SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended: Commission file number
June 30, 1996 0-19485
ADVANCED FINANCIAL, INC.
(Name of small business issuer in its charter)
DELAWARE 84-1069416
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5425 Martindale, Shawnee, KS 66218
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (913) 441-2466
-----------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of July 15, 1996: 4,255,476
<PAGE>
Advanced Financial, Inc.
PART I - FINANCIAL INFORMATION
ITEM 1.
Page - 2
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<TABLE>
<CAPTION>
ADVANCED FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 1996 and March 31, 1996
Assets
------
June 30, 1996 March 31, 1996
------------- --------------
(unaudited)
<S> <C> <C>
Cash and investments $ -- 585,643
Mortgage servicing advances and accounts receivable 530,826 520,620
Property and equipment, net 1,645,012 1,718,355
Mortgage loans held for sale 13,708,717 10,110,747
Mortgage loans held for investment 87,324 94,932
Purchased mortgage servicing rights, net 2,022,119 2,440,280
Excess of cost over fair value of assets acquired, net 512,120 524,798
Prepaid expenses 150,975 191,442
Deferred income taxes 440,000 440,000
Other investment 221,542 235,800
Receivable from related party 65,000 190,000
Other 297,267 260,899
---------- ----------
Total assets $ 19,680,902 17,313,516
============ ==========
Liabilities
-----------
Accounts payable and accrued expenses $ 2,373,071 2,507,103
Checks outstanding in excess of bank balance 194,537 -
Settlement liabilities on purchased mortgage
Notes payable 16,338,905 13,412,419
Capitalized lease obligations 358,190 415,665
------------ ----------
Total liabilities $ 19,264,703 16,335,187
------------ ----------
Stockholders' Equity
--------------------
Preferred stock, Series B, $.005 par value.
10,000,000 shares authorized; 372,000
shares issued and outstanding 1,860 1,860
Common stock, $.001 par value. 25,000,000
shares authorized; 4,125,476 shares issued
and outstanding 4,256 4,256
Paid-in capital 8,877,493 8,877,493
Deficit (8,026,065) (7,463,935)
---------- ----------
857,544 1,419,674
Treasury stock, 99,869 shares of common
stock at cost (441,345) (441,345)
----------- ----------
Total stockholders' equity 416,199 978,329
----------- ----------
Total liability and stockholders' equity $ 19,680,902 17,313,516
============ ==========
See accompanying notes to condensed consolidated financial statements.
Page - 3
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<TABLE>
<CAPTION>
ADVANCED FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three month periods ended
June 30, 1996 and June 30, 1995
June 3O, 1996 June 3O, 1995
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
Revenues:
Servicing fee income $ 528,960 635,451
Other fee income 183,690 236,021
Gain on sale of mortgage loans 694,112 513,968
Gain on sale of servicing rights - 99,759
Interest income 240,280 100,953
Other income 15,443 14,043
--------- ---------
Total operating revenues 1,662,485 1,600,195
--------- ---------
Expenses:
Servicing expense 139,581 313,830
Personnel 1,019,983 867,581
General and administrative 398,791 457,558
Interest expense 222,189 153,301
Depreciation and amortization 373,548 450,427
Loss on sale of servicing rights 13,482 -
Other 57,041 44,852
--------- ---------
Total operating expenses 2,224,615 2,287,549
--------- ---------
Loss before income taxes (562,130) (687,354)
Income tax (expense) benefit - -
--------- ---------
Net loss (562,130) (687,354)
======== ========
Weighted average shares outstanding 3,819,563 3,775,600
========= =========
Loss per common share:
Primary $ (0.15) (0.19)
========= =========
Fully diluted $ (0.15) (0.19)
========= =====
See accompanying notes to condensed consolidated financial statements.
Page - 4
</TABLE>
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<TABLE>
<CAPTION>
ADVANCED FINANCIAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the three month periods ended June 30, 1996 and June 30, 1995
June 30, 1996 June 30, 1995
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
Net cash (used in) provided by operating activities $ (3,864,476) (7,508,946)
Cash fows from investing activiies:
Acquisition of property and equipment 27,272 1,275
Proceeds/(Acquisition) of mortgage servicing rights 216,049 -
Sale of real estate owned - 15,512
Acquisition/Principal payments on mortgage
loans held for investment,net 7,608 3,196
------------ -----------
Net cash provided by (used in)
investing activiies 250,928 19,983
Cash flows from fnancing activities:
Notes payable, net 2,926,486 6,878,903
Checks outstanding in excess of bank balance 194,537 199,807
Payments on capitalized lease obligations (93,118) (62,843)
Payment of peferred dividends - (39,060)
------------ -----------
Net cash provided by (used in)
financing activities 3,027,905 6,976,807
Net decrease in cash (585,643) (512,156)
Cash at beginning of period 585,643 512,156
------------ -----------
Cash at end of period $ 0 0
============ ===========
Supplemental disclosures of cash flows:
Cash paid for interest $ 203,103 153,301
Cash paid for income taxes $ - -
Supplemental disclosures of noncash
financing and investing activities:
Property acquired under capital leases $ - 24,592
Receivable recognized for exercise of stock options $ 65,000 -
See accompanying notes to condensed consolidated financial statements.
Page - 5
</TABLE>
<PAGE>
ADVANCED FINANCIAL, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996 and 1995
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
The Company's financial statements include the accounts of Advanced
Financial, Inc. (the Company) and its wholly-owned subsidiary AFI
Mortgage Corp, formally Continental Mortgage, Inc. (AFI Mortgage). AFI
Mortgage is a full service mortgage banking company currently servicing
first and second mortgage loans of approximately $438,744,000 as of June
30, 1996.
The condensed consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB. To the extent that
information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or
consistent with the audited financial statements incorporated by
reference in the company's Form 10-KSB for the year ended March 31,
1996, such information and footnotes have not been duplicated herein. In
the opinion of management, all adjustments considered necessary for fair
presentation of financial statements have been reflected herein. The
March 31, 1996 condensed consolidated balance sheet has been derived
from the audited balance sheet as of that date.
Page - 6
<PAGE>
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ---------------------------------------------------------
The Company intends to continue its expansion through the implementation of
a convenient, low cost and rate competitive national network known as the
Desktop Mortgage Loan Origination System (Desktop). The Company's Desktop
installations are primarily targeted at respected residential real estate
brokerage offices. This market is targeted due to the fact that current mortgage
loan production volume is driven by real estate transactions versus refinancing
transactions. However, if the market provides for a decrease in interest rates ,
an active refinancing market will be established through not only such real
estate brokers but the placement of terminals with respected mortgage brokers.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
GENERAL
- -------
Advanced Financial, Inc. (the "Company") is a publicly traded Delaware
Corporation formed in June 1988. In July 1990 the principals of the Company
recognized an opportunity existed in the mortgage servicing industry due to the
collapse of the savings and loan industry. On March 29, 1991, the Company was
successful in acquiring Creative Financing, Inc. as a wholly owned subsidiary.
In 1992, this subsidiary changed its name to Continental Mortgage, Inc. The name
was again changed, due to expansion into additional states, to AFI Mortgage,
Corp. ("AFIM") in November 1994.
AFIM is a mortgage banking company servicing a principal balance of
approximately $439,000,000 mortgages as of June 30 1996 and originating
approximately $44.4 million in single family housing mortgages for the quarter
ended June 30, 1996. AFIM is a full service residential mortgage company and has
all approvals needed to service mortgages for the Federal National Mortgage
Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and
Government National Mortgage Association (GNMA). Due to the current size of the
servicing portfolio, the Company does not believe it is taking advantage of the
economies of scales for cost of servicing to maximize the return on its
investment in mortgage servicing rights. Also, the current price the Company is
receiving from investors for the servicing rights on originated loan production
is strong and beneficial to fund the operations of the Company. As a result, the
Company has sold approximately $240,000,000 of its current servicing portfolio
to be recorded in the second quarter of fiscal 1997, as well as future servicing
rights generated from its own originations, to reduce its outstanding debt and
related interest expense and to use any additional capital for expansion of its
origination operations.
The Company intends to continue its expansion through the implementation of a
convenient, low cost and rate competitive national network known as the Desktop
Mortgage Loan Origination System (Desktop). The Company's Desktop installations
are primarily targeted at respected residential real estate brokerage offices.
This market is targeted due to the fact that current mortgage loan production
volume is driven by real estate transactions versus refinancing transactions.
However, if the market provides for a decrease in interest rates , an active
refinancing market will be established through not only such real estate brokers
but the placement of terminals with respected mortgage brokers.
RESULTS OF OPERATIONS
- ---------------------
Quarter Ended June 30, 1996 Compared To The Quarter Ended June 30, 1995
- -----------------------------------------------------------------------
The Company had operating reven ues of $1,662,485 for the quarter ended
June 30, 1996 compared to $1,600,195 for the quarter ended June 30, 1995. Net
loss for the quarter ended June 30, 1996 was $562,130 or .15 cents per share
primary and fully diluted compared to net loss of $687,354 or .19 cents per
share primary and fully diluted for the quarter ended June 30, 1995. Primary
earnings per share for the quarter ended June 30, 1995 are calculated after
deducting , from net loss, $39,060 paid in preferred stock dividends. No
preferred stock dividends were paid in the quarter ended June 30, 1996.
The decrease in service fee income to $528,960 for the quarter ended June
30, 1996 from $635,451 for the quarter ended June 30, 1995 reflected the
decrease in the servicing portfolio to $439,000,000 at June 30, 1996 from
$512,000,000 at June 30, 1995. Also, in the first quarter of fiscal 1996, the
Company completed the sale and transfer of approximately $4.6 million in second
mortgages. A gain of $99,759 was recognized on the sale in fiscal 1996. In the
first quarter of fiscal 1997, the Company completed the sale and transfer of
approximately $20 million of Citimae loans for a slight loss of $13,482.
Page - 7
<PAGE>
At June 30, 1996, the Company entered into a puchase and sale agreement to
sell approximately $240,000,000 of the Company's outstanding servicing
portfolio. The related gain of approximately $390,00 will be recognized in the
second quarter of fiscal 1997. The actual transfer is also expected to take
place during the second quarter of fiscal 1997. The proceeds from the sale are
to be used to pay off related indebtedness. The Company continues to evaluate
the need to sell its remaining servicing portfolio.
The decrease in other fee income to $183,690 for the quarter ended June 30,
1996 from $236,021 is also the result fo the decrease in the servicing portfolio
to $439,000,000 at June 30, 1996 from $512,000,000 at June 30, 1995.
Gain on sale of mortgage loans for the quarter ended June 30, 1996 was
$694,112 compared to a gain on sale of mortgage loans of $513,968 for the
quarter ended June 30, 1995. The gain on sale of mortgages is derived through
the sale of loans originated and sold to investors, such as FNMA, FHLMC or GNMA
as well as private investors. This gain also includes all servicing released
premiums, orgination fee income and is net of all direct origination expenses.
The increase is due to the 35 (average over last 18 months) Desktop terminals
that are seasoned with time. For the quarter ended June 30, 1996, the Company
closed and funded approximately $44 million of retail loan production compared
to $21 million for the quarter ended June 30, 1995. As a result of the capital
needed to expand the Desktop product as well as other avenues for originations,
substantially all loans are being sold servicing released resulting in a premium
paid by the purchaser for these loans of approximately 1.25 percent of unpaid
principal balance. The Company expects to see continued increased gains on sale
of mortgage loans for fiscal 1997 due to the factors described above. The
Company currently has a $17 million credit facility with BankOne, Texas. The
Company also has an uncommitted credit facility with Merrill Lynch on a loan by
loan basis. These credit facilities allow the Company to fund originations of
mortgage loans as well as fund servicing advances.
The increase in interest income to $240,280 for the quarter ended June 30,
1996 from $100,953 for the quarter ended June 30, 1995 is due to increased loan
production to $44 million from $21 million, respectively. The Company also
earned interest on its excess compensating balances for the quarter ended June
30, 1996 which were previously used as an earnings credit against the bank
analysis fees.
The Company's total operating expenses for the quarter ended June 30, 1996
were $2,224,615 compared to $2,287,549 for the quarter ended June 30, 1995.
Included in the operating expenses for quarter ended June 30, 1995 is expense
relating to the State of Washington operations of $274,000. Effective October
1995, the Company sold its two Washington operations to two independent
companies.
The decrease in servicing expense to $139,581 for the quarter ended June
30, 1996 compared to $313,830 for the quarter ended June 30, 1995 is due to
reimbursement of approximately $70,000 from claims filed against errors and
ommissions insurance for penalties paid by AFIM for delinquent taxes on
servicing portfolios transferrred to the Company through purchases.
The increase in personnel to $1,019,983 for quarter ended June 30, 1996
compared to $867,581 for quarter ended June 30, 1995 is due primarily to the
personnel costs related to increased production. With increased production and
the growth of the Desktop installations anticipated by managment during fiscal
1997, a decrease in personnel costs is not anticipated.
The increase in interest expense to $222,189 for quarter ended June 30,
1996 from $153,301 for quarter ended June 30, 1995 is the result of increased
loan production to $44 million from $21 million, respectively. The Company has a
banking relationship that provides more favorable warehouse interest rates
because of compensating escrow balances from the servicing portfolio. With the
sale of a portion of the servicing portfolio, the Company will want to make sure
the mortgage loans held for sale are shipped to investors timely for funding to
ensure the benefit of the positive spread due to the remaining compensating
balances.
In connection with the acquisition of mortgage servicing rights, the
Company capitalizes the price paid for the mortgage servicing rights acquired.
The resulting asset is amortized on an accelerated basis and evaluated for
impairment on a quarterly basis. Amortization for the quarter ended June 30,
1996 was $202,112 compared to $269,341.
The Company's servicing portfolio is subject to reduction by normal
amortization, by sales of servicing rights, by prepayment or by foreclousre of
outstanding loans. The value of the Company's loan servicing portfolio my be
adversely affected if mortgage interest rates decline and loan prepayments
increase. The value is also adversely affected by unanticipated rates of
default. Conversely, as mortgage interest rates increase or as rates of deault
decrease, the value of the Company's loan servicing portfolio may be positively
affected. The weighted average interest rate on the underlying mortgage loans
being serviced by the Company at June 30, 1996 was 9.03%. The Company's PMSRs
are subject to a great degree of volatility in the event of unanticipated
prepayments or defaults. Prepayments or defaults in excess of those anticipated
at the time PMSRs are recorded result in decreased future net servicing income.
Such decreases in future net servicing income would result in accelerated
amortization and/or impairment of PMSRs. The Company's net earnings, future net
earnings and liquidity are adversely affected by unanticipated prepayments of
the mortgage loans underlying its PMSRs.
Page -8-
<PAGE>
The Company has a net operating loss carryforward for tax purposes of
approximately $6.2 million at June 30, 1996. No income tax benefits are
recognized for the quarter ended June 30, 1996 or 1995 since a valuation
allowance for the same amount would be required under FASB 109. In determing the
amount of the valuation allowance, management has relied on a potential
tax-planning strategy whereby an unrealized taxable gain in the Company's
purchased mortgage servicing rights portfolio could be recognized through the
sale of such servicing rights.
FINANCIAL POSITION
- ------------------
The Company has seen an increase in its total assets and a decrease in
stockholders' equity. The Company's total assets were $19,680,902 at June 30,
1996 compared to $17,313,516 at March 31, 1996. The increase is due primarily to
the increase in mortgage loans held for sale at June 30, 1996. Stockholders'
equity has decreased to $416,199 at June 30, 1996 from $978,329 at March 31,
1996. The decrease is due to the net loss for the quarter ended June 30, 1996.
AFIM's net worth is currently satisfactory for those financial institutions
purchasing loans from the Company on a servicing release basis. However, AFIM is
not currently in compliance with minimum net worth requriements for GNMA and
FHA. AFIM plans to increase the net worth to meet both agency requirements
through the sale of a portion of the servicing portfolio as well as through
additional stock options issued in accordance with a consulting agreement
entered into in February 1996, discussed below. To help preserve the net worth,
preferred stock dividends have been suspended until the cash flow of the Company
permits payment. The preferred stock carries a $.42 per share annual cumulative
dividend.
Management believes that the items noted above will enable the Company to
meet its obligations and maintain its financial ratios and balances required by
its lenders and investors; however, there are no assurances that the Company
will ultimately be able to realize its assets and discharge its liabilites in
the normal course of business.
The mortgage servicing advances and accounts receviable were $530,826 at
June 30, 1996 compared to $520,620 at March 31, 1996. The balance is primarily
comprised of advances made related to servicing functions. There are some pools
in the servicing portfolio that require the servicer to pass on to the investor
all pricipal and interest payments regardless of whether the payment has been
collected. If customers are delinquent, an advance is required by the Company.
As payments are made by borrowers during the month, the advance is repaid to the
Company.
At June 30, 1996, the Company had a $65,000 outstanding receivable from
related party compared to $190,000 at March 31, 1996. The receivable which was
subsequently collected, resulted from a consulting agreement entered into in
February 1996 with four companies. Under the terms of each agreement, the
Company is provided with financial and public relations services, including
advice concerning marketing surveys, investor profiles and increasing investor
awareness of the Company and its products and services. The term of the
agreement is six months. As compensation for this service, the Company has
granted options to purchase 1,000,000 shares of common stock at $.50 per share.
Such options expire in fiscal 1997. The $190,000 is the excercise of the first
380,000 shares.
The Company had $13,708,717 in mortgage loans held for sale at June 30,
1996 (which were pledged to collateralize the Company's warehouse lines)
compared to $10,110,747 at March 31, 1996, which reflects the timing of the sale
of the mortgage loans in the secondary market.
The Company expects its assets to continue to grow as the Company expands
its origination business. The Company currently has a $17 million credit
facility with Bank One, Texas, and an uncommitted credit facility with Merrill
Lynch. As a result, the warehouse lines are in place to accommodate increased
loan originations. The Bank One, Texas agreement is up for renewal at August
1996 which time the Company anticipates a review and adjustment of covenants.
The Merrill Lynch agreement is an uncommitted line with approval on a loan by
loan basis. In fiscal 1996, the Company had a note payable come due of
approximately $550,000 secured by a portion of the servicing portfolio currently
being sold. Management will repay the note with proceeds from the sale proceeds.
The Company's building note is also up for renewal in fiscal 1997 which
Management plans to refinance.
The net decrease in cash of the Company was $585,643 for the quarter ended
June 30, 1996. At the end of fiscal 1996, the Company received proceeds from a
loan financing of $750,000. The proceeds were used to pay down a taxes and
insurance advance line and pay $50,000 down on the working capital line with
Bank One. The Company paid an additional $25,000 down on the working capital
line during the quarter ended June 30, 1996. With the increase in originated
mortgage loans, the related warehouse line was also increased during the quarter
ended June 30, 1996. Bank One will not lend 100% of the outstanding loan
balance; therefore, the Company must fund the difference. The Company also paid
$93,118 in capital lease payments for the purchase of the IBM AS/400, office
furniture and Desktop computers and equipment. During fiscal 1997, the Company
expects to generate cash through the additional loan originations, the sale of
the servicing portfolio and the raising of capital.
Page -9-
<PAGE>
PROSPECTIVE TRENDS
- ------------------
The Company will continue to develop and implement the latest
state-of-the-art technologies that will enhance the Company's operations as well
as increase productivity. The Company's Management believes that new
technologies will be one of the most significant factors in increasing
production volume and reducing costs of originating and servicing mortgage
loans. Another important factor will be the strategies used to implement these
new technologies. The Company believes its strategy of implementing a
convenient, low cost national network of Desktop Mortgage Loan Origination
Systems will substantially increase the Company's loan originations and
ultimately its servicing portfolio.
A key technology that the Company implemented in the first quarter of
fiscal 1997, is the use of Automated Underwriting. Automated Underwriting is the
use of artificial intelligence through computer technology to make underwriting
and credit decision on residential mortgage loans. The use of automated
underwriting will reduce the time needed to process and underwrite a residential
mortgage loan from approximately 30 to 45 days to as few as 5 to 14 days. It
will also significantly lower the cost of processing and underwriting those
loans since the technology will increase the number of loans processed and
underwritten per employee.
To compliment the Desktop sites, the Company will be recruiting loan
originators to set up "net branches". The originator, who will be employed by
AFIM, will be credited all revenues generated from the loan above the Company's
par price which will be netted against all the expenses related to the
origination site. The Company feels this is another cost efficient method of
originating loans in comparison to the traditional retail branch.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
- ----------------------------------------------
The Company adopted Statement of Financial Accounting Standards No. 114 and
118, "Accounting by Creditors for Impairment of Loan," during the first quarter
of fiscal 1996. This statement requires the accounting by creditors for
impairment of certain loans. The impact of adopting the statement on the
Company's consolidated financial statements was not material.
The Company adopted Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights, an amendment to FASB Statement No.
65", during the first quarter of fiscal 1997. The statement generally requires
entities that sell or securitize loans to retain the mortgage servicing rights
to allocate the total cost of mortgage servicing rights to the loan and the
related servicing right based on their relative fair values. Costs allocated to
mortgage servicing rights should be recognized as a separate asset and amortized
over the period of estimated net servicing income and periodically evaluated for
impairment based on fair value. The impact of adopting this statement was not
material on the Company's 1997 consolidated financial statements since the
Company intends on selling primarily all originated loans servicing released
during fiscal 1997.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" is
required for fiscal year beginning April 1,1996. The Statement requires that
certain long-lived assets be reviewed for impairment when events or
circumstances indicates that the carrying amounts of the assets may not be
recoverable. If such review indicates that the carrying amount of an asset
exceeds the sum of its expected future cash flows, the asset's carrying value is
written down to fair value. Long-lived assets to be disposed of are reported at
the lower of carrying amount or fair value less cost to sell. The impact of
adopting this Statement on the Company's consolidated financial statements has
not been determined by Management.
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation," will be adopted by the Company during fiscal year
ending March 31, 1997. This statement establishes financial accounting and
reporting standards for stock-based employee compensation plans. These plans
include all arrangements by which employees receive shares of stock or other
equity investments of the employer or where an employer issues its equity
instruments to acquire goods and services from nonemployees. This statement will
require pro forma disclosures of net income and earnings per share as if a new
accounting method based on the estimated fair value of employee stock options
had been adopted. The Company has not decided if the optional accounting
treatment proposed by SFAS No. 123 will be adopted.
Page - 10
<PAGE>
Advanced Financial, Inc.
PART II
ITEM 1 Legal Proceedings none.
ITEM 2. Changes in Securities. none.
ITEM 3. Defaults upon Senior Securities. The Company decided to postpone the
payment of its regular quarterly dividend on its Series "A" Cumulative
Convertible Preferred Stock. The dividend will accumulate until such time as the
Company has determined that its cash flows have improved enough to sufficiently
pay the dividend from the cash flow of its operations. The total arrearage is
currently $117,180.
ITEM 4. Submission Matters to a Vote
of Securities Holders. none.
ITEM 5. Other Information none.
ITEM 6. Exhibits and Reports on Form 8-K
Page - 11
<PAGE>
Advanced Financial, Inc.
SIGNATURES
- ----------
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCED FINANCIAL, INC.
(Registrant)
Dated: August 5, 1996 By: /S/ Debbie K. Towery
---------------------------------
Debbie K. Towery
Chief Financial Officer
Dated: August 5, 1996 By: /S/ William E. Moffatt
--------------------------------
William E. Moffatt
President/Director
Page - 12
<PAGE>
Advanced Financial, Inc.
SIGNATURES
----------
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCED FINANCIAL, INC.
(Registrant)
Dated: August 5, 1996 --------------------------------
Debbie K. Towery
Chief Financial Officer
Dated: August 5, 1996 --------------------------------
William E. Moffatt
President/Director
Page - 13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 530,826
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,645,012
<DEPRECIATION> 373,548
<TOTAL-ASSETS> 19,680,902
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
1,860
<COMMON> 4,256
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 416,199
<SALES> 0
<TOTAL-REVENUES> 1,662,485
<CGS> 0
<TOTAL-COSTS> 2,224,615
<OTHER-EXPENSES> 57,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 222,189
<INCOME-PRETAX> (562,130)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (562,130)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
