Stock Option Plans

12 Months Ended

Sep. 30, 2011

Stock Option Plans [Abstract]

STOCK OPTION PLANS

NOTE J — STOCK OPTION PLANS

Equity Compensation Plan

On December 1, 2005, the board of directors adopted the Company’s Equity Compensation Plan (the “Equity Compensation Plan”), which was approved by the stockholders of the Company on March 1, 2006. The Equity Compensation Plan was adopted to supplement the Company’s existing 2002 Stock Option Plan. In addition to permitting the grant of stock options as are permitted under the 2002 Stock Option Plan, the Equity Compensation Plan allows the Company flexibility with respect to equity awards by also providing for grants of stock awards (i.e. restricted or unrestricted), stock purchase rights and stock appreciation rights.

The general purpose of the Equity Compensation Plan is to provide an incentive to the Company’s employees, directors and consultants, including executive officers, employees and consultants of any subsidiaries, by enabling them to share in the future growth of the business.

The Company has 1,000,000 shares of Common Stock authorized for issuance under the Equity Compensation Plan and 495,569 were available as of September 30, 2011. As of September 30, 2011, approximately 87 of the Company’s employees were eligible to participate in the Equity Compensation Plan. Future grants under the Equity Compensation Plan have not yet been determined.

2002 Stock Option Plan

On March 5, 2002, the board of directors adopted the Asta Funding, Inc. 2002 Stock Option Plan (the “2002 Plan”), which plan was approved by the Company’s stockholders on May 1, 2002. The 2002 Plan was adopted in order to attract and retain qualified directors, officers and employees of, and consultants to, the Company. The following description does not purport to be complete and is qualified in its entirety by reference to the full text of the 2002 Plan, which is included as an exhibit to the Company’s reports filed with the SEC.

The 2002 Plan authorizes the granting of incentive stock options (as defined in Section 422 of the Code) and non-qualified stock options to eligible employees of the Company, including officers and directors of the Company (whether or not employees) and consultants of the Company.

The Company has 1,000,000 shares of Common Stock authorized for issuance under the 2002 Plan and 134,634 were available as of September 30, 2011. As of September 30, 2011, approximately 87 of the Company’s employees were eligible to participate in the 2002 Plan.

In June 2011, the Compensation Committee of the board of directors of the Company (the “Compensation Committee”) granted 50,000 stock options to a consultant. The exercise price of these options was above the market price on the date of the grant. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.09	%
Expected term (years)	10.0
Expected volatility	105.4	%
Dividend yield	0.95	%

In March 2011, the Compensation Committee granted 10,000 stock options to an employee. The exercise price of these options was at the market price on the date of the grant. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.10	%
Expected term (years)	10.0
Expected volatility	106.2	%
Dividend yield	0.94	%

In December 2010, the Compensation Committee granted 324,800 stock options, of which 30,000 options were issued to each non-employee independent director for a total of 150,000 stock options. 60,000 stock options were awarded to the Chief Executive Officer and 30,000 stock options were awarded to the Chief Financial Officer and the Senior Vice President. The remaining 54,800 stock options were granted to full time employees of the Company, who had been employed at the Company for at least six months prior to the date of grant. The grants to employees excluded officers of the Company. The exercise price of these options was at the market price on the date of the grant. The exercise price of all stock options was at the market price on the date of the grant. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.17	%
Expected term (years)	10.0
Expected volatility	106.9	%
Dividend yield	0.98	%

Additionally, in December 2010, the Compensation Committee issued 32,765 shares of restricted stock to the Chief Executive Officer.

In December 2009, the Compensation Committee granted 25,000 stock options to each director of the Company other than the Chief Executive Officer, for a total of 150,000 options, and 8,900 stock options to full time employees of the Company who had been employed at the Company for at least six months prior to the date of grant. The grants to employees excluded officers of the Company. The exercise price of these options was at the market price on the date of the grant. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.17	%
Expected term (years)	10.0
Expected volatility	110.2	%
Dividend yield	1.12	%

1995 Stock Option Plan

The 1995 Stock Option Plan expired on September 14, 2005. The plan was adopted in order to attract and retain qualified directors, officers and employees of, and consultants to the Company. The following description does not purport to be complete and is qualified in its entirety by reference to the full text of the 1995 Stock Option Plan, which is included as an exhibit to the Company’s reports filed with the SEC.

The 1995 Stock Option 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 not employees) and consultants to the Company.

The Company authorized 1,840,000 shares of Common Stock for issuance under the 1995 Stock Option Plan. All but 96,002 shares were utilized. As of September 14, 2005, no more options could be issued under this plan.

The following table summarizes stock option transactions under the plans:

	Year Ended September 30,
	2011					2010					2009
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding options at the beginning of year		922,039		$	12.70		1,157,905		$	10.76		1,037,438		$	11.69
Options granted		384,800			7.53		158,900			8.07		122,000			2.95
Options cancelled		(6,300	)		6.07		(66,700	)		17.48		(1,000	)		28.75
Options exercised		(6,268	)		3.35		(328,066	)		2.65		(533	)		2.95
Outstanding options at the end of year		1,294,271		$	11.41		922,039		$	12.70		1,157,905		$	10.76
Exercisable options at the end of year		992,607		$	12.41		792,377		$	13.65		1,081,912		$	11.31

The Company recognized $1,906,000 of compensation expense related to stock options in the fiscal year ended September 30, 2011. As of September 30, 2011, there was $1,176,000 of unrecognized compensation cost related to unvested stock options. The Company recognized $807,000 and $164,000 of stock based compensation expense related to stock option grants in fiscal year 2010 and 2009, respectively.

The intrinsic value of the options exercised during fiscal year 2010 was approximately $30,000. The intrinsic value of options exercised during the fiscal year ended September 30, 2010 was $1.3 million and there was no intrinsic value for the options exercised in 2009. There was no intrinsic value of the outstanding and exercisable options as of September 30, 2011, 2010 and 2009.

The following table summarizes information about the plans’ outstanding options as of September 30, 2011:

	Options Outstanding						Options Exercisable
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$  2.8751 - $  5.7500		189,600		3.9	$	3.95		189,600	$	3.95
$  5.7501 - $  8.6250		501,400		8.7		7.71		233,069		7.72
$  8.6251 - $14.3750		50,000		9.7		11.50		16,667		11.50
$14.3751 - $17.2500		198,611		2.1		14.88		198,611		14.88
$17.2501 - $20.1250		339,660		3.1		18.23		339,660		18.23
$25.8751 - $28.7500		15,000		5.2		28.75		15,000		28.75
		1,294,271		5.5	$	11.41		992,607	$	12.41

The following table summarizes information about restricted stock transactions:

	Year Ended September 30, 2011 Shares			Weighted Average Grant Date Fair Value		Year Ended September 30, 2010 Shares			Weighted Average Grant Date Fair Value
Unvested at the beginning of period		17,669		$	19.73		35,338		$	19.73
Awards granted		32,765			7.63		—			0.00
Vested		(28,591	)		15.11		(17,669	)		19.73
Forfeited		—			0.00		—			0.00
Unvested at the end of period		21,843		$	7.63		17,669		$	19.73

The Company recognized $149,000, $382,000 and $820,000 of compensation expense during the fiscal years ended September 30, 2011, 2010 and 2009, respectively, for restricted stock. As of September 30, 2011, there was $101,000 of unrecognized compensation cost related to unvested restricted stock.

The Company recognized a total of $2,055,000, $1,189,000 and $984,000 in compensation expense for the fiscal years ended September 30, 2011, 2010 and 2009, respectively, for the stock options and restricted stock grants. As of September 30, 2011, there was a total of $1,277,000 of unrecognized compensation cost related to unvested stock options and restricted stock grants. The method used to calculate stock based compensation is the straight line pro-rated method.