<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, 1997
( ) 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, 1997
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 $328,443 in revenues for the fiscal year ended June 30,
1997.

The aggregate market value of the voting stock held by non-affiliates was 
approximately $557,588 on October 8, 1997.

<PAGE>

State the number of shares outstanding of each of the Issuer's classes of common
stock, as of the latest practicable date.


               Class                           Outstanding at August 31, 1997
   Common Stock, $.025 par value                          3,388,400

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.

In September 1991, the Company acquired a three-story office building known 
as the "Corporate Centre" located on approximately 6.2 acres in Colorado 
Springs, Colorado.  In 1995, the Company completed the subdivision into two 
lots of this property.  The Company was not required to perform extensive 
work in order to obtain subdivision approval and incurred expenses, primarily 
consisting of professional fees, of approximately $7,500.  A larger lot, 
consisted of approximately 3.8 acres and included the Corporate Centre.  The 
smaller lot consisted of approximately 2.4 undeveloped acres.   In November 
1995 the Company sold the smaller lot to Centurion Development Company, an 
unaffiliated party, for $700,000. In February 1996, the Company sold the 
larger lot to CC Center LLC, an unaffiliated party, for $2,725,000.  

During the fiscal year ended June 30, 1997, the Company purchased two 
undeveloped lots in the Vail, Colorado area.  Each of these lots has been 
conveyed to a limited liability company.  The Company is a member of each 
limited liability company, together with the Zneimer Company, Inc. an 
experienced real estate developer located in Vail.  Each of the limited 
liability companies is developing a luxury residence for sale.

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 
is considering what development activities it will undertake on this land.

    (b)  Business of the Company.  From September 1991 to February 1996, the 
Company owned and managed the Corporate Centre, a Class "A" three-story 
glass, steel and concrete office building located in north Colorado Springs 
adjacent to Interstate 25, the main north-south arterial highway in Colorado  
The Company completed the sale of the Corporate Centre and adjacent acreage 
in February 1996.

<PAGE>

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 in Eagle County, Colorado west of Vail.  Each lot 
has been reconveyed to a limited liability company in which the Company is a 
member with a 50% interest.  Each lot is to be developed with a separate 
luxury residence.

The two lots purchased by the Company are known as Lot 2 and Lot 19, which 
were purchased for $357,000 and $366,000, respectively.  In May 1997, the 
Company sold Lot 2 to CVC Lot 2 LLC for its purchase price of Lot 2, 
resulting in no gain or loss to the Company.  CVC Lot 2 LLC is a limited 
liability company organized in Colorado in March 1997.  The members of CVC 
Lot 2 LLC are the Company and Zneimer Company, Inc., each of which has 
contributed $1,000 to the capital of CVC Lot 2 LLC and each of which has a 
50% interest in the net profits and losses of CVC Lot 2 LLC.  Zneimer 
Company, Inc. is the manager of CVC Lot 2 LLC.  CVC Lot 2 LLC was formed for 
the limited purpose of developing, constructing and selling a residential 
dwelling upon Lot 2 unless otherwise agreed to by both members.

In May 1997, the Company conveyed Lot 2 to CVC Lot 2 LLC in consideration for 
a promissory note for $357,000 secured by a mortgage on the Lot 2 property.  
The note bears interest at the prime rate at the Firstbank of Avon, as 
changed from time to time, which commenced at 8.5%.  The note is due on the 
earlier of sale of the property or December 31, 1998.  CVC Lot 2 LLC has 
obtained a construction loan of $963,700 from the Firstbank of Avon, 
Colorado, which construction loan has been guaranteed by Zneimer Company, 
Inc. and its sole shareholder Edward J. Zneimer.  The construction loan bears 
interest at the prime rate of the Firstbank of Avon as changed from time to 
time, which commenced at 8.5%.  The construction loan matures on May 10, 1998 
and is secured by a mortgage on the Lot 2 property.  The mortgage held by the 
Company to secure its note made by CVC Lot 2 LLC has been subordinated to the 
construction loan.  Zneimer Company, Inc. and Mr. Zneimer, individually, have 
guaranteed 50% of the principal amount of the note made by CVC Lot 2 LLC to 
the Company.  In the event the capital contributions and proceeds of the 
construction loan are insufficient to enable CVC Lot 2 LLC to develop and 
sell the Lot 2 property, Zneimer Company, Inc. has agreed with the Company to 
purchase a 50% interest in the Company's note from CVC Lot 2 LLC at a 
purchase price equal to 50% of the original principal amount, in which event 
the guaranty to the Company will be canceled.  The Company and Zneimer 
Company, Inc. have agreed that they will each contribute such additional 
capital contributions to CVC Lot 2 LLC in the form of unsecured loans, 
subject to a maximum of $100,000 each, as may be required to complete the 
development and sale of the Lot 2 property.

The Lot 2 property is currently under construction and is expected to be 
completed in calendar 1997.  The general contractor is Integrated Resources 
LLC, 


<PAGE>

which is owned and managed by Edward J. Zneimer.  The residence being 
constructed will be a custom-designed single-family home featuring an open, 
multi-level floor plan with high ceilings and large covered porches 
overlooking the Tom Fazio designed Cordillera Valley Golf Club golf course.  
The home will include five bedrooms, 4 1/2 baths, three fireplaces and an 
oversized three-car garage.   The Lot 2 property has been listed for sale at 
$1,750,000.

In August 1997, the Company sold Lot 19 to CVC Lot 19 LLC for its purchase 
price of Lot 19, resulting in no gain or loss to the Company.   CVC Lot 19 
LLC is a limited liability company organized in Colorado in March 1997.  The 
members of CVC Lot 19 LLC are the Company and Zneimer Company, Inc., each of 
which has contributed $1,000 to the capital of CVC Lot 19 LLC and each of 
which has a 50% interest in the net profits and losses of CVC Lot 19 LLC.  
Zneimer Company, Inc. is the Manager of CVC Lot 19 LLC.  CVC Lot 19 LLC was 
formed for the limited purpose of developing, constructing and selling a 
residential dwelling upon Lot 19 unless otherwise agreed by both members.

In August 1997, the Company conveyed Lot 19 to CVC Lot 19 LLC in 
consideration for a promissory note for $366,000 secured by a mortgage on the 
Lot 19 property. The note bears interest at the prime rate at the Firstbank 
of Avon, as changed from time to time, which commenced at 8.5%.  The note is 
due on the earlier of sale of the property or December 31, 1998.  CVC Lot 19 
LLC has obtained a construction loan of $1,019,000 from the Firstbank of 
Avon, Colorado, which construction loan has been guaranteed by Zneimer 
Company, Inc. and its sole shareholder Edward J. Zneimer.  The construction 
loan bears interest at the prime rate of the Firstbank of Avon as changed 
from time to time, which commenced at 8.5%.  The construction loan matures in 
1998 and is secured by a mortgage on the Lot 19 property.  The mortgage held 
by the Company to secure its note made by CVC Lot 19 LLC has been 
subordinated to the construction loan. Zneimer Company, Inc. and Mr. Zneimer, 
individually, have guaranteed 50% of the principal amount of the note made by 
CVC Lot 19 LLC to the Company.  In the event the capital contributions and 
proceeds of the construction loan are insufficient to enable CVC Lot 19 LLC 
to develop and sell the Lot 19 property, Zneimer Company, Inc. has agreed 
with the Company to purchase a 50% interest in the Company's note from CVC 
Lot 19 LLC at a purchase price equal to 50% of the original principal amount, 
in which event the guaranty to the Company will be canceled.  The Company and 
Zneimer Company, Inc. have agreed that they will each contribute such 
additional capital contributions to CVC Lot 19 LLC in the form of unsecured 
loans, subject to a maximum of $100,000 each, as may be required to complete 
the development and sale of the Lot 19 property.  CVC Lot 19 LLC has 
appointed Integrated Resources LLC as the general contractor.  The Lot 19 
property is currently under construction and should be completed within the 
next year.  The residence to be constructed will be a custom-designed 
single-family home similar to the home being constructed on Lot 2.

<PAGE>

The lots are located in Cordillera, a mountain-top 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.

Cordillera is located in an area referred to as the "Upper Eagle Valley" 
which lies west of Vail.  The Vail and Beaver Creek resorts are located 25 
and 15 minutes, respectively, by car from Cordillera.  Vail was founded in 
1962, and is now the nation's largest ski area by acreage of skiable terrain. 
 The economy of the Upper Eagle Valley is based primarily upon the resort 
industry, with major revenues being derived from skiing, real estate 
concessions, restaurants, and short-term lodging.  Cordillera is primarily a 
second home/resort community.  As such, it may have a greater than average 
susceptibility to general economic conditions, and may be impacted by the 
cost, accessibility and continued desirability of area recreational 
facilities such as the Vail and Beaver Creek ski areas as well as the private 
golf facilities.  In addition, there will be significant competition from 
other developers in Cordillera as well as other developments in the area, 
including some which are in close proximity to Cordillera.  The impact of 
this competition cannot be assessed because future demand cannot be predicted 
with accuracy and the factors influencing the success of each development are 
speculative.

Subsequent to the fiscal year ended June 30, 1997, the Company purchased 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 July 15, 1999.  There is no prepayment penalty.  The 
Company expects to enter into an arrangement with Zneimer Company, Inc. for 
possible commercial development of this property.  The Company has not made a 
determination of what type of development will be undertaken on 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 type of business 
transactions.  The Company does not intend to limit its search to companies 
in real estate activities.  A substantial amount of time may lapse and the 
Company may expend considerable funds for consulting, legal, accounting and 
other fees before the Company is able, if at all, to acquire other real 
estate interests or businesses outside the real estate industry.  From time 
to time, the Company also acquires equity securities, which have a 


<PAGE>

potential for capital gains 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.

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

Item 2.   DESCRIPTION OF PROPERTIES.

          The Company's administrative activities are conducted at the
Company's corporate headquarters located in 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 its share of rent in
addition to 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, 1997 and 1996 are as follows:

<PAGE>

          Quarter Ended                 High Bid        Low Bid
          -------------                 --------        -------
          June 30, 1997                 $.375           $.375
          March 31, 1997                $.625           $.375
          December 31, 1996             $.625           $.50
          September 30, 1996            $.50            $.25
          June 30, 1996                 $.4375          $.4375
          March 31, 1996                $.5625          $.34375
          December 31, 1995             $.34375         $.34375
          September 30, 1995            $.34375         $.34375

          At August 31, 1997 the number of holders of record of the Company's
common stock was 1,078 .  No cash dividends were paid during the years ended
June 30, 1997 and 1996.

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.

     The Company's cash and working capital positions were adequate at June
30, 1997.  The increase of cash on hand to approximately $1,640,200 at June
30, 1997 from $1,304,300 at June 30, 1996 is primarily a result of maturing
and redemption of commercial paper.

     For the period ended June 30, 1997, operating activities generated
negative cash flow of $170,900 as compared to cash flow of $69,000 being used
in the year ended  June 30, 1996.  The difference was attributable primarily
to the sale of the Company's property in Colorado Springs, Colorado which
resulted in a gain of approximately $1,759,400 in the year ended June 30,
1996.  Other factors contributing to the difference in cash used by operating
activities during the year were gains from the sale of investment securities
of approximately $165,800.  Prepaid expenses decreased by approximately
$37,100 in the year ended June 30, 1997.  The Company had unsettled trades of
investment securities at June 30,1997 of $81,500 compared to $0 at June 30,
1996.

     Cash provided in investing activities was approximately $494,600 during
the year ended June 30, 1997 compared to $1,405,800 during the year ended
June 30, 1996.  Cash provided during fiscal 1997 from investing activities
was from the maturity of short-term investments of $1,493,700 ,offset by an
increase in notes receivable of $225,000 and investing in real estate
developments of $737,400. In the comparable period in 1996, cash of
$3,182,300 was provided from the sale of the Corporate Centre building.  Cash
was used in investing activities of $250,000 for notes receivable and $21,000
for the purchase of equipment and improvements and $13,900 was the amount by
which the cost to purchase exceeded proceeds of the sale of investment
securities.  The value of the

<PAGE>

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, 1997 provided cash
of approximately $12,200 which was generated from the exercise of stock
options net of repurchases.

     At June 30, 1997, the Company had cash and cash equivalents of $1,640,200
and working capital of $3,690,300. Each of CVC Lot 2 LLC and CVC Lot 19 LLC
have obtained debt financing in the amount of $963,725 and $1,019,331
respectively for the construction of a luxury residential property. It was a
condition to the Company's agreement to convey each lot to the applicable
limited liability company that the construction loan for the applicable
property close concurrently with the conveyance of the property. The two
limited liability companies are developing these properties prior to
soliciting buyers for completed residences.  There can be no assurances the
properties will be sold promptly, or that profits will be achieved which could
impact adversely the Company's liquidity.  In its consideration of potential
business opportunities, the Company expects to consider the potential effect
on its liquidity.

In July 1997, the Company purchased land in Glenwood Springs, Colorado for 
$925,000, including a mortgage note of $675,000.  The Company is considering 
what development activities it will undertake on this land.

RESULTS OF OPERATIONS.

FISCAL YEAR ENDED JUNE 30, 1997 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1996

     The Company's revenues for the year  ended June 30, 1997 totaled
approximately $328,400, consisting of gains on the sale of securities of
approximately $165,800, interest on temporary cash and other money market
instruments of $70,400, dividend income of $91,600 and other income of $600.
Revenues for the year ended June 30, 1996 totaled approximately $2,287,900,
of which approximately $1,759,400 was the gain on the sale of the Corporate
Centre building, rental income recognized up to the time of sale of
approximately $383,100, approximately $101,900 was interest and dividend
income and gains from the sale of marketable equity securities of
approximately $43,500.  The increase in interest and dividend income was
attributable to the increased cash on hand from the sale of the real
property.  The decrease in rental income of $383,100 was attributable to the
sale of the Corporate Centre building in early February 1996.  At the time of
sale, the building's occupancy rate was 100%.

     During the years ended June 30, 1997 and June 30, 1996, the Company
incurred operating, general and administrative costs of approximately
$176,200 and $408,100, respectively.  The decrease of approximately $231,900
resulted from the reduced overhead and other expenses due to sale of the
Corporate Centre and undeveloped lot in Colorado Springs, Colorado.  Interest
expense decreased to approximately $0 for the period from $43,500 in the
comparable

<PAGE>

period in 1996 due to the retirement of the mortgage on the Corporate Centre.
The Company had income before taxes for the year ended June  30, 1997 of
approximately $172,200 as compared with income before taxes of approximately
$1,836,300 for the year ended June 30, 1996.

NEW ACCOUNTING PRONOUNCEMENTS

On March 3, 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
(SFAS No.128).  This pronouncement provides a different method of calculating
earnings per share than is currently used in accordance with Accounting Board
Opinion (APB) No. 15, "Earnings Per Share".  SFAS No. 128 provides for the
calculation of "Basic" and "Diluted" earnings per share.  Basic earnings per
share includes no dilution and is computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar
to fully diluted earnings per share.  The Company will adopt SFAS No.128 in
1998 and its implementation is not expected to have a material effect on the
consolidated financial statements.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130), which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances.  Comprehensive income is
defined to include all changes in equity except those resulting from
investments by owners and distributions to owners.  Among other disclosures,
SFAS 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence
as other financial statements.

Also, in June 1997, FASB issued SFAS No.131, "Disclosures about Segments of
an Enterprise and Related Information" which supersedes SFAS No.14,
"Financial Reporting for Segments of a Business Enterprise."  SFAS No. 131
establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim
financial statements issued to the public.  It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of a company
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.

SFAS 130 and 131 are effective for financial statements for periods beginning
after December 15, 1997 and requires comparative information for earlier
years to

<PAGE>

be restated.  Because of the recent issuance of the standard, management has
been unable to fully evaluate the impact, if any, the standard may have on
future financial statement disclosures.  Results of operations and financial
position, however, will be unaffected by implementation of this standard.

Item 7.   FINANCIAL STATEMENTS.

          See pages F-1 through F-17.

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, 1996 and 1997.

<PAGE>

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS.

                           Date First
                            Elected             Principal Occupation
Name                Age     Director               and Employment
----                ---     --------               --------------
Gregory Pusey       45        1982      President, treasurer and director.  Mr.
                                        Pusey is also the president of
                                        Livingston Capital, Ltd., a venture
                                        capital and business consulting firm.
                                        Mr. Pusey is a director and consultant
                                        to  Nutrition For Life International,
                                        Inc., a publicly held distributor of
                                        nutritional products.

Donald E. Yager     72        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   66        1991      Director.  Dr. Altshuler is a medical
                                        doctor with a specialty in hematology.
                                        He maintains a laboratory and a private
                                        medical practice and serves as a medical
                                        consultant.  He also previously served
                                        as an officer and director of Applied
                                        Medical Devices, Inc.  and Hemo Tec,
                                        Inc., each of which was a small
                                        publicly-held company engaged in the
                                        development and marketing of medical
                                        devices.

Scott Menefee       32        1993      Director.  Mr. Menefee is a Real
                                        Estate Manager for Opus Northwest,
                                        L.L.C. a large commercial real estate
                                        development firm. Prior to his current
                                        position, he served as a Leasing
                                        Manager for Vector Property Services,
                                        L.L.C. From 1992 through early 1997,
                                        Mr. Menefee was a Leasing Manager for
                                        Brookfield Development. Mr. Menefee
                                        graduated from Southern

<PAGE>

                                        Methodist University with a MBA in 1989.

     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, 1997,
the Company held five 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, 1997.

Item 10.  EXECUTIVE COMPENSATION.

     (a)  COMPENSATION.  The following table sets the cash compensation paid
by the Company during the fiscal year ended June 30, 1997 and in the two
prior fiscal years of the Company to the named executive officers.  No
executive officer received a total annual salary and bonus of more than
$100,000 during the fiscal year.

                         Summary Compensation Table
<TABLE>
<CAPTION>
                            Annual Compensation                    Awards       Payouts
                            -------------------                    ------       -------
                                                 Other
     Name and                                    Annual    Restricted            LTIP    All Other
     Principal               Salary             Compensa-    Stock     Options  Payouts  Compensa-
     Position   Fiscal year  ($)(1)  Bonus (2)  tion (3)   Awards ($)   (#)(4)   ($)(5)  tion ($)(6)
     --------   -----------  ------  ---------  ---------  ----------  -------  -------  ----------
<S>             <C>          <C>     <C>        <C>        <C>          <C>      <C>      <C>
Gregory Pusey,
President           1997     60,000    -0-         -0-        -0-        -0-      -0-      11,543
                    1996     40,000   50,000       -0-        -0-        -0-      -0-      14,128
                    1995     34,500    -0-         -0-        -0-       50,000    -0-       5,603
</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.

<PAGE>

     (2)  The Company paid a bonus of $50,000 to Mr. Pusey in recognition of his
          contribution in locating for acquisition the Corporate Centre and for
          his efforts in improving that property for sale.

     (3)  During the period covered by the Table, the Company did not pay any
          other annual compensation not properly categorized as salary or bonus,
          including perquisites and other personal benefits.

     (4)  The sum of the number of shares of common stock to be received upon
          the exercise of all stock options granted of the options shown for Mr.
          Pusey, of which 50,000 were granted in September 1994, 25,000 were
          granted in September 1993 and the remaining 20,000, which were to
          expire in September 1994 were extended to September 1996.  All
          underlying options were exercised during the year ended June 30, 1996.
          The sum of the number of shares of common stock to be received upon
          the exercise of all stock options granted of the options shown for Mr.
          Yager, of which 10,000 were granted in September 1994, 10,000 were
          granted in September 1993 and 10,000 were granted in September 1992.
          The 10,000 options underlying options granted in September 1992 were
          exercised during the year ended June 30, 1996.  The remaining
          underlying options were exercised subsequent to the year ended June
          30, 1996.

     (5)  Except for stock option plans, the Company does not have in effect any
          plan that is intended to serve as incentive for performance to occur
          over a period longer than one fiscal year.

     (6)  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, 1997 is health insurance premiums of $5,789
          and auto lease payments of $5,754 paid on Mr. Pusey's behalf.  The
          amount shown for the year ended June 30, 1996 is health insurance
          premiums in the amount of $5,691 and auto lease payments of $8,437.
          The amount shown for the year ended June 30, 1995 is health insurance
          premiums paid on Mr. Pusey's behalf.  As a non-employee director, Mr.
          Yager is entitled to receive a fee for each meeting attended by him
          which is what comprises his compensation.

     (b)  OPTION GRANTS TABLE; AGGREGATED OPTION EXERCISE AND FISCAL YEAR END
          OPTION TABLE; AGGREGATED OPTION EXERCISED IN LAST FISCAL YEAR AND
          FISCAL YEAR END OPTION VALUES; LONG-TERM INCENTIVE PLAN AWARDS TABLE.

          STOCK OPTIONS.

     The information concerning the grant of stock options under the Company's 
Non-Discretionary Stock Option Plan and its 1988 Stock Option Plan, to the 
executive officers is not applicable as Mr. Pusey was not granted any options 
in 1997, nor does he hold options from prior years.

<PAGE>

     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 is administered by an Option Committee. The Board of
Directors serves as the Option Committee with respect to options to employees
who are not directors of the Company.  With respect to options to employees
who also are directors, however, the 1988 Plan was, on September 12, 1991,
amended to comply with certain rules promulgated by the Securities and
Exchange

<PAGE>

Commission to provide that the 1988 Plan is administered by a committee of
two directors selected by the Board, each of whom shall not have received,
within one year prior to his service on the Committee, options under the 1988
Plan or any other discretionary stock plan of the Company.  During the year
ended June 30, 1996, Dr. Altshuler and Mr. Yager served as members of the
Option Committee with respect to options to employees who also were directors.

     The Option Committee may adopt rules and regulations for carrying out
the purpose of the 1988 Plan and is authorized, within the limits of the 1988
Plan, to determine the individuals to whom, and the time or times at which,
options will be granted, the number of shares to be subject to each grant
(except as provided below) and the applicable restriction period. In
addition, the Option Committee may determine the purchase price for the
shares subject to the option and specify such other terms and provisions of
any grants of options under the 1988 Plan as it deems necessary or desirable;
 provided, however, that grants intended to qualify as incentive stock
options shall not be for less than 100 percent of the fair market value of
the shares underlying the grant on the date of the grant.

            The 1988 Plan permits the grant of both incentive stock options
and non-incentive stock options.  Incentive stock options may by granted only
to those employees who are regarded by the Committee as "key" employees.
With respect to incentive stock options, the aggregate fair market value
(determined at the time the option is granted) of the stock with respect to
which an incentive stock option first becomes exercisable may not exceed
$100,000 per calendar year. Further, no incentive stock option shall be
granted to an individual if, at the time the option is granted, such
individual owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or subsidiary
corporation, within the meaning of Section 422A(b)(6) of the Internal Revenue
Code of 1986 (the "Code"), unless (i) at the time such option is granted the
option price is at least 110 percent of the fair market value of the stock
subject to the option and (ii) such option by its terms is not exercisable
after the expiration of five years from the date of grant.

     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 is 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 provided that, as of the effective date, options to purchase
20,000 were granted shares to each non-employee director of

<PAGE>

the Company. Thereafter, at such time as a person becomes a non-employee
director of the Company, the Company will grant that person options to
purchase 20,000 shares of the Company's common stock.  Dr. Altshuler and Mr.
Yager were each granted options to acquire 20,000 shares at an exercise price
of $.36 per share, the fair market value of the Company's common stock on the
date of grant.  However, upon his acceptance of his appointment as a director
on October 23, 1993, Mr. Menefee and the Company agreed that he would be
granted options to acquire 10,000 shares at an exercise price of $.28 per
share.  In addition, effective September 1 of each year, commencing 1992,
options to purchase an additional 10,000 shares have been and/or will be
granted options to acquire 10,000 shares on each September 1 on which he
served as a director commencing on September 1, 1992 at an exercise price
equal to fair market value of the Company's common stock on the dates the
options were granted.

     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.

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 17, 1997.  The Company has only one
class of capital stock, its $.025 par value common stock.

                                        Number of           Percent of
Beneficial Owner                         Shares               Class
----------------                        ---------           ----------
John H. Altshuler                         129,190               3.8%
18 Blue Heron Drive West
Littleton, CO 80121 (1)

Scott Menefee                              20,000               0.6%
971 Garfield Street
Denver, CO 80206 (5)

Gregory Pusey                           1,487,417              43.9%
1722 Buffehr Creek Road
Vail, CO 81657 (2)

<PAGE>

Cede & Co.                               203,469               6.0%
PO Box 222
New York, NY 10274

Donald E. Yager                           60,000               1.8%
3200 W. 72nd Avenue
Westminster, CO 80030 (3)

E. Jeffrey Peierls                       307,824               9.1%
73 S. Holman Way
Golden, CO 80401 (4)

All officers and directors as a        1,994,431              58.9%
group (4 persons) (1) (2) (3) (5)

     (1)  Includes 110,586 shares owned by Dr. Altshuler jointly with his wife
          and currently exercisable options to purchase 10,000 shares which have
          been granted under the Non-Discretionary Stock Option Plan.

     (2)  Includes 18,604 shares owned jointly by Mr. Pusey with his wife, and
          an aggregate of 51,306 shares owned by Mrs. Pusey, individually or as
          custodian for their minor children.

     (3)  Includes 60,000 shares owned by Mr. Yager and currently exercisable
          options to purchase 10,000 shares which have been granted under the
          Non-Discretionary Stock Option Plan.

     (4)  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.

     (5)  Includes 30,000 shares subject to options granted under the Non-
          Discretionary Stock Option Plan.

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.

     In October 1993, the Company obtained a mortgage on the Corporate Centre
in the amount of $850,000.  The loan was guaranteed by Mr. Pusey, subject to
a limit of 40% of the obligation of the Company to the mortgagee.  Mr. Pusey
was granted 100,000 shares of the Company's restricted common stock in
consideration of the loan guaranty (See Item 10).  In February 1996, the
Company sold the Corporate Centre, repaid the loan and retired the mortgage.

     Mr. Pusey is a member of the Board of Directors of, and a consultant 
for, Nutrition For Life International, Inc., a publicly held company. At 
June 30, 1997 the Company held securities of Nutrition For Life, 
International, Inc. in the amount of $263,975.

<PAGE>

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

     (a)  EXHIBITS.

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

     (b)  REPORTS ON FORM 8-K.

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

                                INDEX TO EXHIBITS

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

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

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

     (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,
<PAGE>

               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.

                                   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 10, 1997             By:
                                       --------------------------------------
                                        Gregory Pusey
                                        President, Treasurer and Director

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


Date: October 10, 1997             By:
                                       --------------------------------------
                                        Gregory Pusey
                                        President, Treasurer and Director


Date: October 10, 1997             By:
                                       --------------------------------------
                                        Donald E. Yager
                                        Secretary and Director


Date: October 10, 1997             By:
                                       --------------------------------------
                                        John H. Altshuler, Director


Date: October 10, 1997             By:
                                       --------------------------------------
                                        Scott Menefee, Director


<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                 INDEX TO FINANCIAL STATEMENTS

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

Report of Independent Certified Public Accountants          F-2

Balance Sheet as of June 30, 1997                     F-3 - F-4

Statements of Income for the years ended
     June 30, 1997 and 1996                                 F-5

Statements of Stockholders' Equity for the
     years ended June 30, 1997 and 1996                     F-6

Statements of Cash Flows for the years ended
     June 30, 1997 and 1996                           F-7 - F-8

Summary of Accounting Policies                       F-9 - F-11

Notes to Financial Statements                       F-12 - F-17



                                                                          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, 1997 and the related statements of income, 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, 1997, and the results of its operations and its cash flows for each of
the two years then ended, in conformity with generally accepted accounting
principles.





Denver, Colorado
August 21, 1997

                                                                           F-2
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                                 BALANCE SHEET

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

JUNE 30,                                                                1997
------------------------------------------------------------------------------

ASSETS

Current:
  Cash and cash equivalents                                       $1,640,216
  Investment securities - available for sale (Note 1)                430,516
  Investment securities - available for sale related
   party (Notes 1 and 8)                                             263,975
  Investment in partnership (Note 2)                                 101,278
  Notes receivable - related party (Note 3)                          356,660
  Notes receivable (Note 4)                                          425,000
  Accounts receivable                                                 81,451
  Prepaids and other                                                  73,637
  Real estate developments (Note 3)                                  380,768
------------------------------------------------------------------------------

Total current assets                                               3,753,501

Other assets                                                           3,007
------------------------------------------------------------------------------


                                                                  $3,756,508
------------------------------------------------------------------------------
------------------------------------------------------------------------------

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

                                                                           F-3
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                                 BALANCE SHEET
                                                                   (CONTINUED)

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

JUNE 30,                                                                1997
------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accrued liabilities                                            $   13,223
  Deferred income taxes (Note 5)                                     50,000
------------------------------------------------------------------------------

Total current liabilities                                            63,223
------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (NOTE 6):
  Common stock, $.025 par value; 15,000,000 shares
   authorized; 3,388,400 issued and outstanding                      84,710
  Additional paid-in capital                                      3,174,785
  Retained earnings                                                 358,509
  Net unrealized gain on securities
   available for sale                                                75,281
------------------------------------------------------------------------------

Total stockholders' equity                                        3,693,285
------------------------------------------------------------------------------

                                                                 $3,756,508
------------------------------------------------------------------------------
------------------------------------------------------------------------------

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

                                                                           F-4

<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                          STATEMENTS OF INCOME

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

YEARS ENDED JUNE 30,                                      1997        1996
------------------------------------------------------------------------------

REVENUES:
  Gain on sales of
   investment securities                               $165,765     $   43,535
  Interest and dividend income                          162,678        101,879
  Gain on sale of property (Note 7)                           -      1,759,368
  Rental income                                               -        383,089
------------------------------------------------------------------------------

Total revenues                                          328,443      2,287,871
------------------------------------------------------------------------------

EXPENSES:
  Operating, general, and administrative                176,199        408,087
  Interest                                                    -         43,506
------------------------------------------------------------------------------

Total expenses                                          176,199        451,593
------------------------------------------------------------------------------

INCOME BEFORE TAXES ON INCOME                           152,244      1,836,278

TAXES ON INCOME (Note 5)                                 49,000        162,000
------------------------------------------------------------------------------

NET INCOME                                             $103,244     $1,674,278
------------------------------------------------------------------------------
------------------------------------------------------------------------------

NET INCOME PER COMMON AND COMMON
 EQUIVALENT SHARE                                        $  .03         $  .52
------------------------------------------------------------------------------
------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF
  COMMON AND COMMON EQUIVALENT
  SHARES OUTSTANDING                                  3,382,567      3,242,355
------------------------------------------------------------------------------
------------------------------------------------------------------------------

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

                                                                           F-5
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                             STATEMENTS OF STOCKHOLDERS EQUITY

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

<TABLE>
-------------------------------------------------------------------------------------------------------------------------
                                                                                             NET UNREALIZED
                                                                                             GAIN (LOSS) ON
                                               COMMON STOCK        ADDITIONAL     RETAINED     SECURITIES       TOTAL
                                         ----------------------     PAID-IN       EARNINGS      AVAILABLE    STOCKHOLDERS'
YEARS ENDED JUNE 30, 1997 AND 1996         SHARES       AMOUNT      CAPITAL       (DEFICIT)      FOR SALE       EQUITY
-------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>        <C>           <C>            <C>           <C>
BALANCE, JULY 1, 1995                    3,087,940     $77,199    $3,079,407    $(1,419,013)    $ (28,215)    $1,709,378

  Net income                                     -           -             -      1,674,278             -      1,674,278

  Shares issued from
   exercise of stock options               265,000       6,625        87,613              -             -         94,238

  Common shares
   repurchased and retired                  (4,540)       (114)       (3,473)             -             -         (3,587)

  Net unrealized gain on
   securities available
   for sale                                      -           -             -              -       496,551        496,551
-------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 1996                   3,348,400     $83,710    $3,163,547    $   255,265     $ 468,336     $3,970,858

  Net income                                     -           -             -        103,244             -        103,244

  Shares issued from
   exercise of stock
   options                                  40,000       1,000        11,238              -             -         12,238

  Net unrealized loss on
   securities available
  for sale (Note 1)                              -           -             -              -      (393,055)      (393,055)
-------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 1997                   3,388,400     $84,710    $3,174,785    $   358,509     $  75,281     $3,693,285
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                                                           F-6

<PAGE>
                                                      CAMBRIDGE HOLDINGS, LTD.

                                                      STATEMENTS OF CASH FLOWS

------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 


YEARS ENDED JUNE 30,                                      1997        1996     
------------------------------------------------------------------------------ 


OPERATING ACTIVITIES:
 Net income                                           $ 103,244    $ 1,674,278 
 Adjustments to reconcile net income to cash
  used in operating activities:
   Gain on sale of property                                   -     (1,759,368)
   Depreciation and amortization                            178         87,052 
   Gain on sale of investment securities               (165,765)       (43,535)
 Changes in operating assets and liabilities:
  Accounts receivable                                   (81,451)             - 
  Prepaids and other                                    (37,139)       (28,358)
  Accrued liabilities and other                          10,074            947 
------------------------------------------------------------------------------ 

Net cash used in operating activities                  (170,859)       (68,984)
------------------------------------------------------------------------------ 

INVESTING ACTIVITIES:
 Purchase of property                                 (737,428)              - 
 Proceeds from sale of property                              -       3,182,300 
 Purchase of short-term investments                          -      (1,493,687)
 Proceeds from sale of short-term investments        1,493,687               - 
 Purchase of investment securities                    (602,066)       (627,789)
 Proceeds from sale of investment securities           616,649         613,856 
 Purchase of equipment and improvements                      -         (21,038)
 Investments in notes receivable                      (225,000)       (250,000)
 Investments in partnerships                          (101,278)              - 
 Collections on note receivable                         50,000           2,155 
------------------------------------------------------------------------------ 


Net cash provided by investing activities              494,564       1,405,797 
------------------------------------------------------------------------------ 




                                                                           F-7 
<PAGE>




                                                      CAMBRIDGE HOLDINGS, LTD. 

                                                      STATEMENTS OF CASH FLOWS 
                                                                   (CONTINUED) 
------------------------------------------------------------------------------ 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 


YEARS ENDED JUNE 30,                                      1997        1996     
------------------------------------------------------------------------------ 


FINANCING ACTIVITIES:
 Principal payments on notes payable                          -       (821,826)
 Proceeds from exercise of stock options,
  net of repurchases                                     12,238         90,651 
------------------------------------------------------------------------------ 


Net cash provided by (used in) financing activities      12,238       (731,175)
------------------------------------------------------------------------------ 


INCREASE IN CASH AND CASH EQUIVALENTS                   335,943        605,638 

CASH AND CASH EQUIVALENTS, beginning of year          1,304,273        698,635 
------------------------------------------------------------------------------ 


CASH AND CASH EQUIVALENTS, end of year              $ 1,640,216    $ 1,304,273 
------------------------------------------------------------------------------ 
------------------------------------------------------------------------------ 


                                 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.  On September 27, 1991, the Company acquired Corporate Centre, a
three story office building located in Colorado Springs, Colorado.  Corporate
Centre was sold during the year ended June 30, 1996 as discussed in Note 7. 
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 plans to build a separate luxury residence on each parcel for resale.
The Company also explores other business acquisitions, opportunities and 
investments.

CONCENTRATIONS OF
CREDIT RISK

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

USE OF ESTIMATES

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

INVESTMENT
SECURITIES

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

FAIR VALUES OF
FINANCIAL
INSTRUMENTS

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

PROPERTY AND
OTHER ASSETS

Property was stated at cost with depreciation computed using the straight-line
method over 31.5 years for the building and leasehold improvements amortized
over the life of the lease of 4 to 7 years.  Lease commissions were stated at
cost and are amortized on a straight-line basis over the term of the related
lease.  Loan acquisition costs were amortized over the life of the loan.

REVENUE
RECOGNITION

Rental income consisted primarily of rentals for office space. Leases included
scheduled base rent increases over the terms of the agreements. The total
amount of rent was recognized as income on the straight line method over the
terms of the leases.  Interest and dividend income is

                                                                           F-9
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                SUMMARY OF ACCOUNTING POLICIES

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

recorded on the accrual basis.

INVESTMENT IN
PARTNERSHIP

Investments in partnerships are accounted for by the cost method.

INVESTMENT IN LLC

Investments in LLCs are accounted for under the equity method.

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 INCOME
PER SHARE

Net income per common and common equivalent share is based on the weighted
average number of shares outstanding during each period presented. Options to
purchase stock are included as common stock equivalents, when dilutive.

CASH EQUIVALENTS

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

RECLASSIFICATIONS

Certain reclassifications have been made to the accompanying 1996 financial
statements for them to conform to the current year presentation.

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.

NEW ACCOUNTING
PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128).
This pronouncement provides a different method of calculating

                                                                          F-10
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                SUMMARY OF ACCOUNTING POLICIES

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

earnings per share than is currently used in accordance with Accounting Board
Opinion No. 15, Earnings Per Share.  SFAS No. 128 provides for the calculation
of "Basic" and "Dilutive" earnings per share.  Basic earnings per share includes
no dilution and is computed by dividing income available to common shareholders
by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully diluted earnings per
share.  The Company will adopt SFAS No. 128 in 1998 and its implementation is
not expected to have a material effect on the consolidated financial
statements.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130), which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances.  Comprehensive income is
defined to include all changes in equity except those resulting from
investments by owners and distributions to owners.  Among other disclosures,
SFAS 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements.

Also, in June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" which supersedes SFAS No.14, "Financial
Reporting for Segments of a Business Enterprise."  SFAS No. 131 establishes
standards for the way that public companies report information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements issued to
the public.  It also establishes standards for disclosures regarding products
and services, geographic areas and major customers.  SFAS No. 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.

SFAS 130 and 131 are effective for financial statements for periods beginning
after December 15, 1997 and requires comparative information for earlier years
to be restated.  Because of the recent issuance of the standard, management has
been unable to fully evaluate the impact, if any, the standard may have on
future financial statement disclosures.  Results of operations and financial
position, however, will be unaffected by implementation of this standard.

                                                                          F-11
<PAGE>
                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

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


1.  INVESTMENT     At June 30, 1997 the Company's market value of available
    SECURITIES     for sale securities consisted of:

                                                 Gross      Gross    Estimated
                                              Unrealized  Unrealized    Fair
                                        Cost     Gains      Losses     Value
                   -----------------------------------------------------------

                   Common and
                    preferred stocks  $569,573  $193,318  $(68,400)  $694,491
                   -----------------------------------------------------------
                   -----------------------------------------------------------

                   The Company realized gains of $165,765 and $43,535 on the
                   sale of investment securities for the years ended June 30,
                   1997 and 1996.

2.  INVESTMENT IN  The Company has invested $100,000 for 10% interest in a
    PARTNERSHIP    Partnership which entered into a bridge loan with a third
                   party.  The bridge loan pays interest at 8% and the amount
                   is due at closing of the third party's initial public
                   offering.  The amount is collateralized by assets of the
                   third party.  Increase in partnership investment totaled
                   $1,278 for year ended June 30, 1997.

3.  REAL ESTATE    In February 1997, the Company entered into agreements to
    DEVELOPMENTS   become a member of two limited liability companies with the
                   Zneimer Company, an experienced real estate developer in the
                   Vail, Colorado area.  Each of the Company and The Zneimer
                   Company hold a 50% interest in these companies, each of
                   which will build a separate luxury residence in the Vail
                   Valley for resale.  In December 1996 the Company purchased
                   raw land near Vail for $366,400.  This land which is known
                   as Cordillera Valley Club Lot #19 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 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 will be
                   subordinate to the secured construction loan provided by a
                   financial institution.  The Zneimer Company and Mr. Zneimer
                   personally guaranteed one half the original principal amount
                   of the note to be issued to the Company.  This guarantee took
                   place simultaneously with the conveyance of each property to
                   the applicable limited liability company.

                                                                            F-12
<PAGE>
                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

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


4.  NOTES          Note Receivables consisted of the following:
    RECEIVABLE

                   JUNE 30,                                              1997
                   -------------------------------------------------------------

                   Convertible note receivable with interest
                   at 10%, note is due December 14, 1997,
                   and is personally guaranteed by the
                   majority stockholder of the borrower.
                   The note is convertible into common
                   stock of the borrower at the election
                   of the Company.                                     $325,000

                   Convertible note receivable with interest
                   at 12%, note due January 5, 1998, and is
                   secured by assets of the Company.  The
                   note is convertible into common stock of
                   the borrower at the registration date.               100,000
                   -------------------------------------------------------------

                                                                       $425,000
                   -------------------------------------------------------------
                   -------------------------------------------------------------

5.  TAXES ON       Taxes on income consisted of the following:
    INCOME

                   YEARS ENDED JUNE 30,                    1997          1996
                   -------------------------------------------------------------

                   CURRENT
                      Federal                            $41,000       $141,000
                      State                                8,000         21,000

                   DEFERRED:
                      Federal                                  -        483,000
                      State                                    -         39,000
                   -------------------------------------------------------------


                                                          49,000        684,000
                   Utilization of net operating
                     loss carryforwards                        -       (522,000)
                   -------------------------------------------------------------

                                                         $49,000       $162,000


                                                                            F-13
<PAGE>
                                                        CAMBRIDGE HOLDINGS, LTD.

                                                   NOTES TO FINANCIAL STATEMENTS

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


                   The difference between the tax basis of assets that give rise
                   to the deferred tax liability, totalling $50,000 relates to
                   the net unrealized gain on securities available for sale.

                   A reconciliation of income taxes at the federal statutory
                   rate to the effective tax rate is as follows:

                   YEARS ENDED JUNE 30,                  1997          1996
                   -------------------------------------------------------------

                   Income taxes computed at the
                     federal statutory rate            $41,000       $624,000
                   State income taxes, net of
                     federal benefit                     8,000         60,000
                   Utilization of net operating
                     loss carryforwards                      -       (522,000)
                   -------------------------------------------------------------

                   Taxes on income                     $49,000      $ 162,000
                   -------------------------------------------------------------
                   -------------------------------------------------------------

6. STOCK OPTIONS   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.

                   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

                                                                            F-14
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                 NOTES TO FINANCIAL STATEMENTS

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

date of grant.

FASB Statement 123, "Accounting for Stock-Based Compensation" (SFAS No. 123),
requires the Company to provide pro forma information regarding net income and
net income 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.  Under the accounting provisions for
SFAS No. 123, the Company's net income per share would have been equal to 
historical net income per share.

A summary of the status of the Company's stock option plans and outstanding
options as of June 30, 1997 and 1996 and changes during the years ending on
those dates is presented below:

                                        1997                    1996
------------------------------------------------------------------------------
                                              Weighted               Weighted
                                              Average                Average
                                   Range of   Exercise   Range of    Exercise
                                    Shares      Price     Shares      Price
------------------------------------------------------------------------------

Outstanding, beginning
 of year                           215,000    $.39756     350,000    $.34114

  Granted                           30,000     .87500     130,000     .46394
  Cancelled                        (35,000)    .28000           -     .35561
  Exercised                        (40,000)    .30593    (265,000)    .35561
------------------------------------------------------------------------------

Outstanding, end of year           170,000    $.51382     215,000    $.39756
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Options exercisable, end 
 of year                           170,000    $.51382     215,000    $.39756

Weighted average fair 
 value of options granted
 during the year                              $.87500                $.46394

                                                                          F-15
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                 NOTES TO FINANCIAL STATEMENTS

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

The following table summarizes information about stock options outstanding at 
June 30, 1997:

          Options Outstanding                    Options Exercisable
------------------------------------------------------------------------------
                             Weighted
                              Average     Weighted                 Weighted
  Range of      Number       Remaining     Average      Number      Average
  Exercise    Outstanding   Contractual   Exercise   Exercisable   Exercise
   Prices     at 6/30/97       Life         Price     at 6/30/97     Price
------------------------------------------------------------------------------
  $.32000       30,000          1          .32000       30,000       .32000
   .34375       10,000          1          .34875       10,000       .34375
   .87500       30,000          2          .87500       30,000       .87500
   .50000      100,000          2          .50000      100,000       .50000
------------------------------------------------------------------------------
 
  $.32000-
   .87500      170,000          2         $.51382      170,000      $.51382
------------------------------------------------------------------------------
------------------------------------------------------------------------------

7. SALES OF
   PROPERTY

As of June 30, 1996, the Company had completed sales of its property.  The 
sales consisted of a $2,725,000 sale of the building and related net assets 
and a $700,000 land sale.  The gain resulting from the sales totalled 
approximately $1,759,000.

The Company had an $850,000 mortgage note from a financial institution, payable
through November 2003 in monthly installments of $7,512 including interest at
8.75%.  The mortgage payable was collateralized by real estate, assignment of
all leases and rentals and guaranteed by the President of the Company, subject
to a limit of 40 percent of the obligation.  As a result of the sales of the
property, the mortgage note was paid off, including a prepayment penalty which
totalled $17,700.

8. RELATED PARTY
   TRANSACTIONS

The Company shares corporate office space and administrative staff with an 
affiliate of the Company.  The Company paid its affiliate approximately $750 
per month for these facilities and services. During the year end June

                                                                          F-16
<PAGE>

                                                      CAMBRIDGE HOLDINGS, LTD.

                                                 NOTES TO FINANCIAL STATEMENTS

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

30, 1996, the Company paid its president $50,000 in bonuses for his efforts in 
consummating the sales of the properties.

The Company's president is a current member of the Board of Directors of a
company in which investment securities are classified as available for sale and
at June 30, 1997, the investments had an estimated fair value of $263,975.

9. SUPPLEMENTAL
   DISCLOSURES OF
   CASH FLOW
   INFORMATION

------------------------------------------------------------------------------
                                              1997          1996
------------------------------------------------------------------------------
Cash paid during year for:
  Interest                                  $   100       $ 44,000
  Income taxes                               49,000        162,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------

The Company conveyed land valued at $356,660 to an LLC, in which they own a 50%
interest, in exchange for a note receivable of the same amount.

10. SUBSEQUENT
    EVENTS 

The Company purchased a parcel of raw land in Glenwood Springs, Colorado on 
July 15, 1997 with a purchase price of $925,000 and a mortgage of $675,000.
The land is currently being held for resale or possible commercial development.

                                                                          F-17