<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ TO ______________
Commission file number 0-12962
CAMBRIDGE HOLDINGS, LTD.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0826695
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
8100 W. Crestline Avenue, Suite A-15, 80123-1200
#330 Littleton, Colorado (Zip Code)
(Address of principal executive offices)
Issuer's telephone number, (970) 479-2800
including area code
191 University Blvd., #302, Denver, CO 80206
(Former address)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
Common Stock, $.025 par value 3,107,940
<PAGE>
CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
TABLE OF CONTENTS
Part I. Financial Information................................ 3
Balance Sheets as of September 30, 1995 and June 30, 1995..... 4 & 5
Statements of Income for the three month periods ended
September 30, 1995 and September 30, 1994.................... 6
Statements of Cash Flows for the three month periods ended
September 30, 1995 and September 30, 1994.................... 7 & 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 9 & 10
Part II. Other Information................................... 11
Signature Page................................................ 12
Form 10-QSB
Page 2 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
SEPTEMBER 30, 1995
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The unaudited financial statements reflect all adjustments and
contain all information necessary, in the opinion of management, for
a fair presentation of the financial position and results of
operation for the interim periods reported when these statements are
read in conjunction with the notes to financial statements included
in the Registrant's Form 10-KSB for the year ended June 30, 1995.
Form 10-QSB
Page 3 of 12
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CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1995
ASSETS
------
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 646,635 $ 698,635
Investment securities 507,416 332,345
Prepaids and other 18,018 8,140
---------- ----------
TOTAL CURRENT ASSETS 1,172,069 1,039,120
---------- ----------
PROPERTY:
Land 200,000 200,000
Building and improvements 1,415,796 1,415,796
---------- ----------
1,615,796 1,615,796
Less accumulated depreciation 213,073 192,424
---------- ----------
NET PROPERTY 1,402,723 1,423,372
---------- ----------
OTHER ASSETS:
Lease commissions, net 50,981 56,028
Deferred rent 32,137 32,137
Note receivable 20,768 21,559
Loan acquisition costs 19,100 19,630
Restricted securities 20,000 -
TOTAL OTHER ASSETS 142,986 129,354
---------- ----------
$2,717,778 $2,591,846
========== ==========
</TABLE>
Form 10-QSB
Page 4 of 12
<PAGE>
CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 17,261 $ 18,850
Accrued property taxes and other 27,344 18,807
Security deposits 22,985 22,985
Current maturities of long term debt 19,396 18,841
----------- -----------
TOTAL CURRENT LIABILITIES 86,986 79,483
LONG-TERM DEBT, less current maturities 797,839 802,985
----------- -----------
TOTAL LIABILITIES 884,825 882,468
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock - $.025 par value,
15,000,000 shares authorized: 3,107,940
shares issued and outstanding as of
September 30, 1995 and 3,087,940 shares
issued and outstanding as of June 30, 1995 77,684 77,184
Additional paid in capital 3,085,522 3,079,422
Accumulated deficit (1,391,762) (1,419,013)
Unrealized gain (loss) on investment
equity securities 61,509 (28,215)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,832,953 1,709,378
----------- -----------
$ 2,717,778 $ 2,591,846
=========== ===========
</TABLE>
Form 10-QSB
Page 5 of 12
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPT. 30, 1995 SEPT. 30, 1994
<S> <C> <C>
REVENUES:
Rental income $ 155,574 $ 146,547
Gain on sales of
investment securities 20,925 -
Interest income 8,567 4,085
Dividend income 2,876 -
---------- ----------
TOTAL REVENUES 187,942 150,632
---------- ----------
EXPENSES:
Operating, general, and
administrative 142,747 111,656
Interest 17,944 18,327
---------- ----------
TOTAL EXPENSES 160,691 129,983
---------- ----------
NET INCOME $ 27,251 $ 20,649
========== ==========
NET INCOME PER COMMON
SHARE: $.01 $.01
========== ==========
TOTAL WEIGHTED AVERAGE
SHARES OUTSTANDING 3,095,962 3,087,940
========== ==========
</TABLE>
Form 10-QSB
Page 6 of 12
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPT. 30, 1995 SEPT. 30, 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 27,251 $ 20,649
Adjustment to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 26,226 22,006
Gain on sales of investment securities (20,925) -
Change in operating assets and
liabilities:
Prepaids and other (9,878) (10,427)
Accounts payable (1,589) 6,783
Accrued liabilities and other 8,537 7,838
--------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 29,622 46,849
--------- --------
INVESTING ACTIVITIES:
Purchase of investment securities (134,216) (53,619)
Proceeds from sales of investment
securities 49,793 -
Lease commissions paid - (1,717)
Collections on note receivable 792 717
--------- --------
NET CASH USED IN INVESTING ACTIVITIES (83,631) (54,619)
--------- --------
</TABLE>
Form 10-QSB
Page 7 of 12
<PAGE>
CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPT. 30, 1995 SEPT. 30, 1994
<S> <C> <C>
FINANCING ACTIVITIES:
Principal payments on notes payable $ (4,591) $ (4,207)
Proceeds from the sale of common stock 6,600 -
-------- --------
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES 2,009 (4,207)
-------- --------
INCREASE (DECREASE) IN CASH (52,000) (11,977)
CASH, beginning of period 698,635 596,301
-------- --------
CASH, end of period $646,635 $584,324
========= =========
</TABLE>
Form 10-QSB
Page 8 of 12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and working capital positions were
adequate at September 30, 1995. The decrease of cash on hand to
approximately $646,600 at September 30, 1995 from $698,600 at June
30, 1995 is a result primarily of additional investments in
investment securities.
For the three month period ended September 30, 1995,
operating activities generated positive cash flow of $29,600 as
compared to approximately $46,800 in the three month period ended
September 30, 1994. The difference was attributable primarily to an
increase in gains from the sale of investment securities of $20,900
in the three month period ended September 30, 1995, as compared to no
gains in the three month period ended September 30, 1994, and changes
in accounts payable and accrued liability balances which increased by
approximately $6,900 and $14,600 in the three month period ended
September 30, 1995 and 1994, respectively. Other factors
contributing to the difference in cash provided by operating
activities in the period were changes in prepaid expenses which
increased by approximately $9,900 and $10,400 in the three month
periods ended September 30, 1995 and 1994, respectively. Operating,
general and administrative expenses increased by approximately
$31,100 to $142,700 in the three months ended September 30, 1995
compared to the same period in 1994. The increase related primarily
to additional costs incurred in connection with matters pertaining to
the proposed sale of the Company's assets.
Cash used in investing activities was $83,600 during the
three month period ended September 30, 1995, of which approximately
$84,400 was the amount by which the cost to purchase exceeded
proceeds of the sale of investment securities. In the comparable
period in 1994, cash used in investing activities was $54,600, of
which approximately $53,600 was the amount by which the cost to
purchase exceeded proceeds of the sale of investment securities.
Financing activities during the three month period ended
September 30, 1995 provided cash of approximately $2,000, of which
$4,600 was utilized for principal payments on the mortgage and $6,600
was realized from the sale of the Company's common stock through the
exercising of options. In the three month period ended September 30,
1994, $4,200 was used for principal payments on the mortgage.
The Company currently has no commitments for acquisition or
significant capital expenditures. In reviewing any acquisitions, the
Company will consider the effects on its liquidity. The Company
believes that cash on hand and generated by operations will provide
sufficient funds for the next twelve months.
It is generally perceived that the market for Class A
office buildings in Colorado Springs has improved since the time the
Company acquired the Corporate Centre in September 1991. Vacancy
rates for such buildings are generally lower than they were in 1991
and Corporate Centre is now fully leased. Although the market has
improved, numerous factors could affect the market in which Corporate
Centre competes. These factors include but are not limited to the
health of national, state and local economies, the continued
operation of Ft. Carson, the influx or closing of businesses in the
metropolitan area, new construction of similar properties and the
financial condition and stability of the Company's tenants. None of
these factors can be controlled or predicted by the Company.
Form 10-QSB
Page 9 of 12
<PAGE>
The Company has entered into an agreement to sell Corporate
Centre to Columbine West LLC and/or its assigns ("Columbine West")
for the purchase price of $2,725,000. As provided for in the
contract, the Company received an earnest check in the amount of
$75,000 from Columbine West LLC on October 27, 1995. The Company's
shareholders approved this sale at a Special Meeting held on October
23, 1995. Closing is scheduled for February 29, 1996 and is subject
to an extension of up to sixty (60) days upon written notice by
Columbine West.
The Company also entered into an agreement to sell the adjacent
lot to the Corporate Centre to Centurion Development Company
("Centurion") for $725,000 in cash. Centurion made a $25,000 earnest
money deposit with Chicago Title. The balance of $700,000 is to be
paid in cash at closing which is currently scheduled for November 15,
1995.
RESULTS OF OPERATIONS.
In the event that the proposed sales of the Company's properties
are consummated, then the future rental operations subsequent to the
sale would be eliminated.
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTH
ENDED SEPTEMBER 30, 1994
The Company's revenues for the three month period ended
September 30, 1995 totaled approximately $187,900, consisting of
rental income of approximately $155,600, interest on temporary cash
and other money market instruments of approximately $11,400 and gains
from the sale of investment securities of approximately $20,900.
Revenues for the three month period ended September 30, 1994 totaled
approximately $150,600, of which approximately $146,500 was rental
income and approximately $4,100 was interest and dividend income.
Increases in rental revenues of approximately $9,100 were
attributable primarily to increases in rental rates in the three
month period ended September 30, 1995. At September 30, 1995 and
1994 the occupancy rate was 100%. The loss of any existing tenants
and various factors which affect the Colorado Springs office rental
market could result in negative effects on future revenues from
rentals.
During the three month period ended September 30, 1995, as
compared with the three month period ended September 30, 1994, the
Company incurred operating, general and administrative costs of
approximately $142,700 and $111,700, respectively. The increase of
approximately $31,000 resulted from increases in amortization and
depreciation, additional office expenses, expenses related to the
Special Meeting of Shareholders and miscellaneous expenses of $4,200,
$13,000, $10,100, and $3,700, respectively. Interest expense
decreased to approximately $17,900 for the period from $18,300 in the
comparable period in 1994. The Company had net income for the three
month period ended September 30, 1995 of approximately $27,300 as
compared with net income of approximately $20,600 for the three month
period ended September 30, 1994.
The Company has paid no federal or state income taxes for
the year ended June 30, 1995 due to the utilization of net operating
loss carryovers. The Company has recorded a deferred tax asset of
$521,000 (consisting primarily of net operating loss carryforwards)
and has also recorded a valuation allowance equal to the net deferred
tax asset, as it was determined that it is more likely than not that
the deferred tax asset will not be realized. In the event that the
proposed property sales are consummated then the deferred tax asset
would be utilized.
Form 10-QSB
Page 10 of 12
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(b) On or about July 1, July 21 and September 15, 1995,
the Company filed Reports on Form 8-K reporting developments
with respect to contracts to sell property owned by the
Company.
Form 10-QSB
Page 11 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
SEPTEMBER 30, 1995
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAMBRIDGE HOLDINGS, LTD.
November 13, 1995 By: /s/ Gregory Pusey
---------------------------------
Gregory Pusey
President, Treasurer and Director
Form 10-QSB
Page 12 of 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 646,635
<SECURITIES> 507,416
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,172,069
<PP&E> 1,615,796
<DEPRECIATION> 213,073
<TOTAL-ASSETS> 2,717,778
<CURRENT-LIABILITIES> 86,986
<BONDS> 797,839
<COMMON> 3,163,206
0
0
<OTHER-SE> (1,330,253)
<TOTAL-LIABILITY-AND-EQUITY> 2,717,778
<SALES> 0
<TOTAL-REVENUES> 187,942
<CGS> 0
<TOTAL-COSTS> 142,747
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,944
<INCOME-PRETAX> 27,251
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,251
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
