Company accounts for stock-based employee compensation under ASC 718, Compensation — Stock Compensation (“ASC 718”). ASC 718requires that compensation expense associated with stock options and other stock based awards be recognized in the income statement rather than adisclosure in the notes to the Company’s consolidated financial statements. F-32Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 14 — STOCK OPTION PLANS (CONTINUED): Stock Based Compensation (Continued) On June 8, 2017, the Compensation Committee granted 56,600 stock options to an officer and employees of the Company, of which 10,000 optionsvested immediately, 10,000 options vest on January 1, 2018, 10,000 options vest on January 1, 2019 and the remaining 26,600 stock options vest inthree equal annual installments and accounted for as one graded vesting award. The exercise price of these options was at the market price on that date.The weighted average assumptions used in the option pricing model were as follows: Risk-free interest rate 1.86%Expected term (years) 5.97 Expected volatility 26.27%Forfeiture rate 3.49%Dividend yield 0.00% On December 16, 2015, the Compensation Committee of the Board of Directors of the Company (“Compensation Committee”) granted 67,100stock options, with a grant date fair value of $7.93 to non-officer employees of the Company, of which 9,100 options vested immediately and theremaining 58,000 stock options vest in three equal annual installments and accounted for as one graded vesting award. The exercise price of theseoptions was at the market price on that date. The weighted average assumptions used in the option pricing model were as follows: Risk-free interest rate 0.24%Expected term (years) 6.25 Expected volatility 23.4%Dividend yield 0.00% On December 16, 2015, the Compensation Committee granted 5,000 restricted shares to a non-officer employee of the Company. These sharesvested fully in March, 2016. In February 2015, the Compensation Committee of the Board of Directors of the Company (“Compensation Committee”) granted 45,400 optionswith a grant date fair value of $8.37 to employees of the Company. The exercise price of these options, issued on February 23, 2015, was at the marketprice on that date. The options generally vest in three equal annual installments and are accounted for as one graded vesting award. The weighted averageassumptions used in the option pricing model were as follows: Risk-free interest rate 0.12%Expected term (years) 5.9 Expected volatility 32.7%Dividend yield 0.00% F-33Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 14 — STOCK OPTION PLANS (CONTINUED): Stock Based Compensation (Continued) Summary Of The Plan Compensation expense for stock options and restricted stock is recognized over the vesting period. Compensation expense for restricted stock isbased upon the market price of the shares underlying the awards on the grant date. The following table summarizes stock option transactions under the plans: Year Ended September 30, 2017 2016 Shares WeightedAverageExercisePrice Shares WeightedAverageExercisePrice Outstanding options at the beginning of year 949,667 $8.47 1,043,566 $8.47 Options granted 56,600 6.55 67,100 7.93 Options forfeited/cancelled (125,700) 10.59 (14,468) 8.12 Options exercised — (146,531) 8.22 Outstanding options at the end of year 880,567 $8.05 949,667 $8.47 Exercisable options at the end of year 796,962 $8.14 830,326 $8.51 The Company recognized $58,000 and $558,000 of compensation expense related to stock options, for the fiscal years ended September 30, 2017and 2016 respectively. As of September 30, 2017, there was $110,000 of unrecognized compensation cost related to unvested stock options. Theweighted average remaining period over which such costs are expected to be recognized is 1.8 years. The intrinsic value of the outstanding and exercisable options as of September 30, 2017 was approximately $78,000 and $32,000 respectively.There were no options exercised during the fiscal year 2017.The intrinsic value of the options exercised during fiscal year 2016 was approximately$338,000. The fair value of the options exercised during the fiscal year ended September 30, 2016 was $918,000. The proceeds from the exercise of stockoptions during the fiscal years ended September 30, 2016 were approximately $1,205,000. The weighted average remaining contractual life ofexercisable options as of September 30, 2017 is 4.6 years. The fair value of the stock options that vested during the 2017 and 2016 fiscal years wasapproximately $685,000 and $1,359,000, respectively. The fair value of options granted during the fiscal years ended September 30, 2017 and 2016 wasapproximately $371,000 and $532,000, respectively. F-34Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 14 — STOCK OPTION PLANS (CONTINUED): Stock Based Compensation (Continued) The following table summarizes information about the plans’ outstanding options as of September 30, 2017: Options Outstanding Options Exercisable Range ofExercise Price NumberOutstanding WeightedAverageRemainingContractualLife (In Years) WeightedAverageExercisePrice NumberExercisable WeightedAverageExercisePrice $2.8751-$5.7500 3,800 1.6 $2.95 3,800 $2.95 $5.7501-$8.6250 759,767 5.0 7.87 676,162 7.95 $8.6251-$11.5000 117,000 5.3 9.39 117,000 9.39 880,567 5.0 $8.05 796,962 $8.14 The following table summarizes information about restricted stock transactions: Year EndedSeptember 30,2017Shares WeightedAverageGrant DateFair Value Year EndedSeptember 30,2016Shares WeightedAverageGrant DateFair Value Unvested at the beginning of period — $— 44,107 $9.28 Awards granted — — 5,000 7.89 Vested — — (49,107) 9.36 Forfeited — — — 0.00 Unvested at the end of period — $— — $8.00 The Company did not recognize any compensation expense related to the restricted stock awards during the fiscal year 2017. The Companyrecognized $128,000 of compensation expense during the fiscal year ended September 30, 2016 for restricted stock. As of September 30, 2017, there wasno unrecognized compensation cost related to restricted stock awards. An aggregate of 5,000 shares of restricted stock were granted during the fiscal year2016, with a fair value of $40,000, all of which were granted to a non-officer employee. The fair value of the restricted stock awards vested during thefiscal year ended September 30, 2016 was approximately $460,000. The Company recognized an aggregate total of $ 58,000 and $686,000 in compensation expense for the fiscal years ended September 30, 2017and2016, respectively, for the stock options and restricted stock grants. As of September 30, 2017, there was a total of $110,000 of unrecognizedcompensation cost related to unvested stock options and restricted stock grants. The method used to calculate stock based compensation is the straightline pro-rated method. NOTE 15 — STOCKHOLDERS’ EQUITY The Company has 5,000,000 authorized preferred shares with a par value of $0.01 per share. The Board of Directors are authorized to divide theauthorized 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 allother series and classes. There were no shares of preferred stock issued and outstanding as of September 30, 2017 and 2016. F-35Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 15 — STOCKHOLDERS’ EQUITY (CONTINUED): Dividends are declared at the discretion of the Board of Directors and depend upon the Company’s financial condition, operating results, capitalrequirements and other factors that the Board of Directors deems relevant. In addition, agreements with the Company’s lenders may, from time to time,restrict the ability to pay dividends. As of September 30, 2017, there were no such restrictions. No dividends were declared for fiscal years 2017 and 2016. On August 11, 2015, the Board of Directors approved the repurchase of up to $15,000,000 of the Company’s common stock and authorizedmanagement of the Company to enter into the Shares Repurchase Plan under Sections 10b-18 and 10(b)5-1 of the Securities and Exchange Act (“theShares Repurchase Plan”). The Shares Repurchase Plan was to have been effective to December 31, 2015. On December 17, 2015 the Board of Directorsapproved the extension of the Plan to March 31, 2016 and reset the maximum to an additional $15 million in repurchases. On March 17, 2016, after theCompany Had repurchased approximately $9.9 million of the Company’s common stock, the Board of Directors approved further extension of the SharesRepurchase Plan to December 31, 2016 and reset the maximum to $15 million in repurchases. On March 22, 2016, a Company shareholder commenced atender offer on the Company’s common stock. Per the provisions of the Shares Repurchase Plan, it terminated immediately, and no further purchases werepermitted under the Shares Repurchase Plan. Through September 30, 2016, the Company purchased approximately 1,186,000 shares at an aggregate costof approximately $10.1 million under the Shares Repurchase Plan. On May 25, 2016, the Company entered into a Mutual Confidentiality Agreement (the “Agreement”) with MPF InvestCo 4, LLC, a wholly ownedsubsidiary of The Mangrove Partners Master Fund, Ltd. (“Mangrove”), pursuant to which Mangrove and the Company agreed to (1) provide certainConfidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (2) the confidentiality of theConfidential Information, and (3) certain restrictions on the activities of the parties to the Agreement. Pursuant to the Agreement, the Company made available to Mangrove and its representatives certain confidential information relating to theCompany or its subsidiaries, and Mangrove agreed to make available to the Company and its representatives certain confidential information relating toMangrove and its affiliates (collectively, the “Confidential Information”). The Company and Mangrove agreed not to disclose the ConfidentialInformation, and to cause each of their representatives, respectively, not to disclose the Confidential Information, except as required by law. Pursuant tothe Agreement, the Company provided information requested by Mangrove to one or more of Mangrove’s representatives and such representativesprepared summaries of such information (the “Summaries”). The Company approved the Summaries, the approved Summaries were provided toMangrove. The Company agreed to release the approved Summaries publicly on or prior to the end of the Extended Period (as defined in the Agreement),to the extent that the information contained in the Summaries has not already been disclosed. Further, under the terms of the Agreement, Mangrove and the Company have agreed to certain restrictions during the Discussion Period, whichbegan on May 25, 2016 and the Extended Period, including that, unless consented to by the other party to the Agreement or required by applicable law,neither party will, and shall cause its affiliates and representatives not to, (i) commence any litigation against the other party, (ii) make any filing with theSEC of proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise or call any annual or special meeting ofstockholders of the Company, (iii) publicly refer to: (a) the Confidential Information or Discussion Information (as defined in the Agreement), (b) anyannual or special meetings of stockholders of the Company or (c) any prior discussions between the parties, including in any filing with the SEC(including any proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise), in any press release or in any otherwritten or oral disclosure to a third party, (iv) make any purchases of the Company’s securities, including, but not limited to, pursuant to any stockbuyback plans, tender offers, open-market purchases, privately negotiated transactions or otherwise, (v) make any demand under Section 220 of theDelaware General Corporation Law, (vi) make or propose to make any amendments to the Company’s Certificate of Incorporation, as amended, or By-laws, as amended, (vii) adopt, renew, propose or otherwise enter into a Shareholder Rights Plan with respect to the Company’s securities, (viii) adopt orpropose any changes to the Company’s capital structure or (ix) negotiate, discuss, enter into, propose or otherwise transact in any extraordinarytransactions with respect to the Company, outside the ordinary course of business, including, but not limited to, any mergers, asset sales or assetpurchases. F-36Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 15 — STOCKHOLDERS’ EQUITY (CONTINUED): On November 21, 2016, Mangrove notified the Company that Mangrove was terminating the Agreement with the Company. Under the Agreement,the Company and Mangrove agreed to (1) provide certain Confidential Information (as defined below) to the other party to the Agreement and the otherparty’s representatives, (2) maintain the confidentiality of the Confidential Information, and (3) certain restrictions on the activities of the parties to theAgreement. Upon termination of the Discussion Period, the agreement provides for a period of 30 days thereafter (the “Extended Period”). Throughout theExtended Period of the Agreement, the parties are subject to the standstill provisions of the Agreement. Following the Discussion Period and theExtended Period, nothing in the Agreement shall prohibit any party from taking any of the activities referred to as the Restricted Activities, andspecifically nothing shall restrict Mangrove or its representatives from calling a special meeting, nominating one or more candidates to serve as directorsof the Company or commencing, or announcing its intension to commence, a “solicitation” of “proxies” (as such terms are used in Regulation 14A of theSecurities Exchange Act of 1934, as amended) to vote with respect to any meeting of stockholders of the Company. The effective termination date of thisAgreement is January 6, 2017. On January 6, 2017, the Company entered into a settlement agreement (the “ Settlement Agreement ”) with Mangrove and, for limited purposesstated therein, Gary Stern, Ricky Stern, Emily Stern, Arthur Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ SternFamily ”). The Settlement Agreement provided that, within ten business days following the date of the Settlement Agreement, the Company will commence aself-tender offer (“ Tender Offer ”) to repurchase for cash 5,314,009 shares of its common stock at a purchase price of $10.35 per share. The Tender Offerwill expire no later than February 28, 2017. Pursuant to the Settlement Agreement, Mangrove will tender its 4,005,701 shares for purchase by theCompany. The Stern Family has agreed not to tender any of their shares in the Tender Offer. In addition, pursuant to a securities purchase agreement datedJanuary 6, 2017 between Mangrove and Gary Stern (the “Purchase Agreement”), Gary Stern will purchase any remaining shares owned by Mangroveeleven business days following the closing of the Tender Offer for $10.35 per share. The Settlement Agreement included customary standstill and related provisions. Mangrove and the Company also agreed on a mutual release ofclaims. Additionally, the Company indemnified Mangrove from and against any excise tax imposed as a result of this Settlement Agreement. The Settlement Agreement was terminable by either the Company or Mangrove by written notice at any time after the close of business on thesecond anniversary of the Settlement Agreement. The Settlement Agreement would also terminate if the Tender Offer did not close on or before February28, 2017 or the Company amended the terms of the Tender Offer in a manner adverse to Mangrove. In connection with the Settlement Agreement, the Company also entered into a Voting Agreement dated January 6, 2017 (the “ Voting Agreement ”)with Gary Stern, Ricky Stern, Emily Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Stockholders ”). TheVoting Agreement provides that the Stern Stockholders will not have the right to vote more than 49% of the Company’s total outstanding shares, and anyadditional shares held by the Stern Stockholders will be voted in a manner proportionate to the votes of the outstanding shares not held by the SternStockholders. On January 19, 2017, the Company commenced a self-tender offer to purchase for cash up to 5,314,009 shares of its common stock at a purchaseprice of $10.35 per share, less applicable withholding taxes and without interest. The Company made the tender offer pursuant to the SettlementAgreement dated as of January 6, 2017, by and among the Company, Mangrove and certain of their respective affiliates, pursuant to which Mangrove andits affiliates would tender their 4,005,701 shares. The tender offer would reduce the number of shares in the public market. If more than 5,314,009 shares had been tendered, the Company would have purchased all tendered shares on a pro rata basis, subject to theconditional tender provisions described in the Offer to Purchase. Pursuant to the Settlement Agreement, Gary Stern (or his permitted assignees) hadunconditionally agreed to purchase from Mangrove and its affiliates any shares owned by Mangrove and its affiliates that the Company did not purchasein the tender offer. The tender offer expired on February 15, 2017, at 11:59 p.m., New York City time. Based on the final count by American Stock Transfer & TrustCompany, LLC ("AMSTOCK"), the depositary for the tender offer, a total of approximately 6,022,253 shares of the Company’s common stock werevalidly tendered and not validly withdrawn. Because the tender offer was oversubscribed by 708,244 shares, the Company purchased only a proratedportion of the shares properly tendered by each tendering stockholder. The depositary had informed the Company that the final proration factor for thetender offer was approximately 88.24% of the shares validly tendered and not validly withdrawn. AMSTOCK promptly issued payment for the5,314,009 shares accepted pursuant to the tender offer and returned all other shares tendered and not purchased. The shares acquired representedapproximately 44.7% of the total number of shares of the Company’s common stock issued and outstanding as of February 6, 2017. As a result of thistender offer, the Company recorded during the second quarter an additional $54.2 million in treasury stock, and $797,000 was charged to general andadministrative expenses in the consolidated statements of operations which represent the excess of the current market price of the Company’s commonstock on January 18, 2017 of $10.20 per share. Additionally, the Ricky Stern Family 2012 Trust (as Gary Stern's permitted assignee), acquired 471,086Shares under the Purchase Agreement on March 10, 2017 for $4.9 million. F-37Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 15 — STOCKHOLDERS’ EQUITY (CONTINUED): As of December 31, 2016 and for the three months ended December 31, 2016 and 2015, through February 14, 2017, Mangrove due to theirownership in the Company's common stock, which was acquired in a series of OTC transactions, was deemed to be a related party. Effective on February15, 2017, the date Mangrove tendered its shares, they were no longer deemed to be a related party. Stockholder Rights Agreement On May 5, 2017, the Board of the Company adopted a stockholder rights plan (the “Rights Agreement”), pursuant to which the Company declared adividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock. The dividend was paid to the stockholdersof record at the close of business on May 15, 2017. Each Right entitles the holder, subject to the terms of the Rights Agreement, to purchase from theCompany one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock (the “Preferred Stock”) at a price of $28.60,subject to certain adjustments. The Rights generally become exercisable on the earlier of (i) ten business days after any person or group obtains beneficial ownership of 10% ormore of the Company’s outstanding common stock (an “Acquiring Person”), or (ii) ten business days after commencement of a tender or exchange offerresulting in any person or group becoming an Acquiring Person. The exercise price payable and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights aresubject to adjustment from time to time to prevent dilution. In the event that, after a person or a group has become an Acquiring Person, the Company isacquired in a merger or other business combination transaction (or 50% or more of the Company’s assets or earning power are sold), proper provision willbe made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right,that number of shares of common stock of the acquiring company having a market value at the time of that transaction equal to two times the exerciseprice. The Company may redeem the Rights at any time before a person or group becomes an Acquiring Person at a price of $0.01 per Right, subject toadjustment. At any time after any person or group becomes an Acquiring Person, the Company may generally exchange each Right in whole or in part atan exchange ratio of one shares of common stock per outstanding Right, subject to adjustment. Unless terminated on an earlier date pursuant to the terms of the Rights Agreement, the Rights was set to expire on June 1, 2018, or such later dateas may be established by the Board as long as any such extension is approved by a vote of the stockholders of the Company by June 1, 2018. TheCompany concluded any value associated with the Right given to shareholders as a dividend is deemed deminimus. The Rights and Rights Agreement expired on June 1, 2018. NOTE 16 — RETIREMENT PLAN The Company maintains a 401(k) Retirement Plan covering all of its eligible employees. Matching contributions made by the employees to theplan are made at the discretion of the board of directors each plan year. Contributions for the years ended September 30, 2017 and 2016 were $139,000and $140,000, respectively. F-38Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 17 — FAIR VALUE OF FINANCIAL MEASUREMENTS AND DISCLOSURES: Disclosures about Fair Value of Financial Instruments The estimated fair value of the Company’s financial instruments is summarized as follows: September 30, 2017 September 30, 2016 CarryingAmount FairValue CarryingAmount FairValue Financial assets Cash equivalents (Level 1) $68,000 $68,000 $923,000 $923,000 Available-for-sale investments (Level 1) 5,511,000 5,511,000 56,763,000 56,763,000 Other investments(Level 1) — — 3,590,000 3,590,000 Consumer receivables acquired for liquidation (Level 3) 6,841,000 32,603,000 13,427,000 47,233,000 The following assets have been reclassified to discontinued operations as of September 30, 2017 and 2016: September 30, 2017 September 30, 2016 CarryingAmount FairValue CarryingAmount FairValue Financial asset Structured settlements (Level 3) 86,971,000 86,971,000 86,091,000 86,091,000 Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The Company uses the following methods andassumptions to estimate the fair value of financial instruments: Cash equivalents – The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cashequivalents. The carrying amount of cash equivalents approximates fair value. Available-for-sale investments — The available-for-sale securities consist of mutual funds that are valued based on quoted prices in active markets. The Company’s available-for-sale investments are classified as Level 1 financial instruments based on the classifications described above. TheCompany did not have any transfers into (out of) Level 1 investments during the fiscal year ended September 30, 2017. The Company had no Level 2 orLevel 3 available-for-sale investments during the fiscal year ended September 30, 2017. Other investments — The Company estimated the fair value using the net asset value per share of the investment. There are no unfundedcommitments and the investment cannot be redeemed for 5 years. Consumer receivables acquired for liquidation — The Company computed the fair value of the consumer receivables acquired for liquidation usingits proprietary forecasting model. The Company’s forecasting model utilizes a discounted cash flow analysis. The Company’s cash flows are an estimateof collections for consumer receivables based on variables fully described in Note 4 - Consumer Receivables Acquired for Liquidation. These cash flowsare discounted to determine the fair value. Structured settlements — The Company determined the fair value based on the discounted forecasted future collections of the structuredsettlements. Unrealized gains on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date ofacquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate. Of the $4.3 million ofunrealized gains recognized in the fiscal year ended September 30, 2017, approximately $6.9 million is due to day one gains on new structuredsettlements financed during the period, $0.2 million due to a change in the discount rate, offset by a decrease of $2.1 million in realized gains recognizedas realized interest income on structured settlements during the period and fair value adjustment of $0.7 million. There were no other changes inassumptions during the period. F-39Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 17 — FAIR VALUE OF FINANCIAL MEASUREMENTS AND DISCLOSURES (CONTINUED): Fair Value Hierarchy (Continued) A significant unobservable input used in the fair value measurement of structured settlements is the discount rate. Significant increases anddecreases in the discount rate used to estimate the fair value of structured settlements could decrease or increase the fair value measurement of thestructured settlements. The discount rate could be affected by factors, which include, but are not limited to, creditworthiness of insurance companies,market conditions, specifically competitive factors, credit quality of receivables purchased, the diversity of the payers of the receivables purchased, theweighted average life of receivables, current benchmark rates (i.e. 10 year treasury or swap rate) and the historical portfolio performance of the originatorand/or servicer. The following table sets forth the Company’s quantitative information about its Level 3 fair value measurements as of September 30, 2017: Fair Value ValuationTechniqueUnobservableInput Rate Structured settlements at fair value $86,971,000 Discounted cash flowDiscount rate 4.81–5.82% The changes in structured settlements at fair value using significant unobservable inputs (Level 3) during the year ended September 30, 2017 wereas follows: Balance at September 30, 2016 $86,091,000 Fair market value adjustment (3,958,000)Purchases 15,749,000 Sales (7,485,000)Interest accreted 6,389,000 Payments received (9,815,000) Total $86,971,000 Realized and unrealized gains and losses on structured settlements included in earnings in the accompanying consolidated statements ofoperations for the year ended September 30, 2017 are reported in the following revenue categories: The amount of total gains for the year included in earnings attributable to the change in unrealized gainsrelating to assets held at September 30, 2017 $4,326,000 Realized loss relating to assets sold during the year ended September 30, 2017 $(5,353,000) Total losses included in the year ended September 30, 2017 $(1,027,000) NOTE 18 — RELATED PARTY TRANSACTIONS On December 12, 2011, the Company and Piccolo Business Advisory (“Piccolo”), which is owned by Louis Piccolo, a director of the Company,entered into a Consulting Agreement, pursuant to which Piccolo provided consulting services which included, but was not limited to, analysis ofproposed debt and equity transactions, due diligence and financial analysis and management consulting services (“Services”). The Consulting Agreementwas for a period of two years, which ended on December 31, 2013 and Piccolo received compensation of $150,000 per annum payable monthly, a bonusof $25,000 per new transaction closed by the Company with Piccolo’s assistance (if any), and 30,000 options per year, with such options vesting in threeequal annual installments on the first, second and third anniversaries of the first grant date. The Company paid Piccolo $25,000 in the fiscal year endedSeptember 30, 2014. This agreement was not immediately renewed. F-40Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 18 — RELATED PARTY TRANSACTIONS (CONTINUED) On September 17, 2015, the Company and Piccolo agreed to terms to a new two-year, $80,000 contract, pursuant to which Piccolo will provideconsulting services, as described above. The compensation is to be paid quarterly. For the years ended September 30, 2017 and 2016, the Company paidPiccolo approximately $80,000 per annum for such services. The consulting agreement with Piccolo terminated on September 30, 2017. In addition, A. L. Piccolo & Co., Inc. (“ALP”), which is also owned by Louis Piccolo, receives a fee from Pegasus which is calculated based onamounts loaned to Pegasus by Fund Pegasus up to maximum of $700,000. The fee is payable over six years including interest at 4% per annum fromPegasus during the term of the Pegasus Operating Agreement that expires December 28, 2016, and, thereafter, by PLF and its affiliates. For fiscal yearsended September 30, 2017 and 2016, Pegasus paid ALP $133,000 each year, which includes fees and interest paid during the periods. As of September30, 2017 and 2016, the Company owed Piccolo $66,000 and $193,000, respectively, which has been recorded in other liabilities on the Company’sconsolidated balance sheet at September 30, 2017. In June 2015, CBC entered into an asset purchase agreement with Fortress Funding, LLC (“Fortress”) to acquire an interest in certain tangible andintangible assets of Fortress, which included customer lists, equipment and other intellectual property. In consideration for these assets CBC agreed topay Fortress $0.5 million, as well as up to an additional $1.2 million based on conversion of customers from the acquired lists obtained in the transaction.Fortress is owned by Michelle Silverman, the wife of Ryan Silverman, who in connection with the agreement was offered employment as General Counselof CBC. Effective January 2017, Silverman was appointed as CEO, and currently serves as the CEO/General Counsel of CBC. For the years ended September 30, 2017 and 2016, the Company paid Fortress $0.2 million and $0.3 million, respectively. In June 2017, CBC reached an agreement with Fortress; to settle the remaining $0.6 million owed under the agreement, which included any futureamounts that could have been paid under the agreement in exchange for shares of Asta's common stock. Under the settlement agreement the Companyissued Fortress 55,000 unrestricted shares of the Company's common stock as a complete release of any future obligations under the agreement. Inconjunction with this transaction the Company recognized a charge to expense of $0.4 million for the year ended September 30, 2017, which representsthe market price of the shares at the date of issuance. The Company did not recognize a gain on the settlement of this obligation. On July 1, 2015, Mr. Arthur Stern, former Chairman Emeritus of the Company, retired from the Board of Directors and became a consultant to theCompany. As of April 30, 2016, the consulting agreement with Mr. Stern was terminated. For the fiscal year ended September 30, 2016, Mr. Stern waspaid $88,000. NOTE 19 — SEGMENT REPORTING The Company operates through strategic business units that are aggregated into three reportable segments: consumer receivables, personal injuryclaims, and GAR Disability Advocates. The three reportable segments consist of the following: •Consumer receivables - This segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumerreceivables, including judgment receivables, charged off receivables and semi-performing receivables. Judgment receivables are accounts whereoutside attorneys have secured judgments directly against the consumer. Primary charged-off receivables are accounts that have been written-offby the originators and may have been previously serviced by collection agencies. Semi-performing receivables are accounts where the debtor iscurrently making partial or irregular monthly payments, but the accounts may have been written-off by the originators. Distressed consumerreceivables are the unpaid debts of individuals to banks, finance companies and other credit providers. A large portion of our distressedconsumer 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 thecharacteristics (issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio. The business conducts itsactivities primarily under the name Palisades Collection, LLC. F-41Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 19 — SEGMENT REPORTING (CONTINUED) •Personal injury claims (including Equity Method Investment) – Pegasus Funding, LLC, purchases interests in personal injury claims fromclaimants who are a party to personal injury litigation. Pegasus advances to each claimant funds on a non-recourse basis at an agreed uponinterest rate, in anticipation of a future settlement. The interest in each claim purchased by Pegasus consists of the right to receive, from suchclaimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to suchclaimant’s claim. Effective January 2017, Simia commenced funding personal injury settlement claims while Pegasus will not fund any newadvances, and will remain in operation to liquidate its current portfolio of advances. Simia's activity for the years ended September 30, 2017 and2016 are included in this segment, along with that of the Company's equity investment in Pegasus. •Social Security benefit advocacy – GAR Disability Advocates and Five Star are advocacy groups which represent individuals nationwide intheir claims for social security disability and supplemental security income benefits from the Social Security Administration. Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected inCorporate. Corporate assets include cash and cash equivalents, available-for-sale securities, property and equipment, goodwill, deferred taxes, other assetsand assets related to discontinued operations. (Dollars in millions) ConsumerReceivables GAR DisabilityAdvocates PersonalInjury Claims(2) Corporate (3) Total Fiscal Year Ended September 30, 2017: Revenues $15.9 $5.1 $0.4 $— $21.4 Other income — — — (0.1) (0.1)Segment profit (loss) 12.5 (1.7) 4.1 (22.2) (7.3)Segment Assets (1) (4) 20.4 3.9 55.0 122.2 201.5 2016: Revenues 18.9 4.0 — — 22.9 Other income — — — 1.7 1.7 Segment profit (loss) 14.2 (7.3) 10.5 (11.7) 5.7 Segment Assets (1) (4) 18.9 2.0 48.6 185.5 255.0 The Company does not have any intersegment revenue transactions. (1)Includes other amounts in other line items on the consolidated balance sheet.(2)The Company records Pegasus as an equity investment in its consolidated financial statements. For segment reporting the Company has included itspro-rated share of the earnings and losses from its investment under the Personal Injury Claims segment.(3)Corporate is not part of the three reportable segments, as certain expenses and assets are not earmarked to any specific operating segment.(4)Included in Corporate are approximately $92.8 million and $91.5 million of assets related to discontinued operations as of September 30, 2017 and2016, respectively. F-42Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIES Notes to Consolidated Financial StatementsSeptember 30, 2017 and 2016 NOTE 20 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) consists of: 2017 2016 Unrealizedgain onmarketablesecurities Foreigncurrencytranslation, net Total Unrealizedgain onmarketablesecurities Foreigncurrencytranslation, net Total Beginning Balance $624,000 $179,000 $803,000 $(205,000) $225,000 $20,000 Change in unrealized gains(losses) on foreign currencytranslation, net - (168,000) (168,000) - (46,000) (46,000)Change in unrealized gains(losses) on marketablesecurities (10,000) - (10,000) 868,000 - 868,000 Amount reclassified fromaccumulated othercomprehensive income (607,000) - (607,000) (39,000) - (39,000) Net current-period othercomprehensive income (617,000) (168,000) (785,000) 829,000 (46,000) $783,000 Ending balance $7,000 $11,000 $18,000 $624,000 $179,000 $803,000 NOTE 21 — SUBSEQUENT EVENTS Pegasus The Company filed for arbitration with the American Arbitration Association ("AAA") against Pegasus in April 2017 for breaches in the Operatingand Term Sheet. On April 18, 2017, the Company was granted an Emergent Award restraining the cash in Pegasus, until a formal arbitration panel isconfirmed and can review the case. As of June 30, 2017 there was approximately $24.7 million in cash that was restrained under the Emergent Award, andis classified as restricted on the Company's consolidated balance sheet. The Company has as equity method investment in Pegasus. See Note 5 -Litigation Funding. On July 17, 2017, an arbitration panel was confirmed, and a hearing date has been scheduled for August 25, 2017 on the Company's motion to havePLF removed from managing Pegasus and replacing them with Company designated representatives, and to permit disbursements to the Company inaccordance with the Operating and Liquidation Agreements. On January 12, 2018, the Company, ASFI and Fund Pegasus entered into a Settlement Agreement and Release (the “Settlement Agreement”) by andamong the Company, ASFI, Fund Pegasus, Pegasus, the Seller, Max Alperovich, Alexander Khanas, Larry Stoddard, III, Louis Piccolo and A.L. Piccolo &Co., Inc., a New York corporation. The Settlement Agreement releases certain claims in exchange for, among other things, the parties' entry into thePurchase Agreement. Additionally, on January 12, 2018, ASFI Pegasus Holdings, LLC (“ASFI”), a Delaware limited liability company and a subsidiary of Asta Funding,Inc. (the “Company” or “Asta”), a Delaware corporation, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement) with PegasusLegal Funding, LLC, a Delaware limited liability company (the “Seller”). Under the Purchase Agreement, ASFI bought the Seller’s ownership interests ofPegasus Funding, LLC (“Pegasus”), which was 20% of the issued and outstanding limited liability company interests of Pegasus, for an aggregatepurchase price of $1,800,000. As a result of the execution of the Purchase Agreement, ASFI became the owner of 100% of the limited liability companyinterests of Pegasus. F-43Table of Contents ASTA FUNDING, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Note 21—Subsequent Events (Continued) Pegasus (continued) As a result of the purchase of the Seller’s 20% interest in Pegasus on January 12, 2018 under the Purchase Agreement, beginning with the quarterended March 31, 2018, the Company will consolidate the financial statements of Pegasus. The Company currently accounts for its investment in Pegasusunder the equity method of accounting. See Note 5 - Litigation Funding. Legal Matters On November 24, 2017, the Company paid $0.8 million as a settlement in conjunction with the lawsuit filed against the Company in Montana statecourt alleging, fraud and abuse of process arising from the Company's business relationship with an entity that finances divorce proceedings. See Note 12- Commitments and Contingencies. On January 23, 2018, the Company paid $2.3 million as a global settlement in conjunction with the punitive class action complaint filed againstthe Company, and one of its third-party law firm servicers. This payment represented the Company's portion of the total settlement of $4.6 million, whichwas split with the third-party law firm. See Note 12 - Commitments and Contingencies. 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 Companycertain amounts that are due the Company under a servicing agreement. The third party servicer filed a counterclaim in the Delaware action alleging thatthe Company owes certain amounts to the third party servicer for court costs pursuant to an alleged arrangement between the companies. On or aboutJuly 12, 2018, the parties agreed to settle the action pursuant to a settlement agreement and release, which provides for, among other things, the paymentby the third party servicer of $4.4 million to the Company pursuant to an agreed upon schedule. See Note 12 - Commitments and Contingencies. Special Dividend On February 5, 2018, the Board of Directors of the Company declared a special cash dividend in the amount of $5.30 per share with respect to itsCommon Stock, payable on February 28, 2018 to holders of record of the Company’s Common Stock at the close of business on February 16, 2018, withan ex-dividend date of March 1, 2018. The aggregate payment to shareholders was approximately $35 million. IRS Examination The Company's amended federal tax return for the year ended September 30, 2014 and 2015 is currently being audited by the Internal RevenueService. US Tax Reform On December 22, 2017 the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduces the Federal statutorycorporate income tax rate from 35% to 21%. This rate reduction is expected to have a significant impact on our provisions for income taxes for periodsbeginning after September 30, 2017, including a one-time impact resulting from the revaluation of our deferred tax assets and liabilities to reflect the newlower rate. Based on our initial assessment of the Act, we expect that it will result in a charge to income taxes of approximately $3.5 million in the firstquarter of fiscal 2018. F-44Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. ASTA FUNDING, INC. By: /s/ Gary Stern Gary Stern President and Chief Executive Officer (Principal Executive Officer) Dated: October 12, 2018 Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated: Signature Title Date/s/ Gary Stern Chairman of the Board, President, and ChiefExecutive October 12, 2018Gary Stern Officer /s/ Bruce R. Foster Chief Financial Officer October 12, 2018Bruce R. Foster (Principal Financial Officer and Accounting Officer) /s/ David Slackman Director October 12, 2018David Slackman /s/ Louis A. Piccolo Director October 12, 2018Louis A. Piccolo /s/ Mark Levenfus Director October 12, 2018Mark Levenfus /s/ Timothy H. Bishop Director October 12, 2018Timothy H. Bishop Exhibit 10.24 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and Bruce Foster (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By:/s/ Gary Stern Gary SternChairman and Chief Executive Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ Bruce Foster Bruce FosterChief Financial Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632Fax: (201) 308-9278 Exhibit 10.25 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and Seth Berman (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By:/s/ Gary Stern Gary SternChairman and Chief Executive Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ Seth Berman Seth BermanChief Compliance Officer, General Counsel and Secretary Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Exhibit 10.26 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and Mark Levenfus (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By:/s/ Gary Stern Gary SternChairman and Chief Executive Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ Mark Levenfus Mark LevenfusDirector Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Exhibit 10.27 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and Louis A. Piccolo (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By: /s/ Gary Stern Gary SternChairman and Chief Executive Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ Louis A. Piccolo Louis A. PiccoloDirector Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Exhibit 10.28 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and David Slackman (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By: /s/ Gary Stern Gary SternChairman and Chief Executive Officer Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ David Slackman David Slackman Director Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Exhibit 10.29 ASTA FUNDING, INC. Indemnification Agreement This Indemnification Agreement (this “Agreement”) is made as of September 11, 2017, by and between Asta Funding, Inc., a Delaware corporation (the“Company”), and Ricky Stern (“Indemnitee”). RECITALS WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and keyemployees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify itsdirectors, officers and key employees so as to provide them with the maximum protection permitted by law; WHEREAS, pursuant to the Certificate of Incorporation and Bylaws of the Company, it is obligated to indemnify the Indemnitee to the fullestextent permitted by Delaware law; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the Bylaws of the Company, and shallnot be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; WHEREAS, each of the Company and the Indemnitee desire to set forth certain indemnification rights and obligations in more details as is setforth herein in order to induce the Indemnity to continue his service to the Company free from undue concern that Indemnitee will not be so indemnified. AGREEMENT In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Company and Indemnitee hereby agree as follows: 1.Indemnification. 1.Third-Party Proceedings. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee if Indemniteewas, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding byor in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paidin settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld,conditioned or delayed) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted ingood faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the caseof a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.  2.Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnifyIndemnitee if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding byor in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred byIndemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to bein or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue ormatter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless andonly to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon applicationthat, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which suchcourt shall deem proper. 3.Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on themerits or otherwise in defense of any Proceeding referred to in Section 1(1) or Section 1(2) or the defense of any claim, issue or mattertherein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred byIndemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits orotherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee againstall Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters tothe fullest extent permitted by applicable law. If any Proceeding (or issue, claim or matter therein) is disposed of on the merits orotherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication thatIndemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in goodfaith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respectto any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful,Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. The indemnificationprovided by this Section 1(3) shall be in addition to any right to indemnification for Expenses set forth elsewhere herein (including,without limitation, pursuant to Sections 1(1) and 1(2)).  4.Additional Indemnification. In addition to, and without regard to any limitations on, the indemnification provided for above in thisSection 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, heis, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The onlylimitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligatedto make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth herein)to be unlawful. 5.Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked toparticipate in any Proceeding by virtue of his Corporate Status to which Indemnitee is not a party (including responding to discoveryrequests), the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connectionwith such Proceeding. 2.Indemnification Procedure. 1.Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually andreasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statementrequesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall beunsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard toIndemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled tocontinue to receive advancement of Expenses pursuant to this Section 2(1) unless and until the matter of Indemnitee’s entitlement toindemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined thatIndemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify foradvances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repaymentof advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than theexecution of this Agreement.  2.Notice and Cooperation by Indemnitee. Indemnitee shall promptly notify the Company in writing upon being served with anysummons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for whichindemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of,and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordancewith the provisions of Section 13(4) below. In addition, Indemnitee shall give the Company such additional information andcooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperatewith the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, except tothe extent that the Company is adversely affected by such failure. 3.Determination of Entitlement. Notwithstanding any other provision in this Agreement, no determination as to entitlement toindemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding. Subject to theforegoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, tothe extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth inSection 145 of the General Corporation Law of Delaware. The Company shall pay any claims made under this Agreement, under anystatute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancementof Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claimis not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against theCompany in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shallalso be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. Itshall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(1))that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnifyIndemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person orpersons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and theCompany shall have the burden of proof and the burden of persuasion to overcome that presumption with clear and convincingevidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner whichIndemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding,that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that ifthe Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the courtto decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board ofDirectors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actualdetermination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independentlegal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption thatIndemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement toindemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisitedetermination that Indemnitee’s entitlement to indemnification shall be deemed to have been made.  4.Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’srequest (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amountsufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses. 5.Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(2) hereof, the Company has director andofficer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actionto cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the termsof such policies. 6.Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(1) hereof to advanceExpenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, withcounsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not beliable to Indemnitee under this Agreement for any fees of separate and supplemental counsel subsequently incurred by Indemnitee withrespect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company,(B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in theconduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding,then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, butnot an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred byIndemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’sdefense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to beExpenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether suchconflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Companyshall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend ifthe Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required toobtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (i)does not grant Indemnitee a complete release of liability, (ii) would impose any penalty or limitation on Indemnitee, or (iii) wouldadmit any liability or misconduct by Indemnitee.  7.Independent Counsel Under Section 145. If the determination of entitlement to indemnification is to be made by Independent Counselpursuant to Section 145(d) of the General Corporation Law of the State of Delaware, the Independent Counsel shall be selected asprovided in this Section 2(7). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after suchwritten notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, thatsuch objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of“Independent Counsel” as defined below, and the objection shall set forth with particularity the factual basis of such assertion. Absent aproper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request forindemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petitionthe Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall havebeen made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counselof a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objectionsare so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees andexpenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 145(d) of theGeneral Corporation Law of the State of Delaware, and the Company shall pay all reasonable fees and expenses incident to theprocedures herein, regardless of the manner in which such Independent Counsel was selected or appointed  3.Additional Indemnification Rights. 1.Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullestextent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the dateof this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of itsboard of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’sobligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of aDelaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required bysuch law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligationshereunder. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted underthe General Corporation Law of Delaware and public policy of the State of Delaware. 2.Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemniteemay be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterestedmembers of the Company’s Board of Directors, the General Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’sofficial capacity and as to action in another capacity while holding such office. 3.Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90)days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company toIndemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the periodcommencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement andending with the date on which such payment is made to Indemnitee by the Company. 4.Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rightsto indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-PartyIndemnitors”). The Company hereby agrees that it will not assert that the Indemnitee must seek expense advancement orreimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement andreimbursement, and indemnification obligations, under this Agreement.  4.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, butnot, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,fines and amounts paid in settlement to which Indemnitee is entitled. 5.Director and Officer Liability Insurance. 1.D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for theCompany to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors andofficers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnificationobligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurancecoverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall benamed as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorablyinsured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of theCompany but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determinesin good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amountof coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or ifIndemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company. 2.Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership orentering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies thenmaintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) inrespect of Indemnitee, for a period of six years thereafter. 6.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act inviolation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreementthat shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.  7.Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement: 1.Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or broughtvoluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret aright to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the GeneralCorporation Law of Delaware, but such indemnification or advancement of Expenses may be provided by the Company in specificcases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of thissubsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary oradvisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party; 2.Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by aninsurance carrier under an insurance policy maintained by the Company; or 3.Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accountingof profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning ofSection 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii)any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of anyprofits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (includingany such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Actof 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee ofsecurities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicablelaw and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually andreasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject toindemnification hereunder. 8.Contribution Claims. 1.If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason otherthan those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would beif joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shallpay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid insettlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company herebywaives and relinquishes any right of contribution it may have at any time against Indemnitee. The Company shall not enter into anysettlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.  2.Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason,Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completedaction, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit orproceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually andreasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in suchaction, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessaryto conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of theCompany other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on theone hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments,fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. Therelative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable withIndemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall bedetermined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit oradvantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 3.With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to thefullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may bebrought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable withIndemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceedinghad been brought against Indemnitee.  4.Without diminishing or impairing the obligations of the Company set forth elsewhere herein (including Sections 8(1) and 8(2) above),to the fullest extent permissible under applicable law, if the indemnification or contribution rights provided for elsewhere in thisAgreement are unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contributeto the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlementand/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as isdeemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received bythe Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relativefault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/ortransaction(s). 9.No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Companyitself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement. 10.Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith ifIndemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied toIndemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board ofDirectors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or recordsgiven or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensationconsultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemniteemay be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall inany event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or notopposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden ofpersuasion by clear and convincing evidence. 11.Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings: 1.“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Actas in effect on the date hereof.  2.“Change of Control” shall be deemed to occur upon the earliest of any of the following events: 1.Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of theCompany representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstandingsecurities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of theCompany’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securitiesentitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the ContinuingDirectors and such acquisition would not constitute a Change of Control under part (3) of this definition. 2.Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors(the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholderswas approved by a vote of at least two thirds of the directors then still in office who were directors on the date of thisAgreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members ofthe Board. 3.Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the thenoutstanding securities of the Company entitled to vote generally in the election of directors resulting from such BusinessCombination (including a corporation which as a result of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors andwith the power to elect at least a majority of the Board or other governing body of the surviving entity; (ii) no Person(excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15%or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directorsof such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least amajority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors atthe time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such BusinessCombination.  4.Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or seriesof agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other thanfactoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board toproceed with such a liquidation, sale or disposition in one transaction or a series of related transactions). 5.Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under theExchange Act whether or not the Company is then subject to such reporting requirement. 3.“Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of aconstituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authorityto indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of suchconstituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner,managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under theprovisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to suchconstituent corporation if its separate existence had continued. 4.“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Enterprise or ofany other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at theexpress written request of the Company 5.“Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director,officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent. 6.“Exchange Act” means the Securities Exchange Act of 1934, as amended.  7.“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ feesand costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators andprofessional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state,local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement(including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to theimposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligationsor expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be awitness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expensesincurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costsrelating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessmentor other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses,however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 8.“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neitherpresently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to eithersuch party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similarindemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards ofprofessional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action todetermine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counselreferred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto 9.“Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided,however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) anyemployee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporationowned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of theCompany (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.  10.“Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolutionmechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought bya third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Companyor otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative orinvestigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as aparty, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee oragent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’spart while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving atthe request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee,fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability orexpense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement. 11.In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture,trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee withrespect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director,officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employeebenefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed tobe in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in amanner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shallmean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses inthis Agreement unless otherwise specified. 12.Attorneys’ Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the termshereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with suchProceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for suchProceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under thisAgreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actuallyand reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action weremade in bad faith or were frivolous.  13.Miscellaneous. 1.Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shallbe governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arisingout of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “DelawareCourt”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent tosubmit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection withthis Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive,and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in animproper or inconvenient forum. 2.Binding Effect; Survival. Without limiting the provisions of Section 3, this Agreement shall be deemed supplemental to anyindemnification rights granted to Indemnitee, and shall not be deemed to abrogate or limit, or be abrogated or limited by, any othersuch rights. The indemnification provided under this Agreement applies with respect to events occurring before or after the effectivedate of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company or the Enterprise in any andall indemnified capacities. 3.Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under thisAgreement shall not be construed as a waiver of any rights of such party. 4.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to timeprovide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust orother collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent ofthe Indemnitee. 5.Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemedsufficient when delivered personally or sent by fax or 48 hours after being sent by nationally-recognized courier or deposited in the U.S.mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or fax numberas set forth below or as subsequently modified by written notice.  6.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one instrument. 7.Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirectsuccessor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) andassigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. TheCompany shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee,expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform if no such succession had taken place. 8.No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment. 9.Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcingor interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid,binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and isprecluded from making any assertion to the contrary. 10.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all ofthe rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure suchrights and to enable the Company to effectively bring suit to enforce such rights.  The parties have executed this Agreement as of the date first set forth above. Asta Funding, Inc. By: /s/ Seth Berman Seth BermanChief Compliance Officer, General Counsel and Secretary Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Fax: (201) 683-5612 /s/ Ricky Stern Ricky SternSenior Vice President Address: 210 Sylvan Ave.Englewood Cliffs, New Jersey 07632 Exhibit 16.1 October 12, 2018 Securities and Exchange CommissionOffice of the Chief Accountant100 F Street, NEWashington, D.C. 20549 Re:Asta Funding, Inc.Commission File Number 001-35637 Dear Sir or Madam: We have read the statements included in the Form 10-K dated October 12, 2018, of Asta Funding, Inc. to be filed with the Securities and ExchangeCommission and are in agreement with the statements contained in Item 9 insofar as they relate to our Firm. Very truly yours, /s/ Mazars USA LLPMazars USA LLPEdison, NJ Exhibit 21.1 Subsidiary Companies Name JurisdictionUnderWhich Organized PercentageOwned Asta Funding, Inc. Delaware Asta Funding Acquisition I, LLC Delaware 100%Asta Funding Acquisition II, LLC Delaware 100%Asta Commercial, LLC Delaware 100%Asta Funding.com, LLC Delaware 100%Palisades Acquisition I, LLC Delaware 100%Palisades Acquisition II, LLC Delaware 100%Palisades Acquisition IV, LLC Delaware 100%CBC Settlement Funding, LLC Delaware 100%Computer Finance, LLC Delaware 100%Palisades Collection, LLC Delaware 100%Palisades Acquisition VIII, LLC Delaware 100%Option Card, LLC Colorado 100%Palisades Acquisition IX, LLC Delaware 100%VATIV Recovery Solutions LLC Texas 100%Palisades Acquisition X, LLC Delaware 100%Cliffs Portfolio Acquisition I, LLC Delaware 100%Sylvan Acquisition I, LLC Delaware 100%Palisades Acquisition XI LLC Delaware 100%Palisades Acquisition XII LLC Delaware 100%Palisades Acquisition XIII LLC Delaware 100%Palisades Acquisition XIV LLC Delaware 100%Palisades Acquisition XV LLC Delaware 100%Palisades Acquisition XVI LLC Delaware 100%Palisades Acquisition XVII LLC Delaware 100%Palisades Acquisition XVIII LLC Delaware 100%LBLINY, LLC Delaware 100%Prestiga Funding, LLC Delaware 100%ASFI Litigation Holdings LLC Delaware 100%ASFI Pegasus Holdings, LLC Delaware 100%Pegasus Funding, LLC Delaware 80%GAR Disability Advocates, LLC Delaware 100%EMIRIC LLC Delaware 100%Snappy Rent, LLC Delaware 100%Palisades Acquisition XIX, LLC Delaware 100%Palisades Acquisition XXII, LLC Delaware 100%Palisades Acquisition XXIII, LLC Delaware 100%Palisades XXIV SpA Delaware 100%Simia Capital, LLC Delaware 100%Blue Bell Receivables I, LLC Delaware 100%Blue Bell Receivables II, LLC Delaware 100%Blue Bell Receivables III, LLC Delaware 100%Blue Bell Receivables IV, LLC Delaware 100%Blue Bell Receivables V, LLC Delaware 100%Blue Bell Receivables VI, LLC Delaware 100%Five Star Veterans Disability, LLC Delaware 100% Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements of Asta Funding, Inc. on Form S-8 (Nos. 333-185175, 333-142201, 333-99911, and 333-38836) of our report dated October 12, 2018, on our audit of the consolidated financial statements as of September 30, 2017 and for theyear then ended, which report is included in this Annual Report on Form 10-K to be filed on or about October 12, 2018. /s/ EisnerAmper LLP Iselin, New JerseyOctober 12, 2018 Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (File No. 333-185175, File No. 333-142201, File No.333-99911 and File No. 333-38836) of our report dated September 17, 2018 on the consolidated financial statements of Asta Funding, Inc. andsubsidiaries as of September 30, 2016 and for the year then ended, which appears in the Annual Report on Form 10-K of Asta Funding, Inc. for the yearended September 30, 2017. /s/ Mazars USA LLP Edison, New Jersey October 12, 2018 Exhibit 31.1 CERTIFICATION I, Gary Stern, certify that: 1. I have reviewed this annual report on Form 10-K of Asta Funding, Inc.: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. /s/ Gary SternGary SternChairman of the Board, President and Chief Executive Officer(Principal Executive Officer) Date: October 12, 2018 A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff per request. Exhibit 31.2 CERTIFICATION I, Bruce R. Foster, certify that: 1. I have reviewed this annual report on Form 10-K of Asta Funding, Inc.: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrantand have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. /s/ Bruce R. FosterBruce R. FosterChief Financial Officer(Principal Financial Officer and Principal Accounting Officer) Date: October 12, 2018 A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff per request. EXHIBIT 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Asta Funding, Inc. (the “Company”) on Form 10-K for the year ended September 30, 2017 as filed with theSecurities and Exchange Commission (the “Report”), I, Gary Stern, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the company as ofthe dates presented and the consolidated result of operations of the Company for the periods presented. /s/ Gary SternGary SternPresident and Chief Executive Officer(Principal Executive Officer)Dated: October 12, 2018 This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the 10-K as aseparate disclosure statement. EXHIBIT 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Asta Funding, Inc. (the “Company”) on Form 10-K for the year ended September 30, 2017 as filed with theSecurities and Exchange Commission (the “Report”), I, Bruce R. Foster, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company asof the dates presented and the consolidated result of operations of the Company for the periods presented. /s/ Bruce R. FosterBruce R. FosterChief Financial Officer(Principal Financial Officer and PrincipalAccounting Officer) Dated: October 12, 2018 This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the 10-K as aseparate disclosure statement. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff per request.

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