<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 March 31, 1996
( ) 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, 80123-1200
Suite A-15, #330 Littleton, Colorado (Zip Code)
(Address of principal executive offices)
Issuer's telephone number, (970) 479-2800
including area code
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 April 30, 1996
Common Stock, $.025 par value 3,348,400
<PAGE>
CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
TABLE OF CONTENTS
Part I. Financial Information 3
Balance Sheets as of March 31, 1996 and June 30, 1995 4 & 5
Statements of Income for the three and nine month periods
ended March 31, 1996 and March 31, 1995 6
Statements of Cash Flows for the nine month periods ended
March 31, 1996 and March 31, 1995 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
Form 10-QSB
Page 2 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
MARCH 31, 1996
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>
MARCH 31, JUNE 30,
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
------
CURRENT:
Cash and cash equivalents $2,950,247 $ 698,635
Investment securities 1,320,023 332,345
Prepaids and other 3,388 8,140
---------- ----------
TOTAL CURRENT ASSETS 4,273,658 1,039,120
---------- ----------
PROPERTY:
Land - 200,000
Building and improvements - 1,415,796
---------- ----------
- 1,615,796
Less accumulated depreciation - 192,424
---------- ----------
NET PROPERTY - 1,423,372
---------- ----------
OTHER ASSETS:
Lease commissions, net - 56,028
Deferred rent - 32,137
Note receivable - 21,559
Loan acquisition costs - 19,630
Non-Trading and Restricted securities 146,950 -
Convertible notes receivable 200,000 -
Office equipment, net 3,361 -
---------- ----------
TOTAL OTHER ASSETS 350,311 129,354
---------- ----------
$4,623,969 $2,591,846
---------- ----------
---------- ----------
</TABLE>
Form 10-QSB
Page 4 of 12
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CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1996 1995
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 2,851 $ 18,850
Accrued property taxes and other 3,967 18,807
Security deposits - 22,985
Accrued income taxes 174,000 -
Deferred income taxes 375,000 -
Current maturities of long term debt - 18,841
---------- ----------
TOTAL CURRENT LIABILITIES 555,818 79,483
LONG-TERM DEBT, less current maturities - 802,985
---------- ----------
TOTAL LIABILITIES 555,818 882,468
---------- ----------
STOCKHOLDERS' EQUITY:
Common Stock - $.025 par value, 15,000,000
shares authorized: 3,349,200 shares issued and
outstanding as of March 31, 1996 and
3,087,940 shares issued and outstanding as
of June 30, 1995 83,715 77,184
Additional paid in capital 3,164,174 3,079,422
Retained earnings (deficit) 182,449 (1,419,013)
Unrealized gain (loss) on investment
equity securities 637,813 (28,215)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 4,068,151 1,709,378
---------- ----------
$4,623,969 $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 NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995 MARCH. 31, 1996 MARCH 31, 1995
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 70,424 $ 155,725 $ 382,689 $ 446,082
Option extension fee (75,000) - - -
Gain on sales of
investment securities (49,434) 4,331 (5,497) 20,573
Interest income 19,284 8,210 38,541 20,988
Dividend income 11,756 - 17,458 -
Gain on sale of subdivided land - - 434,920 -
Gain on sale of building 1,324,447 - 1,324,447 -
Misc. income - - 400 -
---------- ---------- ---------- ----------
TOTAL REVENUES 1,301,477 168,266 2,192,958 487,643
---------- ---------- ---------- ----------
EXPENSES:
Operating, general, and
administrative 82,956 106,990 373,990 339,746
Interest 7,730 18,140 43,506 54,702
---------- ---------- ---------- ----------
TOTAL EXPENSES 90,686 125,130 417,496 394,448
---------- ---------- ---------- ----------
INCOME BEFORE TAXES ON INCOME 1,210,791 43,136 1,775,462 93,195
TAXES ON INCOME 174,000 - 174,000 -
---------- ---------- ---------- ----------
NET INCOME $1,036,791 $ 43,136 $1,601,462 $ 93,195
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME PER COMMON
SHARE AND COMMON EQUIVALENT
SHARE: $.31 $.01 $.50 $.03
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,364,074 3,087,940 3,189,368 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>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,601,462 $ 93,195
Adjustment to reconcile net income
to cash provided by operating activities:
Gain on sale of land (434,920) -
Gain on sale of building (1,324,447) -
Depreciation and amortization 86,875 71,342
Write off of convertible note - 12,500
(Gain) loss on sales of investment securities 5,497 (20,573)
Change in operating assets and liabilities:
Prepaids and other 1,391 (29,369)
Accounts payable 215 9,261
Accrued liabilities and other - 25,167
Accrued income taxes 174,000 -
Accrued interest receivable - (3,912)
----------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 110,073 157,611
----------- ---------
INVESTING ACTIVITIES:
Proceeds from sale of land 634,920 -
Proceeds from sale of building 2,547,380 -
Purchase of investment securities (503,089) (172,427)
Proceeds from sales of investment securities 403,991 95,256
Purchase of improvements (20,861) (44,909)
Lease commissions and others 7,586 (24,605)
Collections on note receivable 2,155 -
Purchase of convertible notes (200,000) -
----------- ---------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 2,872,082 (146,685)
----------- ---------
</TABLE>
Form 10-QSB
Page 7 of 12
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
FINANCING ACTIVITIES:
Principal payments on notes payable (821,826) (12,902)
Proceeds from the sale of common stock 91,283 -
---------- --------
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES (730,543) (12,902)
---------- --------
INCREASE (DECREASE) IN CASH 2,251,612 (1,976)
CASH AND CASH EQUIVALENTS,
beginning of period 698,635 596,301
---------- --------
CASH AND CASH EQUIVALENTS,
end of period $2,950,247 $594,325
---------- --------
---------- --------
</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 completed the sale of Corporate Centre office
building located in Colorado Springs, Colorado during February 1996. This
sale, combined with the sale of the adjacent undeveloped lot to the Corporate
Centre during November 1995 generated a substantial increase in income as
well as significant cash proceeds to the Company. The Company currently is
anticipating exploring options to acquire other properties or other businesses.
If a suitable business prospect were identified, the Company would consider
acquiring, merging or entering into another form of business combination with
another entity. At the present time, the Company has no commitments regarding
any acquisitions or mergers.
As a result of the gains form the sale of the Corporate Centre
building and the undeveloped lot, the Company's entire net operating loss
carryforward will be utilized in the current year. The gains combined with
income from ongoing activities results in an income tax expense for the nine
month period of approximately $174,000 which will require a cash payment
during the current year. Due to the utilization of the net operating loss
carryforward, a deferred income tax liability of $375,000 has been provided
relating to the unrealized gain on securities held for sale. This deferred
income tax provision on the unrealized gain had previously been offset by the
then available net operating loss carryforward. The increase of cash on hand
to approximately $2,950,200 at March 31, 1996 from $698,600 at June 30, 1995
is a result primarily of the sale of the property sales.
For the nine month period ended March, 1996, operating activities
generated positive cash flow of $110,100 as compared to approximately
$157,600 in the nine month period ended March 31, 1995. The difference was
attributable primarily to an increase in gains from the sale of the Corporate
Centre building and adjacent lot of approximately $1,759,400 in the nine
month period ended March 31, 1996, and increases in accounts payable and accrued
liability balances of approximately $34,400 in the nine month period ended
March 31, 1995. Other factors contributing to the difference in cash
provided by operating activities in the period were changes in prepaid
expenses which increased by approximately $1,400 in the nine month
period ended March 31, 1996 as compared to a decrease of approximately of
$29,400 in the same period in 1995. The Company also incurred losses on the
sale of investment securities of approximately $5,500 in the nine month
period ended March 31, 1996 as compared to a gain of approximately $20,600 in
the same period in 1995.
Cash provided in investing activities was $2,872,100 during the
nine month period ended March 31, 1996, of which approximately $3,182,300 was
generated from the sale of the Corporate Centre building and the undeveloped
lot. Approximately $99,100 used was the amount by which the cost to purchase
exceeded proceeds of the sale of investment securities and $200,000 was used
to purchase convertible notes. In the comparable period in 1995, cash used
in investing activities was
Form 10-QSB
Page 9 of 12
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$146,700, of which approximately $77,200 was the amount by which the cost to
purchase exceeded proceeds of the sale of investment securities and
approximately $69,500 was used for the purchase of improvements and lease
commissions.
Financing activities during the nine month period ended March 31,
1996 utilized cash of approximately $730,500, of which $821,800 was used for
principal payments including the repayment of the mortgage upon the sale of
the building and $91,300 was realized from the sale of the Company's common
stock through the exercising of options net of $2,900 shares in treasury used
for the repurchase of common stock from dissenting shareholders. In the nine
month period ended March 31, 1995, $12,900 was used for principal payments on
the mortgage.
The Company completed the sale of the Corporate Centre building to
Columbine West LLC ("Columbine West") on February 8, 1996 for the purchase
price of $2,725,000. The Company received a non-refundable earnest check in the
amount of $75,000 from Columbine West LLC on October 27, 1995 and the balance of
$2,650,000 was paid at closing prior to closing costs and expenses.
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.
The Company's investment securities have appreciated considerably
since June 30, 1995 to March 31, 1996. The prices of the securities held by
the Company are often highly volatile. In addition, trading in these
securities may be thin or there may be other impediments to, or restrictions
on, transfer.
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.
RESULTS OF OPERATIONS.
Since the sale of the Company's Corporate Centre was consummated, the
future rental operations are eliminated.
NINE MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO NINE MONTH ENDED
MARCH 31, 1995
The Company's revenues for the nine month period ended March 31, 1996
totaled approximately $2,193,000, consisting of the gain on the sale of the
Corporate Centre buildings of approximately $1,324,400 and the undeveloped lot
of approximately $434,900, rental income recognized up to the time of sale of
approximately $382,700, interest on temporary cash and other money market
instruments, dividend and miscellaneous income of approximately $56,300 and
losses from the sale of investment securities of approximately $5,500. Revenues
for the nine month period
Form 10-QSB
Page 10 of 12
<PAGE>
ended March 31, 1995 totaled approximately $487,700, of which approximately
$446,100 was rental income, gains from the sale of investment securities of
approximately $20,600, and approximately $21,000 was interest and dividend
income. Decreases in rental revenues of approximately $63,400 were attributable
primarily to the sale of the Corporate Centre building in early February 1996.
Through the time of sale, the building's occupancy rate was 100%.
During the nine month period ended March 31, 1996, as compared with
the nine month period ended March 31, 1995, the Company incurred operating,
general and administrative costs of approximately $374,000 and $339,700,
respectively. The increase of approximately $34,300 resulted from increases in
amortization and depreciation, expenses related to the Special Meeting of
Shareholders and sale of the land and building, and miscellaneous expenses of
$16,000 $52,500, and $11,800, respectively. A decrease of non-reoccurring
expenses of approximately $14,200 and operating, general and administrative
costs of approximately $31,800 due to the sale of the building offset the above
referenced increases. Interest expense decreased to approximately $43,500 for
the period from $54,700 in the comparable period in 1995 due to the mortgage
being paid off at the time of the sale. The Company had
income before taxes for the nine month period ended March 31, 1996 of
approximately $1,775,500 as compared with income before taxes of approximately
$93,200 for the nine month period ended March 31, 1995.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(6) The Company filed a report on Form 8-K, and an amendment
thereto, reporting under Items 2 and 7 the sale of the Company's
Corporate Centre office building, including pro forma financial
information.
Form 10-QSB
Page 11 of 12
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
MARCH 31, 1996
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.
May 15, 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,950,247
<SECURITIES> 1,320,023
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,273,658
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,623,969
<CURRENT-LIABILITIES> 555,818
<BONDS> 0
0
0
<COMMON> 3,247,889
<OTHER-SE> 820,262
<TOTAL-LIABILITY-AND-EQUITY> 4,623,969
<SALES> 0
<TOTAL-REVENUES> 2,192,958
<CGS> 0
<TOTAL-COSTS> 373,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,506
<INCOME-PRETAX> 1,775,462
<INCOME-TAX> 174,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,601,462
<EPS-PRIMARY> .50
<EPS-DILUTED> 0
</TABLE>
