<PAGE>

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB

(X)  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 (Fee Required) for the annual period ended JUNE 30, 2000

( )  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 (No Fee Required)
     For the transition period from _____________ TO ______________

For the fiscal year ended June 30, 2000
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)


       7315 East Peakview Ave.                             80111
         Englewood, Colorado                             (Zip Code)
(Address of principal executive offices)

Issuer's telephone number, including area code (720) 529-3550

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, and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /.

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[X]

The issuer had $36,202 in revenues for the fiscal year ended June 30, 2000.

The aggregate market value of the voting stock held by non-affiliates was
approximately $643,266 on September 26, 2000.

                                  Page 1 of 17
                                     10-KSB
<PAGE>

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 September 26, 2000
    Common Stock, $.025 par value                      3,029,870


Transitional Small Business Disclosure Format Yes    No X
                                                 ---   ---

                                     Part I

Item 1. DESCRIPTION/BUSINESS.

     (a)  BUSINESS DEVELOPMENT. Cambridge Holdings, Ltd. the Registrant (the
"Company"), was incorporated under the laws of the State of Colorado on June 23,
1980 under the name Jones Optical Company. The Company's name was changed to
Cambridge Holdings, Ltd. in August 1988.

During the fiscal year ended June 30, 1997, the Company purchased in two
separate transactions from two different unaffiliated sellers, raw land in an
area known as Cordillera Valley Club in Eagle County, Colorado west of Vail.
Each lot was conveyed to a limited liability company in which the Company is a
member with a 50% interest (CVC Lot 2 LLC and CVC Lot 19 LLC). Each lot has been
developed with a separate luxury residence and is offered for sale. Construction
on the properties was completed in early 1998. Due to the delay on the sale of
these properties, it is presently expected that when sold, these properties will
be sold at a loss. Management recorded an allowance for the loss on these note
receivables in the amount of $470,400 during the year ended June 30, 2000. Due
to the delay on sale of these properties, CVC Lot 19 LLC rented the CVC Lot 19
home at a monthly rental fee of $5,700 for a nine-month period ending in May
2000. As the home is now vacant, management anticipates that some structural
changes will be made to the home to make it more salable. CVC Lot 2 LLC agreed
to rent the CVC Lot 2 home for a lease period of twelve months commencing on
April 1, 2000 at a rate of $7,000 per month.

The lots are located in Cordillera Valley Club, a mountain golf community of 1
to 11-acre home sites and custom-designed residences, tennis courts, 15 miles of
hiking and cross-country ski trails, a fly-fishing river, mountain bike and
nature trails. The lots are being developed in a golf community planned with
care for natural aesthetic values. Accordingly, the home sites in the community
are being developed to minimize the impact of development upon the varied
vegetation and indigenous wildlife unique to the area. Deer and elk grazing and
calving areas have been carefully preserved along with native grasses, shrubs
and trees. The home sites in the community have been planned to maximize
mountain views, as well as the extensive aspen groves, forests of fir and
spruce, and varied terrain of adjacent canyons and draws which is characteristic
of the area.

                                  Page 2 of 17
                                     10-KSB


<PAGE>

In July 1997, the Company purchased approximately three acres of raw land in
Glenwood Springs, Colorado for $925,000, including a mortgage of $675,000. The
mortgage bore interest at 9% per annum. The Company paid the mortgage in full
during the year ended June 30, 2000. The property was sold in July 2000 for
$1,300,000 less property costs, closing fees and reimbursements, resulting in a
net gain of $234,500.

The Company is currently considering other real estate development activities,
as well as other business opportunities. In addition to real property
acquisitions, the Company may consider the possible acquisition of, or merger
with, another business entity, or other types of business transactions. The
Company does not intend to limit its search to companies in real estate
activities. A substantial amount of time may lapse and the Company may expend
considerable funds for consulting, legal, accounting and other fees before the
Company is able, if at all, to acquire other real estate interests or businesses
outside the real estate industry. From time to time, the Company also acquires
equity securities, which have a potential for capital gains and losses or, in
some cases, income potential. The Company has no limitations on the percentage
of assets that may be invested in any one instrument, or type of investment, nor
is the Company limited in the types of real estate in which the Company may
invest. The Company's determination of the method of operating and financing its
properties is not fixed, and will, instead depend on the type of property
purchased and the Company's objective in operating the particular property.

In August 2000 the Company organized a new corporation in Colorado, CamCap, Inc.
CamCap's business purpose is to identify and complete a merger or acquisition
with a private entity. CamCap is currently a wholly-owned subsidiary of the
Company, but the Company intends to spinoff these shares to the shareholders of
the Company. It is anticipated that CamCap will file a registration statement to
effect the spinoff. The spinoff may not be made until the registration statement
becomes effective.

     (b)  COMPETITION. The real estate business is highly competitive and the
Company competes with numerous entities engaged in real estate activities, many
of which have greater financial resources than those of the Company. The
Company's management believes that success against such competition is dependent
upon the quality of the investments, the geographic location of the property,
the amount of new construction in the area and the design and appearance of the
property. The Company's management believes that general economic circumstances
and trends and new properties in the vicinity of each of the Company's
properties will also be competitive factors.

     EMPLOYEES. The Company has no full-time employees; however, Gregory Pusey,
the Company's President, devotes a significant amount of time to the affairs of
the Company.

Item 2. DESCRIPTION OF PROPERTIES.

     The Company's administrative activities are conducted at the Company's
corporate headquarters located in Englewood, Colorado in space shared by the
Company with an affiliate, Livingston Capital, Ltd. ("Livingston"). The Company
pays Livingston a monthly fee of

                                  Page 3 of 17
                                     10-KSB


<PAGE>

$750 for rent and certain overhead administrative expenses. A description of
real estate business activities is included in Item 1.

Item 3. LEGAL PROCEEDINGS.

     The Company is not involved in any material, pending legal proceedings.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matter was submitted to a vote of the Company's security holders during
the fourth quarter covered by this Report, and the Item is, therefore,
inapplicable.


                                     PART II

Item 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's $.025 par value common stock trades on the Electronic
Bulletin Board under the symbol "CDGD". Trading in the common stock in the
over-the-counter market has been limited and sporadic and the quotations set
forth below are not necessarily indicative of actual market conditions. Further,
these prices reflect inter-dealer prices without retail mark-up, markdown, or
commission and may not necessarily reflect actual transactions. The high and low
bid prices for the common stock for each quarter of the fiscal years ended June
30, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
Quarter Ended                                High Bid                   Low Bid
---------------------------------------------------------------------------------
<S>                                       <C>                       <C>
June 30, 2000                                  $.47                      $.47
March 31, 2000                                 $.47                      $.47
December 31, 1999                              $.47                      $.47
September 30, 1999                             $.47                      $.47
June 30, 1999                                  $.47                      $.47
March 31, 1999                                 $.47                      $.45
December 31, 1998                              $.45                      $.34375
September 30, 1998                             $.34375                   $.28125

</TABLE>

     At September 26, 2000 the number of holders of record of the Company's
common stock was 990. No cash dividends were paid during the years ended June
30, 2000 and 1999.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward looking
statements" within the meaning of Section 27A of the Securities Act, and is
subject to the safe harbor created by that section. Factors that could cause
actual results to differ materially from these contained in the forward looking
statements are set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

                                  Page 4 of 17
                                     10-KSB

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES.

     At June 30, 2000, the Company had cash and cash equivalents of $499,700 and
working capital of $2,566,100. CVC Lot 2 LLC and CVC Lot 19 LLC (the "LLC's")
have incurred debt financing in the amounts of $1,041,600 and $1,063,100,
respectively, for the construction of the luxury residential properties. In
addition to the debt financing, the Company has notes receivable and loans with
CVC Lot 2 LLC of $540,300 and CVC Lot 19 LLC of $480,100 for interest on the
mortgages on each property, aid in completing and selling the residential
property and for sale of land to the LLC's. Due to the delay on the sale of
these properties, it is presently expected that when sold, these properties will
be sold at a loss. Management recorded an allowance for the loss on these note
receivables in the amount of $470,400 during the year ended June 30, 2000. Due
to the delay on sale of these properties, CVC Lot 19 LLC rented the CVC Lot 19
home at a monthly rental fee of $5,700 for a nine-month period ending in May
2000. As the home is now vacant, management anticipates that some structural
changes will be made to the home to make it more salable. Although the specific
structural changes have not been finalized, management expects that the changes
will cost between $50,000 and $150,000. CVC Lot 2 LLC is renting the CVC Lot 2
home for a lease period of twelve months commencing on April 1, 2000 at a rate
of $7,000 per month.

     In July 1997, the Company purchased approximately three acres of raw land
in Glenwood Springs, Colorado for $925,000, including a mortgage of $675,000.
The mortgage bore interest at 9% per annum. The Company paid the mortgage in
full during the year ended June 30, 2000. The property was sold in July 2000 for
$1,300,000 less property costs, closing fees and reimbursements, resulting in a
net gain of $234,500. As a result of the sale of this property, cash and cash
equivalents increased by approximately $1,200,000 in July 2000.

     During the quarter ended December 31, 1998, the Company commenced an offer
to its shareholders to tender shares of the Company's common stock to the
Company at a price of $.45 per share. The tender offer was concluded during the
quarter ended March 31, 1999. The Company purchased 378,530 shares for a total
of $170,338 in the tender offer.

     For the period ended June 30, 2000, operating activities generated a
positive cash flow of $65,900 as compared to a negative cash flow of $186,200
for the year ended June 30, 1999. The Company had no interest income paid on
investment securities during the year ended June 30, 2000 and had $77,800
paid on investment securities during the year ended June 30, 1999. The
Company wrote-down the value of two investments that were determined to be
worthless for $206,300 during the year ended June 30, 1999. Gains from the
sale of investment securities increased from a loss of $101,400 to a gain of
$11,700 and depreciation increased from $17,800 in 1999 to $18,200 in 2000.
The Company recorded a deferred tax asset of $44,000 in 1999 and increased it
to $75,000 in 2000 to reflect the tax benefits from capital loss carry
forwards that will be realizable in the future. Prepaid expenses and other
decreased by $53,000 in the year ended June 30, 2000. Other accrued
liabilities decreased by $12,200 in 2000.

                                  Page 5 of 17
                                     10-KSB
<PAGE>

     Cash provided by investing activities was approximately $905,100 during the
year ended June 30, 2000 compared to cash used in investing activities of
$1,099,300 during the year ended June 30, 1999. Approximately $190,000 was used
to purchase investment securities during the year ended June 30, 2000 compared
to $1,913,200 in 1999. The Company purchased fixed assets for $6,300 in the year
ended June 30, 1999 and $17,423 in the year ended June 30, 2000. Investments in
notes receivable were $114,800 and $131,300 in 2000 and 1999 respectively. Cash
provided from investing activities during fiscal 2000 was from the proceeds from
sales of investment securities of $1,227,300 and $0 were from the collection of
notes receivable. In the comparable period in 1999, cash provided from investing
activities was from proceeds from sales of investment securities of $909,100 and
$42,500 was the collection of notes receivable. The values 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.

     Cash used in financing activities during the year ended June 30, 2000
totaled $665,800 which was used for principal payments on notes payable. Cash
used in financing activities during the year ended June 30, 1999 totaled
$194,700. Of this total, $5,000 was used for principal payments on notes
payable, $170,300 was used to repurchase common stock and $22,800 was for
payment of costs to repurchase common stock. These outflows were offset by cash
generated from the exercise of stock options of $3,400.

RESULTS OF OPERATIONS.

FISCAL YEAR ENDED JUNE 30, 2000 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1999

     The Company's revenues for the year ended June 30, 2000 totaled
approximately $36,200, consisting of losses on the sale of securities of
approximately $11,700 offset by interest and dividend income of $47,900.
Revenues for the year ended June 30, 1999 totaled approximately $202,500,
consisting of net gains on the sale of securities of approximately $101,400 and
interest and dividend income of $101,100. The Company's dividend and interest
income decreased primarily because of an increase in use of funds for real
estate development and investments in bond funds in 2000. The Company's net
realized gains on sales of investment securities and cash equivalents decreased
primarily as a result of the sale of bond mutual funds and other investment
securities.

     During the years ended June 30, 2000 and June 30, 1999, the Company
incurred operating, general and administrative costs of approximately
$161,300 and $175,400, respectively. The Company also incurred a write-down
of impaired assets of $206,300 in 1999. During the year ended June 30, 1999,
the Company wrote off its investment in a partnership totaling $101,300 as it
had not been repaid under the terms of the bridge loan agreement. The Company
filed suit against the general partner of the partnership to collect its
investment and collected $70,000 during the year ended June 30, 2000. The
Company had a loss before taxes for the year ended June 30, 2000 of
approximately $546,600 as compared with a loss before taxes of approximately
$239,300 for the year ended June 30, 1999. The Company recognized tax
benefits of $48,000 in 2000 and $57,000 in 1999, as a result of net operating
losses.

                                  Page 6 of 17
                                     10-KSB

<PAGE>

INCOME TAXES

     As discussed in Note 6 to the accompanying financial statements, the
Company has $114,000 in deferred tax assets. Management of the Company has
developed a tax planning strategy in which capital losses will be carried
forward to future tax filings and allow the Company to realize a $75,000 tax
benefit. A valuation allowance of $39,000 has been established for the remainder
of the net deferred tax assets because the Company has not been able to
determine that it is more likely than not that the net deferred tax assets will
be realized.

Item 7. FINANCIAL STATEMENTS.

     See pages F-1 through F-18.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

     (a)  Previous independent accountants

          (i)   On February 24, 2000, BDO Seidman, LLP resigned as independent
                accountants for the Company.

          (ii)  The reports of BDO Seidman, LLP on the financial statements for
                the past two fiscal years contained no adverse opinion or
                disclaimer of opinion and were not qualified or modified as to
                uncertainty, audit scope or accounting principle.

          (iii) The Company's Board of Directors participated in and approved
                the decision to change independent accountants.

          (iv)  In connection with its audits for the two most recent fiscal
                years and through February 24, 2000, there have been no
                disagreements with BDO Seidman, LLP on any matter of accounting
                principles or practices, financial statement disclosure, or
                auditing scope or procedure, which disagreements if not resolved
                to the satisfaction of BDO Seidman, LLP would have caused them
                to make reference thereto in their report on the financial
                statements for such years.

          (v)   BDO Seidman LLP furnished the Company with a letter addressed to
                the Securities and Exchange Commission stating that it agreed
                with the above statements. A copy of such letter, dated February
                25, 2000, was filed as Exhibit 16 to the Company's Form 8-K
                Report regarding the change in accountants.

     (b)  New independent accountants

     The Company has engaged AJ. Robbins, P.C. as its new independent
     accountants as of February 24, 2000. During the two most recent fiscal
     years and through February 24, 2000, the Company has not consulted with AJ.
     Robbins, P.C. regarding either (i) the

                                  Page 7 of 17
                                     10-KSB
<PAGE>

     application of accounting principles to a specific transaction, either
     completed or proposed; or the type of audit opinion that might be rendered
     on the Company's financial statements; or (ii) any matter that was either
     the subject of a disagreement, or a reportable event.

Item 9. DIRECTORS AND EXECUTIVE OFFICERS.

<TABLE>
<CAPTION>
                                            Date First
                                             Elected                     Principal Occupation
Name                              Age       Director                        and Employment
----                              ---       ----------                   --------------------
<S>                               <C>       <C>            <C>
Gregory Pusey                     48           1982        President, treasurer and director. Mr. Pusey is also the
                                                           president of Livingston Capital, Ltd., a venture capital and
                                                           business consulting firm, and an officer and director of Advanced
                                                           Nutraceuticals, Inc., a company organized to do business in the
                                                           nutritional supplement industry. Mr. Pusey was a consultant and
                                                           at times a director of Nutrition for Life International from 1986
                                                           to 1999. Mr. Pusey graduated from Boston College in 1974 with a
                                                           BS in finance.

John H. Altshuler                 69           1991        Director. Dr. Altshuler is a medical doctor with a specialty in
                                                           hematology. He maintains a laboratory and a private medical
                                                           practice and has served as a medical consultant since 1965. Dr.
                                                           Altshuler graduated from McGill University in 1959 with a
                                                           doctorate in medicine.

Scott Menefee                     35           1993        Director. Mr. Menefee is a Real Estate Manager for Opus
                                                           Northwest, LLC. a large commercial real estate development firm.
                                                           Prior to his current position, he served as a Leasing Manager for
                                                           Vector Property Services, LLC. From 1992 through early 1997. Mr.
                                                           Menefee was a Leasing Manager for Brookfield Development. Mr.
                                                           Menefee graduated from Southern Methodist University with a MBA
                                                           in 1989.

Jeffrey G. McGonegal              49           2000        Secretary and Director. Mr. McGonegal has served as Senior Vice
                                                           President-
</TABLE>

                                  Page 8 of 17
                                     10-KSB
<PAGE>

<TABLE>
<S>                               <C>       <C>            <C>
                                                           Finance of Advanced Nutraceuticals, Inc. since February 2000.
                                                           Since 1997, Mr. McGonegal has also served as Managing Director of
                                                           McGonegal and Co., a company engaged in providing accounting and
                                                           business consulting services. From 1974 to 1997, Mr. McGonegal
                                                           was an accountant with BDO Seidman LLP. While at BDO Seidman,
                                                           LLP, Mr. McGonegal served as managing partner of the Denver,
                                                           Colorado office. Mr. McGonegal is a member of the Board of
                                                           Directors of The Rockies Venture Club, Inc. and Colorado Venture
                                                           Centers, Inc. He received a BA degree in accounting from Florida
                                                           State University.

</TABLE>

     The Company's directors serve until the next annual meeting of the
shareholders and until their successors shall have been duly elected and
qualified. The Company's Board of Directors may remove the Company's officers
from their positions at any time. There are no family relationships among the
current directors of the Company. During the fiscal year ended June 30, 2000,
the Company's Board of Directors held three meetings in person or by consent.

     Based solely upon review of Forms 3, 4 and 5, which have been furnished to
the Company with respect to the past fiscal year of the Company, and certain
representations made by officers and directors of the Company in connection
therewith, the Company has no knowledge that any current officer or director
failed to file on a timely basis any reports required by Section 16(a) of the
Securities Exchange Act of 1934 with respect to the fiscal year of the Company
ended June 30, 2000.

Item 10. EXECUTIVE COMPENSATION.

     (a)  COMPENSATION. The following table sets the cash compensation paid by
the Company during the fiscal year ended June 30, 2000 and in the two prior
fiscal years of the Company to the chief executive officer of the Company. No
executive officer received a total annual salary and bonus of more than $100,000
during the fiscal year.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                              Annual Compensation                                   Awards              Payouts
                            ---------------------------                     -----------------------     -------
                                                                Other        Restricted                   LTIP
Name and                    Fiscal     Salary                  Annual           Stock       Options     Payouts       All Other
Principal Position           Year      ($)(1)     Bonus     Compensation      Awards($)      (#)          ($)     Compensation($)(2)
<S>                         <C>       <C>         <C>       <C>              <C>            <C>          <C>      <C>
Gregory Pusey, President     2000      60,000      -0-          -0-             -0-          -0-          -0-           5,207
                             1999      60,000      -0-          -0-             -0-          -0-          -0-           4,924
                             1998      60,000      -0-          -0-             -0-          -0-          -0-           5,993

</TABLE>

                                  Page 9 of 17
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<PAGE>

     (1)  The dollar value of base salary (cash) received. (No non-cash base
salary was paid during the period covered by the Table). Mr. Pusey's current
salary is $60,000 per year.

     (2)  All other compensation received that the Company has not properly
reported in any other column of the Table. During the period covered by the
Table, the Company did not make any contributions or other allocations to any
defined contribution plans. The amount shown for the year ended June 30, 2000 is
health insurance premiums of $5,207 paid on Mr. Pusey's behalf. The amount shown
for the year ended June 30, 1999 is health insurance premiums of $4,924. The
amount shown for the year ended June 30, 1998 is health insurance premiums in
the amount of $3,852 and auto lease payments of $2,141.

     (b)  OPTION GRANTS IN FISCAL YEAR ENDED JUNE 30, 1999.

<TABLE>
<CAPTION>
                                              % of Total
                                                Options
                                               Granted to         Exercise or
                            Options       Employees/Directors     Base Price
Name                      Granted (#)        in Fiscal Year         ($/Sh)        Expiration Date
----                      -----------     -------------------     -----------     ---------------
<S>                       <C>             <C>                     <C>             <C>
Gregory Pusey                30,000               50%                 $.52             4/15/04
John Altshuler               10,000               17%                 $.47             4/15/04
Scott Menefee                10,000               17%                 $.47             4/15/04
Donald Yager (1)             10,000               17%                 $.47             4/15/04

</TABLE>

(1)  Donald Yager resigned his position as Secretary and Director of the Company
in August 2000.

1988 STOCK OPTION PLAN. During the fiscal year ended June 30, 1989 the Company
adopted the 1988 Stock Option Plan (the "1988 Plan"). The 1988 Plan is designed
to provide incentives for key employees of the Company. In September 1992, the
shareholders approved an increase from 200,000 to 400,000 in the number of
shares issuable pursuant to the 1988 Plan and the elimination of a provision of
the 1988 Plan that limited the number of shares underlying options that could be
granted to any one individual to 40,000 shares in a fiscal year. The 1988 Plan
terminated in May 1999, except that previously granted options will remain
outstanding until terminated in accordance with the individual option
agreements.

     All the outstanding options granted pursuant to the 1988 Stock Option Plan
are exercisable at a price of not less than 100 percent of the fair market value
on their respective dates of grant.

NON-DISCRETIONARY STOCK OPTION PLAN. During the fiscal year ended June 30, 1992,
the Company adopted a Non-Discretionary Stock Option Plan pursuant to which the
Company was authorized to grant options to purchase up to an aggregate of
250,000 shares of the Company's common stock to reward non-employee directors
for their participation and contributions to the Company. The Non-Discretionary
Stock Option Plan terminated in

                                  Page 10 of 17
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<PAGE>

September 1997. Outstanding options will remain exercisable in accordance with
the terms of the individual option agreements.

Options granted pursuant to the Non-Discretionary Plan are exercisable in full
effective as of the date of grant and expire three years from the date of grant,
except that an option will expire, if not exercised, 90 days after the optionee
ceases to be a director of the Company.

1999 STOCK OPTION PLAN. In April 1999, the Board of Directors of the Company,
adopted, subject to shareholder approval, the 1999 Stock Option Plan (the "1999
Plan"). The purpose of the 1999 Plan is to promote the interests of the Company
and its shareholders by:

     -    Attracting and retaining key personnel;

     -    Providing participants a significant stake in the performance of the
          Company;

     -    Providing an opportunity for participants to increase their holdings
          of the Company's common stock.

The 1999 Plan is administered by the Option Committee. The Option Committee
consists of the Board of Directors or a committee of the Board of Directors, as
the Board of Directors may from time to time designate, composed of not less
than two members of the Board of Directors, each of whom shall be a director who
is not employed by the Company. The Option Committee currently consists of the
full Board of Directors. The Option Committee has the authority to select
employees and consultants to receive awards, to determine the number of shares
of common stock covered by awards, and to set the terms and conditions of
awards. The Option Committee has the authority to establish rules for the
administration of the 1999 Plan, and its determinations and interpretations are
binding.

Any employee or officer (including executive officers) of the Company or any of
its subsidiaries will be eligible for a stock option grant under the 1999 Plan
if selected by the Option Committee. Any consultant to the Company, including
Directors, will also be eligible to receive option grants under the 1999 Plan if
authorized by the Option Committee.

The 1999 Plan authorizes the grant of options to purchase up to 1,000,000 shares
of the Company's common stock. There are currently outstanding options to
purchase up to 60,000 shares. All of these options were granted on April 16,
1999. Of the options to purchase up to 60,000 shares, options to purchase 10,000
shares were granted to each of John H. Altshuler, Scott L. Menefee, and Donald
E. Yager, directors of the Company, and options to purchase up to 30,000 shares
were granted to Gregory Pusey, President and Director of the Company. The
options granted to Dr. Altshuler and Messrs. Menefee and Yager are exercisable
at $.47 per share, the fair market value of the Company's common stock on the
date of grant. The options granted to Mr. Pusey are exercisable at $.52 per
share, which represented 110% of the fair market value of the Company's common
stock on the date of grant. All of the options are exercisable upon shareholder
approval of the 1999 Plan through April 15, 2004. The options will terminate
earlier if the optionee's status as an employee or consultant is discontinued.

The 1999 Plan was designed to permit the Option Committee to grant stock options
that qualify as "incentive stock options" or options that do not so qualify. The
option grant to Mr. Pusey

                                  Page 11 of 17
                                     10-KSB
<PAGE>

was intended to qualify as an incentive stock option, and the option grants to
the other directors are not intended to so qualify.

In addition to stock options, the Company may also offer a participant a right
to purchase shares of common stock subject to such restrictions and conditions
as the Option Committee may determine at the time of grant. Such conditions may
include, but are not limited to, continued employment or the achievement of
specified performance goals or objectives. No restricted common stock has been
issued pursuant to the 1999 Plan.

Certain corporate transactions or events such as stock splits,
recapitalizations, spin-offs, mergers, etc. may directly affect the number of
outstanding shares and/or the value of the outstanding common stock. If such
transactions occur, the Option Committee may adjust the number of shares that
may be granted under the 1999 Plan, as well as the limits on individual option
grants. The Option Committee may adjust the number of shares and the exercise
price under outstanding options, and may make other adjustments, which are
thought to be in the best interest of the Company.

Options granted under the 1999 Plan may not be transferred except by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order or the Employee Retirement Income Security Act. The Board of Directors may
amend or terminate the 1999 Plan at any time. No amendments may be made without
the approval of the Company's shareholders to the extent such approval is
required by law or agreement. The 1999 Plan will continue until April 15, 2009,
unless abandoned or terminated at an earlier time.

2000 STOCK OPTION PLAN. In September 2000, the Board of Directors of the
Company, adopted, subject to shareholder approval, the 2000 Stock Incentive Plan
(the "2000 Plan"). The purpose of the 2000 Plan is to promote the interests of
the Company and its shareholders by:

     -    Attracting and retaining key personnel;

     -    Providing participants a significant stake in the performance of the
          Company;

     -    Providing an opportunity for participants to increase their holdings
          of the Company's common stock.

The 2000 Plan is administered by the Option Committee. The Option Committee
consists of the Board of Directors or a committee of the Board of Directors, as
the Board of Directors may from time to time designate, composed of not less
than two members of the Board of Directors, each of whom shall be a director who
is not employed by the Company. The Option Committee currently consists of the
full Board of Directors. The Option Committee has the authority to select
employees and consultants to receive awards, to determine the number of shares
of common stock covered by awards, and to set the terms and conditions of
awards. The Option Committee has the authority to establish rules for the
administration of the 2000 Plan, and its determinations and interpretations are
binding.

Any employee or officer (including executive officers) of the Company or any of
its subsidiaries will be eligible for a stock option grant under the 2000 Plan
if selected by the Option

                                  Page 12 of 17
                                     10-KSB
<PAGE>

Committee. Any consultant to the Company, including Directors, will also be
eligible to receive option grants under the 2000 Plan if authorized by the
Option Committee.

The 2000 Plan authorizes the grant of options to purchase up to 500,000 shares
of the Company's common stock. There are currently outstanding options to
purchase up to 140,000 shares. All of these options were granted on September
18, 2000. Of the options to purchase up to 140,000 shares, options to purchase
20,000 shares were granted to each of John H. Altshuler and Scott L. Menefee,
directors of the Company, and options to purchase up to 50,000 shares were
granted to each of Gregory Pusey, President and Director of the Company and
Jeffrey G. McGonegal, Secretary and Director of the Company. The options granted
to Dr. Altshuler and Messrs. Menefee and McGonegal are exercisable at $.47 per
share, the fair market value of the Company's common stock on the date of grant.
The options granted to Mr. Pusey are exercisable at $.52 per share, which
represented 110% of the fair market value of the Company's common stock on the
date of grant. All of the options are exercisable from the later to occur of
September 18, 2001 or upon shareholder approval of the 2000 Plan through
September 17, 2010. The options will terminate earlier if the optionee's status
as an employee or consultant is discontinued.

The 2000 Plan was designed to permit the Option Committee to grant stock options
that qualify as "incentive stock options" or options that do not so qualify. The
option grant to Mr. Pusey was intended to qualify as an incentive stock option,
and the option grants to the other directors are not intended to so qualify.

In addition to stock options, the Company may also offer a participant a right
to purchase shares of common stock subject to such restrictions and conditions
as the Option Committee may determine at the time of grant. Such conditions may
include, but are not limited to, continued employment or the achievement of
specified performance goals or objectives. No restricted common stock has been
issued pursuant to the 2000 Plan.

Certain corporate transactions or events such as stock splits,
recapitalizations, spin-offs, mergers, etc. may directly affect the number of
outstanding shares and/or the value of the outstanding common stock. If such
transactions occur, the Option Committee may adjust the number of shares that
may be granted under the 2000 Plan, as well as the limits on individual option
grants. The Option Committee may adjust the number of shares and the exercise
price under outstanding options, and may make other adjustments, which are
thought to be in the best interest of the Company.

Options granted under the 2000 Plan may not be transferred except by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order or the Employee Retirement Income Security Act. The Board of Directors may
amend or terminate the 2000 Plan at any time. No amendments may be made without
the approval of the Company's shareholders to the extent such approval is
required by law or agreement. The 2000 Plan will continue until September 17,
2010, unless abandoned or terminated at an earlier time.

                                  Page 13 of 17
                                     10-KSB
<PAGE>

     (c)  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>

                              Shares           Number of Shares            Value of Unexercised
                             Received             Underlying                   In-The-Money
Name                       Upon exercise      Unexercised Options         Options at 6/30/00 ($)
----                       -------------      -------------------         ----------------------
<S>                        <C>                <C>                         <C>
Gregory Pusey                   -0-                  30,000                       -0-
Scott Menefee                   -0-                  20,000                     300.00
Donald Yager                    -0-                  20,000                     300.00
John Altshuler                  -0-                  20,000                     300.00
</TABLE>


Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth ownership as of October 2, 2000 of the
issued and outstanding shares of the Company's $.025 par value common stock held
by each director, individually, and all officers and directors as a group, and
all persons who own five percent or more of the outstanding shares of the
Company's common stock. The Company has only one class of capital stock, its
$.025 par value common stock.

<TABLE>
<CAPTION>
                                        Number of     Percent of
Beneficial Owner                         Shares         Class
----------------                        ---------     ----------
<S>                                    <C>            <C>
John H. Altshuler                              0         0%
18 Blue Heron Drive West
Littleton, CO 80121 (1)

Scott Menefee                             40,000         1.3%
971 Garfield Street
Denver, CO 80206 (2)

Gregory Pusey                          1,591,218        52.5%
8101 E. Dartmouth #58
Englewood, CO 80231 (3)

Cede & Co.                               460,441        15.2%
PO Box 222
New York, NY 10274

Jeffrey G. McGonegal                           0         0%
1905 W. Valley Vista Drive
Castle Rock, CO 80104 (4)

E. Jeffrey Peierls                       307,824        10.2%
73 S. Holman Way
Golden, CO 80401 (5)

All officers and directors as a        1,631,218        53.8%
group (4 persons) (1) (2) (3) (4)

</TABLE>

     (1)  Does not include options which are not currently exercisable to
purchase 10,000 shares that have been granted under the 1999 Plan and 20,000
shares that have been granted under the 2000 Plan.

                                  Page 14 of 17
                                     10-KSB

<PAGE>

     (2)  Does not include options which are not currently exercisable to
purchase 10,000 shares that have been granted under the 1999 Plan and 20,000
shares that have been granted under the 2000 Plan.

     (3)  Includes 18,604 shares owned jointly by Mr. Pusey with his wife, and
an aggregate of 96,411 shares owned by Mrs. Pusey, individually or as custodian
for their minor children. Does not include options which are not currently
exercisable to purchase 30,000 shares that have been granted under the 1999 Plan
and 50,000 shares that have been granted under the 2000 Plan.

     (4)  Does not include options which are not currently exercisable to
purchase 50,000 shares that have been granted under the 2000 Plan.

     (5)  Does not include 178,111 shares held of record by Brian E. Peierls. E.
Jeffrey Peierls disclaims beneficial ownership in the shares held by other
members of his family and Kathryn and Alice Thames.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Pursuant to an oral agreement with Livingston, which is an affiliate of
Gregory Pusey, the Company pays $750 per month to Livingston for rent and
certain administrative expenses. The Company believes that these arrangements
have been at least as favorable as could be obtained with a non-affiliated
party.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  EXHIBITS.

     The exhibits listed on the accompanying index to exhibits are filed as part
of this Annual Report.

     (b)  REPORTS ON FORM 8-K.

     No reports on Form 8-K were filed during the last fiscal quarter covered by
this Report.


                                INDEX TO EXHIBITS

     (3)(a) Articles of Incorporation, as amended, filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended June 30, 1990 are
incorporated herein by this reference.

     (3)(b) Bylaws, as amended, filed as an Exhibit to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1988 are incorporated herein by
this reference.

     (10)(a) 1988 Stock Option Plan, as amended, filed as an Exhibit to the
Registrant's Proxy Statement for a Special Meeting of Shareholders held on
September 30, 1992 is incorporated herein by this reference.

                                  Page 15 of 17
                                     10-KSB
<PAGE>

     (10)(b) Contract of Purchase and Sale between the Company and San Jac
Financial Services, Inc. filed as Exhibit 10(b) the Registrant's Annual Report
on Form 10-K for the year ended June 30, 1991 is incorporated herein by this
reference.

     (10)(d) Non-Discretionary Stock Option Plan, as amended, filed as an
Exhibit to the Registrant's Proxy Statement for a Special Meeting of
Shareholders held on September 30, 1992 is incorporated herein by this
reference.

     (10)(j) Continuing Contract to Buy and Sell Real Estate between the Company
and Columbine West, LLC, accepted June 15, 1995, as amended on August 11, 1995,
August 15, 1995, September 8, 1995 and September 25, 1995 filed as Exhibit 10(k)
in the Registrant's Report on Form 10-KSB for the year ended June 30, 1995 is
incorporated herein by this reference.

     (10)(l) Commercial Contract to Buy and Sell Real Estate between the Company
and Centurion Development Company, dated June 15, 1995, as amended on September
15, 1995 filed as Exhibit 10(l) in the Registrant's Report on Form 10-KSB for
the year ended June 30, 1995 is incorporated herein by this reference.

     (10)(m) 1999 Stock Option Plan filed as exhibit (10)(m) in the Registrant's
Report on Form 10-KSB for the year ended June 30, 1999 is incorporated herein by
this reference.

     (10)(n) 2000 Stock Option Plan.

                                  Page 16 of 17
                                     10-KSB
<PAGE>

                                   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.

Date: October 11, 2000                 By: /s/ Gregory Pusey           .
                                           -----------------------------
                                           Gregory Pusey
                                           President, Treasurer and Director

     In accordance with the requirements of the Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Date: October 11, 2000                 By: /s/ Gregory Pusey           .
                                           -----------------------------
                                           Gregory Pusey
                                           President, Treasurer and Director


Date: October 11, 2000                 By: /s/ Jeffrey G. McGonegal    .
                                           -----------------------------
                                           Jeffrey G. McGonegal
                                           Secretary and Director


Date: October 11, 2000                 By: /s/ John H. Altshuler       .
                                           -----------------------------
                                           John H. Altshuler, Director


Date: October 11, 2000                 By: /s/ Scott Menefee           .
                                           -----------------------------
                                           Scott Menefee, Director



                                  Page 17 of 17
                                     10-KSB
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.

                              FINANCIAL STATEMENTS
                       YEARS ENDED JUNE 30, 2000 AND 1999

<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                        <C>
Independent Auditors' Report                                                F-2

Independent Auditors' Report                                                F-3

Balance Sheet                                                               F-4

Statements of Operations and Comprehensive Loss                             F-5

Statements of Changes in Stockholders' Equity                               F-6

Statements of Cash Flows                                                    F-7

Notes to Financial Statements                                               F-8

</TABLE>

<PAGE>

                                 AJ. ROBBINS, PC
                  CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
                              3033 EAST 1ST AVENUE
                                    SUITE 201
                             DENVER, COLORADO 80206


                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
Cambridge Holdings, Ltd.
Englewood, Colorado


We have audited the accompanying balance sheet of Cambridge Holdings, Ltd. as of
June 30, 2000, and the related statements of operations and comprehensive loss,
changes in stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cambridge Holdings, Ltd. as of
June 30, 2000, and the results of its operations and comprehensive loss and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

                                       AJ. ROBBINS, PC
                                       CERTIFIED PUBLIC ACCOUNTANTS
                                         AND CONSULTANTS

DENVER, COLORADO
SEPTEMBER 18, 2000


                                      F-2

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


The Board of Directors and Stockholders
Cambridge Holdings, Ltd.
Vail, Colorado

We have audited the accompanying statements of operations and comprehensive
loss, stockholders' equity and cash flows of Cambridge Holdings, Ltd. for the
year ended June 30, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and comprehensive loss and cash
flows of Cambridge Holdings, Ltd. for the year ended June 30, 1999, in
conformity with generally accepted accounting principles.



Denver, Colorado
August 30, 1999


                                      F-3

<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                                  BALANCE SHEET
                                  JUNE 30, 2000

                                     ASSETS

<TABLE>
<S>                                                                              <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                   $   499,673
     Investment securities - available for sale, net                                 507,125
     Notes receivable - related parties                                              550,000
     Deferred tax asset                                                               75,000
     Real estate development                                                         939,199
                                                                                 -----------
                  Total Current Assets                                             2,570,997

PROPERTY AND EQUIPMENT, net                                                           26,315
                                                                                 -----------
                                                                                 $ 2,597,312
                                                                                 ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                                       $     4,878
                                                                                 -----------
                  Total Current Liabilities                                            4,878
                                                                                 -----------
COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY:
     Common stock, $.025 par value; 15,000,000 shares
         authorized: 3,029,870 issued and outstanding                                 75,747
     Additional paid-in capital                                                    2,997,292
     Retained earnings (deficit)                                                    (458,970)
     Accumulated other comprehensive income (loss), net of tax:
         Net unrealized (losses) on securities
             available for sale                                                      (21,635)
                                                                                 -----------
                  Total Stockholders' Equity                                       2,592,434
                                                                                 -----------
                                                                                 $ 2,597,312
                                                                                 ===========
</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                      F-4
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED JUNE 30,
                                                                    -----------------------------
                                                                       2000              1999
                                                                    -----------       -----------
<S>                                                                 <C>               <C>
REVENUES:
     Net realized gains (losses) on sales of
         investment securities                                      $   (11,697)      $   101,359
     Interest and dividend income                                        47,899           101,120
                                                                    -----------       -----------
                  Total revenues                                         36,202           202,479
                                                                    -----------       -----------

OTHER INCOME (EXPENSE):
     Operating, general and administrative                             (161,312)         (175,372)
     Investment write-off                                                  --            (206,278)
     Interest expense                                                   (21,087)          (60,168)
     Impairment allowance on notes receivable, related parties         (470,426)             --
     Other income                                                        70,000              --
                                                                    -----------       -----------
                  Net Other Income (Expense)                           (582,825)         (441,818)
                                                                    -----------       -----------
(LOSS) BEFORE INCOME TAXES                                             (546,623)         (239,339)

INCOME TAX (BENEFIT)                                                    (48,000)          (57,000)
                                                                    -----------       -----------
NET (LOSS)                                                             (498,623)         (182,339)

OTHER COMPREHENSIVE INCOME (LOSS), net of tax -
     Unrealized holding gains (losses)                                  (50,696)           18,521
                                                                    -----------       -----------
COMPREHENSIVE (LOSS)                                                $  (549,319)      $  (163,818)
                                                                    ===========       ===========
NET (LOSS) PER COMMON SHARE, BASIC AND DILUTED                      $      (.16)      $      (.06)
                                                                    ===========       ===========
Weighted average number of
     common shares outstanding                                        3,029,870         3,295,337
                                                                    ===========       ===========

</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                      F-5
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                 Common Stock            Additional                        Other          Total
                                          -------------------------       Paid-in         Retained     Comprehensive   Stockholders'
                                            Shares         Amount         Capital         Earnings     Income/(Loss)      Equity
                                          ---------     -----------     -----------     -----------    -------------   -------------
<S>                                       <C>           <C>             <C>             <C>            <C>             <C>
BALANCE, June 30, 1998                    3,398,400     $    84,960     $ 3,177,735     $   221,992     $    10,540     $ 3,495,227
  Net (loss) for the year                      --              --              --          (182,339)           --          (182,339)
  Shares issued from
    exercise of stock options                10,000             250           3,187            --              --             3,437
  Repurchase of shares at $.45 share,
    plus costs of$22,755                   (378,530)         (9,463)       (183,630)           --              --          (193,093)
  Net unrealized gains on
    securities available for sale              --              --              --              --            18,521          18,521
                                          ---------     -----------     -----------     -----------     -----------     -----------
BALANCE, June 30, 1999                    3,029,870          75,747       2,997,292          39,653          29,061       3,141,753
  Net unrealized (losses) on
    securities available for sale              --              --              --              --           (50,696)        (50,696)
  Net (loss) for the year                      --              --              --          (498,623)           --          (498,623)
                                          ---------     -----------     -----------     -----------     -----------     -----------
BALANCE, June 30, 2000                    3,029,870     $    75,747     $ 2,997,292     $  (458,970)    $   (21,635)    $ 2,592,434
                                          =========     ===========     ===========     ===========     ===========     ===========
</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                      F-6
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                For the Years Ended June 30,
                                                                               -----------------------------
                                                                                  2000              1999
                                                                               -----------       -----------
<S>                                                                            <C>               <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net (loss)                                                                     $  (498,623)      $  (182,339)
  Adjustments to reconcile net (loss) to net cash
     provided (used) by operating activities:
       Write off of investments                                                       --             206,278
       Impairment allowance on notes receivable, related parties (Note 4)          470,434              --
       Interest income paid in investment securities                                  --             (77,796)
       Depreciation and amortization                                                18,238            17,792
       Realized (gains) losses on sale of investment securities                     11,697          (101,359)
       Deferred income taxes                                                        28,116           (44,000)
  Changes in:
       Prepaids and other                                                           45,888            (7,085)
       Accrued liabilities and other                                                (9,873)            2,358
                                                                               -----------       -----------
         Cash Flows Provided (Used) By Operating Activities                         65,877          (186,151)
                                                                               -----------       -----------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
  Purchase of investment securities                                               (189,969)       (1,913,184)
  Proceeds from sale of investment securities                                    1,227,321           909,077
  Investments in notes receivable - related parties                               (114,798)         (131,333)
  Collection on notes receivable - related parties                                    --              42,500
  Purchases of property and equipment                                              (17,423)           (6,322)
                                                                               -----------       -----------
         Cash Flows Provided (Used) By Investing Activities                        905,131        (1,099,262)
                                                                               -----------       -----------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
  Payments of costs to repurchase common stock                                        --             (22,755)
  Payments to repurchase common stock                                                 --            (170,338)
  Principal payments on note payable                                              (665,782)           (5,007)
  Proceeds from exercise of stock options                                             --               3,437
                                                                               -----------       -----------
         Cash Flows Used In Financing Activities                                  (665,782)         (194,663)
                                                                               -----------       -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               305,226        (1,480,076)

CASH AND CASH EQUIVALENTS, beginning of year                                       194,447         1,674,523
                                                                               -----------       -----------
CASH AND CASH EQUIVALENTS, end of year                                         $   499,673       $   194,447
                                                                               ===========       ===========

</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-7
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Cambridge Holdings, Ltd. ("Cambridge" or "The Company") was incorporated on June
23, 1980 under the laws of the State of Colorado. The Company has purchased two
undeveloped lots in the Cordillera Valley Club, located near Vail, Colorado and
has sold the properties to two separate limited liability companies (LLC's).
With their partner in the LLC's, the Company has built a separate luxury
residence on each parcel for resale. The Company also explores other business
acquisitions, opportunities and investments.

CONCENTRATIONS OF CREDIT RISK

The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash balances in excess of the insurance provided by
governmental insurance authorities. The Company has not experienced any losses
on such accounts.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.

INVESTMENT SECURITIES

Investment securities classified as available for sale are those securities that
the Company does not have the positive intent to hold to maturity or does not
intend to trade actively. These securities are reported at fair value with
unrealized gains and losses reported as a net amount (net of applicable income
taxes) as a separate component of stockholders' equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Unless otherwise specified, the Company believes the carrying value of financial
instruments approximates their fair value.

REVENUE RECOGNITION

Interest and dividend income is recorded on the accrual basis. Gains and losses
on sales of securities are recognized at time of sale.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation expense is generally
provided on a straight-line basis using estimated useful lives of 3-5 years.
Depreciation expense of property and equipment was $18,238 and $17,792 for the
years ended June 30, 2000 and 1999, respectively.

INVESTMENT IN LLC

The investments in LLC's are accounted for under the equity method.

                                      F-8
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates its long lived assets by measuring the carrying amount of
the assets against the estimated undiscounted future cash flows associated with
them. At the time such evaluations indicate the future undiscounted cash flows
of certain long lived assets are not sufficient to cover the carrying value of
such assets, the assets are adjusted to their fair values. During the year ended
June 30, 2000 the Company recorded an allowance against its notes receivables
from the LLC's of $470,434 because the Company does not believe it will realize
the full amounts due under the notes receivables.

INCOME TAXES

The Company follows the provisions of Statement of Financial Accounting
Standards No. 109 - Accounting for Income Taxes. Under SFAS No. 109, the
Company's policy is to provide deferred income taxes related to items that
result in differences between the financial reporting and tax basis of assets
and liabilities.

EARNINGS PER COMMON SHARE

Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
No. 128) was issued in February 1997 (effective for financial statements issued
for periods ending after December 15, 1997). This Statement simplifies the
standards for computing earnings per share (EPS) previously found in Accounting
Principles Board Opinion No. 15, Earnings Per Share, and makes them more
comparable to international EPS standards. SFAS No. 128 replaces the
presentation of primary EPS with a presentation of basic EPS. In addition, the
Statement requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.

Options to purchase 90,000 and 120,000 shares of common stock were not included
in the computation of diluted earnings per share as their effect was
anti-dilutive for the years ended June 30, 2000 and 1999, respectively.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and investments with original
maturities of three months or less.


                                      F-9
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

STOCK OPTION PLANS

The Company applies Accounting Principles Board Opinion 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES, ("APB Opinion 25") and related Interpretations in
accounting for all stock option plans. Under APB Opinion 25, no compensation
cost has been recognized for stock options granted as the option price equals or
exceeds the market price of the underlying common stock on the date of grant.

Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, ("SFAS No. 123") requires the Company to provide pro forma
information regarding net income as if compensation cost for the Company's stock
option plans had been determined in accordance with the fair value based method
prescribed in SFAS.

COMPREHENSIVE INCOME (LOSS)

Effective July 1, 1998, Cambridge Holdings, Ltd. adopted FASB Statement No. 130,
REPORTING COMPREHENSIVE INCOME (LOSS) ("SFAS No. 130"). SFAS No. 130 requires
the reporting of comprehensive income (loss) in addition to net income (loss)
from operations. Comprehensive income (loss) is a more inclusive financial
reporting methodology that includes disclosure of certain financial information
that historically has not been recognized in the calculation of net income
(loss).

The change in net unrealized securities gains (losses) recognized in other
comprehensive income includes two components: (1) unrealized gains (losses) that
arose during the period from changes in market value of securities that were
held during the period (Holding gains (losses), and (2) gains or (losses) that
were previously unrealized, but have been recognized in current period net
income due to sales of available-for sale securities (reclassification for
realized gains). This reclassification has no effect on total comprehensive
income (loss) or shareholder's equity.

The following table presents the components of other comprehensive income
(loss), net of tax:

<TABLE>
<CAPTION>
     Years ended June 30, (net of tax)                             2000           1999
                                                                 --------       --------
<S>                                                              <C>            <C>
     Holding (losses)                                            $(24,587)      $(13,512)
     Reclassification for realized gains (losses)                 (26,109)        32,033
                                                                 --------       --------
     Increase (decrease) in net unrealized securities gains
       (losses) recognized in other comprehensive income         $(50,696)      $ 18,521
                                                                 ========       ========
</TABLE>

                                      F-10
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the FASB issued SFAS No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES" which requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
market value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. Management believes
the adoption of this statement will have no material impact on the Company's
financial statements.

RECLASSIFICATION

Certain amounts reported in the Company's financial statements for the year
ended June 30, 1999 have been reclassified to conform to the current year
presentation.

NOTE 2 - INVESTMENT SECURITIES

At June 30, 2000 the Company's market value of available for sale securities
consisted of the following:

<TABLE>
<CAPTION>
                                                       Gross
                                                     Unrealized        Estimated
                                      Cost             (Loss)          Fair Value
<S>                                 <C>              <C>               <C>
Common and preferred stocks         $543,452         $(37,536)         $505,916
Bond Funds                             1,209             --               1,209
                                    --------         --------          --------
Total                               $544,661         $(37,536)         $507,125
                                    ========         ========          ========

</TABLE>

The Company realized net gains (losses) of $(11,697) and $101,359 on the sale of
investment securities for the years ended June 30, 2000 and 1999, respectively.

The Company wrote off $105,000 in investment securities during the year ended
June 30, 1999.

NOTE 3 - INVESTMENT IN PARTNERSHIP

In 1997 the Company invested $100,000 for a 10% interest in a partnership which
entered into a bridge loan with a third party. During the year ended June 30,
1999, the Company wrote off its investment in the partnership totaling $101,278
as it had not been repaid under the terms of the bridge loan agreement and
collection was doubtful. The Company pursued litigation and recovered $70,000
during 2000.


                                      F-11
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - NOTES RECEIVABLE - RELATED PARTIES

In February 1997, the Company entered into agreements to become a member of two
limited liability companies with the Zneimer Company, a real estate developer in
the Vail, Colorado area. The Company and the Zneimer Company each hold a 50%
interest in these companies, each of which built a separate luxury resident 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,
was conveyed to the limited liability company entitled CVC Lot 19, LLC in August
1997. In January 1997 the Company purchased raw land near Vail, known as
Cordillera Valley Club Lot #2, for $356,700. This lot was conveyed to the
limited liability company known as CVC Lot 2, LLC in May 1997. In both cases,
the Company received a secured promissory note in an amount equal to the
purchase price for the real estate plus expenses, and subsequently a mortgage
guaranteed by Zneimer Company and Mr. and Mrs. Zneimer, personally, which have
been subordinated to the secured construction loans provided by a financial
institution. The notes receivable from CVC Lot 19, LLC and CVC Lot 2, LLC
totaled $250,000 and $300,000 after an impairment allowance of $470,434 at June
30, 2000 and are due upon the consummation of the sale of the property. The
Zneimer Company and Mr. Zneimer personally guaranteed $454,402, one half the
original principal amount of the notes issued to the Company. This guarantee
took place simultaneously with the conveyance of each property to the applicable
limited liability company.

The notes qualify as related party only due to the fact that the CVC LLC's are
50% owned by Cambridge Holdings, Ltd. The management of Cambridge Holdings, Ltd.
has no interest in these properties other than as a shareholder of Cambridge
Holdings, Ltd.

Separate unaudited condensed statement of operations of CVC Lot 2, LLC and CVC
Lot 19, LLC, on a combined basis are as follows:

<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED
                                             JUNE 30,
                                     -------------------------
                                       2000             1999
                                     ---------       ---------
                                           (UNAUDITED)
<S>                                  <C>             <C>
     Revenue                         $  71,901       $     122
     Expenses                          200,174           3,391
                                     ---------       ---------
     Net (loss) from operations      $(128,273)      $  (3,269)
                                     =========       =========

</TABLE>


                                      F-12
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                         June 30,
                                                           2000
                                                         -------
<S>                                                      <C>
     Automobile                                          $30,762
     Furniture and fixtures                               29,757
     Office equipment                                      1,200
                                                         -------
     Total                                                61,719

     Less accumulated depreciation                        35,404
                                                         -------
                                                         $26,315
                                                         =======
</TABLE>

NOTE 6 - INCOME TAXES (BENEFIT)

<TABLE>
<CAPTION>
                              FOR THE YEARS ENDED
                                    JUNE 30,
                             2000           1999
                           --------       --------
<S>                        <C>            <C>
     Current:
              Federal      $(48,000)      $(56,000)
              State            --           (1,000)
                           --------       --------
                           $(48,000)      $(57,000)
                           ========       ========
</TABLE>

<TABLE>
<CAPTION>
                                              June 30,
                                               2000
                                            ---------
<S>                                         <C>
     DEFERRED TAX ASSETS:
       Allowance for losses on
         investments                        $  54,000
       Net operating loss carryforward         60,000
                                            ---------
       Net deferred tax assets                114,000
       Less valuation allowance               (39,000)
                                            ---------
       Net deferred tax assets                 75,000
                                            ---------
       DEFERRED TAX LIABILITY                    --
                                            ---------
       Net deferred tax asset               $  75,000
                                            =========
</TABLE>


                                      F-13
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 6 - INCOME TAXES (BENEFIT) (Continued)

The Company has recorded a deferred tax asset of $75,000, which reflects the
amount of tax benefit expected to be realized as a result of the available
capital loss carryforward. A valuation allowance has been recorded for the
remainder of the deferred tax assets as management is not able to determine if
it is more likely than not that certain other deferred tax assets will be
realized.

A reconciliation of income tax expense (benefit) at the federal statutory rate
to the effective tax rate is as follows:

<TABLE>
<CAPTION>
                                            FOR THE YEARS ENDED JUNE 30,
                                            ----------------------------
                                                2000            1999
                                             ---------       ---------
<S>                                         <C>             <C>
     Income tax benefit computed at the
       federal statutory rate                $(186,000)      $ (81,000)
     State income taxes, net of
       federal benefit                          (2,000)         (8,000)
     Increase in valuation allowance              --             1,000
     Other                                     140,000          31,000
                                             ---------       ---------
     Income tax benefit                      $ (48,000)      $ (57,000)
                                             =========       =========

</TABLE>

The Company has a net operating loss carryforward of $161,000 which expires in
2020.


                                      F-14
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 7 - NOTE PAYABLE

In July 1997, the Company purchased a parcel of raw land in Glenwood Springs,
Colorado for $264,199 in cash and a $675,000 note payable. The 9% note required
monthly payments of $5,431 and originally matured on July 15, 1999. The note was
collateralized by the parcel of raw land. At June 30, 1999 the balance of the
note payable was $665,782. The Company made a principal reduction of $300,000 on
the original due date to extend the note to January 15, 2000, at which time the
balance was paid in full.

NOTE 8 - STOCK OPTIONS

1999 STOCK OPTION PLAN

The Company's 1999 Stock Option Plan, as amended, has a maximum of 1,000,000
common shares reserved to be issued to key employees upon the exercise of
options granted under the Plan. The option price of shares may not be less than
the fair market value of common stock on the date of grant. The option price of
shares issued to more than 10% shareholders may not be less than 110% of the
fair market value of common stock on the date of grant. The exercise term will
not exceed ten years from the date of the grant. During 1999 the Company granted
60,000 options under the plan, which are scheduled to expire April 15, 2004. No
options were granted during 2000.

1988 STOCK OPTION PLAN

The Company's 1988 Stock Option Plan, as amended, has a maximum of 400,000
common shares reserved to be issued to key employees upon the exercise of
options granted under the Plan. The option price of shares may not be less than
the fair market value of common stock on the date of grant. The exercise term
will not exceed five years from the date of the grant. The Plan expired in May
1998. Individual grants expire under the terms of the option agreements.



                                      F-15
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 8 - STOCK OPTIONS (CONTINUED)

NON-DISCRETIONARY STOCK OPTION PLAN

The Company's Non-Discretionary Stock Option Plan (the "Plan"), as amended, was
intended to reward non-employee directors' contributions to the Company. The
number of shares of common stock reserved for issuance pursuant to the Plan was
250,000. The option price of shares under this Plan may not be less than the
fair market value of common stock on the date of grant. The exercise term will
expire three years from the date of grant. The Plan expired in September 1997.
Individual grants of options expire under the terms of the option agreements.

PRO FORMA STOCK OPTION COMPENSATION

FASB Statement 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS No. 123"),
requires the Company to provide pro forma information regarding net loss and net
loss per share as if compensation costs for the Company's stock option plans and
other stock awards had been determined in accordance with fair value based
methods prescribed in SFAS No. 123. The Company estimates the fair value of each
stock award at the grant date by using the Black-Scholes option-pricing model
with the following weighted-average assumptions: no dividend yield; risk free
interest rate of 5.13%; and an expected life of 5 years for the year ended June
30, 1999. There were no options granted during June 30, 2000. The Company's net
loss and basic and diluted loss per share would have been increased to the pro
forma amounts indicated in the following table.

<TABLE>
<CAPTION>
                                      FOR THE YEARS ENDED JUNE 30,
                                     ------------------------------
                                         2000              1999
                                     ------------      ------------
<S>                                  <C>               <C>
     Net loss as reported            $  (498,623)      $  (182,339)
     Net loss pro forma                 (498,623)         (194,880)
     Basic and diluted loss per
       share as reported                    (.16)             (.06)
     Basic and diluted loss per
       share pro forma                      (.16)             (.06)

</TABLE>

                                      F-16
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 8 - STOCK OPTIONS (CONTINUED)

A summary of the Company's stock option plans, outstanding options and changes
during the years is presented below:

<TABLE>
<CAPTION>
                                                                                       FOR THE YEARS ENDED
                                                                                              JUNE 30,
                                                                         --------------------------------------------------
                                                                                  2000                         1999
                                                                         ----------------------      ----------------------
                                                                                       Weighted                    Weighted
                                                                                       Average                     Average
                                                                                       Exercise                    Exercise
                                                                          Shares         Price       Shares         Price
                                                                          -------      --------      -------       --------
<S>                                                                       <C>          <C>           <C>           <C>
Outstanding, beginning of year                                            120,000      $ .57625      160,000       $ .53805
  Granted                                                                    --           --          60,000         .50000
  Expired                                                                  30,000        .87500      (90,000)        .48000
  Exercised                                                                  --           --         (10,000)        .34375
                                                                          -------      --------      -------       --------
Outstanding, end of year                                                   90,000      $ .47667      120,000       $ .57625
                                                                          =======      ========      =======       ========
Options exercisable, end of year                                           90,000      $ .47667       60,000       $ .65750
                                                                          =======      ========      =======       ========
Weighted average fair value of options
  granted during the year                                                    --        $  --          60,000       $ .21000
                                                                          =======      ========      =======       ========

</TABLE>

The following table summarizes information about stock options outstanding at
June 30, 2000:

<TABLE>
<CAPTION>
                       Options Outstanding                        Options Exercisable
                  ----------------------------                 -------------------------
                                     Weighted
                                     Average       Weighted                     Weighted
    Range of                        Remaining      Average                      Average
    Exercise          Number       Contractual     Exercise        Number       Exercise
     Prices        Outstanding     Life-Years        Price      Exercisable      Price
--------------     -----------     -----------     --------     -----------     --------
<S>                <C>             <C>             <C>          <C>             <C>
$ .44 to $ .52        90,000           2.6         $ .47667             90,000  $ .47667

</TABLE>

                                      F-17
<PAGE>

                            CAMBRIDGE HOLDINGS, LTD.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company shares corporate office space and administrative staff with an
affiliate of the Company. The Company paid its affiliate $750 per month for
these facilities and services. Cambridge's president is also president and Chief
Executive Officer of Advanced Nutracueticals, Inc. ("ANII"). The Company held
investment securities in ANII classified as available for sale and at June 30,
2000, the investments had an estimated fair value of $46,798.

NOTE 10 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                    FOR THE YEARS ENDED
                                         JUNE 30,
                                  ----------------------
                                    2000           1999
                                  --------      --------
<S>                               <C>           <C>
Cash paid during year for:
  Interest                        $ 21,087      $ 60,168

</TABLE>

NOTE 11 - SUBSEQUENT EVENTS

In August 2000 the Company formed a wholly owned subsidiary, CamCap, Inc. The
Company intends to spin-off the common stock of CamCap, Inc. to its
stockholders.

The Glenwood Springs parcel of land was sold in July 2000 for $1,300,000 less
closing fees and reimbursements to net gain of $234,500.

                                      F-18