<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, 1999

( )   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, 1999
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)

       1722 Buffehr Creek Road,                       81657
           Vail, Colorado                           (Zip Code)

    (Address of principal executive offices)
 Issuer's telephone number, including area code    (970) 479-2800

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, 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 $202,479 in revenues for the fiscal year ended June 30, 1999.

The aggregate market value of the voting stock held by non-affiliates was
approximately $741,386 on September 24, 1999.

                                  Page 1 of 16
                                     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.

<TABLE>
<CAPTION>
           Class                               Outstanding at August 31, 1999
<S>                                            <C>
 Common Stock, $.025 par value                             3,029,870
</TABLE>

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 were completed in early 1998. It is presently
unknown when these properties will be sold or what proceeds will be realized
upon sale. Due to the delay on sale of these properties, the Company has
agreed to rent the CVC Lot 19 house until a buyer is found. Management has
rented the CVC Lot 19 home commencing on September 1, 1999 at a monthly
rental fee of $5,700, net of commission. The delay on the sale of these
properties is likely to cause the LLC's to incur a loss in these transactions
and may cause the Company to be constrained in its ability to engage in other
transactions.

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 16
                                     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 bears interest at 9% per annum, payable $5,431 per month and is
due on January 15, 2000. The Company paid $300,000 on this mortgage in July
1999. Although management has commenced some preliminary engineering it is
decided at this time to resell the properties. In the event the Company
determines to proceed with the project, it is anticipated that the Company
will enter into an arrangement with Zneimer Company, Inc. to develop this
property.

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 an
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 which 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.

     COMPETITION. The investment and real estate business is highly
competitive and the Company competes with numerous entities engaged in
investment and 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.

                                  Page 3 of 16
                                     10-KSB


<PAGE>

Item 2.    DESCRIPTION OF PROPERTIES.

           The Company's administrative activities are conducted at the
Company's corporate headquarters located in Vail, Colorado in space shared by
the Company with an affiliate, Livingston Capital, Ltd. ("Livingston"). The
Company pays Livingston a monthly fee of $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, mark-down, 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, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
         Quarter Ended                 High Bid                Low Bid
         -------------                 --------                -------
<S>                                    <C>                     <C>
         June 30, 1999                 $.47                    $.47
         March 31, 1999                $.47                    $.45
         December 31, 1998             $.45                    $.34375
         September 30, 1998            $.34375                 $.28125
         June 30, 1998                 $.28125                 $.28125
         March 31, 1998                $.28125                 $.28125
         December 31, 1997             $.40                    $.25
         September 30, 1997            $.40                    $.375
</TABLE>

                                  Page 4 of 16
                                     10-KSB

<PAGE>

          At September 20, 1999 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, 1999 and 1998.

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."

LIQUIDITY AND CAPITAL RESOURCES.

     At June 30, 1999, the Company had cash and cash equivalents of $194,400
and working capital of $3,114,600. 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 loaned CVC Lot
2 LLC $109,300 and CVC Lot 19 LLC $65,900 to aid in completing and selling
the residential property. Commencing on September 1, 1999 the CVC #19 home is
being rented at a monthly rental fee of $5,700 net of commission. Due to the
inability to sell the homes to date, management anticipates making changes to
the houses to make them more saleable and believes that the LLC's will
realize a loss once sold. However, management is unsure whether the proceeds
received by the LLC's from the sale of the luxury residential properties will
be sufficient to allow the Company to fully realize the $905,636 (at June 30,
1999) in notes receivable from the LLC's.

     In July 1997 the Company purchased land in Glenwood Springs, Colorado
for $925,000, including a mortgage note in the amount of $675,000. The
Company made a principal payment of $300,000 on the mortgage note in July
1999. The remaining balance of $365,782 is due January 15, 2000. The property
is currently available for resale.

     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, 1999, operating activities generated a
negative cash flow of $186,200 as compared to a positive cash flow of $21,800

                                  Page 5 of 16
                                     10-KSB

<PAGE>

for the year ended June 30, 1998. The Company had interest income paid on
investment securities of $77,800 and $22,500 during the years ended June 30,
1999 and June 30, 1998, respectively. The Company wrote-down the value of two
investments which were determined to be worthless for $206,300 during the
year ended June 30, 1999. The Company wrote off investment securities of
$102,000 during the year ended June 30, 1998. Gains from the sale of
investment securities increased from approximately $44,200 to $101,400 and
depreciation increased from $11,900 in 1998 to $17,800 in 1999. In 1999 the
Company recorded a $44,000 deferred tax asset to reflect capital loss
carrybacks which will be realizable through a carry back to previous year's
capital gains. Prepaid expenses and other increased by $7,100 in the year
ended June 30, 1999. Other accrued liabilities increased by $2,400 in 1999.

     Cash used in investing activities was approximately $1,099,300 during
the year ended June 30, 1999 compared to cash provided from investing
activities of $13,600 during the year ended June 30, 1998. Approximately
$1,913,200 was used to purchase investment securities during the year ended
June 30, 1999 compared to $234,500 in 1998. No land was purchased during
1999, but $264,200 was used to purchase land in 1998. The Company purchased
fixed assets for $6,300 and $47,500 in the years ended June 30, 1999 and June
30, 1998, respectively and had an increase in investments in notes receivable
from $36,900 to $131,300. Cash provided from investing activities during
fiscal 1999 was from the proceeds from sales of investment securities of
$909,100 and $42,500 was the collection of notes receivable. In the
comparable period in 1998, cash provided from investing activities was from
proceeds from sales of investment securities of $214,100 and $382,500 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.

     Financing activities during the year ended June 30, 1999 used cash of
approximately $194,700, including $170,300 in payments to repurchase stock
and $22,800 of costs incurred in connection with the tender offer. Cash used
in financing activities during the year ended June 30, 1998 totaled $1,000.
Of this total, $4,200 was principal payments on notes payable compared to
$5,000 in 1999 offset by cash generated from the exercise of stock options of
$3,400 in 1999 and $3,200 in 1998.

     YEAR 2000 COMPLIANCE

The Company has completed a review and risk assessment of all technology
items used in its operations. The Company believes that the year 2000 problem
will pose no significant operational problems. The Company's accounting
software program as well as other office software will be upgraded during
1999 to be year 2000 compliant. The Company estimates that the cost of the
upgrades will be

                                  Page 6 of 16
                                     10-KSB

<PAGE>

approximately $1,000. The Company has reviewed the status of the year 2000
issues with its financial institutions.

RESULTS OF OPERATIONS.

FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998

     The Company's revenues for the year ended June 30, 1999 totaled
approximately $202,500, consisting of gains on the sale of securities of
approximately $101,400 and interest and dividend income of $101,100. Revenues
for the year ended June 30, 1998 totaled approximately $178,100, consisting
of net gains on the sale of securities of approximately $44,200 and interest
and dividend income of $133,900. 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 1999. The Company's net realized
gains on sales of investment securities and cash equivalents increased
primarily as a result of the sale of common stock received with convertible
notes and the sale of various other investment securities.

During the years ended June 30, 1999 and June 30, 1998, the Company incurred
operating, general and administrative costs of approximately $175,400 and
$166,900, respectively. The Company also incurred a write-down of impaired
assets of $206,300 and $102,000 during 1999 and 1998 respectively. During the
year ended June 30, 1999, the Company wrote off its investment in a
partnership totaling $101,300 as it has not been repaid under the terms of
the bridge loan agreement and collection is doubtful. The Company has filed
suit against the general partner of the partnership to collect its
investment. The Company had a loss before taxes for the year ended June 30,
1999 of approximately $239,300 as compared with a loss before taxes of
approximately $146,500 for the year ended June 30, 1998. The Company
anticipates a tax benefit of $57,000 and $10,000 in 1999 and 1998
respectively, as a result of the carryback of capital losses to 1996.

INCOME TAXES
As discussed in Note 4 to the accompanying financial statements, the Company has
$83,000 in deferred tax assets. Management of the Company has developed a tax
planning strategy in which capital losses will be carried back to previous tax
filings and allow the Company to realize a $44,000 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.

                                  Page 7 of 16
                                     10-KSB

<PAGE>

Item 7.   FINANCIAL STATEMENTS.
          See pages F-1 through F-20.

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

          There were no changes in accountants during the fiscal years ended
June 30, 1999 and 1998.

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS.

<TABLE>
<CAPTION>
                             Date First
                              Elected               Principal Occupation
Name                  Age     Director                 and Employment
----                  ---     --------                 --------------
<S>                   <C>    <C>             <C>
Gregory Pusey         47        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 1998.  Mr. Pusey graduated from
                                             Boston College in 1974 with a BS in finance.

Donald E. Yager       74        1988         Secretary and director.  Since 1968 Mr. Yager has served as President and Director of
                                             Yager Realty, Inc., a real estate agency and development company located in
                                             Westminster, Colorado, a suburb of Denver, Colorado.

John H. Altshuler     68        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

                                  Page 8 of 16
                                     10-KSB

<PAGE>

                                             McGill University in 1959 with a doctorate in medicine.

Scott Menefee         34        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.
</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 officers may be removed from their positions at any
time by the Company's Board of Directors. Dr. Altshuler and Mr. Yager serve as
members of the Option Committee (See Item 10). There are no family relationships
among the directors of the Company except that Mr. Yager is the father-in-law of
Mr. Pusey. During the fiscal year ended June 30, 1999, 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, 1999.

Item 10.  EXECUTIVE COMPENSATION.

     (a)  COMPENSATION.  The following table sets the cash compensation paid
by the Company during the fiscal year ended June 30, 1999 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.


                                  Page 9 of 16
                                     10-KSB

<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
                              Annual Compensation                         Awards              Payouts
                              -------------------                         ------              -------
                                                         Other
   Name and                                             Annual     Restricted                  LTIP        All Other
   Principal                 Salary                    Compensa-      Stock      Options      Payouts      Compensa-
   Position   Fiscal Year    ($)(1)       Bonus          Tion      Awards ($)      (#)          ($)       Tion ($)(2)
   --------   -----------    ------       ------         ----      ----------      ---          ---       -----------
<S>           <C>            <C>          <C>          <C>         <C>           <C>          <C>         <C>
Gregory Pusey,
President        1999        60,000         -0-           -0-          -0-         -0-          -0-          4,924
                 1998        60,000         -0-           -0-          -0-         -0-          -0-          5,993
                 1997        60,000         -0-           -0-          -0-         -0-          -0-         11,543
</TABLE>

     (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, 1999 is health insurance premiums of $4,924
          paid on Mr. Pusey's behalf. The amount shown for the year ended June
          30, 1998 is health insurance premiums of $3,852 and auto lease
          payments of $2,141. The amount shown for the year ended June 30, 1997
          is health insurance premiums in the amount of $5,789 and auto lease
          payments of $5,754.

     (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               10,000              17%                $.47           4/15/04
</TABLE>

     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 1998, except that
previously granted options will remain outstanding until terminated in
accordance with the individual option agreements.

                                  Page 10 of 16
                                     10-KSB

<PAGE>

     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. The Board of Directors has 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. The Non-Discretionary Stock Option Plan became
effective as of September 12, 1991 and is intended to reward non-employee
directors for their participation and contributions to the Company. The
Non-Discretionary Stock Option Plan terminated in 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,

                                  Page 11 of 16
                                     10-KSB

<PAGE>

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 from the later to occur of October 16, 1999 or 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 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

                                  Page 12 of 16
                                     10-KSB

<PAGE>

required by law or agreement. The 1999 Plan will continue until April 15,
2009, unless abandoned or terminated at an earlier time.

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

     The following table sets forth ownership of the presently 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 as of September 15, 1999. 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                               10,000                 0.3%
18 Blue Heron Drive West
Littleton, CO 80121 (1)

Scott Menefee                                   50,000                 1.6%
971 Garfield Street
Denver, CO 80206 (2)

Gregory Pusey                                  1,591,218               52.5%
1722 Buffehr Creek Road
Vail, CO 81657 (3)

Cede & Co.                                      203,469                6.6%
PO Box 222
New York, NY 10274

Donald E. Yager                                 10,000                 0.3%
3200 W. 72nd Avenue
Westminster, CO 80030 (4)

E. Jeffrey Peierls                              307,824                10.0%
73 S. Holman Way
Golden, CO 80401 (5)

All officers and directors as a                1,661,218               54.8%
group (4 persons) (1) (2) (3) (4)
</TABLE>

     (1)  Includes exercisable options to purchase 10,000 shares which have been
          granted under the Non-Discretionary Stock Option Plan. Does not
          include options to purchase 10,000 shares which have been granted
          under the 1999 Plan which are not currently exercisable.

                                  Page 13 of 16
                                     10-KSB

<PAGE>

     (2)  Includes exercisable options to purchase 10,000 shares which have been
          granted under the Non-Discretionary Stock Option Plan. Does not
          include options to purchase 10,000 shares which have been granted
          under the 1999 Plan which are not currently exercisable.

     (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 30,000 shares
          which have been granted under the 1999 Plan which are not currently
          exercisable.

     (4)  Includes options to purchase 10,000 shares which have been granted
          under the Non-Discretionary Stock Option Plan. Does not include
          options to purchase 10,000 shares which have been granted under the
          1999 Plan which are not currently exercisable.

     (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.

     During the fiscal year ended June 30, 1997 the Company purchased raw land
in Eagle County, Colorado. The land has been conveyed to two limited liability
companies. The Company owns a 50% interest in each company. Additional
information regarding transactions with these companies and the status of the
properties is provided in Item 1(a).

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.

                                  Page 14 of 16
                                     10-KSB

<PAGE>


     (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.

     (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

                                  Page 15 of 16
                                     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 13, 1999        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

<TABLE>
<S>                           <C>
Date: October 13, 1999        By:  /s/ Gregory Pusey
                                 ----------------------------------------------
                                       Gregory Pusey
                                       President, Treasurer and Director

Date: October 13, 1999        By:  /s/ Donald E. Yager
                                 ----------------------------------------------
                                       Donald E. Yager
                                       Secretary and Director



Date: October 13, 1999        By:  /s/ John H. Altshuler
                                 ----------------------------------------------
                                       John H. Altshuler, Director



Date: October 13, 1999        By:  /s/ Scott Menefee
                                 ----------------------------------------------
                                       Scott Menefee, Director
</TABLE>


                                  Page 16 of 16
                                     10-KSB

<PAGE>



                                                        CAMBRIDGE HOLDINGS, LTD.

                                                                        CONTENTS

<TABLE>
<S>                                                                     <C>
     REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-2

     BALANCE SHEET                                                         F-3

     STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS                       F-5

     STATEMENTS OF STOCKHOLDERS' EQUITY                                    F-6

     STATEMENTS OF CASH FLOWS                                              F-7

     SUMMARY OF ACCOUNTING POLICIES                                        F-9

     NOTES TO FINANCIAL STATEMENTS                                        F-13
</TABLE>



                                                                         F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

We have audited the accompanying balance sheet of Cambridge Holdings, Ltd. as of
June 30, 1999 and the related statements of operations and comprehensive loss,
stockholders' equity and cash flows for each of the two years 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 audits.

We conducted our audits 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 audits provide 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. at
June 30, 1999, and the results of its operations and comprehensive loss, and its
cash flows for each of the two years then ended, in conformity with generally
accepted accounting principles.



Denver, Colorado
August 30, 1999




                                                                         F-2

<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                                   BALANCE SHEET

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
JUNE 30,                                                                          1999
------------------------------------------------------------------------------------------
<S>                                                                        <C>
ASSETS

CURRENT:

   Cash and cash equivalents                                               $     194,447
   Investment securities - available for sale (Note 1 and 7)                   1,683,136
   Notes receivable - related party (Note 3)                                     905,636
   Deferred tax asset (Note 4)                                                    44,000
   Prepaids and other                                                             45,888
   Real estate development (Note 5)                                              939,199
-------------------------------------------------------------------------------------------

Total current assets                                                           3,812,306

Other assets                                                                      27,130
-------------------------------------------------------------------------------------------


                                                                           $   3,839,436
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>



                                                                         F-3

<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                                   BALANCE SHEET
                                                                     (CONTINUED)

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
JUNE 30,                                                                        1999
-----------------------------------------------------------------------------------------
<S>                                                                    <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT:
   Accrued liabilities                                                 $       14,751
   Deferred income taxes (Note 4)                                              17,150
   Note payable (Note 5)                                                      665,782
-----------------------------------------------------------------------------------------

Total current liabilities                                                     697,683
-----------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (Note 6):

   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                                                           39,653
   Accumulated other comprehensive income, net of tax
      Net unrealized gains on securities
        available for sale (Note 1)                                            29,061
-----------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                                                  3,141,753
-----------------------------------------------------------------------------------------

                                                                       $    3,839,436
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>

                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                                                         F-4
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                        STATEMENTS OF OPERATIONS
                                                          AND COMPREHENSIVE LOSS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,                                            1999               1998
-------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>
REVENUES:
   Net realized gains on sales of
      investment securities                           $      101,359      $      44,203
   Interest and dividend income                              101,120            133,865
-------------------------------------------------------------------------------------------

Total revenues                                               202,479            178,068
-------------------------------------------------------------------------------------------

EXPENSES:
   Operating, general and administrative                     175,372            166,866
   Investment write-off (Notes 1 and 2)                      206,278            102,000
   Interest expense                                           60,168             55,719
-------------------------------------------------------------------------------------------

Total expenses                                               441,818            324,585
-------------------------------------------------------------------------------------------

LOSS BEFORE INCOME TAX BENEFIT                              (239,339)          (146,517)

INCOME TAX BENEFIT (Note 4)                                  (57,000)           (10,000)
-------------------------------------------------------------------------------------------

NET LOSS                                                    (182,339)          (136,517)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX -
   Unrealized holding gains (losses)                          18,521            (64,741)
-------------------------------------------------------------------------------------------

COMPREHENSIVE LOSS                                    $     (163,818)     $    (201,258)
-------------------------------------------------------------------------------------------

BASIC AND DILUTED LOSS PER COMMON SHARE               $         (.06)     $        (.04)
-------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                               3,295,337          3,396,948
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>

                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                                                         F-5
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                              STATEMENTS OF STOCKHOLDERS' EQUITY

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   Common Stock                 Additional
                                                       -----------------------------------       Paid-in
YEARS ENDED JUNE 30, 1998 AND 1999                           Shares           Amount             Capital
--------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>              <C>
BALANCE, July 1, 1997                                       3,388,400      $    84,710      $   3,174,785

   Net loss                                                         -                -                  -

   Shares issued from
      exercise of stock options                                10,000              250              2,950

   Net unrealized losses on
      securities available for sale                                 -                -                  -
--------------------------------------------------------------------------------------------------------------

BALANCE, June 30, 1998                                      3,398,400           84,960          3,177,735

   Net loss                                                         -                -                  -

   Shares issued from
      exercise of stock options                                10,000              250              3,187

   Repurchase of shares at $.45 share, plus costs of
      $22,755                                                (378,530)          (9,463)          (183,630)

   Net unrealized gains on
      securities available for sale                                 -                -                  -
--------------------------------------------------------------------------------------------------------------

BALANCE, June 30, 1999                                      3,029,870      $    75,747      $   2,997,292
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                          Accumulated
                                                                             Other             Total
                                                           Retained      Comprehensive     Stockholders'
YEARS ENDED JUNE 30, 1998 AND 1999                         Earnings         Income            Equity
------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>               <C>
BALANCE, July 1, 1997                                  $     358,509       $     75,281      $  3,693,285

   Net loss                                                 (136,517)                 -          (136,517)

   Shares issued from
      exercise of stock options                                    -                  -             3,200

   Net unrealized losses on
      securities available for sale                                -            (64,741)          (64,741)
------------------------------------------------------------------------------------------------------------

BALANCE, June 30, 1998                                       221,992             10,540         3,495,227

   Net loss                                                 (182,339)                 -          (182,339)

   Shares issued from
      exercise of stock options                                    -                  -             3,437

   Repurchase of shares at $.45 share, plus costs of
      $22,755                                                      -                  -          (193,093)

   Net unrealized gains on
      securities available for sale                                -             18,521            18,521
------------------------------------------------------------------------------------------------------------

BALANCE, June 30, 1999                                 $      39,653       $     29,061      $  3,141,753
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</TABLE>

                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                                                          F-6
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                        STATEMENTS OF CASH FLOWS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

YEARS ENDED JUNE 30,                                                    1999               1998
-------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>
OPERATING ACTIVITIES:

   Net loss                                                         (182,339)   $      (136,517)
   Adjustments to reconcile net loss to cash
      provided by (used in) operating activities:
        Provision for possible losses                                      -            102,000
        Write off of investments                                     206,278                  -
        Interest income paid in investment securities                (77,796)           (22,500)
        Depreciation and amortization                                 17,792             11,940
        Realized gains on sale of investment securities             (101,359)           (44,203)
        Deferred income taxes                                        (44,000)                 -
   Changes in operating assets and liabilities
      Prepaids and other                                              (7,085)           111,876
      Accrued liabilities and other                                    2,358               (830)
-------------------------------------------------------------------------------------------------

Net cash provided by (used in) operating activities                 (186,151)            21,766
-------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
   Purchase of property                                                    -           (264,199)
   Purchase of investment securities                              (1,913,184)          (234,453)
   Proceeds from sale of investment securities                       909,077            214,112
   Increase in other non operating assets                             (6,322)           (47,533)
   Investments in notes receivable - related party                  (131,333)           (36,875)
   Collection on notes receivable - related party                     42,500            382,500
-------------------------------------------------------------------------------------------------

Net cash provided by (used in) investing activities               (1,099,262)            13,552
-------------------------------------------------------------------------------------------------
</TABLE>


                                                                          F-7
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                        STATEMENTS OF CASH FLOWS
                                                                     (CONTINUED)

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

YEARS ENDED JUNE 30,                                                  1999               1998
------------------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>
FINANCING ACTIVITIES:
   Payments of costs to repurchase common stock                    (22,755)                 -
   Payments to repurchase common stock                            (170,338)                 -
   Principal payments on notes payable                              (5,007)            (4,211)
   Proceeds from exercise of stock options                           3,437              3,200
-----------------------------------------------------------------------------------------------

Net cash used in financing activities                             (194,663)            (1,011)
-----------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                (1,480,076)            34,307

CASH AND CASH EQUIVALENTS, beginning of year                     1,674,523          1,640,216
-----------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of year                             194,447     $    1,674,523
-----------------------------------------------------------------------------------------------
</TABLE>

                                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                              AND NOTES TO FINANCIAL STATEMENTS.

                                                                          F-8
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                  SUMMARY OF ACCOUNTING POLICIES

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


BUSINESS            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 contributed 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      The Company's financial instruments that are exposed to
OF CREDIT RISK      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.

INVESTMENT          Investment securities classified as available for sale are
SECURITIES          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       Unless otherwise specified, the Company believes the
FINANCIAL           carrying value of financial instruments approximates their
INSTRUMENTS         fair value.

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

                                                                          F-9
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                  SUMMARY OF ACCOUNTING POLICIES

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

INVESTMENT IN       The investment in partnership is accounted for using the
PARTNERSHIP         cost method.

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

LONG-LIVED ASSETS   Long-lived assets are reviewed for impairment whenever
                    events or changes in circumstances indicate that the
                    carrying amount may not be recoverable. If the expected
                    undiscounted future cash flow from the use of the assets and
                    its eventual disposition is less than the carrying amount of
                    the assets, an impairment loss is recognized and measured
                    using the asset's fair value.

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.

NET LOSS            The Company follows the provisions of SFAS No. 128, which
PER SHARE           provides for the calculation of "Basic" and "Diluted"
                    earnings per share. Basic earnings per share includes no
                    dilution and is computed by dividing income (loss) available
                    to common shareholders by the weighted average number of
                    common shares outstanding for the period. Diluted earnings
                    per share reflect the potential dilution of securities that
                    could share in the earnings of an entity. In loss periods,
                    dilutive common equivalent shares are excluded, as the
                    effect would be anti-dilutive. Basic and diluted earnings
                    are the same for all periods presented.

                    Options to purchase 120,000 and 160,000 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, 1999 and 1998.

CASH EQUIVALENTS    The Company considers all highly liquid investments
                    purchased with an original maturity of three months or less
                    to be cash equivalents.

                                                                          F-10
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                  SUMMARY OF ACCOUNTING POLICIES

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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       Effective July 1, 1998, Cambridge Holdings, Ltd. adopted
INCOME (LOSS)       FASB Statement No. 130, REPORTING COMPREHENSIVE INCOME
                    ("SFAS No. 130"). SFAS No. 130 requires the reporting of
                    comprehensive income 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 or shareholder's equity.


                                                                          F-11
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                  SUMMARY OF ACCOUNTING POLICIES

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
                   ------------------------------------------------------------------------------------
                    YEARS ENDED JUNE 30, (NET OF TAX)                         1999             1998
                   ------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>
                    Holding losses                                      $  (13,512)     $   (37,026)
                    Reclassification for realized (gains) losses            32,033          (27,715)
                   ------------------------------------------------------------------------------------

                       Increase (decrease) in net unrealized
                          securities gains recognized in other
                            comprehensive income                        $   18,521      $   (64,741)
                   ------------------------------------------------------------------------------------
</TABLE>

NEW ACCOUNTING      In June 1998, the FASB issued SFAS No. 133, "ACCOUNTING FOR
PRONOUNCEMENT       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.

RECLASSIFICATIONS   Certain items included in the prior years' financial
                    statements have been reclassified to conform to current year
                    presentation.

                                                                          F-12
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

1. INVESTMENT       The Company's market value of available for sale securities
   SECURITIES       consisted of the following:

<TABLE>
<CAPTION>
                                                              Gross         Gross
                                                           Unrealized     Unrealized      Estimated
                    JUNE 30, 1999              Cost           Gains          Loss         Fair Value
                    --------------------- --------------- -------------- --------------- --------------
<S>                                       <C>             <C>            <C>             <C>
                    Common and
                       preferred stocks    $    585,079     $  89,427        $      -    $    674,506
                    Bond Funds                1,051,845             -         (43,215)      1,008,630
                    --------------------- --------------- -------------- --------------- --------------

                    Total                  $  1,636,924     $  89,427        $ (43,215)   $  1,683,136
                    --------------------- --------------- -------------- --------------- --------------
</TABLE>

                    The Company realized net gains of $101,359 and $44,203 on
                    the sale of investment securities for the years ended June
                    30, 1999 and 1998.

                    The Company wrote off $105,000 and $102,000 in investment
                    securities during the years ended June 30, 1999 and 1998.

2. INVESTMENT IN    In 1997 the Company invested $100,000 for a 10% interest in
   PARTNERSHIP      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 has not been repaid under the terms of the
                    bridge loan agreement and collection is doubtful. The
                    Company, however, is pursuing litigation in this matter in
                    an effort to recover its investment.

                                                                          F-13
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

3. NOTES            In February 1997, the Company entered into agreements to
   RECEIVABLE-      become a member of two limited liability companies with the
   RELATED PARTY    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 residence in the Vail Valley for resale. In
                    December 1996 the Company purchased raw land near Vail for
                    $366,400. This land, which is known as Cordillera Valley
                    Club Lot #19, 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, 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 $420,125 and $485,511 at June 30,
                    1999 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.

                    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>
                    JUNE 30,                                    1999              1998
                   ----------------------------------------------------------------------
                                                                 (UNAUDITED)
<S>                                                       <C>              <C>
                    Revenue                               $      122       $     8,466
                    Expenses                                   3,391            48,005
                   ----------------------------------------------------------------------

                    Net loss from operations              $   (3,269)      $   (39,539)
                   ----------------------------------------------------------------------
</TABLE>

                                                                          F-14
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

4. INCOME           Income taxes (benefit) consisted of the following:
   TAXES
   (BENEFIT)

<TABLE>
<CAPTION>
                   YEARS ENDED JUNE 30,                    1999                 1998
                   ---------------------------------------------------------------------
<S>                                              <C>                   <C>
                    CURRENT:
                       Federal                   $       (56,000)      $       (9,000)
                       State                              (1,000)              (1,000)
                   ---------------------------------------------------------------------

                                                 $       (57,000)      $      (10,000)
                   ---------------------------------------------------------------------
</TABLE>

                    The types of temporary differences between the tax basis of
                    assets and liabilities that give rise to a significant
                    portion of the net deferred tax liability and their
                    approximate tax effects are as follows:

<TABLE>
<CAPTION>
                    YEAR ENDED JUNE 30,                                      1999
                   ----------------------------------------------------------------
<S>                                                                    <C>
                    DEFERRED TAX ASSETS:
                       Allowance for losses on investments             $   45,000
                       Write off of Partnership interests                  38,000
                   ----------------------------------------------------------------

                       Net deferred tax assets                             83,000
                       Less valuation allowance                           (39,000)
                   ----------------------------------------------------------------

                       Net deferred tax assets                             44,000
                   ----------------------------------------------------------------

                    DEFERRED TAX LIABILITY:
                       Net unrealized gain on securities
                          available for sale                               17,150

                   ----------------------------------------------------------------

                    Net deferred tax asset                             $   26,850
                   ----------------------------------------------------------------
</TABLE>

                                                                          F-15
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                    Management of the Company has developed a tax planning
                    strategy in which certain capital losses will be carried
                    back to prior years tax filings in which the Company
                    reported capital gains. The Company has recorded a deferred
                    tax asset of $44,000, which reflects the amount of tax
                    benefit expected to be realized as a result of the available
                    capital loss carry back. 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>
                    YEARS ENDED JUNE 30,                                       1999                1998
                   ---------------------------------------------------------------------------------------
<S>                                                                  <C>               <C>
                    Income tax benefit computed at the
                       federal statutory rate                        $      (81,000)   $        (50,000)
                    State income taxes, net of
                       federal benefit                                       (8,000)             (5,000)
                    Increase in valuation allowance                           1,000              38,000
                    Other                                                    31,000               7,000
                   ---------------------------------------------------------------------------------------

                    Income tax benefit                               $      (57,000)   $        (10,000)
                   ---------------------------------------------------------------------------------------
</TABLE>

5. NOTE             In July 1997, the Company purchased a parcel of raw land in
   PAYABLE          Glenwood Springs, Colorado for $264,199 in cash and a
                    $675,000 note payable. The note requires monthly payments of
                    $5,431 and bears interest at 9%. The note originally matured
                    on July 15, 1999 and is collateralized by the parcel of raw
                    land. At June 30, 1999 the balance of the note payable was
                    $665,782. Subsequent to year end the Company made a
                    principal reduction of $300,000 to extend the note to
                    January 15, 2000.

                                                                          F-16
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

6. 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 and may not be exercised
                    prior to October 16, 1999.

                    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.

                    NON-DISCRETIONARY STOCK OPTION PLAN

                    The Company's Non-Discretionary Stock Option Plan (the
                    "Plan"), as amended, is intended to reward non-employee
                    directors' contributions to the Company. The number of
                    shares of common stock reserved for issuance pursuant to the
                    Plan is 250,000. Pursuant to the terms of the Plan, on
                    September 1 of each year, options to purchase an additional
                    10,000 shares will be granted to each non-employee director.
                    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.

                                                                          F-17
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                    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, 1998. 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>
                    YEARS ENDED JUNE 30,                                 1999                1998
                   ---------------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>
                    Net loss as reported                            $     (182,339)     $      (136,517)
                    Net loss pro forma                                    (194,880)            (136,517)
                    Basic and diluted loss per share as
                      reported                                                (.06)                (.04)
                    Basic and diluted loss per share pro
                      forma                                                   (.06)                (.04)
                   ---------------------------------------------------------------------------------------
</TABLE>

                                                                          F-18
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
                    YEARS ENDED JUNE 30,                      1999                         1998
                    ------------------------------ -------------------------    --------------------------
                                                                  Weighted                      Weighted
                                                                  Average                        Average
                                                                  Exercise                      Exercise
                                                      Shares       Price            Shares        Price
                    ------------------------------ ------------ ------------    ------------- ------------
<S>                                                <C>          <C>             <C>           <C>
                    Outstanding, beginning
                       of year                     160,000       $ .53805           170,000    $  .52522

                          Granted                   60,000         .50000                 -   -
                          Expired                  (90,000)        .48000                 -   -
                          Exercised                (10,000)        .34375           (10,000)      .32000
                    ------------------------------ ------------ ------------    ------------- ------------

                    Outstanding, end of year       120,000       $ .57625           160,000    $  .53805
                    ------------------------------ ------------ ------------    ------------- ------------

                    Options exercisable, end
                       of year                     60,000        $ .65750           160,000    $  .53805
                    ------------------------------ ------------ ------------    ------------- ------------

                    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, 1999:

<TABLE>
<CAPTION>
                                       Options Outstanding                      Options Exercisable
                    --------------------------------------------------------    --------------------------
                                                      Weighed
                                                      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>           <C>
                      $ .44 to $ .875     120,000          2.7     $ .57625          60,000     $  .65750
                    ----------------- ------------ ------------ ------------    ------------- ------------
</TABLE>

                                                                          F-19
<PAGE>

                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

7. RELATED PARTY    The Company shares corporate office space and administrative
   TRANSACTIONS     staff with an affiliate of the Company. The Company paid its
                    affiliate $750 per month for these facilities and services.

                    The Company's president was a member of the Board of
                    Directors of Nutrition for Life, Inc. ("NFL") in which
                    investment securities are classified as available for sale
                    and at June 30, 1999, the investments had an estimated fair
                    value of $16,620. The Company's president resigned from the
                    Board of Directors of NFL in August 1998.

8. SUPPLEMENTAL
   DISCLOSURES OF
   CASH FLOW
   INFORMATION

<TABLE>
<CAPTION>
                    JUNE 30,                                              1999                1998
                   ---------------------------------------------------------------------------------------
                   <S>                                        <C>                 <C>
                    Cash paid during year for:
                       Interest                               $         60,168    $         55,532
                   ---------------------------------------------------------------------------------------
</TABLE>

                    In 1998, the Company's purchase of a parcel of land in
                    Glenwood Springs included a mortgage note of $675,000.

                    The Company's deferred tax liability recognized on
                    securities available for sale was $17,150 and $6,054 at June
                    30, 1999 and 1998.







                                                                          F-20