UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

   

                              

 

 

FORM 8-K

 

                            

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 9, 2017

 

                            

 

 

ASTA FUNDING, INC.

(Exact name of registrant as specified in its charter)

 

   

                            

 

 

Delaware

001-35637

22-3388607

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

210 Sylvan Avenue, Englewood Cliffs, New Jersey

07632

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: 201-567-5648

(Former name or former address, if changed since last report.)

 

                            

   

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

   

 
 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On August 9, 2017 Asta Funding, Inc. issued a press release announcing its financial results for the third quarter of the fiscal year ended September 30, 2017, the quarterly period ended June 30, 2017. A copy of the press release, including financial information released as a part thereof, is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in this Item 2.02 of this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section. The information in this Item 2.02 of this Current Report, including Exhibit 99.1, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01 Exhibits

 

(d) Exhibits. The following exhibit is furnished with this Current Report on Form 8-K:

 

 

 

 

No. 

  

Description       

 

 

99.1

  

Press Release dated August 9, 2017, announcing financial results for the third quarter of Fiscal Year 2017

 

 
 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

ASTA FUNDING, INC.

 

 

 

Date: August 9, 2017

 

By:

 

/s/ Bruce R. Foster                                   

 

 

 

 

Bruce R. Foster

 

 

 

 

Chief Financial Officer

    

Exhibit 99.1

 

Investor Contact:

 

Bruce R. Foster, CFO    

Asta Funding, Inc.    

(201) 567-5648    

 

 

 Asta Funding Announces Results for

The Third Quarter Ended June 30, 2017

 

 

 

$14.9 million in total revenue and $1.8 million in net income attributed to Asta Funding for the quarter ended June 30, 2017

 

$0.27 earnings per diluted share for the quarter ended June 30, 2017

 

$121.9 million in stockholders' equity with a book value per share of $18.00 at June 30, 2017 

 

$89 million investment in Structured Settlements and $27.5 million in Personal Injury Claims

 

 ENGLEWOOD CLIFFS, N.J., August 9, 2017 – Asta Funding, Inc. (NASDAQ: ASFI) (the “Company”), a diversified financial services company, today announced results for the third quarter ended June 30, 2017.

 

"Our third quarter results are beginning to reflect the investments we’ve made and continue to make in our business. I am pleased with this quarter's results, and look forward to continuing to execute on our strategic plan. I remain keenly focused on sustainable growth and value creation for our shareholders ," said Gary M. Stern, Chairman and Chief Executive Officer.

 

Mr. Stern continued, “We are confident our strategic investments will continue to provide long-term growth and will best-position the Company for continued success."

 

Fiscal Third Quarter 201 7 Results

  

For the three months ended June 30, 2017, net income attributable to Asta Funding, Inc. was $1.8 million, or $0.27 per diluted share, as compared to net income attributable to Asta Funding, Inc. of $3.2 million, or $0.26 per diluted share for the three months ended June 30, 2016.

  

For the three months ended June 30, 2017, net income was $2.6 million as compared to net income of $4.7 million for the three months ended June 30, 2016.

  

Total income for the three months ended June 30, 2017 decreased $4.1 million to $14.9 million, compared to $19.0 million for the three months ended June 30, 2016. Total revenue included in the three months ended June 30, 2017 is approximately $4.1 million in revenue from CBC Settlement Funding, LLC on structured settlements, as compared to $3.2 million for the three months ended June 30, 2016. Also included in total revenues for the three months ended June 30, 2017 is approximately $5.6 million from the personal injury claims segment, as compared to $9.8 million for the three months ended June 30, 2016. Disability fee income for the three months ended June 30, 2017, was down by $0.1 million to $1.1 million as compared to $1.2 million for the three months ended June 30, 2016.

  

Finance income from the distressed receivable business was down by approximately $0.6 million to $4.0 million for the three months ended June 30, 2017, as compared to $4.6 million for the three months ended June 30, 2016.

 

General and administrative expenses were $9.3 million for the three months ended June 30, 2017, as compared to $10.6 million for the three months ended June 30, 2016. The decrease for the three months ended June 30, 2017 was primarily attributable to a reduction in the Disability segment expenses related to advertising and payroll costs.

  

Interest expense was $1.1 million for the three months ended June 30, 2017 as compared to $0.8 million for the three months ended June 30, 2016.

 

 
 

 

   

Year-to-Date Results

  

For the nine months ended June 30, 2017, net loss attributable to Asta Funding, Inc. was $(5.4) million, or $(0.57) per diluted share, as compared to net income attributable to Asta Funding, Inc. of $3.2 million, or $0.26 per diluted share for the nine months ended June 30, 2016.

  

For the nine months ended June 30, 2017, net loss was $(4.7) million as compared to net income of $5.3 million for the nine months ended June 30, 2016.

  

Total income for the nine months ended June 30, 2017 was $31.6 million, as compared to $42.3 million for the nine months ended June 30, 2016. Total revenue included for the nine months ended June 30, 2017 is approximately $5.6 million in revenue from CBC Settlement Funding, LLC on structured settlements, as compared to $9.1 million for the nine months ended June 30, 2016. Also included in total revenues for the nine months ended June 30, 2017 is approximately $10.0 million from the personal injury claims segment, as compared to $14.8 million for the nine months ended June 30, 2016. Disability fee income for the nine months ended June 30, 2017 was up by $1.3 million to $4.0 million, as compared to $2.7 million for the nine months ended June 30, 2016.

  

Finance income from the distressed receivable business was down by approximately $2.7 million to $12.0 million for the nine months ended June 30, 2017 from $14.7 million for the nine months ended June 30, 2016.

 

General and administrative expenses were $36.3 million for the nine months ended June 30, 2017, as compared to $32.0 million for the nine months ended June 30, 2016. The increase for the nine months ended June 30, 2017 was primarily attributable to increase in professional fees of $2.5 million, primarily related to the Mangrove matter, increase in bad debt expense of $3.5 million, and a loss on investment of $3.4 million, partially offset by the reduction in litigation settlement costs of $2.1 million, and advertising and payroll costs in the Disability segment of $2.7 million.

  

Interest expense was $3.0 million for the nine months ended June 30, 2017, as compared to $2.3 million for the nine months ended June 30, 2016. The increase in interest expense is a result of the additional CBC debt incurred during the period to expand the investment in structured settlements and the interest related to the Bank Hapoalim line of credit.

 

Balance Sheet Review

 

As of June 30, 2017 the Company had approximately $22.1 million in cash and cash equivalents and available for sale investments, approximately $121.9 million in stockholders' equity, and a net book value per share of $18.00. At June 30, 2017, the Company had an invested balance of $89 million in structured settlements and $27.5 million in personal injury claims.

 

 
 

 

 

Investor Call Information

 

A conference call for investors to hear and discuss results for the third quarter ended June 30, 2017 will be held on Wednesday, August 9, 2017 at 9:30 am EDT.

 

Toll-free dial-in number (U.S. and Canada):
(844) 281-7827

International dial-in number:

(478) 219-0008

 

Conference ID #:

67315513

 

Phone Replay:

Toll-Free #: (800) 585-8367

Toll #: (404) 537-3406

Conference ID #: 67315513

Recording will be available for replay two hours after the call's completion through 11:59 pm, EDT on August 15, 2017.

 

 

About Asta

 

Asta Funding, Inc. (NASDAQ:ASFI), headquartered in Englewood Cliffs, New Jersey, is a diversified financial services company that assists consumers and serves investors through the strategic management of four complementary business segments: Personal Injury Claims, Structured Settlements, Consumer Debt and Disability Advocacy.

  

Founded in 1994 as a sub-prime auto lender, Asta now manages business units that include funding of personal injury claims through its 80 percent owned subsidiary, Pegasus Funding LLC, and starting on January 2, 2017, through its wholly owned subsidiary, Simia Capital, LLC; structured settlements through its wholly owned subsidiary, CBC Settlement Funding LLC; acquiring and managing international distressed consumer receivables through its wholly owned subsidiary, Palisades Acquisitions LLC; and benefits advocacy through its wholly owned subsidiary, GAR Disability Advocates, LLC. For additional information, please visit our website at http://www.astafunding.com. 

  

 

Forward-Looking Statements

 

All statements in this news release other than statements of historical facts, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 thereon, or similar terminology or expressions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors which could materially affect our results and our future performance include, without limitation, our ability to purchase defaulted consumer receivables at appropriate prices, changes in government regulations that affect our ability to collect sufficient amounts on our defaulted consumer receivables, our ability to employ and retain qualified employees, changes in the credit or capital markets, changes in interest rates, deterioration in economic conditions, negative press regarding the debt collection industry which may have a negative impact on a debtor's willingness to pay the debt we acquire, and statements of assumption underlying any of the foregoing, as well as other factors set forth under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2016 and other filings with the Securities and Exchange Commission . All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise any forward-looking statements.

 

 
 

 

   

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

( rounded to the nearest thousands, except share data)

 

 

   

(Unaudited)

         
   

June 30,
2017

   

September 30,
2016

 

ASSETS

               

Cash and cash equivalents

  $ 16,570,000     $ 18,526,000  

Restricted cash

    35,248,000        

Available for sale investments (at fair value)

    5,500,000       56,764,000  

Consumer receivables acquired for liquidation (at net realizable value)

    9,118,000       13,671,000  

Structured settlements (at fair value)

    89,045,000       85,708,000  

Investment in personal injury claims

    27,538,000       48,289,000  

Other investments, net

          3,590,000  

Due from third party collection agencies and attorneys

    1,367,000       1,005,000  

Prepaid and income taxes receivable

    4,836,000       880,000  

Furniture and equipment, net

    178,000       243,000  

Deferred income taxes

    18,940,000       15,530,000  

Goodwill

    2,770,000       2,770,000  

Other assets

    5,102,000       8,423,000  
                 

Total assets

  $ 216,212,000     $ 255,399,000  
                 

LIABILITIES

               

Line of credit

  $ 9,600,000     $  

Other debt – CBC (including non-recourse notes payable of $72.1 million at June 30, 2017 and $57.3 million at September 30, 2016)

    76,435,000       67,435,000  

Other liabilities

    8,272,000       5,974,000  

Income taxes payable

          252,000  
                 

Total liabilities

    94,307,000       73,661,000  
                 

Commitments and contingencies

               

STOCKHOLDERS’ EQUITY

               

Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none

           

Preferred Stock, Series A Junior Participating, $.01 par value; authorized 30,000 shares; issued and outstanding — none

           

Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,398,108 at June 30, 2017 and 13,336,508 at September 30, 2016; and outstanding 6,623,815 at June 30, 2017 and 11,876,224 at September 30, 2016

    134,000       133,000  

Additional paid-in capital

    67,467,000       67,026,000  

Retained earnings

    122,669,000       128,063,000  

Accumulated other comprehensive income (loss)

    (968,000

)

    86,000  

Treasury stock (at cost) 6,774,293 shares at June 30, 2017 and 1,460,284 shares at September 30, 2016

    (67,128,000

)

    (12,925,000

)

Non-controlling interest

    (269,000

)

    (645,000

)

                 

Total stockholders’ equity

    121,905,000       181,738,000  
                 

Total liabilities and stockholders’ equity

  $ 216,212,000     $ 255,399,000  

 

 
 

 

 

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

( rounded to the nearest thousands, except share data)

 

   

Three

Months

   

Three

Months

   

Nine

Months

   

Nine

Months

 
   

Ended

   

Ended

   

Ended

   

Ended

 
   

June 30, 2017

   

June 30, 2016

   

June 30, 2017

   

June 30, 2016

 

Revenues:

                               

Finance income, net

  $ 3,980,000     $ 4,612,000     $ 11,999,000     $ 14,668,000  

Personal injury claims income

    5,569,000       9,838,000       10,017,000       14,769,000  

Unrealized gain on structured settlements

    7,531,000       1,422,000       5,238,000       4,586,000  

Interest income on structured settlements

    1,923,000       1,765,000       5,765,000       4,473,000  

Loss on sale of structured settlements

    (5,353,000

)

          (5,353,000

)

     

Disability fee income

    1,134,000       1,169,000       3,990,000       2,700,000  

Total revenues

    14,784,000       18,806,000       31,656,000       41,196,000  

Other income (loss) - includes ($18,000) and ($32,000) during the three month periods ended June 30, 2017 and 2016, and ($1,011,000) and ($63,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive loss reclassification for securities sold

    98,000       215,000       (31,000

)

    1,108,000  
      14,882,000       19,021,000       31,625,000       42,304,000  

Expenses:

                               

General and administrative

    9,349,000       10,591,000       36,327,000       32,039,000  

Interest

    1,123,000       832,000       3,039,000       2,348,000  

Impairment of consumer receivables

    148,000             148,000       124,000  
      10,620,000       11,423,000       39,514,000       34,511,000  

Income (loss) before income tax

    4,262,000       7,598,000       (7,889,000

)

    7,793,000  

Income tax (benefit)/expense - includes tax expense/(benefit) of $7,000 and ($13,000) during the three month periods ended June 30, 2017 and 2016 and $404,000 and ($24,000) during the nine month periods ended June 30, 2017 and 2016, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities

    1,700,000       2,853,000       (3,237,000

)

    2,461,000  

Net income (loss)

    2,562,000       4,745,000       (4,652,000

)

    5,332,000  

Less: net income attributable to non-controlling interests

    730,000       1,549,000       742,000       2,161,000  

Net income (loss) attributable to Asta Funding, Inc.

  $ 1,832,000     $ 3,196,000     $ (5,394,000

)

  $ 3,171,000  

Net income (loss) per share attributable to Asta Funding, Inc.:

                               

Basic

  $ 0.28     $ 0.27     $ (0.57

)

  $ 0.26  

Diluted

  $ 0.27     $ 0.26     $ (0.57

)

  $ 0.26  

Weighted average number of common shares outstanding:

                               

Basic

    6,577,784       11,897,139       9,389,864       12,023,156  

Diluted

    6,879,082       12,433,424       9,389,864       12,294,073