ADMIRAL FINANCIAL CORP
10-Q, 1996-09-16
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                   FOR THE SIX MONTHS ENDED DECEMBER 31, 1991

                         COMMISSION FILE NUMBER 0-17214

                             ADMIRAL FINANCIAL CORP.


    STATE OF FLORIDA                              I.R.S. NO. 59-2806414


                             825 ARTHUR GODFREY ROAD
                           MIAMI BEACH, FLORIDA 33140


                        TELEPHONE NUMBER: (305) 672-5800



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 Act of
1934 during the preceding twelve (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 ninety (90) days.

                           Yes  [X]             No  [ ]






                          Common Stock $.001 Par Value
               Outstanding Shares at December 31, 1991: 10,985,046

<PAGE>

                     ADMIRAL FINANCIAL CORP. AND SUBSIDIARY

                                TABLE OF CONTENTS

                                    FORM 10-Q

                                     PART I

                              FINANCIAL INFORMATION


Item 1.           FINANCIAL STATEMENTS

                  Consolidated Balance Sheets                                  1

                  Consolidated Statements of Operations                        2

                  Consolidated Statements of Cash Flows                        3

                  Notes to Consolidated Financial Statements                   4

Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  CONSOLIDATED FINANCIAL CONDITION AND
                  RESULTS OF OPERATIONS                                        5



                                     PART II

                                OTHER INFORMATION


Item 1.           Legal Proceedings                                            8

Item 2.           Changes in Securities                                        8

Item 3.           Defaults Upon Senior Securities                              8

Item 4.           Submission of Matters to a Vote of Security Holders          8

Item 5.           Other Information                                            8

Item 6.           Exhibits and Reports on Form 8-K                             8

<PAGE>
<TABLE>
<CAPTION>

                                                PART I  -  FINANCIAL INFORMATION


                             ADMIRAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS


                  ASSETS                                   DECEMBER 31, 1991  JUNE 30, 1991
                                                           -----------------  -------------
                                                              (UNAUDITED)      (UNAUDITED)
<S>                                                        <C>                <C>
Cash                                                           $       0        $       0
Prepaid expenses and other assets                                 30,290           40,387
Net assets of Haven Federal Savings and
         Loan Association (notes 1 and 2)                              0                0
                                                               ---------        ---------
                  Total assets                                 $  30,290        $  40,387
                                                               =========        =========





LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Accrued expenses and other liabilities                         $  23,890        $  23,890
Net liabilities of Haven Federal Savings
         and Loan Association (notes 1 and 2)                          0                0
                                                               ---------        ---------
                  Total liabilities                               23,890           23,890


Preferred stock, $.01 par value, Authorized
         6,000,000 shares, none outstanding

Common stock, $.001 par value,
         50,000,000 shares authorized,
         10,987,000 shares issued                                 10,987           10,987
         Treasury stock, 1,954 and 1,954 shares, at cost               0                0
Additional paid-in capital                                       680,710          680,710
Deficit                                                         (685,297)        (675,200)
                                                               ---------        ---------
         Total stockholders' (deficit) equity                      6,400           16,497
                                                               ---------        ---------
         Total liabilities and stockholders'
                  (deficit) equity                             $  30,290        $  40,387
                                                               =========        =========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                        1

<PAGE>
<TABLE>
<CAPTION>

                                                  PART I - FINANCIAL INFORMATION


                     ADMIRAL FINANCIAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)






                                        THREE MONTHS ENDED DEC 31      SIX MONTHS ENDED DEC 31
                                       ---------------------------    --------------------------
                                           1991           1990           1991           1990
                                           ----           ----           ----           ----
<S>                                    <C>             <C>            <C>            <C>
Interest Income                                   0              0              0              0
Other income                                      0              0              0              0
                                       ------------    -----------    -----------    -----------
         Total income                             0              0              0              0

Expense
         Employee Compensation                    0              0              0              0
         Other                                5,048          5,048         10,097         10,640
                                       ------------    -----------    -----------    -----------

         Total expense                        5,048          5,048         10,097         10,640

         Loss from discontinued
                  operation (note 2)              0              0              0              0
                                       ------------    -----------    -----------    -----------
Net loss                               $     (5,048)        (5,048)       (10,097)       (10,640)
                                       ============    ===========    ===========    ===========

Loss per share                         $      (.000)   $     (.000)   $     (.001)   $     (.001)
                                       ============    ===========    ===========    ===========

Dividend per share                             --             --             --             --
                                       ============    ===========    ===========    ===========

Weighted average number
   of shares outstanding                 10,985,046     10,985,046     10,985,046     10,985,046
                                       ============    ===========    ===========    ===========
</TABLE>
           See accompanying notes to consolidated financial statements

                                        2

<PAGE>

                                                  PART I - FINANCIAL INFORMATION


                     ADMIRAL FINANCIAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                   SIX MONTHS ENDED DECEMBER 31
                                                   ----------------------------
                                                          1991        1990
                                                          ----        ----
                                                                          

Cash flows from operating activities:

Net loss                                               $(10,097)   $(10,640)

Adjustments to reconcile net loss to net cash
   provided by operating activities:

Decrease in deficit arising from confiscation of
   Haven Federal after retroactive disallowance
   of agreed supervisory goodwill and regulatory 
   capital                                                    0           0
Decrease in prepaid expenses and other assets                 0           0
Decrease (increase) in net assets of
   Haven Federal                                              0           0
(Decrease) in accrued expenses and other 
   liabilities                                                0           0
(Decrease) Increase in net liabilities of
   Haven Federal                                              0           0
Amortization of organization expenses                    10,097      10,097
                                                       --------    --------

Net cash provided (used) by operating activities              0        (543)

Cash and cash equivalents, beginning of year                  0         850
                                                       --------    --------

Cash and cash equivalents, end of quarter              $      0    $    307
                                                       ========    ========

           See accompanying notes to consolidated financial statements

                                        3

<PAGE>

                                                  PART I - FINANCIAL INFORMATION


                     ADMIRAL FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.     In the opinion of management, the accompanying consolidated 
            financial statements contain all the adjustments (principally 
            consisting of normal recurring accruals and the confiscation of all
            the principal assets of the Company by the United States government)
            necessary to present fairly the financial statements of Admiral
            Financial Corp. ('Admiral') and Subsidiary.

Note 2.     The net assets of Admiral's principal operating subsidiary, Haven 
            Federal Savings and Loan Association ('Haven'), were confiscated by 
            the United States government on March 2, 1990. Therefore, where
            applicable, Haven's net assets and net liabilities are presented in
            the balance sheets in the aggregate; and its loss is shown in the
            aggregate in the Statements of Operations for the three and six
            month periods ended December 31, 1991 and 1990.

                                        4

<PAGE>

                                                  PART I - FINANCIAL INFORMATION



                  ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS



GENERAL

         ADMIRAL FINANCIAL CORP. ("ADMIRAL") IS CURRENTLY AN INACTIVE 
CORPORATION, WITH NO ONGOING BUSINESS ACTIVITY.


         Admiral Financial Corp. was formed in 1987 to acquire an insolvent
savings and loan association in a supervisory acquisition solely with private
investment funds, and without the benefit of any federal assistance payments.
Admiral acquired Haven Federal Savings and Loan Association of Winter Haven,
Florida on June 16, 1988. In that acquisition transaction, Admiral issued
8,000,000 new common shares in exchange for assets (primarily real estate and a
profitable business engaged in the purchase and redemption of Florida tax sale
certificates) having a fair market value of approximately $40 million, subject
to approximately $27 million of mortgages and other liabilities, and less
approximately $1 million of fees and expenses (necessary to provide the proper
forms and documentation in accordance with government rules and regulations),
for a net equity contribution of approximately $12 million. Admiral then
contributed virtually all of these net assets and liabilities to the capital of
Haven, plus an additional 987,000 new common shares of Admiral, which were
simultaneously issued in exchange for 100% of the outstanding shares of Haven in
an approved "supervisory acquisition" of an insolvent thrift institution.
Admiral has had substantially no assets or operations other than its investment
in Haven.

         The Financial Institution Reform, Recovery and Enforcement Act of 1989
("FIRREA") was introduced on February 5, 1989, and enacted into law on August 9,
1989. FIRREA imposed, by no later than December 7, 1989, more stringent capital
requirements upon savings institutions than those previously in effect. Haven
did not meet these new capital requirements. Because of certain provisions of
FIRREA relating primarily to the disallowance of supervisory goodwill and
certain other intangible assets in the calculation of required net capital,
management estimates that Admiral would have been required under the Agreement
to infuse additional capital of approximately $18 million by December 7, 1989.
Admiral did not infuse any additional capital, and the net assets of Haven were
confiscated by the federal authorities on March 2, 1990.

         In the agreement allowing Admiral to acquire Haven in the supervisory
acquisition, Haven was credited with new capital under "Regulatory Accounting
Principles" (RAP) then in effect equal to $11 million. This amount was computed
by taking into account the $13 million fair market value of the net assets
contributed by Admiral to Haven, less the $1 million of fees and costs incurred,
and less an additional $1 million resulting from reduced valuations of certain
of the contributed assets for purposes of calculating Haven's RAP equity by the
appraisal division of the Federal Home Loan Bank Board.

         A condition to the Federal Home Loan bank Board ("FHLBB") Resolution
approving the acquisition of control of Haven by Admiral (the "Agreement")
required that Admiral account for the

                                        5

<PAGE>

acquisition of Haven under the "purchase" method of accounting, whereby an asset
in the nature of "Goodwill" would be realized, generally, to the extent of any
previous negative net worth of the acquired insolvent thrift, plus the excess of
the fair market values of the contributed assets over their respective
historical costs. Haven's regulatory goodwill of approximately $20 million was,
in accordance with the Agreement, to be amortized against earnings over a period
of twenty-five years.

         Another condition to the same Agreement required that Admiral execute a
Regulatory Capital Maintenance/Dividend Agreement which provided certain
remedies if Haven and Admiral were unable to liquidate, on a scheduled basis
ending June 30, 1990, the real estate used by Admiral to capitalize its
acquisition of Haven. The remedies of the Federal Savings and Loan Insurance
Corporation ("FSLIC") agreed to by Admiral in the Agreement included the right
of the FSLIC to (I) vote the common stock of Haven; (ii) remove the board of
directors of Haven; and/or (iii) dispose of any or all of the voting securities
of Haven owned by Admiral.

         The failure of Admiral and Haven to liquidate the real estate in
accordance with the agreement with the FHLBB could have caused the forfeiture to
the FSLIC of all shares of Haven. If the voting securities of Haven were so
forfeited, the stockholders of Admiral would still hold their shares of Admiral.
However, Admiral would have lost substantially its only asset, and the shares of
Admiral common stock, after such forfeiture, could have had little or no value.

         Under the same Agreement, Admiral was also obligated to cause the
regulatory capital of Haven to be maintained at a level at or above the minimum
regulatory capital requirement and, if necessary, infuse additional equity
capital into Haven.

         At all times during Admiral's control , Haven was successful in meeting
the real estate liquidation requirements imposed by the Agreement, including any
extensions of time granted thereunder. However, Haven experienced a $4.3 million
erosion of its regulatory capital due in large part to losses sustained as a
result of liquidating the real estate under the "fire sale" conditions imposed
by the Agreement. This loss, together with other operating losses and goodwill
amortization expenses, caused Haven to fail to meet its minimum capital
requirement as of March 31, 1989 and at all times thereafter. Admiral and Haven
continued to abide by the Agreement entered into with the FHLBB, to its
financial detriment, in spite of the United States government's assertion that
the enactment of FIRREA retroactively eliminated the need for the government (or
any of its instrumentalities) to live up to any express or implied agreements
which may have been contrary to the subsequent legislation, without the
necessity of the retroactive return of Admiral's $13+ million of net capital and
expenses invested in Haven.

         Admiral was notified by the FHLBB on July 17, 1989 that Admiral was in
default of the Agreement and had 90 days (i.e. until October 16. 1989) to cure
the default. Admiral had virtually no assets other than the stock of Haven, and
has had no other viable means available to cure the default since the
introduction of FIRREA. The net assets of Haven, including Admiral's $13 million
of contributed equity, were confiscated on March 2, 1990.

         Admiral and Haven applied for relief from the requirements of the
Resolution and the Agreement. Haven has also applied for regulatory relief from
sanctions imposed by FIRREA for failing to meet the minimum regulatory capital
requirements. Furthermore, Admiral and Haven have also applied for federal
assistance payments under a FIRREA provision for assistance which management
believes is directly applicable to Admiral/Haven's current situation. Admiral
received no notice of any hearings prior to the confiscation of Haven on March
2, 1990.

                                        6

<PAGE>

         Since Haven was the only significant asset owned by Admiral, the
Admiral common stock has little or no continuing value.

LIQUIDITY AND CAPITAL RESOURCES

         Admiral has been reduced to a corporate "shell," with no operations or
current activity. There is very little corporate liquidity, no available capital
resources, and no immediately foreseeable prospects for the future improvement
of Admiral's financial picture.

         Admiral management intends to seek a new line of business. as yet
unidentified. In connection therewith, Admiral's management believes that a
restructuring of Admiral may be necessary in order to raise capital for new
operations, and any such restructuring may have a substantial dilutive effect
upon Admiral's existing shareholders. Admiral has no ongoing commitments or
obligations other than with respect to its obligations related to the
acquisition of Haven.


COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1991 AND 1990

Admiral's sole remaining expense of $5,048 for 1991 and 1990 relates to the
non-cash amortization of organization expenses, which occurs solely as a result
of the passage of time.


COMPARISON OF SIX MONTHS ENDED DECEMBER 31, 1991 AND 1990

         The primary change in the operations of the parent company has been a
reduction in expenses from $10,640 in the six months ended December 31, 1990 to
$10,097 for the comparable period in 1991. The decrease in expenses was due
mostly to the discontinuance of directors fees, the suspension of all employee
compensation, and the closing of Admiral's business offices. Amortization of
organization expenses, which occurs solely as a result of the passage of time,
was $10,097 and $10,096 for 1991 and 1990, respectively.

                                        7

<PAGE>

                                                     PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

          Admiral is not involved in any material legal proceedings.


Item 2.   Changes in Securities

          Not applicable.


Item 3.   Defaults Upon Senior Securities

          Not applicable.


Item 4.   Submission of Matters to a Vote of Security Holders

          Not applicable.


Item 5.   Other Information

          Not applicable.


Item 6.   Exhibits and Reports on Form 8-k

          Not applicable.

                                        8

<PAGE>

                                   SIGNATURES


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


                                            ADMIRAL FINANCIAL CORP. (Registrant)




Date:    September 16, 1996            By:  /s/ WM. LEE POPHAM
                                            -------------------------------
                                            Wm. Lee Popham, President


Date:    September 16, 1996            By:  /s/ LINDA E. BAKER
                                            -------------------------------
                                            Linda E. Baker, Principal Financial
                                            and Accounting Officer


<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          JUN-30-1992
<PERIOD-END>                               DEC-31-1991
<CASH>                                               0
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                30,290
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  30,290
<CURRENT-LIABILITIES>                           23,890
<BONDS>                                              0
                                0
                                          0
<COMMON>                                        10,987
<OTHER-SE>                                     (7,756)
<TOTAL-LIABILITY-AND-EQUITY>                    30,290
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                                 5,048
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                (5,048)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                            (5,048)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   (5,048)
<EPS-PRIMARY>                                   (0.00)
<EPS-DILUTED>                                   (0.00)
        

</TABLE>


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