<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 DECEMBER 31, 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, including area (970) 479-2800
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 January 31, 1996
Common Stock, $.025 par value 3,107,940
<PAGE>
CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<S> <C>
Part I. Financial Information.............................................. 3
Balance Sheets as of December 31, 1995 and June 30, 1995.................... 4 & 5
Statements of Income for the three and six month periods ended December 31,
1995 and December 31, 1994.................................................. 6
Statements of Cash Flows for the six month periods ended December 31,
1995 and December 31, 1994.................................................. 7 & 8
Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 9,10 & 11
Part II. Other Information................................................. 11
Signature Page............................................................. 12
</TABLE>
Form 10-QSB
Page 2 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
DECEMBER 31, 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>
DECEMBER 31, JUNE 30,
1995 1995
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<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $1,108,461 $698,635
Investment securities 1,465,391 332,345
Prepaids and other 24,861 8,140
---------- ----------
TOTAL CURRENT ASSETS 2,598,713 1,039,120
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PROPERTY:
Land - 200,000
Building and improvements 1,415,796 1,415,796
---------- ----------
1,415,796 1,615,796
Less accumulated depreciation 233,721 192,424
---------- ----------
NET PROPERTY 1,182,075 1,423,372
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OTHER ASSETS:
Lease commissions, net 46,082 56,028
Deferred rent 32,137 32,137
Note receivable 19,956 21,559
Loan acquisition costs 18,571 19,630
Non-Trading and Restricted securities 178,513 -
Convertible note receivable 100,000 -
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TOTAL OTHER ASSETS 395,259 129,354
---------- ----------
$4,176,047 $2,591,846
---------- ----------
---------- ----------
</TABLE>
Form 10-QSB
Page 4 of 12
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CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1995
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 32,361 $ 18,850
Accrued property taxes and other 36,297 18,807
Security deposits 22,985 22,985
Current maturities of long term debt 19,904 18,841
---------- ----------
TOTAL CURRENT LIABILITIES 111,547 79,483
LONG-TERM DEBT, less current maturities 792,628 802,985
---------- ----------
TOTAL LIABILITIES 904,175 882,468
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STOCKHOLDERS' EQUITY:
Common Stock - $.025 par value, 15,000,000
shares authorized: 3,107,940 shares issued and
outstanding as of December 31, 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 (854,342) (1,419,013)
Unrealized gain (loss) on investment
equity securities 963,008 (28,215)
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TOTAL STOCKHOLDERS' EQUITY 3,271,872 1,709,378
---------- ----------
$4,176,047 $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 SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $156,692 $143,810 $312,265 $290,357
Option extension fee 75,000 - 75,000 -
Gain on sales of
investment securities 23,012 16,242 43,937 16,242
Interest income 10,689 8,693 19,257 12,778
Dividend income 2,826 - 5,702 -
Gain on sale of
subdivided land 434,920 - 434,920 -
Misc. income 400 - 400 -
--------- --------- --------- ---------
TOTAL REVENUES 703,539 168,745 891,481 319,377
--------- --------- --------- ---------
EXPENSES:
Operating, general, and
administrative 148,289 121,101 291,034 232,756
Interest 17,831 18,235 35,776 36,562
--------- --------- --------- ---------
TOTAL EXPENSES 166,120 139,336 326,810 269,318
--------- --------- --------- ---------
NET INCOME $537,419 $29,409 $564,671 $50,059
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME PER COMMON
SHARE: $.17 $.01 $.18 $.02
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL WEIGHTED AVERAGE
SHARES OUTSTANDING 3,107,940 3,087,940 3,102,015 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>
SIX MONTHS SIX MONTHS
ENDED ENDED
DEC. 31, 1995 DEC. 31, 1994
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $564,671 $50,059
Adjustment to reconcile net income to cash
provided by operating activities:
Gain on sale of land (500,000) -
Depreciation and amortization 52,303 45,399
Write off of convertible note - 12,500
Gain on sales of investment securities (43,937) (16,242)
Change in operating assets and liabilities:
Prepaids and other (16,721) (28,597)
Accounts payable 13,512 6,704
Accrued liabilities and other 17,490 16,819
Accrued interest receivable - (3,742)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 87,318 82,900
-------- --------
INVESTING ACTIVITIES:
Proceeds from sale of land 700,000 -
Purchase of investment securities (435,511) (75,057)
Proceeds from sales of investment securities 159,110 78,150
Purchase of improvements - (40,601)
Lease commissions paid - (19,041)
Collections on note receivable 1,603 -
Purchase of convertible note (100,000) -
-------- --------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 325,202 (56,549)
-------- --------
</TABLE>
Form 10-QSB
Page 7 of 12
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
DEC. 31, 1995 DEC. 31, 1994
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<S> <C> <C>
FINANCING ACTIVITIES:
Principal payments on notes payable (9,294) (8,507)
Proceeds from the sale of common stock 6,600 -
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NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES (2,694) (8,507)
---------- --------
INCREASE (DECREASE) IN CASH 409,826 17,844
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 698,635 596,301
---------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $1,108,461 $614,145
---------- --------
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</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 December 31, 1995. The increase of cash on hand to
approximately $1,108,500 at December 31, 1995 from $698,600 at June
30, 1995 is a result primarily of the sale of the undeveloped lot
adjacent to the Corporate Centre.
For the six month period ended December, 1995, operating
activities generated positive cash flow of $87,300 as compared to
approximately $82,900 in the six month period ended December 31,
1994. The difference was attributable primarily an increase in gains
from the sale of investment securities of $43,900 in the six month
period ended December 31, 1995, as compared to gains of approximately
$16,200 in the six month period ended December 31, 1994, and changes
in accounts payable and accrued liability balances which increased by
approximately $31,000 and $23,500 in the six month period ended
December 31, 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 $16,700 and $28,600 in the six month periods ended
December 31, 1995 and 1994, respectively. Operating, general and
administrative expenses increased by approximately $58,200 to
$291,000 in the six months ended December 31, 1995 compared to the
same period in 1994. The increase related primarily to additional
costs incurred in connection with matters pertaining to the completed
and proposed sales of certain of the Company's assets.
Cash provided in investing activities was $325,200 during
the six month period ended December 31, 1995, of which approximately
$700,000 was generated from the sale of the undeveloped lot.
Approximately $276,400 used was the amount by which the cost to
purchase exceeded proceeds of the sale of investment securities and
$100,000 was used to purchase a convertible note. In the comparable
period in 1994, cash used in investing activities was $56,600, of
which approximately $3,100 was the amount by which the proceeds of
the sale of investment securities exceeded the cost of purchase of
the securities and approximately $59,600 was used for the purchase
of improvements and lease commissions.
Financing activities during the six month period ended
December 31, 1995 utilized cash of approximately $2,700, of which
$9,300 was used 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 six month period ended December 31,
1994, $8,500 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.
Form 10-QSB
Page 9 of 12
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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.
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 a non-refundable 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 on or before February 29,
1996 and is subject to an extension of up to sixty (60) days upon
written notice by Columbine West.
The Company completed the sale of the undeveloped lot adjacent
to the Corporate Centre to Centurion Development Company
("Centurion") for $700,000 in cash which was reduced from the
original contract amount of $725,000. The earnest deposit of $25,000
made by Centurion previously and the balance of $675,000 was paid in
cash at the closing which occurred on November 30, 1995. After
considering the Company's cost of the land of $200,000, a net gain of
$500,000 was recognized upon the sale of the land, prior to closing
costs and expenses of $65,080.
RESULTS OF OPERATIONS.
In the event that the proposed sale of the Company's Corporate
Centre is consummated, then the future rental operations subsequent
to the sale would be eliminated.
SIX MONTH PERIOD ENDED DECEMBER 31, 1995 COMPARED TO SIX MONTH
ENDED DECEMBER 31, 1994
The Company's revenues for the six month period ended
December 31, 1995 totaled approximately $891,500, consisting of the
gain on the sale of the undeveloped lot of approximately $434,900, a
non-refundable earnest deposit on the sale of Corporate Centre of
$75,000, rental income of approximately $312,300, interest on temporary
cash and other money market instruments of approximately $25,300 and
gains from the sale of investment securities of approximately $43,900.
Revenues for the six month period ended December 31, 1994 totaled
approximately $319,400, of which approximately $290,400 was rental income,
gains from the sale of investments securities of approximately $16,200, and
approximately $12,800 was interest and dividend income. Increases in
rental revenues of approximately $21,900 were attributable primarily
to increases in rental rates in the six month period ended December
31, 1995. At December 31, 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.
Form 10-QSB
Page 10 of 12
<PAGE>
During the six month period ended December 31, 1995, as
compared with the six month period ended December 31, 1994, the
Company incurred operating, general and administrative costs of
approximately $291,000 and $232,800, respectively. The increase of
approximately $58,200 resulted from increases in amortization and
depreciation, additional office expenses, expenses related to the
Special Meeting of Shareholders and miscellaneous expenses of $6,900,
$21,000, $31,000, and $13,500, respectively. A decrease of non-
reoccurring expenses of approximately $14,200 offset the above
referenced increases. Interest expense decreased to approximately
$35,800 for the period from $36,600 in the comparable period in 1994.
The Company had net income for the six month period ended December
31, 1995 of approximately $564,700 as compared with net income of
approximately $50,100 for the six month period ended December 31,
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.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On October 23, 1995, the Company held a special meeting of
shareholders to consider the proposed sale of its real estate
properties located in Colorado Springs, Colorado. The real estate
properties consist of the Corporate Centre office building and an
adjacent, undeveloped lot.
Votes cast for the proposed sale were 2,363,243 shares, with 4,408
shares votes cast against and 6,213 shares abstaining. The proposed
measure was adopted.
Form 10-QSB
Page 11 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
DECEMBER 31, 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.
February 8, 1996 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,108,461
<SECURITIES> 1,465,391
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,598,713
<PP&E> 1,415,796
<DEPRECIATION> 233,721
<TOTAL-ASSETS> 4,176,047
<CURRENT-LIABILITIES> 111,547
<BONDS> 792,628
0
0
<COMMON> 3,163,206
<OTHER-SE> 108,666
<TOTAL-LIABILITY-AND-EQUITY> 4,176,047
<SALES> 0
<TOTAL-REVENUES> 891,481
<CGS> 0
<TOTAL-COSTS> 291,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,776
<INCOME-PRETAX> 564,671
<INCOME-TAX> 0
<INCOME-CONTINUING> 564,671
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 564,671
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
