Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS.
GENERAL
ADMIRAL FINANCIAL CORP. ("ADMIRAL") IS CURRENTLY AN INACTIVE CORPORATION, WITH NO ONGOING BUSINESS ACTIVITY.
Admiral 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 ("Haven") on June 16, 1988. Admiral had no prior operating history.
Haven was a Federally chartered stock savings and loan association that had been conducting its business in Winter Haven, Florida, since 1964. In addition to its main office, Haven had four branch offices in Polk County which were located in central Florida. A large portion of the population of Polk County consists of retired persons on fixed incomes so that the operations of the Association are dependent primarily on the needs of this community and are relatively unaffected by the prosperity of any of the businesses located in its primary market area.
As a result of the enactment of The Financial Institution Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), the United States government retroactively applied new capital standards to Haven, declared Haven to be insolvent and in default of certain provisions of an agreement that the federal government itself had disregarded, and confiscated the net assets of Haven on March 2, 1990.
Admiral's sole significant asset was its investment in Haven, and Admiral has been reduced to an inactive corporate shell.
Admiral acquired Haven on June 16, 1988. The acquisition occurred through a contributed property exchange, whereby 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 fair market values 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) during the ensuing sixteen month application and negotiation process with federal regulatory authorities, for a net fair value equity contribution of approximately $12 million. Admiral then contributed virtually all of these net assets and liabilities to the capital of Haven, while simultaneously issuing an additional 987,000 new common shares of Admiral to the former Haven shareholders, 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, and no operations other than its investment in Haven, and all active business operations were carried on through Haven.
Prior to the consideration of any of the equity capital contributed by Admiral in the exchange, the fair value of Haven's liabilities assumed by Admiral, plus the cost of acquisition, was determined to have exceeded the fair market value of Haven's tangible assets acquired by approximately $14,902,000, of which approximately $5,374,000 was attributable to the estimated intangible value of Haven's deposit base and approximately $548,000 to the estimated intangible value of Haven's mortgage loan servicing portfolio. The balance of approximately $8,980,000 was recorded under generally accepted accounting principles (GAAP) by Haven as excess cost over net assets acquired ("Goodwill"). The acquisition was accounted for as if it occurred on June 30, 1988. The purchase method of accounting was used to record the acquisition and, accordingly, all assets and liabilities of Haven were adjusted to their estimated fair value as of the acquisition date.
By way of a Resolution (the "Agreement") dated April 26, 1988, the Federal Home Loan Bank Board ("FHLBB") approved the acquisition of control of Haven by Admiral. A condition of the Agreement authorizing the acquisition required that Admiral account for the acquisition of Haven under the "purchase" method of accounting, whereby an asset in the nature of "Supervisory Goodwill" would be calculated in accordance with the "Regulatory Accounting Principles" (RAP) then in effect. Supervisory Goodwill was 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 Supervisory Goodwill of approximately $20 million was, in accordance with the Agreement, to be amortized against future earnings over a period of twenty-five years.
Also in accordance with the Agreement, Haven was credited with new capital under RAP accounting, 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.
In accordance with GAAP, however, the contributed equity values reported to Admiral's shareholders was the net historical book value of $596,812, net of approximately $1.05 million of out-of-pocket professional fees, expenses, and other transaction costs associated with the supervisory acquisition, and not the appraised net fair market equity values of $13 million.
As an integral part of Admiral's application to acquire Haven, Admiral filed a Business Plan of proposed operations calling for a significant growth of earning assets, and an increase in low-cost deposits and other lower-cost liabilities to refinance Haven's relatively high cost of funds. This growth was to be generated both internally, and by acquisitions of other branches and thrifts. The FHLBB Agreement approved Admiral's Business Plan.
In exchange for the favorable accounting treatments regarding the Supervisory Goodwill and the resulting calculation of RAP equity, the Agreement imposed a number of conditions upon Admiral. Specifically:
Admiral was required to record the supervisory acquisition transaction utilizing the "purchase" method of accounting, resulting in the recognition of the maximum amount of Supervisory Goodwill possible (approximately $20 million) under any allowable method of current accounting theory.
Admiral agreed that it would cause the regulatory capital of Haven to be maintained at a level at or above the quarterly minimum regulatory capital requirement and, if necessary, infuse additional equity capital sufficient to comply with this requirement.
Should Admiral default in this provision and be unable to cure the default within 90 days, the FSLIC could exercise any right or remedy available to it by law, equity, statute or regulation. In addition to the rights that were available to the FSLIC by virtue of the Agreement, whenever any savings and loan association fails to meet its regulatory capital requirement, the FHLBB and the FSLIC (or their successors) could take such actions as they deem appropriate to protect the Association, its depositors and the FSLIC.
Admiral agreed that it would cause Haven to liquidate all of the contributed real estate according to a schedule specified by the FHLBB as follows: 37.5% of the market value of the properties (as determined by the FHLBB's District Appraiser) by March 31, 1989, an additional 12.5% by June 30, 1989, and an additional 12.5% during each succeeding quarter.
If Admiral had defaulted in this regard, it could have been subject to
forfeiture of 100% of its Haven stock. The FSLIC would have the right to vote the Haven stock, remove Haven's Board of Directors and/or dispose of the stock of Haven.
Admiral acquired Haven solely with private equity capital. There were no federal assistance payments, capital assistance notes, or any other form of federal payments (which had been made available to other purchasers of insolvent thrifts), involved in the acquisition Agreement negotiations. The only element of the Agreement that Admiral specifically bargained for was the allowance of Supervisory Goodwill, with its twenty-five year amortization period, to compensate Admiral for its recapitalization of an insolvent thrift with a $15 million negative net worth on the supervisory acquisition date.
For the fiscal year ended June 30, 1989, Haven experienced a "Net Interest Income" (similar to a "Gross Profit" for commercial business operations) of $1.635 million, as opposed to a Net Interest Expense of ($.163 million) for the fiscal year immediately preceding Admiral's supervisory acquisition of Haven. These results represented a significant turnaround for Haven during the first year of post- supervisory acquisition operations.
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 to losses sustained as a result of liquidating one single, large commercial property included in the stated real estate under what can only be described as "fire sale" conditions, on the last possible day under the Agreement, in order to meet the time schedules mandated by the FHLBB in 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.
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. These capital requirements were applied to Haven on a retroactive basis. Haven did not meet these new capital requirements on the date of enactment, or on the date of Haven's acquisition by Admiral. 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. Had FIRREA been in effect on the date of Haven's acquisition by Admiral, Haven would have fallen short of the capital requirements by approximately $14 million, after taking into account Admiral's contribution of $11 million of new regulatory capital. Admiral did not infuse any additional capital, and the net assets of Haven were confiscated by the federal authorities on March 2, 1990.
With nearly $20 million of Supervisory Goodwill on the books and only $11 million of contributed capital (thereby resulting in a negative tangible net worth in excess of $8 million, and an immediate shortfall of qualifying capital in excess of nearly $15 million) on the date of the supervisory acquisition of Haven by Admiral, Haven did not meet these new capital requirements imposed by FIRREA.
The FHLBB, in a supervisory letter dated March 31, 1989, designated the Association as a "troubled institution" subject to the requirements of the office of Regulatory Activities Regulatory Bulletin 3a ("RB3a"). A troubled institution under RB3a is subject to various growth restrictions concerning deposit accounts and lending activities. Haven was directed to "shrink" its asset and deposit base, thereby assuring future operating losses.
As of March 31, 1989, Haven's regulatory capital fell approximately $580,000 below its minimum regulatory capital requirement. As of June 30, 1989, Haven's regulatory capital was approximately $2.3 million below the minimum regulatory
requirement. This regulatory capital deficiency was a result of the Association's substantial operating losses incurred as a result of the directive from FHLBB supervisory personnel to "shrink" the assets and deposits of Haven, and the sale of certain parcels of contributed real estate, under circumstances that could only be described as a "fire sale," at amounts which approximated predecessor cost, rather than at the substantially higher appraised values (which had previously been reviewed and approved by the appropriate regulatory authorities). In addition, due to Haven's inability to continue operations without a significant capital infusion or other source of recapitalization, the value of the Association's excess cost over net assets acquired (Goodwill) was considered permanently impaired and, accordingly, the entire balance was written off at June 30, 1989.
Admiral was notified by the FHLBB on July 17, 1989, that since the regulatory capital deficiency had not been corrected, Admiral was in default of the Agreement and had 90 days (i.e., until October 18, 1989) to cure the default. Admiral management was directed to resign any positions held at Haven, Haven personnel were directed to cease communications with Admiral, and to abandon any efforts to meet the contributed real estate liquidation schedule contained in the Agreement. Admiral did not infuse the additional capital required, and the net assets of Haven were confiscated by the federal government on March 2, 1990.
Due to the regulatory capital requirements imposed by FIRREA, even if Admiral were able to infuse the approximate $2.3 million June 30, 1989 regulatory capital deficiency and cure the default, the cure would have only been temporary. Because of certain provisions of FIRREA relating primarily to the treatment of intangible assets, management estimates that Admiral would have been required to infuse additional capital of approximately $18 million by the December 7, 1989 date specified by the new law. Had the FIRREA requirements been effective and fully phased in at the time of the acquisition, Haven would have had a tangible capital deficiency of approximately $18 million as of the acquisition date; and to meet the capital requirements, Admiral would have had to fund approximately $14 million, in addition to the assets which were contributed with an appraised equity value of approximately $11 million for regulatory capital purposes.
As of September 30, 1989, Haven had not met the contributed real estate sale schedule. On September 27, 1989, the Association received a letter from its Supervisory Agent in which the Supervisory Agent agreed not to enforce its rights upon a default in the real estate sale schedule until November 1, 1989. The net assets of Haven were confiscated by the federal government on March 2, 1990.
Because of the effects of FIRREA, and the impact of certain requirements imposed by the Federal Home Loan Bank Board ("FHLBB") and the Federal Savings and Loan insurance Corporation ("FSLIC") upon Admiral and upon the operations of Haven, Admiral's management determined that the initial economic decisions leading to the acquisition, recapitalization and operation of Haven had been frustrated by FIRREA, and the only remaining alternative available to Admiral was to sell or merge Haven, and withdraw from the savings and loan business. Once Haven was divested, Admiral would have no other operations.
In the meantime, Admiral and Haven applied, immediately after the enactment of FIRREA, for relief from the requirements of the Agreement. Haven also applied for regulatory relief from sanctions imposed by FIRREA for failing to meet the minimum regulatory capital requirements. Furthermore, Admiral and Haven applied for federal assistance payments under a FIRREA relief provision which management believed was intended to be applicable to prior acquirers of insolvent thrift institutions in supervisory acquisitions, where a significant amount of "supervisory goodwill" is involved, and those acquirers were being treated by the effects of the new legislation as if they had been the persons who had caused the thrift to become insolvent in the first place. Admiral management was never notified of any action taken or hearing scheduled in connection with the various forms of relief being sought.
Because of all of the circumstances enumerated above, Admiral attempted to
dispose of its Haven common stock and to secure a release of its obligations under the Agreement either through a merger, an acquisition or a tender of its Haven common stock to the FHLBB or its successor in the event that the Association's applications for specific relief were not approved.
The net assets of Haven were confiscated on March 2, 1990.
ITEM 2.



ITEM 2. PROPERTIES.
Admiral Financial Corp.'s principal office is located in Miami Beach, Florida. The Company is currently being allowed to share, free of charge, certain office facilities and office equipment located at 825 Arthur Godfrey Road, Miami Beach, Florida 33140. Admiral does not have any lease obligations.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
On August 5, 1993, Admiral filed a Complaint against the United States of America in the United States Court of Federal Claims, alleging as follows:
"This action arises in part out of contractual promises made to Admiral by the United States' Government, acting through the Federal Home Loan Bank Board ("FHLBB") and the Federal Savings and Loan Insurance Corporation ("FSLIC") pursuant to their statutory supervisory authority over federally insured savings and loan institutions and savings banks (hereinafter referred to a "thrifts" or "thrift institutions"), and in part out of takings of property by the FHLBB and FSLIC in the course of exercising that authority. The contractual promises were made for the purpose of inducing Admiral to acquire and operate Haven Federal Savings and Loan Association, an insolvent thrift institution. Admiral's acquisition of Haven saved FSLIC's insurance fund millions of dollars that it would have been obligated to pay to creditors and depositors of Haven had FSLIC and the FHLBB been forced to liquidate it. Admiral fully performed its obligations under its contract with FSLIC and the FHLBB. Although the United States received the benefits of its contractual bargain with Admiral, it has broken its contractual promises to Admiral, partially as a result of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), and of certain regulations promulgated by the Office of Thrift Supervision ("OTS") pursuant to FIRREA. This repudiation and abrogation of the United States' contractual promises to Admiral constitute a material breach of contract that defeats the central object of this agreement, a taking of Admiral's property without just compensation in violation of the Fifth Amendment to the United States Constitution, and a deprivation of Admiral's property without due process of law in violation of the Fifth Amendment to the United States Constitution. In this action, Admiral seeks (1) a declaration that the government's actions constitute a repudiation and material breach of their contractual obligations to Admiral and, thereby, effect a taking of Admiral's property without just compensation and a deprivation of Admiral's property without due process of law, in violation of the Fifth Amendment, and (2) compensatory damages for the United States' breach of contract, or (3) rescission of the contract and restitutionary relief, or (4) compensation for the taking of Admiral's property, or (5) damages for the deprivation of Plaintiffs' property without due process of law."
This action was stayed by order of the Court dated September 3, 1993, pending the en banc decision on rehearing of the Court of Appeal for the Federal Circuit in WINSTAR CORP., ET AL. V. UNITED STATES, a pending action which Admiral management believes to contain a substantially similar fact pattern.
Admiral is not a party to any other legal proceedings. If adversely determined, the above litigation should not have, in the opinion of Admiral management, a material adverse effect on the current operations or financial condition of the Company.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.
On June 21, 1988, Admiral's common stock began trading on the National Association of Securities Dealers Automatic Quotation System (NASDAQ) under the symbol ADFC. During the year, Admiral was notified by NASDAQ that Admiral's net worth did not meet the minimum standards for listing on the NASDAQ System and that Admiral's stock would begin trading in the "over-the-counter" market after September 30, 1989, if the minimum capital standards were not met.
Since September 30, 1989, Admiral's shares have been listed in the "over-the-counter" market on the OTC Bulletin Board. There is no firm currently making a market in Admiral's stock.
The following table sets forth, for the periods indicated, the high and low sales prices as reported on the OTC Bulletin Board.
ASK BID ------------ ----------- HIGH LOW HIGH LOW ---- --- ---- ---
1993: First Quarter 0 0 0 0 Second Quarter 0 0 0 0 Third Quarter 0 0 0 0 Fourth Quarter 0 0 0 0
1994: First Quarter 0 0 0 0 Second Quarter 0 0 0 0 Third Quarter 0 0 0 0 Fourth Quarter 0 0 0 0
As of June 30, 1994, there were 492 stockholders of record.
The Company has not paid cash dividends since inception. The Company anticipates that for the foreseeable future any earnings from future operations will be retained for use in its business and no cash dividends will be paid on its common stock. Declaration of dividends in the future will remain within the discretion of the Company's Board of Directors, which will review its dividend policy from time to time on the basis of the company's financial condition, capital requirements, cash flow, profitability, business outlook and other factors.
ITEM 6.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
Admiral was formed in 1987 for the purpose of effecting the Contributed Property Exchange Offer and Merger with Haven and had no prior operating history. Admiral's acquisition of Haven occurred on June 16, 1988, and has been accounted for as if it occurred on June 30, 1988. The following table sets forth selected consolidated financial data for the operations of Haven and for Admiral for the five years ended June 30, 1994. In addition, selected financial data on the financial position of Admiral is shown as of June 30, 1994, 1993, 1992, 1991, and 1990. Such information is qualified in its entirety by the more detailed information set forth in the financial statements and the notes thereto included elsewhere herein.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Admiral was formed in 1987 and had no operations until its acquisition of Haven on June 16, 1988. Admiral's only significant asset is its investment in Haven and, therefore, the operations being reported on are primarily those of its subsidiary, the predecessor registrant Haven. Admiral has been inactive since 1990.
COMPARISON OF YEARS ENDED JUNE 30, 1994 AND 1993
GENERAL. Net loss for 1994 was $0, or $0.00 per share. This compares to a net loss for 1993 of $20,193, or $0.002 per share. Admiral was inactive at June 30, 1994 and 1993.
TOTAL INCOME. Admiral's gross revenues were $0 and $0 in 1994 and 1993, respectively.
COMPENSATION EXPENSE. Compensation expenditures were eliminated during fiscal 1990, when all employees were terminated. Consequently, compensation expense were $0 and $0 in 1994 and 1993.
TOTAL OTHER EXPENSE. Other expense includes amortization of organizational expenses of $0 and $20,193 in 1994 and 1993.
COMPARISON OF YEARS ENDED JUNE 30, 1993 AND 1992
GENERAL. Net loss for 1993 was $20,193 or $0.002 per share. This compares to a net loss for 1992 of $20,194 or $0.002 per share. Admiral was inactive at June 30, 1993 and 1992.
TOTAL INCOME. Admiral's gross revenues were $0 and $0 in 1993 and 1992, respectively.
COMPENSATION EXPENSE. Compensation expenditures were eliminated during fiscal 1990, when all employees were terminated. Consequently, compensation expense were $0 and $0 in 1993 and 1992.
TOTAL OTHER EXPENSE. Other expense includes amortization of organizational expenses of $20,194 and $20,193 in 1992 and 1993.
LIQUIDITY AND CAPITAL RESOURCES
Admiral has been reduced to a corporate "shell," with no operations or current activity. There is no 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.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedules listed in Item 14 hereof and included in this report on Pages through are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN, AND DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth, as of June 30, 1994, certain information with respect to the directors and executive officers continuing in office until their successors have been elected and qualified.
OFFICER AND/OR DIRECTOR NAME AGE POSITION SINCE ---- --- -------------------------- --------
Wm. Lee Popham 43 Chairman of the Board, 1987 Chief Executive Officer and President
Linda E. Baker 55 Director, Vice President, 1987 Secretary, and Treasurer
Charles E. Fancher, Jr. 44 Director 1988
Certain background information for each director is set forth below.
WM. LEE POPHAM has served as Chairman of the Board and President of Admiral since its inception in 1987. He had also served as Chairman of the Board and President of Caesar Creek Holdings, Inc. (CCH), Miami, Florida (a financial acquisition company) since June 1985, and in various other officer and director positions with several subsidiaries and affiliates of CCH, until its liquidation in December 1989. He has also served as a Director and Secretary-Treasurer of Jeanne Baker, Inc., a real estate brokerage company located in Dade County, Florida, since 1973, and has been actively employed by that Company since 1990. He previously served as President of First Atlantic Capital Corporation, Miami, Florida (an investment company) from July 1983 to May 1985. Prior thereto, he was a partner in the accounting firm of KPMG Peat Marwick, LLP, Miami, Florida, where he practiced as a Certified Public Accountant. He also served as a director of Cruise America,
Inc., Miami, Florida (a recreational vehicle rental and sales corporation), which shares are traded on the American Stock Exchange, from 1984 until 1991.
LINDA E. BAKER has served as Vice President, Secretary and Treasurer of Admiral since its inception in April 1987. She has also served as Vice President, Secretary and Treasurer of CCH, Miami, Florida (a financial acquisition company) from June 1985 until its liquidation in December 1989, and in various other officer and director positions with several subsidiaries and affiliates of CCH. Ms. Baker has been employed as Office/Personnel Manager at Trivest, Inc., Miami, Florida, an investment holding company, since January 1990. She was Vice President and Secretary of First Atlantic Capital Corporation, Miami, Florida (an investment company) from October 1983 to June 1985. Prior thereto, she was a Manager with the accounting firm of KPMG Peat Marwick, LLP, Miami, Florida. Ms. Baker is a Certified Public Accountant and a licensed Florida real estate broker.
CHARLES E. FANCHER, JR. has served as President and Chief Operating Officer of General Development Utilities, Inc., Miami, Florida (a water, waste water, and liquid propane gas utility company) since June 1991, and Vice President of Atlantic Gulf Communities Corporation (f/k/a General Development Corporation), in Miami, Florida (a real estate development company) since January 1986. Mr. Fancher was previously Senior Vice President of General Development Utilities, Inc., since January 1986. Prior thereto, he served as a Vice President of General Development Utilities, Inc. in the areas of finance and operations.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth certain information with respect to the Chief Executive Officer, and each other executive officer of Admiral and/or Haven whose total cash compensation exceeded $100,000 during the year ended June 30, 1994.
ANNUAL COMPENSATION AWARDS NAME AND ----------------------------------- PRINCIPAL POSITION YEAR SALARY BONUS OTHER ------------------ ---- ------ ----- -----
Wm. Lee Popham 1994 $ --- --- --- Chairman and President 1993 --- --- --- Chief Executive Officer 1992 --- --- ---
INCENTIVE BONUS PLAN
Admiral has a policy of paying discretionary bonuses to eligible officers and employees based upon the individual's performance. Under the plan, Admiral and its subsidiaries distribute approximately 20% of Admiral's consolidated pre-tax profits in the form of cash bonuses awarded by the Compensation Committee of the Board of Directors, based on management's recommendations and evaluations of performance. No bonuses have been paid since Admiral's inception in 1987.
RETIREMENT PLAN
No Admiral employee is currently covered under any form of retirement plan.
In prior years, Haven employees were covered under a noncontributory trusteed
pension plan, which was replaced by a contributory Section 401(k) plan for Admiral and Haven employees on March 31, 1989. Employees were permitted to contribute amounts up to 6% of their annual salary to this plan, with the employer providing matching contributions at a rate of 50% of such employee's contributions (to a maximum of 3% of such employee's salary), together with a discretionary contribution amount not exceeding 1% of covered compensation.
The Section 401(k) contribution plan was suspended when the net assets of Haven were confiscated, and all Admiral employees were removed from their employment positions by the federal regulators.
STOCK COMPENSATION PROGRAM
The Board of Directors and shareholders of Admiral adopted the 1988 Stock Compensation Program (the "Program"), effective December 19, 1988, for the benefit of directors, officers and other employees of Admiral and its subsidiaries, including Haven, who are deemed to be responsible for the future growth of Admiral. Under the Program, Admiral has reserved 1,100,000 shares of authorized but unissued Common Stock for the future issuance of option grants. Options granted under the Program can be in the form of incentive options, compensatory options, stock appreciation rights, performance shares, or any combination thereof.
There have been no grants of any rights or options to any director, officer or employee of Admiral or any affiliate.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors and shareholders of Admiral approved the 1988 Employee Stock Purchase Program on December 19, 1988, enabling the directors, officers and employees of Admiral and its affiliates to acquire a proprietary interest in Admiral's Common Stock through a payroll deduction program. To date, this plan has not been implemented by Admiral.
EMPLOYMENT AGREEMENTS
There are no employment agreements between Admiral and any of Admiral's employees.
INDEBTEDNESS OF MANAGEMENT
Admiral makes no loans to its directors, officers or employees.
COMPENSATION OF DIRECTORS
While each Director is entitled to receive $500 plus reasonable out-of-pocket expenses for attending each meeting, each Director volunteered to suspend the receipt of all director fees due to Admiral's current financial condition, beginning with the meeting held during the third fiscal quarter of the fiscal year ended June 30, 1989. No additional compensation is paid for attendance of committee meetings.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of Admiral's Common Stock as of June 30, 1994 by (I) each person who is known by Admiral to own beneficially 5% or more of Admiral's Common Stock, (ii) each Director and/or officer of the Company, and (iii) all Directors and executive officers of Admiral as a group. Except as indicated below, each person has sole dispositive and voting power with respect to the shares of Common Stock indicated.
AMOUNT AND PERCENT NATURE OF OF NAME AND ADDRESS OF BENEFICIAL COMMON BENEFICIAL OWNER OWNERSHIP STOCK ---------------- --------- -----
Wm. Lee Popham (l) 2,119,385 19.29% 825 Arthur Godfrey Road Miami Beach, Florida 33140
Ti-Aun Plantations, N.V. 889,007 8.09% Suite 600 600 Brickell Avenue Miami, Florida 33131
David C. Popham (2) 668,651 6.09% 3166 Commodore Plaza Coconut Grove, Florida 33133
Linda E. Baker 150,120 1.37% Suite 800 2665 South Bayshore Drive Coconut Grove, Florida 33133
Charles E. Fancher, Jr. 12,000 * 2844 Chucunantah Road Coconut Grove, Florida 33133
All directors and executive officers as a group (3 persons) 2,281,505 20.77% _____________ * Less than one percent
(1) Includes 63,695 shares held in a testamentary trust for members of Wm. Lee Popham's family, for which Mr. Popham disclaims beneficial ownership. Does not include any shares directly or beneficially owned by David C. Popham (his brother) or Jeanne M. Baker (his mother).
(2) Includes 76,185 shares held jointly by David C. Popham and Valerie P. Popham, his wife. Also includes 119,928 shares held jointly by David C. Popham and Jeanne M. Baker, the mother of David C. Popham and Wm. Lee Popham. Does not include any shares beneficially owned by Wm. Lee Popham, the brother of David C. Popham.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Wm. Lee Popham, the Chairman and President of Admiral, was previously also the Chairman, President and controlling stockholder of CCH. Mr. Popham's mother, Jeanne M. Baker, was also a director of CCH. While CCH did not receive any fees or other compensation from Admiral or Haven during the fiscal year, CCH did receive a consulting, management and organizational fee in connection with the acquisition of
Haven by Admiral of $354,286, plus expense reimbursements payable in cash during fiscal 1988. CCH and its affiliates, including Caesar Creek TSC, Ltd. (CCTSC) were liquidated in December 1989.
Wm. Lee Popham, together with certain members of his family (including David C. Popham and Jeanne M. Baker) and certain affiliates including CCH and CCTSC, participated in a transaction which capitalized Admiral in order to effect the acquisition of Haven in a contributed property exchange offer. The total historical cost of the property contributed by Wm. Lee Popham, his family and affiliates in the exchange was $1,228,227, the aggregate appraised value of such contributed property was $12,586,553, and the net contribution value was $7,022,965. Mr. Popham and his family and affiliates received an aggregate of 4,330,208 shares of Admiral Common Stock in the exchange, which occurred on June 16, 1988.
Linda E. Baker, a director, officer and stockholder of Admiral was also an officer, director and stockholder of CCH prior to its liquidation, as described above. She is not related to Jeanne M. Baker.
In accordance with the approved supervisory acquisition Agreement, Haven was contractually obligated to pay Admiral a management fee of $25,000 per quarter for financial and operational advice, budgeting, business planning, marketing and public relations. Haven was directed by FHLBB supervisory personnel to cease in honoring this approved contractual obligation, beginning with the January 1990 payment.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ADMIRAL FINANCIAL CORP.
INDEX
(A)1. Admiral Financial Corp.: PAGE
Statement Regarding Sec. 210.3-11 of Regulation S-K
Consolidated Balance Sheets as of June 30, 1994 and 1993
Consolidated Statement of Operations for the three years ended June 30, 1994
Consolidated Statement of Stockholders' (Deficit) Equity for the three years ended June 30, 1994
Consolidated Statement of Cash Flows for the three years ended June 30, 1994
Notes to Consolidated Financial Statements
(a.)2. There are no financial statement schedules required to be filed by Item 8 of this Form 10-K, or by paragraph (d) of Item 14.
(a.)3. Exhibits
(3) The Articles of Incorporation and By-Laws of Admiral are incorporated herein by reference to Exhibits 3.1 and 3.2 of Admiral's Form S-4
Registration Statement filed with the Securities and Exchange Commission on January 22, 1988.
(4) A specimen copy of Admiral's common stock certificate is incorporated herein by reference to Exhibit 4.1 in Amendment No. 1 of Admiral's Form S-4 Registration Statement filed with the Securities and Exchange Commission on April 5, 1988.
(9) Not applicable.
(10) Admiral hereby incorporates by reference the sections entitled "Appendix A - Agreement and Plan of Reorganization, as amended, dated October 26, 1987, and related Agreement and Plan of Merger, as amended" and "Contributed Property Exchange Offer" contained in Haven's Prospectus/Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 in connection with Haven's special meeting held on June 3, 1988.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Admiral's sole subsidiary has been Haven Federal Savings and Loan Association. The assets and liabilities of Haven were confiscated by the federal government on March 2, 1990.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule attached.
(28) Not applicable.
(99) Not applicable.
(b.) No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
(c.) The exhibits required by Item 601 of Regulation S-K are included in (a)(3) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ADMIRAL FINANCIAL CORP.
By /s/ WM. LEE POPHAM ------------------------------- Wm. Lee Popham, President and Date: September 18, 1996 Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ----
/S/ WM. LEE POPHAM Chairman of the Board September 18, 1996 - ---------------------------- of Directors, Chief Wm. Lee Popham Executive Officer, and Chairman and President President Principal Executive Officer
/S/ LINDA E. BAKER Director, Vice President, September 18, 1996 - ---------------------------- Secretary and Treasurer Linda E. Baker Principal Financial Officer
/S/ CHARLES E. FANCHER, JR. Director September 18, 1996 - ---------------------------- Charles E. Fancher, Jr.
FINANCIAL STATEMENTS OF AN INACTIVE REGISTRANT
Pursuant to Sec. 210.3-11 of Regulation S-X, Admiral Financial Corp. qualifies as an inactive entity, meeting all of the following conditions:
(A) Gross receipts from all sources for the fiscal year are not in excess of $100,000;
(B) Admiral has not purchased or sold any of its own stock, granted options therefor, or levied assessments upon outstanding stock;
(C) Expenditures for all purposes for the fiscal year are not in excess of $100,000;
(D) No material change in the business has occurred during the fiscal year, including any bankruptcy, reorganization, readjustment or succession or any material acquisition or disposition of plants, mines, mining equipment, mine rights or leases; and
(E) No exchange upon which the shares are listed, or governmental authority having jurisdiction, requires the furnishing to it or the publication of audited financial statements.
Accordingly, the attached financial statements of Admiral Financial Corp. are unaudited.
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements
ADMIRAL FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND REGULATORY MATTERS
Admiral Financial Corp. ("Admiral") is inactive.
On June 16, 1988, Admiral acquired Haven Federal Savings and Loan Association ("Haven"). Admiral was a newly formed savings and loan holding company that was capitalized through the contribution of various parcels of real estate, investment securities and a tax sale certificate business ("Contributed Property") recorded at its net predecessor cost of $596,812, net of transaction costs. The Association was acquired by Admiral through the exchange of common stock which was accounted for under the purchase method of accounting and, accordingly, the assets and liabilities were adjusted to their estimated fair market values as of the date of acquisition.
In connection with the acquisition, the Federal Home Loan Bank Board ("FHLBB"), which was abolished by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and was succeeded by the Office of Thrift Supervision ("OTS") of the Treasury Department, issued a resolution (the "Agreement") on April 26, 1988, requiring that Admiral must comply with certain conditions. Those conditions included a Regulatory Capital Maintenance/Dividend Agreement (the "Capital Agreement") dated June 15, 1988, by and between the Federal Savings and Loan Insurance Corporation "FSLIC" and Admiral:
(a.) No dividends will be paid by the Association until all of the real estate included in the Contributed Property is liquidated and the cash proceeds recorded on the Association's books. Any dividends that are a result of income from the sale of real estate are restricted to the sales price less the regulatory appraised value minus any carrying costs paid by the Association. In addition, unless prior approval has been obtained from the FHLBB, dividends paid by the Association shall be limited to 50% of its income for that fiscal year as reflected in its quarterly reports to the FHLBB, except for the fiscal year of acquisition when dividends paid by the Association shall be limited to 50% of its net income earned after the effective date of the acquisition, provided that any dividends permitted under this limitation may be deferred and paid in a subsequent year, and the payment of dividends would not reduce the regulatory capital of the Association below the required level.
(b.) If the Association fails to meet its regulatory capital requirements, then Admiral must infuse sufficient equity capital, in a form satisfactory to the FHLBB, into the Association during the subsequent quarter. Admiral was permitted to cure any default within 90 days.
Failure to do so will allow the FSLIC to exercise its legal or equitable rights under the Capital Agreement to enforce the terms of the Capital Agreement. Admiral was deemed by the FHLBB on July 17, 1989, to have defaulted on its obligation to infuse capital under the Capital Agreement and was given until October 18, 1989, to cure such defaults. Failure to cure such default by that date would permit the FSLIC (or its successor) to seek its legal or equitable remedy as set forth in the Capital Agreement, which included specific performance or administrative or judicial enforcement proceedings.
(c.) Admiral shall cause the Association to liquidate all of the real estate contributed as regulatory capital within two years after consummation of the transaction according to the following schedule: at least 37.5% of the market value of the properties as determined by the FHLBB District Appraiser by the end of the third quarter after consummation and thereafter at least 12.5% each subsequent quarter. The Association shall not provide financing to facilitate the liquidation of the real estate contributed as regulatory capital without the prior written approval of the Association's Supervisory Agent. If Admiral does not meet this real estate liquidation schedule, the FSLIC shall have the right to vote the Association's stock, remove the Association's Board of Directors and/or dispose of any or all of the common stock of the Association owned by Admiral. The Association applied for relief from the requirements of the Resolution and Capital Agreement which mandate the sale of real estate in accordance with the schedule above, but was never given the opportunity for a hearing, or the benefit of a response.
For regulatory purposes, the Association was required to comply with minimum regulatory capital requirements. During the year ended June 30, 1989, the Association incurred substantial operating losses and sold certain parcels of Contributed Property at amounts which approximated predecessor cost, rather than at the substantially higher regulatory appraised values. These factors contributed to the Association's failure to meet its minimum regulatory capital requirement on June 30, 1989. At June 30, 1989, such minimum regulatory capital requirement amounted to approximately $6,642,000. When an association fails to meet its regulatory capital requirement, the FHLBB and the FSLIC (and their successors) may take such actions as they deem appropriate to protect the Association; its depositors; the FSLIC; and its successor, Savings Association Insurance 'Fund ("SAIF").
The FHLBB, in a supervisory letter dated March 31, 1989, designated the Association as a "troubled institution" subject to the requirements of the Office of Regulatory Activities Regulatory Bulletin 3a ("RB3a"). A troubled institution under RB3a is subject to various growth restrictions concerning deposit accounts and lending activities.
Admiral did not have the ability to infuse sufficient equity capital into the Association in accordance with the Agreement and Capital Agreement. Due to the inability to continue operations without a significant capital infusion or other source of recapitalization, the value of the Association's excess cost over net assets acquired was considered permanently impaired and, accordingly, was written off at June 30, 1989.
On August 9, 1989, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") was signed into law. FIRREA imposed, by no later than December 7, 1989, more stringent capital requirements upon savings institutions than those currently in effect. In addition, FIRREA included provisions for changes in the Federal regulatory structure for institutions including a new deposit insurance system, increased deposit insurance premiums and restricted investment activities with respect to non-investment grade corporate debt and certain other investments. FIRREA also increases the required ratio of housing-related assets in order to qualify as an insured institution.
FIRREA's provisions for new capital standards required institutions to have a minimum regulatory tangible capital equal to 1.5% of total assets and a minimum 3.0% leverage capital ratio by no later than December 7, 1989. The ability to include qualifying supervisory goodwill for purposes of the leverage capital ratio requirement will be phased out by January 1, 1995. In addition, institutions were required to meet a risk-based capital requirement. In all cases, the capital standards were also required to be no less stringent than standards applicable to national banks. Currently, national banks are required to maintain a primary capital-to-assets ratio of 5.5% and a total capital-to-assets ratio of 6.0%.
The Association did not meet these new capital requirements imposed by FIRREA.
The Association sought regulatory relief from sanctions imposed by FIRREA for failing to meet the minimum regulatory capital requirements, and applied for financial assistance to the FDIC. There was no response or hearing prior to the seizure of Haven.
The net assets of Haven were seized by the federal government on March 2, 1990.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a.) BASIS OF PRESENTATION
The accompanying balance sheets as of June 30, 1994 and 1993, include references to the accounts of Admiral and the net assets and net liabilities of its wholly-owned subsidiary, Haven Federal Savings and Loan Association. Due to Haven's status as a discontinued operation, as discussed in note 1, the Association's net assets, net liabilities, and net losses from operations have been presented in the aggregate. The consolidated statements of operations, stockholders' (deficit) equity and cash flows for the years prior to 1990 include the accounts of Admiral and the Association. All significant intercompany transactions have been eliminated in consolidation.
(b.) OFFICE PROPERTIES AND EQUIPMENT
All office properties and equipment were sold when the offices of the Company were closed during the fiscal year ended June 30, 1990, and the proceeds from such sales are reflected as "other income."
(c.) INCOME TAXES
Admiral and its wholly-owned subsidiary file a consolidated tax return. Taxes are provided on all income and expense items included in earnings, regardless of the period in which such items are recognized for tax purposes, except for income representing a permanent difference.
(d.) REAL ESTATE
Loss from real estate operations includes rental income, operating expenses, interest expense on the related mortgages payable, gains on sales, net and provision for estimated losses to reflect subsequent declines in the net realizable value below predecessor cost.
Provisions for estimated losses on real estate are charged to earnings when, in the opinion of management, such losses are probable. While management uses the best information available to make evaluations, future adjustments to the allowances may be necessary if economic con ditions change substantially from the assumptions used in making the evaluations.
(e.) EXCESS COST OVER NET ASSETS ACQUIRED AND OTHER INTANGIBLES
The excess cost over net assets acquired was amortized by the interest method over the estimated lives of the long-term, interest-bearing assets acquired. The remaining unamortized excess cost over net assets acquired was written off at June 30, 1989 (see note 1).
(g) CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash and cash equivalents include the accounts of Admiral.
(3) PURCHASE ACCOUNTING
At June 30, 1989, the remaining unamortized excess cost over net assets acquired of $7,768,074 was written off and charged to operations (see note 1).
(4) INCOME TAXES
At June 30, 1994 and 1993, the Company has estimated net operating loss carryforwards of approximately $10,447,000 and $10,426,000, respectively, for Federal income tax purposes, and $10,095,000 and $10,074,000, respectively, for state income tax purposes to offset future taxable income.
These carryforwards were scheduled to expire in future years as follows:
June 30, 1993, 1992, 1991 and 1990. While the confiscation of the assets and liabilities of Haven may have resulted in a taxable event, management believes that any taxable income resulting from such confiscation of assets and liabilities should not exceed the available net operating loss carryforwards.
The net operating loss carryforwards expiring through 2002 were generated by the Association prior to its acquisition by Admiral Financial Corp. and have been carried over at their original amounts for income tax purposes. For financial statement purposes, these purchased loss carryforwards will not be used to offset the future tax expense of Admiral. They will be accounted for as an adjustment to equity if and when a tax benefit is realized. At June 30, 1994 and 1993, such purchased loss carryforwards remaining amounted to approximately $2,837,000 and $2,837,000, respectively.
(5) DISPOSAL OF THE ASSOCIATION ASSETS AND LIABILITIES
The net assets and net liabilities of Haven were confiscated by the federal government on March 2, 1990.