ASTA FUNDING INC

Simultaneously with the signing of the amended Merger Agreement, the Company also entered into a Settlement and Voting agreement with RBF Capital, LLC, a stockholder of the Company. Pursuant to the terms of the Settlement and Voting Agreement, RBF Capital, LLC has, among other things, agreed to vote the shares of Common Stock of the Company beneficially owned by RBF Capital, LLC, or that may become beneficially owned by it during the term of the Settlement and Voting Agreement, in favor of adopting the amended Merger Agreement, dated June 25, 2020, and any other matters necessary for consummation of the Merger (as defined in the Settlement and Voting Agreement) and the other transactions contemplated by the amended Merger Agreement.

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

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

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

On June 9, 2020, a newly formed subsidiary of the Company entered into an agreement with a third party pursuant to which it will provide funding in connection with certain consumer lease transactions. Under the agreement, when a consumer is approved for financing at a participating merchant, the Company purchases the merchandise and then leases it to the consumer pursuant to a consumer lease agreement. The Company agreed to fund a maximum of $300,000 in total transactions, over a three-month period beginning with the date of the third party agreement. The Company did not make any funding payments during the month of June 2020.