<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, 1997
( ) 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
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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)
1722 Buffehr Creek Road, 81657
Vail, Colorado (Zip Code)
(Address of principal executive offices)
Issuer's telephone number, including area code (970) 479-2800
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 25, 1997
Common Stock, $.025 par value 3,388,400
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
TABLE OF CONTENTS
Part I. Financial Information..................................... 3
Balance Sheets as of March 31, 1997 and June 30, 1996.............. 4 & 5
Statements of Income for the nine month period ended March 31,
1997 and March 31, 1996............................................ 6
Statements of Cash Flows for the nine month periods ended
March 31,1997 and March 31, 1996................................... 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 8 & 9
Part II. Other Information........................................ 9
Signature Page..................................................... 10
Form 10-QSB
Page 2 of 10
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
MARCH 31, 1997
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, 1996.
Form 10-QSB
Page 3 of 10
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CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
MARCH 31, JUNE 30,
1997 1996
---------- --------
ASSETS
------
CURRENT:
Cash and cash equivalents $1,835,731 $1,304,273
Short-term investments, at cost which
approximates market value 0 1,493,687
Investment securities - available
for sale 825,282 1,161,363
Notes receivable 525,000 250,000
Prepaids and other 44,512 36,498
- ----------------------------------------------------------------------
Total current assets 3,230,525 4,245,821
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OTHER ASSETS
Real Estate Development 751,803 0
Fixed Assets 3,672 3,186
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$3,986,000 $4,249,007
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Form 10-QSB
Page 4 of 10
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CAMBRIDGE HOLDINGS, LTD.
BALANCE SHEET
(Unaudited)
MARCH 31, JUNE 30,
1997 1996
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accrued liabilities $ 2,795 3,149
Deferred income taxes 250,000 275,000
- --------------------------------------------------------------------
Total current liabilities 252,795 278,149
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STOCKHOLDERS' EQUITY:
Common Stock - $.025 par value, 15,000,000
shares authorized: 3,388,400 shares
issued and outstanding as of March 31,
1997 and 3,348,400 shares issued and
outstanding as of June 30, 1996 84,695 83,695
Additional paid-in capital 3,173,335 3,163,562
Retained earnings 487,535 255,265
Net unrealized gain (loss) on investment
securities available for sale (12,360) 468,336
- --------------------------------------------------------------------
Total stockholders' equity 3,733,205 3,970,858
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$3,986,000 $4,249,007
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- --------------------------------------------------------------------
Form 10-QSB
Page 5 of 10
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF INCOME
(unaudited)
<TABLE>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MAR. 31, 1997 MAR. 31, 1996 MAR. 31, 1997 MAR. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ - $ 70,424 - 382,689
Option extension fee - (75,000) - -
Gain on sales of
investment securities 45,318 (49,434) 236,471 (5,497)
Interest and dividend income 36,350 31,040 123,744 55,999
Gain on sale of subdivided
land & building - 1,324,447 - 1,759,367
Misc. Income - - 577 400
- -----------------------------------------------------------------------------------------
Total revenues 81,668 1,301,477 360,792 2,192,958
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EXPENSES:
Operating, general, and
administrative 48,648 82,956 128,492 373,990
Interest - 7,730 30 43,506
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Total expenses 48,648 90,686 128,522 417,496
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INCOME BEFORE TAXES $ 33,020 $1,210,791 $ 232,270 $1,775,462
TAXES ON INCOME 5,000 174,000 74,000 174,000
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NET INCOME $ 28,020 $1,036,791 $ 158,270 $1,601,462
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- -----------------------------------------------------------------------------------------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE: $ .01 $ .31 $ .05 $ .50
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- -----------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,388,400 3,364,074 3,379,507 3,189,368
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</TABLE>
Form 10-QSB
Page 6 of 10
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CAMBRIDGE HOLDINGS, LTD.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 232,270 $ 1,601,462
Adjustment to reconcile net income
to cash provided by operating activities:
Gain on sale of Land - (1,759,367)
Depreciation and amortization 177 86,875
(Gain) loss on sales of investment securities - 5,497
Changes in operating assets and liabilities:
Prepaids and other (8,678) 1,391
Accounts payable and accrued liabilities (354) 174,215
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NET CASH PROVIDED BY OPERATING
ACTIVITIES 223,415 110,073
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INVESTING ACTIVITIES:
Proceeds from sale of land & building 3,182,300
Purchase of land (751,803)
Purchase of investment securities (462,455) (503,089)
Proceeds from sales of investment
securities 292,840 403,991
Purchase of Improvements (20,861)
Lease commissions and others 7,586
Net proceeds upon maturity of
short term investments 1,493,687 -
Collections on note receivable 50,000 2,155
Purchase of convertible note (325,000) (200,000)
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NET CASH PROVIDED
BY INVESTING ACTIVITIES 297,269 2,872,082
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FINANCING ACTIVITIES:
Principal payments on notes payable - (821,826)
Proceeds from the sale of common stock - 91,283
Proceeds from exercise of stock options
net of repurchases 10,774 -
- -------------------------------------------------------------------------------
Net cash provided (used) by
financing activities 10,774 (730,543)
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 531,458 2,251,612
CASH AND CASH EQUIVALENTS,
beginning of period 1,304,273 698,635
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CASH AND CASH EQUIVALENTS,
end of period $1,835,731 $ 2,950,247
- -------------------------------------------------------------------------------
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</TABLE>
Form 10-QSB
Page 7 of 10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has entered into agreements to become a member of two limited
liability companies with The Zneimer Company, an experienced real estate
developer in the Vail, Colorado area. Each of the Company and The Zneimer
Company will hold a 50% interest in these companies, each of which will build a
separate luxury residence in the Vail Valley for resale. In December 1996 the
Company purchased raw land near Vail for $366,400. This land which is known as
Cordillera Valley Club Lot #19 will be conveyed to the limited liability company
entitled CVC Lot 19, LLC. In January 1997 the Company purchased raw land near
Vail known as Cordillera Valley Club Lot #2 for $356,700. This lot will be
conveyed to the liability company known as CVC Lot 2, LLC. In both cases, the
Company will receive a secured promissory note in an amount equal to the
purchase price for the real estate plus expenses, which will be subordinate to
the secured construction loan to be provided by a financial institution. The
Zneimer Company has agreed that simultaneously with the conveyance of each
property to the applicable limited liability company, it and Mr. Zneimer
personally will guarantee one half the original principal amount of the note to
be issued to the Company. The Company is presently exploring other potential
property acquisitions in Colorado. The Company does not intend to limit its
prospective business activities to the development of real estate.
For the nine month period ended March 31, 1997, operating activities
generated positive cash flow of $223,400 as compared to $110,100 in the nine
month period ended March 31, 1996. Through March 31, 1997 the Company has
advanced $28,700 for activities associated with the development of Lot #2 and
Lot #19. Prepaid expenses decreased by approximately $8,700 in the nine month
period ended March 31, 1997. The Company sold investment securities during the
nine month period ended March 31, 1997 resulting in realized gains of $236,500.
Cash provided in investing activities was $297,300 during the nine month
period ended March 31, 1997, of which approximately $1,493,700 was the net
proceeds upon maturity of short-term investments, $292,900 was proceeds from the
sale of investment securities and $50,000 was the collection of notes
receivable. Approximately $462,500 was used to purchase investment securities,
$325,000 was loaned on a convertible basis to a corporation and was
personally guaranteed by the borrowing company's largest shareholder and
$751,800 was used to purchase and develop land. The value of the land and
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.
Financing activities during the three month period ended March 31, 1997
provided cash of approximately $10,800 which was generated from the exercise of
stock options net of repurchases.
At March 31, 1997, the Company had cash and cash equivalents of $1,835,731
and working capital of $2,977,730. Each of CVC Lot 2 LLC and CVC Lot 19 LLC
proposes to obtain debt financing for the construction of a luxury residential
property. The Company believes such financing should be available for each
property, and a commitment for such financing for Lot #2, which is subject to
customary conditions, has been obtained. It is a condition to the Company's
agreement to convey each lot to the applicable limited liability company that
the construction loan for the applicable property close concurrently with the
conveyance of the property. In the event construction financing is not
available, the Company and The Zneimer Company as members of the limited
liability companies could determine to proceed by advancing additional funds to
finance the development of the properties. The two limited liability companies
Form 10-QSB
Page 8 of 10
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intend to develop these properties prior to soliciting buyers for completed
residences. There can be no assurances the properties will be sold promptly,
or that profits will be achieved which could impact adversely the Company's
liquidity. In its consideration of potential business opportunities,the
Company expects to consider the potential effect on its liquidity.
RESULTS OF OPERATIONS.
NINE MONTH PERIOD ENDED MARCH 31, 1997 COMPARED TO NINE MONTH PERIOD ENDED MARCH
31, 1996
The Company's revenues for the nine month period ended March 31, 1997
totaled approximately $360,800, consisting of gains on the sale of securities,
interest on temporary cash and other money market instruments and dividend
income. Revenues for the nine month period ended March 31, 1996 totaled
approximately $2,193,000, of which approximately $1,324,500 was the gain on the
sale of the Corporate Centre buildings, $434,900 was gain on sale of subdivided
land, rental income recognized up to the time of sale of approximately $382,700,
approximately $56,400 was interest and dividend income and losses from the sale
of investment securities of approximately $5,500.
During the nine month periods ended March 31, 1997 and March 31, 1996, the
Company incurred operating, general and administrative costs of approximately
$128,500 and $374,000, respectively. The decrease of approximately $245,500
resulted from the reduced overhead and other expenses due to sale of the
Corporate Centre and undeveloped lot in Colorado Springs, Colorado. Interest
expense decreased to approximately $30 for the period from $43,500 in the
comparable period in 1996 due to the retirement of the mortgage on the Corporate
Centre. The Company had income before taxes for the nine month period ended
March 31, 1997 of approximately $232,270 as compared with income before taxes of
approximately $1,775,500 for the nine month period ended March 31, 1996.
PART II. OTHER INFORMATION
NEW ACCOUNTING PRONOUNCEMENTS
On March 3, 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS
No.128). This pronouncement provides a different method of calculating earnings
per share than is currently used in accordance with Accounting Board Opinion
(APB) No. 15, "Earnings Per Share". SFAS No. 128 provides for the calculation
of "Basic" and "Diluted" earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income available to common shareholders
by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully diluted earnings per
share. The Company will adopt SFAS No.128 in 1998 and its implementation is not
expected to have a material effect on the consolidated financial statements.
Form 10-QSB
Page 9 of 10
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CAMBRIDGE HOLDINGS, LTD.
FORM 10-QSB
MARCH 31, 1997
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 12, 1997 By:
---------------------------------
Gregory Pusey
President, Treasurer and Director
Form 10-QSB
Page 10 of 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,835,731
<SECURITIES> 825,282
<RECEIVABLES> 525,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,672
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,986,000
<CURRENT-LIABILITIES> 252,795
<BONDS> 0
0
0
<COMMON> 3,258,030
<OTHER-SE> 475,175
<TOTAL-LIABILITY-AND-EQUITY> 3,986,000
<SALES> 0
<TOTAL-REVENUES> 360,792
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 128,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> 232,270
<INCOME-TAX> 74,000
<INCOME-CONTINUING> 158,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,270
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
