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

                                   FORM 10-KSB

(X)  Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
     1934

     For the fiscal year ended June 30, 2006

( )  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from _____________ TO ______________

Commission file number 0-12962

                            CAMBRIDGE HOLDINGS, LTD.
                            ------------------------
        (Exact name of small business issuer as specified in its charter)

           Colorado                                      84-0826695
           --------                                      ----------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

      106 S. University Blvd. #14
           Denver, Colorado                                     80209
           ----------------                                     -----
(Address of principal executive offices)                     (Zip Code)

Issuer's telephone number, including area code             (303) 722-4008

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.
[ ]

The issuer's revenues consisted of $34,094 in interest, dividend and other
income and $730,771 in realized gains on the sales of investment securities.

The aggregate market value of the voting stock held by non-affiliates was
approximately $126,000 on September 18, 2006.

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)    Yes [X] No [ ]


<PAGE>




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

                  Class                        Outstanding at September 18, 2006
      Common Stock, $.025 par value                       3,509,877

Transitional Small Business Disclosure Format   Yes [ ]   No [X]

                                     Part I

Item 1.   DESCRIPTION of 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 connection with the SEC's regular review of our filings under the Securities
Exchange Act of 1934, we received correspondence from the SEC asking, among
other points, whether we should be registered as an investment company under the
Investment Company Act of 1940. Generally, an issuer is deemed to be an
investment company subject to registration if its holdings of "investment
securities," which usually are securities other than securities issued by
majority owned subsidiaries and government securities, exceed 40% of the value
of its total assets exclusive of government securities and cash items on an
unconsolidated basis.

Immediately following our receipt of correspondence from the SEC, we consulted
with our legal counsel about the Investment Company Act issues raised by the
SEC's letter. Our counsel recommended that we engage special legal counsel with
significant experience related to the Investment Company Act to assist us with
this issue and we did in fact engage such special counsel. Since February 2005,
our management and board have undertaken numerous discussions to investigate and
explore the best course of action. Based upon the investigation undertaken by
our management and board, including work by our legal counsel and special legal
counsel, the Company has determined that the Company has met the definition of
an "investment company" as provided in Section 3(a)(1) of the Investment Company
Act; and accordingly should have been registered and reporting as an investment
company.

During multiple meetings, our board of directors reviewed and discussed the
information that management had gathered. After such discussions, the board on
June 9, 2005, unanimously concluded that the best way to maximize shareholder
value would be to liquidate the Company. Management and the company's counsel
then developed a plan of liquidation to be completed on an orderly basis to
maximize value to the shareholders that was unanimously approved by the board of
directors on June 9, 2005. At a special meeting of the Company's shareholders
held November 3, 2005, the shareholders approved a plan of liquidation of the
Company and the distribution of substantially all of the Company's cash and
investment assets, in excess of a reasonable operating reserve amount.



<PAGE>
We have advised the SEC of our intention to liquidate our assets in order to,
among other factors described below, eliminate the applicability of the
Investment Company Act. In December 2005, a cash dividend of $0.1825 per common
share (approximate total of $651,500) was paid to shareholders of record as of
November 22, 2005. Included in that dividend distribution were approximately
462,500 shares of common stock of A4S and approximately 420,500 shares of common
stock of ANI, with a combined cost basis of approximately $755,500.

In December 2001, in connection with an equity investment, the Company acquired
310,000 warrants of AspenBio Pharma, Inc. ("AspenBio"). The 310,000 warrants to
purchase AspenBio common stock are exercisable at $1 per share and expire
January 1, 2007. During August 2004, in connection with an additional
investment, the Company received a warrant to acquire 28,571 shares of common
stock at $1.50 per share, expiring in August 2009. In connection with a previous
bank loan guarantee on July 5, 2002, AspenBio issued a warrant to the Company to
purchase 100,000 shares of AspenBio common stock at $1.50 per share, expiring
July 5, 2007. Greg Pusey is a director and Jeffrey G. McGonegal is the chief
financial officer of AspenBio.

In September 2002, the Company completed a pro rata distribution to its
shareholders of 496,296 shares of the AspenBio common stock, which was recorded
by the Company as a dividend at the shares' then estimated fair value of
$150,000. In March 2005, the Company's Board of Directors approved a
distribution of 532,275 shares of the then remaining total AspenBio common stock
owned by the Company at that time. This distribution was made on a pro rata
basis to all shareholders of record as of the close of business on March 24,
2005 and was recorded as a dividend at the shares' estimated value for financial
reporting purposes of approximately $475,000. The Company's Board of Directors
made the decision to distribute this investment based upon the following
considerations; 1) to begin the process of reducing the Company's level of
investment assets, following the SEC's inquiry as to Cambridge's status as not
being in compliance with the reporting requirements under the Investment Company
Act of 1940, and 2) the Board of Directors did not believe that the market value
of the shares of the Company reflected to value of the underlying investments
and therefore to increase the value to its shareholders.



<PAGE>
In July and September of 2003, the Company made two separate loans of $20,000,
each to AspenBio. These loans were repaid in December 2003 with interest. In
July 2004, the Company loaned $10,000 to AspenBio that was repaid later in July
2004 with interest.

During August 2005, Advanced Nutraceuticals, Inc. ("ANI") completed a cash
tender offer for up to 1,058,823 of its common shares then outstanding. The
Company owned approximately 670,000 shares of ANI prior to the tender offer and
in connection with the offer submitted all of the shares it owned, in the
tender. Since the ANI tender offer was over subscribed, the repurchase of shares
by ANI was completed on a pro rata basis, whereby approximately 37% of the
shares tendered were purchased for cash by ANI. The Company therefore received
cash of approximately $1,060,000 for the approximately 249,500 tendered shares,
leaving the Company then owning approximately 420,500 common shares of ANI
following completion of the tender offer. In December 2005 the Company
distributed such remaining shares of ANI stock to its shareholders in connection
with the liquidation of the Company. Greg Pusey is the president and a director
and Jeffrey G. McGonegal is the chief financial officer of ANI.

Commencing in December 2002 through August 2004, the Company made a series of
loans to A4S Security, Inc. (formerly, A4S Technologies, Inc.) ("A4S"). A4S,
which completed an initial public offering of its securities in July 2005,
markets high resolution mobile digital video recording systems for security and
surveillance. Cumulatively, approximately $557,000 was invested in A4S with
$132,000 (through debt conversion and warrants exercises) represented by 18,801
common shares of A4S and $425,000 represented by 6% convertible notes payable,
as of June 30, 2005. In connection with the public offering by A4S in July 2005,
the convertible notes and accrued interest were converted into a total of
439,000 common shares of A4S. In connection with certain of the note
investments, the Company received 7,133 warrants to acquire common stock of A4S.
The warrants are exercisable at an average exercise price of $5.65 per share.
Following the initial A4S investment, Greg Pusey, President of the Company,
became a member of the A4S Board of Directors and subsequently became the
chairman. During August 2006 5,435 of the warrants owned that were exercisable
at $1.66 each were exercised for total cash consideration of $9,022.

In May 2003, the Company loaned $150,000 to Louisiana Land Systems Inc. The loan
was paid back in June 2006 with interest.

In January and March 2004, the Company invested $65,000 for a special limited
partnership interest in Six-Thirty-Three, LLC ("633"). In December 2004, the
Company determined that the investment was worthless and was written off with no
revenue having been generated by 633.


<PAGE>
COMPETITION.   As a result of the Company's plan to liquidate, the Company's
position as a competitor in the real estate industry is no longer applicable.


EMPLOYEES.   The Company has only one employee, who serves the Company on a
part-time basis.


Item 2.   DESCRIPTION OF PROPERTIES.

The Company's administrative activities are conducted at the Company's corporate
headquarters located in Denver, Colorado in a space shared by the Company with
an affiliate, Livingston Capital, Ltd. ("Livingston"). The Company paid
Livingston a monthly fee of $750 for rent and certain overhead administrative
expenses. Effective October 1, 2006 the monthly fee was reduced to $500.


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 of the fiscal year 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.OB". Trading in the common stock in the
over-the-counter market has been limited and sporadic and the quotations set
forth below are not necessarily indicative of actual market conditions. Further,
these prices reflect inter-dealer prices without retail mark-up, markdown, or
commission and may not necessarily reflect actual transactions. The high and low
bid prices for the common stock for each quarter of the fiscal years ended June
30, 2006 and 2005 are as follows:


<PAGE>
      Quarter Ended                                  High Bid        Low Bid
      -------------------------------------------------------------------------
      June 30, 2006                                  $ .15           $ .15
      March 31, 2006                                 $1.36           $ .15
      December 31, 2005                              $1.50           $1.10
      September 30, 2005                             $1.50           $ .31
      June 30, 2005                                  $ .61           $ .30
      March 31, 2005                                 $ .44           $ .35
      December 31, 2004                              $ .35           $ .35
      September 30, 2004                             $ .35           $ .30

At September 6, 2006, the number of holders of record of the Company's common
stock was approximately 943.

At a special meeting of the Company's shareholders held November 3, 2005, the
shareholders approved a plan of liquidation of the Company and the distribution
of substantially all of the Company's cash and investment assets, in excess of a
reasonable operating reserve amount. In December 2005, a cash dividend of
$0.1825 per common share (approximate total of $651,500) was paid to
shareholders of record as of November 22, 2005. Included in that dividend
distribution were approximately 462,500 shares of common stock of A4S and
approximately 420,500 shares of common stock of ANI, with a combined cost basis
of approximately $755,500.

In September 2002, the Company distributed 496,296 shares of AspenBio stock to
its shareholders, which was recorded by the Company as a dividend at the shares'
then estimated fair value of $150,000. In March 2005, the Company distributed
532,275 shares of AspenBio stock to its shareholders, which was recorded by the
Company as a dividend at the shares' then estimated fair value of $475,000.

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 those 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, 2006, the Company had cash and cash equivalents of $636,900 and
working capital of $306,600.



<PAGE>
For the year ended June 30, 2006, operating activities used cash of $158,100 as
compared to cash used of $194,600 for the year ended June 30, 2005. Gains from
the sale of investment securities were $730,800 compared to losses from the sale
of investment securities of $67,200 in 2005. A liability of $332,000 was
recorded for income tax payable in the year ended June 30, 2006 and a deferred
tax asset of $82,000 was reduced to zero. No income taxes were payable at June
30, 2005.

Cash provided by investing activities was approximately $1,272,900 during the
year ended June 30, 2006 as compared to $127,500 during the year ended June 30,
2005. During the year ended June 30, 2006, a net of approximately $1,198,400 was
provided from the sales of investments compared to $273,300 provided in 2005. A
note receivable was collected in 2006 for $150,000. Proceeds from the sale of
fixed assets during 2005 were $34,300 due to the sale of a car previously
provided for the Company's president, Greg Pusey. There were no fixed assets
sold in 2006.

Cash flows from financing activities used $577,800 in 2006 and provided $55,100
in 2005. The exercise of stock options generated $73,800 and $55,100 in 2006 and
2005, respectively. A cash dividend of $0.1852 per share was paid in the year
ended June 30, 2006 totaling $651,500.

RESULTS OF OPERATIONS.

FISCAL YEAR ENDED JUNE 30, 2006 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2005

The Company's revenues for the year ended June 30, 2006 consisted of interest,
dividend and other income of $34,100. Gains on the sale of securities were
approximately $730,800 for the year ended June 30, 2006. The Company's revenues
for the year ended June 30, 2005 consisted of interest and dividend income of
$49,300. Losses on the sale of securities were approximately $67,300 for the
year ended June 30, 2005. During 2005 the Company wrote off an investment in an
LLC that was determined to be worthless for $65,000.

During the years ended June 30, 2006 and 2005, the Company incurred operating,
general and administrative costs of approximately $242,800 and $209,700,
respectively. The increase related primarily to higher professional fees. The
Company had income before taxes of $522,000 for the year ended June 30, 2006 as
compared with a loss before taxes of $277,300 for the year ended June 30, 2005.

INCOME TAXES

As discussed in Note 6 to the accompanying financial statements, at June 30,
2005 the net operating and capital loss carryovers had resulted in a deferred
tax asset of $488,000, against which a valuation reserve of $406,000 had been
established, leaving a net deferred tax asset of $82,000. Due to the taxable
gains in the year ended June 30, 2006, the net operating and capital losses have
been utilized and the valuation reserve reversed.



<PAGE>
For the year ended June 30, 2006, the following is a reconciliation of income
taxes computed at the U. S. federal statutory rate to the Company's effective
rate:

  Federal income tax expense computed
           at the Federal statutory rate                  $176,000
  State income tax expense net of federal benefit           28,000
  Taxable gain attributable to distribution                483,000
  Utilization of operating losses                         (353,000)
  Change in deferred tax asset                              82,000
  Other                                                     (2,000)
                                                          --------
                           Income tax expense             $414,000
                                                          ========



CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect both the recorded values of assets and liabilities
at the date of financial statements and the revenues recognized and expenses
incurred during the reporting period. Our financial position, results of
operations and cash flows are impacted by the accounting policies we have
adopted. The Company evaluates the reasonableness of these estimates and
assumptions as part of the process of preparing its financial statements based
upon a combination of historical information and other information that comes to
our attention that may vary our outlook for the future. Actual results may
differ from these estimates under different assumptions or conditions. A summary
of our critical accounting policies follows:

Investments

Prior to selling the Company's assets in accordance with its plan of
liquidation, the Company invested its excess working capital in investments that
the Company believed have the ability to grow in value at rates in excess of
traditional money market type investments. While such investments are generally
more risky than money market or mutual fund investments, the Company has
experienced what it believes to be acceptable higher net returns for the
additional risk. At June 30, 2006, less than $6,000 of the Company's assets
consisted of such investments.



<PAGE>
Deferred Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. If the tax law or tax rates change in
the future it could impact the available amount of loss carry forwards and/or
the recorded deferred tax amounts.

Revenue Recognition

Our revenues are recognized when rental revenues or property sales are complete
or upon the completion of sales of securities. Revenues realized on sales of
investment securities accounted for a material portion of total revenues during
the years ended June 30, 2006 and 2005. To the extent that we are unable to
dispose of our investments, when we make decisions to do so, due to a lack of
sufficient buying volume or other market conditions, it could impact our ability
to generate revenues, and ultimately impact the value of our investments. The
Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 104,
"Revenue Recognition" provides guidance on the application of generally accepted
accounting principles to select revenue recognition issues. We concluded that
our revenue recognition policy is appropriate and in accordance with SAB No.
104.

Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123 (R) "Share-Based Payment", which
addresses the accounting for share-based payment transactions. SFAS No. 123(R)
eliminates the ability to account for share-based compensation transactions
using APB Opinion No. 25, "Accounting for Stock Issued to Employees", and
generally requires instead that such transactions be accounted and recognized in
the statement of income based on their fair value. SFAS No. 123 (R) will be
effective for Cambridge the quarterly reporting period beginning July 1, 2006.
We evaluated the provisions of this standard. Historically, we have not issued a
significant number of options that would be impacted buy this standard. As of
June 30, 2006 we have no options outstanding. Depending upon the number and
terms of options that may be granted in future periods and the estimates we make
regarding the value and amortization period of the options, the implementation
of this standard could have a material impact on our financial position and
results of operations.


<PAGE>

Item 7.    FINANCIAL STATEMENTS.






                          Index to Financial Statements
                                                                       Page


Report of Independent Registered Public Accounting Firm                 F-2

Report of Independent Registered Public Accounting Firm                 F-3

Balance Sheet                                                           F-4

Statements of Operations and Comprehensive Income (Loss)                F-5

Statements of Changes in Stockholders' Equity                           F-6

Statements of Cash Flows                                                F-7

Notes to Financial Statements                                           F-8










                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

We have audited the accompanying balance sheet of Cambridge Holdings, Ltd. as of
June 30, 2006, and the related statements of operations and comprehensive income
(loss), changes in stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cambridge Holdings, Ltd. as of
June 30, 2006, and the results of its operations and comprehensive income (loss)
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles in the United States of America.


                                        /s/ CORDOVANO AND HONECK LLP
                                        --------------------------------
                                            CORDOVANO AND HONECK LLP
                                            CERTIFIED PUBLIC ACCOUNTANTS

Denver, Colorado
September 25, 2006






                                      F-2
<PAGE>

                  AJ. ROBBINS, PC. CERTIFIED PUBLIC ACCOUNTANTS
                         216 SIXTEENTH STREET, SUITE 600
                             DENVER, COLORADO 80202

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

We have audited the accompanying statements of operations and comprehensive
Income (loss), changes in stockholders' equity, and cash flows of Cambridge
Holdings, Ltd. for the year ended June 30, 2005. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of Cambridge Holdings, Ltd. operations and
comprehensive income (loss) and its cash flows of for the year ended June 30,
2005, in conformity with generally accepted accounting principles in the United
States of America.

                                        /s/ AJ. ROBBINS, PC.
                                        --------------------
                                        AJ. ROBBINS, PC. CERTIFIED PUBLIC
                                        ACCOUNTANTS

Denver, Colorado
August 19, 2005

                                       F-3

<PAGE>

                             Cambridge Holdings, Ltd
                                  Balance Sheet
                                  June 30, 2006




                                     ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                      $   636,893
     Investment securities - available for sale, net (Note 2)             5,485
     Prepaid and other assets                                             6,260
                                                                    -----------

                  Total current assets                                  648,638

Property and equipment, net (Note 5)                                      2,205
                                                                    -----------

                                                                    $   650,843
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                          $     3,797
     Accrued income tax (Note 6)                                        332,000
                                                                    -----------

                  Total current liabilities                             335,797
                                                                    -----------




STOCKHOLDERS' EQUITY:
     Common stock, $.025 par value; 15,000,000 shares
         authorized: 3,509,877 issued and outstanding                    87,747
     Additional paid-in capital                                       1,707,132
     Accumulated (deficit)                                           (1,479,828)
     Accumulated other comprehensive income (loss), net of tax:
         Net unrealized gains on securities
             available for sale                                              (5)
                                                                    -----------

                  Total stockholders' equity                            315,046
                                                                    -----------

                                                                    $   650,843
                                                                    ===========


                 See Accompanying Notes to Financial Statements.

                                       F-4

<PAGE>
<TABLE>
<CAPTION>


                             Cambridge Holdings, Ltd
            Statements of Operations and Comprehensive Income (Loss)

                                                              For the Years Ended June 30,
                                                                   2006          2005
                                                              -----------    -----------
<S>                                                           <C>            <C>
REVENUES:
     Net realized gains (losses) on sales
         of investment securities                             $   730,771    $   (67,251)
     Loss on LLC investment                                            --        (65,000)
     Interest, dividend and other income                           34,094         49,315
                                                              -----------    -----------

                  Total revenues                                  764,865        (82,936)
                                                              -----------    -----------



OPERATING (EXPENSES) AND OTHER INCOME:
     Operating, general and administrative                       (242,817)      (209,680)
     Gain on asset disposal                                            --         14,775
     Other income                                                      --            588
                                                              -----------    -----------

                  Total operating expenses and other income      (242,817)      (194,317)
                                                              -----------    -----------


NET INCOME (LOSS) BEFORE INCOME TAX                               522,048       (277,253)

     Income Tax Expense (Note 6)                                  414,000             --
                                                              -----------    -----------

NET INCOME (LOSS)                                                 108,048       (277,253)

OTHER COMPREHENSIVE INCOME (EXPENSE), net of tax
     Unrealized holding (losses)                               (2,569,665)       (22,310)
      Net unrealized gain (loss)                                    7,609           (662)
                                                              -----------    -----------


COMPREHENSIVE (LOSS)                                          $(2,454,008)   $  (300,225)
                                                              ===========    ===========

NET INCOME (LOSS) PER COMMON SHARE, BASIC AND
    DILUTED                                                   $       .03    $      (.09)
                                                              ===========    ===========

Weighted average number of
     common shares outstanding                                  3,449,985      3,069,224
                                                              ===========    ===========
</TABLE>


               See Accompanying Notes to Financial Statements.

                                       F-5


<PAGE>
<TABLE>
<CAPTION>
                             Cambridge Holdings, Ltd
                   Statements of Operations and Comprehensive


                                                                                                     Accumulated
                                                                       Additional                       Other          Total
                                                  Common Stock           Paid-in       Accumulated   Comprehensive  Stockholders'
                                              Shares        Amount       Capital        (Deficit)    Income/(Loss)     Equity
                                           -----------   -----------    -----------    -----------    -----------    -----------
<S>                                          <C>         <C>           <C>            <C>            <C>            <C>
Balances, June 30, 2004                      3,029,870   $    75,747   $ 2,997,292    $  (835,623)   $ 2,585,023    $ 4,822,439

   Net unrealized (loss) on
       securities available for sale                --            --            --             --        (22,310)       (22,310)

   Net unrealized (loss) on LLCs                    --            --            --             --           (662)          (662)

   Exercise of stock options                   150,000         3,750        51,375             --             --         55,125

   Dividends paid                                   --            --            --       (475,000)            --       (475,000)

   Net (loss) for the year                          --            --            --       (277,253)            --       (277,253)
                                           -----------   -----------    -----------    -----------    -----------    -----------

Balances, June 30, 2005                      3,179,870        79,497     3,048,667     (1,587,876)     2,562,051      4,102,339

   Net unrealized (loss) on
       securities available for sale                --            --            --             --     (2,569,665)    (2,569,665)

   Net realized gain on LLCs                        --            --            --             --          7,609          7,609

   Exercise of stock options                   200,000         5,000        68,750             --             --         73,750

   Adjustment to par value  for cashless
       exercise of options                     130,007         3,250        (3,250)            --             --             --

   Cash and property dividends paid                 --            --    (1,407,035)            --             --     (1,407,035)

   Net income for the year                          --            --            --        108,048             --        108,048
                                           -----------   -----------    -----------    -----------    -----------    -----------

Balances, June 30, 2006                      3,509,877   $    87,747   $ 1,707,132     $(1,479,828)   $        (5)   $   315,046
                                           ===========   ===========    ===========    ===========    -----------    ===========
</TABLE>


                 See Accompanying Notes to Financial Statements.
                                       F-6

<PAGE>
<TABLE>
<CAPTION>

                             Cambridge Holdings, Ltd
                            Statements of Cash Flows

                                                                            For the Years Ended June 30,
                                                                                 2006           2005
                                                                             -----------    -----------
<S>                                                                          <C>            <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net income (loss)                                                            $   108,048    $  (277,253)
  Adjustments to reconcile net (loss) to net cash
     provided (used) by operating activities:
       Depreciation and amortization                                                 362          5,841
       Realized (gains) losses on sale of investment securities                 (730,771)        67,251
       Decrease in deferred income tax benefit                                    82,000             --
       Loss on write-off of LLC investment                                            --         65,000
       Realized gain on sale/disposal of fixed assets                                 --        (14,775)
  Changes in:
       Accounts receivable-related party                                          57,722          6,897
       Accrued interest receivable - related party                                   594        (49,284)
       Prepaid and other assets                                                   (6,260)           423
       Accrued liabilities and other                                             330,193          1,344
                                                                             -----------    -----------

         Cash Flows (Used) By Operating Activities                              (158,112)      (194,556)
                                                                             -----------    -----------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
  Proceeds from sale of investment securities                                     70,513             --
  Purchase of marketable securities                                              (72,410)       (61,830)
  Proceeds from sale of marketable securities                                  1,127,919        216,088
  Additions to note receivable - related parties                                      --        (70,000)
  Collection on notes receivable                                                 150,000         10,000
  Purchase of fixed assets                                                        (2,219)        (1,092)
  Proceeds from sale of fixed assets                                                  --         34,325
  Changes in other assets                                                           (866)            --
                                                                             -----------    -----------

         Cash Flows Provided By Investing Activities                           1,272,937        127,491
                                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Cash dividend paid                                                            (651,508)            --
  Proceeds from exercise of stock options                                         73,750         55,125
                                                                             -----------    -----------

               Cash Flows (Used) Provided By Financing Activities               (577,758)        55,125
                                                                             -----------    -----------


NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                      537,067        (11,940)

CASH AND CASH EQUIVALENTS, beginning of year                                      99,826        111,766
                                                                             -----------    -----------

CASH AND CASH EQUIVALENTS, end of year                                       $   636,893    $    99,826
                                                                             ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
      Cash paid during the year for:
         Interest                                                            $        --    $        --
                                                                             ===========    ===========
         Income taxes                                                        $        --    $        --
                                                                             ===========    ===========
      Schedule of non-cash investing and financing activities:
           Issuance of 130,007 shares of common stock in 2006 for cashless
 exercise of warrants                                                        $        --    $        --
                                                                             ===========    ===========

           Conversion of notes receivable into common stock of A4S           $   425,034    $        --
                                                                             ===========    ===========
           Property distribution as dividend                                 $   755,527    $        --
                                                                             ===========    ===========
</TABLE>


                 See Accompanying Notes to Financial Statements.
                                       F-7



<PAGE>



                             Cambridge Holdings, Ltd
                          Notes to Financial Statements


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

Organization and Business
-------------------------
Cambridge Holdings, Ltd. ("Cambridge" or "the Company") was incorporated on June
23, 1980 under the laws of the State of Colorado. The fiscal year end is June
30. The Company's operations have consisted of investments in the stock market,
real estate development and other business investments. The Company also
explores other business acquisitions, opportunities and investments.

In connection with the SEC's regular review of our filings under the Securities
Exchange Act of 1934, we received correspondence from the SEC asking, among
other points, whether we should be registered as an investment company under the
Investment Company Act of 1940. Generally, an issuer is deemed to be an
investment company subject to registration if its holdings of "investment
securities," which usually are securities other than securities issued by
majority owned subsidiaries and government securities, exceed 40% of the value
of its total assets exclusive of government securities and cash items on an
unconsolidated basis.

Immediately following our receipt of correspondence from the SEC, we consulted
with our legal counsel about the Investment Company Act issues raised by the
SEC's letter. Our counsel recommended that we engage special legal counsel with
significant experience related to the Investment Company Act to assist us with
this issue and we did in fact engage such special counsel and we are now working
with the SEC to respond to its question. Since February 2005, our management and
board have undertaken numerous discussions to investigate and explore the best
course of action. Based upon the investigation undertaken by our management and
board, including work by our legal counsel and special legal counsel, the
Company has determined that the Company has met the definition of an "investment
company" as provided in Section 3(a)(1) of the Investment Company Act; and
accordingly should have been registered and reporting as an investment company.

During multiple meetings, our board of directors reviewed and discussed the
information that management had gathered. After such discussions, the board on
June 9, 2005, unanimously concluded that the best way to maximize shareholder
value would be to liquidate the Company. Management and the Company's counsel
then developed a plan of liquidation to be completed on an orderly basis to
maximize value to the shareholders that was unanimously approved by the board of
directors on June 9, 2005. At a special meeting of the Company's shareholders
held November 3, 2005, the shareholders approved the plan of liquidation of the
Company and the distribution of substantially all of the Company's cash and
investment assets, except for a reasonable operating reserve amount. This
distribution was completed during December 2005.

                                      F-8
<PAGE>


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

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

Fair Value of Financial Instruments
-----------------------------------
Unless otherwise specified, the Company believes the carrying value of financial
instruments approximates their fair value.

Concentration of Credit Risk
----------------------------
From time to time the Company's cash position has exceeded the federally insured
limits, but no losses have been experienced. At June 30, 2006, the Company's
cash in financial institutions exceeded the federally insured deposit limit by
approximately $537,000.

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

Property and Equipment
----------------------
Property and equipment are recorded at cost. Depreciation expense is generally
provided on a straight-line basis using estimated useful lives of 3-5 years.
Total depreciation expense was $362 and $5,841 for the years ended June 30, 2006
and 2005, respectively.

Investment in LLC
-----------------
The investments in LLC's are accounted for under the cost or equity method,
depending on the Company's level of investment. The Company invested $75,000 in
R&B Surgical Solutions, LLC and $65,000 in Six-Thirty-Three, LLC ("633"). The
$65,000 invested in 633 was determined to be worthless during 2005 and
accordingly, was written off. The $75,000 invested in R & B Surgical Solutions
was sold to a related party in 2006.

Impairment of Long-Lived Assets
-------------------------------
The Company evaluates its long lived assets by measuring the carrying amount of
the assets against the estimated undiscounted future cash flows associated with
them. At the time such evaluations indicate the future undiscounted cash flows
of certain long lived assets are not sufficient to cover the carrying value of
such assets, the assets are adjusted to their fair values.

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.


                                      F-9
<PAGE>
Earnings Per Common Share
-------------------------
The Company computes earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). This
Statement simplifies the standards for computing earnings per share (EPS)
previously found in Accounting Principles Board Opinion No. 15, Earnings Per
Share, and makes them more comparable to international EPS standards. SFAS No.
128 replaces the presentation of primary EPS with a presentation of basic EPS.
In addition, the Statement requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.

Options to purchase 440,000 shares of common stock were not included in the
computation of diluted earnings per share as their effect was anti-dilutive for
the year ended June 30, 2005. There were no options outstanding as of June 30,
2006.

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

Stock Option Plans
------------------
The Company applies Accounting Principles Board Opinion 25, Accounting for Stock
Issued to Employees, ("APB Opinion 25") and related Interpretations in
accounting for all stock option plans. Under APB Opinion 25, no compensation
cost has been recognized for stock options granted as the option price equals or
exceeds the market price of the underlying common stock on the date of grant.

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


Comprehensive Income (Loss)
---------------------------
FASB Statement No. 130, Reporting Comprehensive Income (Loss) requires the
reporting of comprehensive income (loss) in addition to net income (loss) from
operations. Comprehensive income (loss) is a more inclusive financial reporting
methodology that includes disclosure of certain financial information that
historically has not been recognized in the calculation of net income (loss).

The change in net unrealized securities gains (losses) recognized in other
comprehensive income includes two components, both computed on the specific
identification method: (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). Such
amounts are reported net of income taxes, however due to the net operating loss
carryforwards that had been available; no income taxes were applied on the
computed amounts. This reclassification has no effect on total comprehensive
income (loss) or shareholder's equity.


                                      F-10
<PAGE>
Recently Issued Accounting Pronouncements
-----------------------------------------

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123(R) Share-Based Payment, which addresses the accounting for share-based
payment transactions. SFAS No. 123(R) eliminates the ability to account for
share-based compensation transactions using APB No. 25, and generally requires
instead that such transactions be accounted and recognized in the statement of
operations based on their fair value. SFAS No. 123(R) will be effective for
public companies that file as small business issuers as of the first interim or
annual reporting period that begins after December 15, 2005. The Company
evaluated the provisions of the standard. Depending upon the amount of and terms
for options that are granted in future periods, the implementation of this
standard could have a significant non-cash impact on results of operations in
future periods.


Accounting Changes and Error Corrections
----------------------------------------
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154"), which is a replacement of APB Opinion No. 20,
"Accounting Changes" ("APB 20"), and FASB Statement No. 3, "Reporting Accounting
Changes in Interim Financial Statements" ("SFAS 3"). SFAS 154 applies to all
voluntary changes in accounting principle, and changes the requirements for
accounting for and reporting of a change in accounting principle. The provisions
of SFAS 154 will have an impact on the Company's financial statements in the
future should there be voluntary changes in accounting principles.


NOTE 2 - INVESTMENT SECURITIES

At June 30, 2006 the Company's market value of available for sale securities
consisted of the following:
                                                   Gross
                                                 Unrealized     Estimated
                                      Cost          Gain       Fair Value
                                   ----------     ---------    ----------
Common and preferred stocks        $      131     $   5,354    $    5,485


The Company realized net gains (losses) of $730,771 and ($67,251) on the sale of
investment securities for the years ended June 30, 2006 and 2005, respectively.

NOTE 3 - NOTES RECEIVABLE

In May 2003, the Company loaned $150,000 to Louisiana Land Systems Inc. The loan
was paid back in June 2006 with interest.

NOTE 4 - NOTES RECEIVABLE - RELATED PARTIES

In July 2004 the Company loaned $10,000 to AspenBio that was repaid later in
July 2004 with interest.

Commencing in December 2002 through August 2004, the Company made a series of
loans to A4S Security, Inc. ("A4S"). A4S which completed an initial public
offering of its securities in July 2005, markets high resolution mobile digital
video recording systems for security and surveillance. Cumulatively
approximately $557,000 was invested in A4S with $132,000 (through debt
conversion and warrants exercises) represented by 18,801 common shares of A4S
and $425,000 represented by 6% convertible notes payable, as of June 30, 2005.
In connection with the public offering by A4S in July 2005, the convertible
notes and accrued interest were converted into a total of 439,000 common shares
of A4S. In connection with certain of the note investments, the Company received
7,133 warrants to acquire common stock of A4S. The warrants are exercisable at
an average exercise price of $5.65 per share. In connection with the initial
transaction, Gregory Pusey, President of the Company, became a member of the A4S
Board of Directors and subsequently became the chairman.


                                      F-11
<PAGE>
NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                                  June 30,
                                                    2006

           Furniture and fixtures             $       1,609
           Office equipment                           2,175
                                              -------------

           Total                                      3,784
           Less accumulated depreciation             (1,579)
                                              --------------
                                              $       2,205
                                              =============


NOTE 6 - INCOME TAX EXPENSE (BENEFIT)

At June 30, 2006 the Company had no deferred tax assets or liabilities. At June
30, 2005, the Company had recorded a deferred tax asset of $82,000, which
reflected the amount of tax benefit expected to be realized as a result of the
available operating loss carryforwards. A valuation allowance had been recorded
for the remainder of the June 30, 2005 deferred tax assets as management was not
able to determine if it is more likely than not that certain other deferred tax
assets will be realized. Due to the taxable gains in the year ended June 30,
2006, the net operating and capital losses have been utilized and the valuation
reserve reversed.


Income tax expense (benefit) consisted of:



                                                    For the Years Ended June 30,
                                                     2006               2005
                                                   --------        -------------
Current income taxes                               $332,000        $          --
Deferred income taxes                                82,000                   --
Income tax expense (benefit)                       $414,000        $          --
                                                   ========        =============


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

                                                            For the Years Ended June 30,
                                                                 2006           2005
                                                            ------------    -----------
<S>                                                         <C>             <C>
   Income tax expense (benefit) computed at the federal
   statutory rate                                           $    176,000    $  (103,000)
   State income tax expense net of federal benefit                28,000             --
   Taxable gain attributable to distribution                     483,000             --
   Utilization of operating losses                              (353,000)            --
   Change in deferred tax asset                                   82,000             --
   Change in valuation allowance                                      --         92,000
   Other                                                          (2,000)        11,000
                                                            ------------    -----------

   Income tax expense (benefit)                            $     414,000    $        --
                                                           =============    ===========
</TABLE>

                                      F-12
<PAGE>


NOTE 7 - STOCKHOLDERS' EQUITY AND STOCK OPTIONS

Stockholders' Equity
--------------------
During the year ended June 30, 2006, the Company completed a dividend
distribution of approximately $650,000 in cash and 420,000 common share it owned
in ANI and 462,000 common shares it owned in A4S. The shares distributed had
been accounted for as investment securities available for sale and were recorded
at fair value, so no gain or loss was recorded at the time of distribution.

2001 Stock Option Plan
----------------------
The Company's 2001 Stock Option Plan, as amended, has a maximum of 650,000
common shares reserved to be issued to employees and consultants 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 grant. During fiscal year 2005
the Company granted 200,000 options under the plan; 75,000 were exercised at
$.385 per share and 75,000 were exercised at $.35 per share. During August 2005,
200,000 options were exercised for cash proceeds totaling $73,750. During
September 2005, a total of 240,000 options were exercised on a cashless basis
whereby the holders surrendered a total of 109,993 other common shares owned in
the Company for the exercise consideration resulting in a net increase of
130,007 common shares outstanding, as the 109,993 shares surrendered were
thereupon retired.

Pro Forma Stock Option Compensation
-----------------------------------
FASB Statement 123, Accounting for Stock-Based Compensation ("SFAS No. 123"),
requires the Company to provide pro forma information regarding net loss and net
loss per share as if compensation costs for the Company's stock option plans and
other stock awards had been determined in accordance with fair value based
methods prescribed in SFAS No. 123. The Company estimates the fair value of each
stock award at the grant date by using the Black-Scholes option-pricing model.
Had the Company applied the fair value recognition provisions of SFAS 123 to its
stock-based employee plans, the net loss for the year ended June 30, 2005 would
have increased by $59,500 to a net loss of $336,800, or $.11 per share, versus
the $.09 per share loss reported. The fair value of the options granted were
estimated on the date of grant using the Black-Scholes option pricing model with
an expected dividend yield of 0%; expected stock price volatility of 100%; risk
free interest rate of 4.3% and expected life of 5-10 years. There were no
options granted or vested during the year ended June 30, 2006.


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

                                      F-13
<PAGE>
<TABLE>
<CAPTION>

                                                           For the Years Ended
                                                               June 30,
                                                   2006                           2005
                                         -----------------------     --------------------------
                                                       Weighted                       Weighted
                                                       Average                        Average
                                                       Exercise                       Exercise
                                          Shares        Price         Shares           Price
                                         -------      ----------     --------         ---------
<S>                                      <C>          <C>             <C>             <C>
  Outstanding, beginning of year         440,000      $     .453      390,000         $    .453

                    Granted                   --              --      200,000
                    Expired/Forfeited         --              --           --                --
                    Exercised            440,000            .453      150,000             .3675
                                         -------      ----------     --------         ---------

  Outstanding, end of year                    -0-     $        -      440,000      $       .435
                                         =======      ==========     =========     ============

  Options exercisable, end of year            -0-     $        -      440,000      $       .435
                                         ========     ==========     =========     ============
</TABLE>


NOTE 8 - RELATED PARTY TRANSACTIONS

In addition to the related party transactions disclosed elsewhere in these
financial statements, the Company had the following related party transactions.

The Company shares corporate office space and administrative staff with an
affiliate of the Company. The Company paid its affiliate $750 per month for
these facilities and services. The per month amount has been reduced to $500
effective October 14, 2006.

The Company held investment securities in Advanced Nutraceuticals, Inc., ("ANI")
classified as available for sale at June 30, 2006 and 2005; having an estimated
fair value of $1,888 and $3,015,381, respectively. During the year ended June
30, 2006, a gain of $719,490 was recognized upon the sale of ANI shares. At June
30, 2006 the Company owned 581 shares of ANI with a value of approximately
$1,900. Subsequent to June 30, 2006, ANI changed its name to Bactolac
Pharmaceutical, Inc.

In December 2001 the Company finalized an agreement to acquire securities of
AspenBio Pharma, Inc. ("AspenBio") including 330,000 warrants to purchase
AspenBio common stock exercisable at $1.00 per share through January 1, 2007.
Certain directors, officers, and consultants of the Company also received an
aggregate of 530,000 warrants to purchase AspenBio common stock with the same
terms.

In July 2002, AspenBio obtained a bank loan for purposes of constructing a new
facility. The bank required additional collateral and the Company agreed to
guarantee up to $200,000 of the bank loan. AspenBio subsequently closed on a
permanent mortgage on the facility thereby releasing the Company from the
guarantee. In connection with making the guarantee, AspenBio, Inc. issued a
warrant to the Company to purchase 100,000 shares of AspenBio common stock at
$1.50 per share, expiring July 5, 2007. At June 30, 2006 the Company owned 750
shares of AspenBio with a value of approximately $1,200.

At June 30, 2006 the Company owned 572 shares of A4S with a value of
approximately $2,300. See Note 9.

During the year ended June 30, 2006 in order to dispose of a restricted
investment in a privately held LLC, it was sold to certain officers, directors
and stockholders (including Greg Pusey and Jeff McGonegal) for its net cost
basis of approximately $71,000.

During the year ended June 30, 2006, Greg Pusey received a total of
approximately $81,250 for consulting services, automobile expenses and
reimbursement of health insurance costs, and Jeff McGonegal received a total of
approximately $31,500 for consulting services.


                                      F-14
<PAGE>

NOTE 9 - SUBSEQUENT EVENTS

During August 2006 5,435 of the 7,133 total warrants rights held in A4S
Security, Inc., which were exercisable at $1.66 each, were exercised for total
cash consideration of $9,022.









                                      F-15
<PAGE>

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

Effective July 21, 2006, Cambridge Holdings, Ltd., ("Cambridge" or the
"Company") dismissed its independent registered public accounting firm, AJ.
Robbins, PC ("AJR"). The decision to change independent registered public
accounting firms was made after the completion of a bid process and was approved
by the Company's Board of Directors. AJR's reports on Cambridge's financial
statements as of and for the years ended June 30, 2005 and 2004 contained no
adverse opinion or a disclaimer of opinion, and were not qualified or modified
as to uncertainty, audit scope or accounting principle.

During each of the years in the two year period ended June 30, 2005, and through
July 24, 2006, there were no disagreements between Cambridge and AJR on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of AJR, would have caused AJR to make reference to the subject
matter of the disagreements in connection with its reports on the financial
statements for such years. There were no "reportable events" during the
Company's fiscal years ended June 30, 2005 and 2004, and through July 21, 2006.

Cambridge provided AJR with a copy of this disclosure and requested that AJR
furnish it with a letter addressed to the Securities and Exchange Commission
stating whether or not AJR agrees with the above statements. A copy of such
letter dated July 24, 2006 from AJR was included as Exhibit 16.1 to our Report
on Form 8-K, stating its agreement with the statements made by us in that
Report.

Effective July 24, 2006, Cambridge engaged Cordovano and Honeck LLP ("CH") as
its new independent registered public accounting firm. During the last two
fiscal years and through July 24, 2006, Cambridge did not consult with CH
regarding (1) the application of accounting principles to any transaction,
either completed or proposed; (2) the type of audit opinion that might be
rendered on Cambridge's financial statements; or (3) any matter that was the
subject of a disagreement or a reportable event.



Item 8A.  Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

In connection with the Securities and Exchange Commission's ("SEC") regular
review of the Company's filings under the Securities Exchange Act of 1934, the
Company received correspondence from the SEC in February 2005 asking, among
other points, whether the Company should be registered as an "investment
company" under the Investment Company Act of 1940 (the "Investment Company
Act"). Generally, an issuer is deemed to be an investment company subject to
registration and reporting under the Investment Company Act if its holdings of
"investment securities" exceed 40% of the value of the issuer's total assets,
exclusive of government securities, securities issued by majority owned
subsidiaries and cash items on an unconsolidated basis.



<PAGE>
Immediately following the Company's receipt of this correspondence from the SEC,
the Company consulted with its legal counsel about the Investment Company Act
issues raised by the SEC's letter. The Company's counsel recommended that
special legal counsel be retained with significant experience related to the
Investment Company Act to assist the Company with this issue and such special
counsel was immediately engaged.

Based upon the investigations undertaken by the Company's management and board
of directors since February 2005, including work by the Company's legal counsel,
the Company determined that it did in fact meet the definition of an investment
company as provided in Section 3(a)(1) of the Investment Company Act during
certain periods over the last several years and, accordingly, should have been
registered and reporting under the Investment Company Act. Further, in
connection with these investigations, the Company's board of directors
evaluated, under the supervision and with the participation of the Company's
chief executive officer and chief financial officer, the effectiveness of the
design and operation of the Company's disclosure controls and procedures during
the relevant periods. Based upon these investigations and evaluations, the
Company concluded that its disclosure controls and procedures were not effective
as of the end of the period covered by this report. The Company attributes this
conclusion to the fact that its controls and procedures did not reveal that the
Company qualified as an investment company subject to the registration and
reporting requirements of the Investment Company Act.

In light of these facts, the Company's board of directors unanimously concluded
that the best way to maximize shareholder value is to liquidate the assets of
the Company for distribution to its shareholders. On June 9, 2005, the Company's
plan of liquidation was unanimously approved by the board of directors. At a
special meeting of the Company's shareholders held November 3, 2005, the
shareholders approved a plan of liquidation of the Company and the distribution
of substantially all of the Company's cash and investment assets, in excess of a
reasonable operating reserve amount.



<PAGE>
(b) Changes In Internal Control Over Financial Reporting.

There have been no changes in internal control over financial reporting that
occurred during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS.
<TABLE>
<CAPTION>

                              Date First
                                Elected                      Principal Occupation
Name                    Age    Director                         and Employment
-----------------       ---    --------      ----------------------------------------------
<S>                     <C>     <C>          <C>
Gregory Pusey           54       1982        President,   Treasurer  and  Director.   Since
                                             1999,  Mr.  Pusey has served as the  president
                                             and   director  of  Advanced   Nutraceuticals,
                                             Inc.,   a  publicly   held   manufacturer   of
                                             nutraceuticals.  Mr. Pusey is also chairman of
                                             AspenBio   Pharma,   Inc.,  a  publicly   held
                                             manufacturer  of  biomedical   products,   and
                                             chairman  of the  board  of  directors  of A4S
                                             Security,   Inc.  Mr.  Pusey   graduated  from
                                             Boston  College in 1974 with a BS in  finance.
                                             Mr. Pusey is also the  president of Livingston
                                             Capital,   Ltd.,   a   venture   capital   and
                                             business-consulting firm.

Scott Menefee           41       1993        Director.  Mr. Menefee is the Senior  Director
                                             of   Real   Estate    Development   for   Opus
                                             Northwest,   LLC,  a  large   commercial  real
                                             estate  development  firm.  During  his tenure
                                             with  Opus,   he  has  been  involved  in  the
                                             development  of over 3.5  million  square feet
                                             of commercial  real estate,  including  office
                                             buildings,        high-rise        residential
                                             condominiums,    land   development   shopping
                                             centers   and   industrial   properties.   Mr.
                                             Menefee  graduated  from  Southern   Methodist
                                             University   with  a  MBA  in  1989   and  the
                                             University of Denver with a BSBA in 1988.



<PAGE>

Jeffrey G. McGonegal    55       2000        Senior Vice  President-Finance,  Secretary and
                                             Director.  Mr.  McGonegal has served as Senior
                                             Vice     President-Finance     of     Advanced
                                             Nutraceuticals,   Inc.  since  February  2000.
                                             Mr.   McGonegal   also  has  served  as  Chief
                                             Financial Officer for A4S Security,  Inc., and
                                             AspenBio  Pharma,   Inc.,  since  2003.  Since
                                             1997,   Mr.   McGonegal  has  also  served  as
                                             Managing  Director  of  McGonegal  and Co.,  a
                                             company  engaged in providing  accounting  and
                                             business  consulting  services.  In  2005  Mr.
                                             McGonegal  was  elected  to serve on the board
                                             of  Imagenetix,  Inc., a publicly held company
                                             in the nutritional  supplements  industry.  He
                                             received  a  BA  degree  in  accounting   from
                                             Florida State  University.  Mr. McGonegal is a
                                             certified  public  accountant  licensed in the
                                             State of Colorado.
</TABLE>

The Company's directors serve until the next annual meeting of the shareholders
and until their successors shall have been duly elected and qualified. The
Company's Board of Directors may remove the Company's officers from their
positions at any time. There are no family relationships among the current
directors of the Company. During the fiscal year ended June 30, 2006, the
Company's Board of Directors held three meetings in person or by consent.


<PAGE>
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, 2006.

Item 10.  EXECUTIVE COMPENSATION.

(a) COMPENSATION. The following table sets forth the cash compensation paid by
the Company during the fiscal year ended June 30, 2006 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.
<TABLE>
<CAPTION>

                           Summary Compensation Table

                        Annual Compensation                      Awards          Payouts
                        --------------------  Other              ------          -------
Name and                                      Annual     Restricted               LTIP    All Other
 Principal   Fiscal   Salary                 Compensa-      Stock       Options  Payouts  Compensa-
Position      Year    ($)(1)        Bonus      tion       Awards($)       (#)      ($)   tion($)(2)
------------- ----    ------        -----    --------    ----------     -------  ------- -----------
<S>           <C>     <C>             <C>        <C>          <C>          <C>      <C>     <C>
Gregory Pusey,
President     2006    60,000         -0-        -0-          -0-          -0-      -0-      7,725
              2005    60,000         -0-        -0-          -0-          -0-      -0-      7,725
              2004    60,000         -0-        -0-          -0-          -0-      -0-      7,761
</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 paid 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 compensation shown is health insurance premiums paid on
Mr. Pusey's behalf. The Company has provided an automobile to Mr. Pusey and paid
associated operating and insurance costs. For the year ended June 30, 2006, the
lease costs totaled approximately $16,000. In prior years the Company had
provided a company-owned vehicle.


<PAGE>

2001 STOCK OPTION PLAN. In October 2001, the Board of Directors of the Company
adopted the 2001 Stock Incentive Plan (the "2001 Plan"). The 2001 Plan was
approved by majority vote of the shareholders in May 2002. The purpose of the
2001 Plan is to promote the interests of the Company and its shareholders by:

     o    Attracting and retaining key personnel;
     o    Providing participants a significant stake in the performance of the
          Company;
     o    Providing an opportunity for participants to increase their holdings
          of the Company's common stock.

The Option Committee administers the 2001 Plan. 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
2001 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 2001 Plan
if selected by the Option Committee. Any consultant to the Company, including
directors, will also be eligible to receive option grants under the 2001 Plan if
authorized by the Option Committee.

The 2001 Plan authorizes the grant of options to purchase up to 650,000 shares
of the Company's common stock. As of June 30, 2006, no options to purchase
shares were outstanding.

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 2001 Plan.

The Board of Directors may amend or terminate the 2001 Plan at any time. No
amendments may be made without the approval of the Company's shareholders to the
extent such approval is required by law or agreement. The 2001 Plan will
continue until October 4, 2011, unless abandoned or terminated at an earlier
time.



<PAGE>
     (b)  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
          --------------------------------------------------------------
          YEAR-END OPTION/SAR VALUES
          --------------------------
<TABLE>
<CAPTION>
                                                                    Number of
                         Shares            Shares                 Shares Under-             Value of
                        Received       Surrendered in          lying Unexercised           Unexercised
     Name             Upon Exercise   Cashless Exercise     Options at 6/30/06 ($)(1)     In-The-Money
     ----             -------------   -----------------    --------------------------     ------------
<S>                      <C>               <C>                         <C>                    <C>
     Gregory Pusey       100,000           48,498                     -0-                     $-0-
     Scott Menefee       40,000            17,570                     -0-                     $-0-
     Jeff McGonegal      100,000           43,925                     -0-                     $-0-
</TABLE>

     (1) Calculated based on the bid price of the Company's common stock of
$0.15 per share on that date.


     (c)  EQUITY COMPENSATION PLAN INFORMATION
          ------------------------------------

     The Company has no outstanding options, accordingly, this section is
omitted.

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

The following table sets forth ownership as of September 18, 2006 of the issued
and outstanding shares of the Company's $.025 par value common stock held by
each director, individually, and all officers and directors as a group, and all
persons who own five percent or more of the outstanding shares of the Company's
common stock. The Company has only one class of capital stock, its $.025 par
value common stock.

                                          Number of                Percent of
Beneficial Owner                           Shares                     Class
---------------------------              -----------               -----------
Scott Menefee                              102,430                    2.9%
1934 Foothills Drive South
Golden, CO 80401

Gregory Pusey                             1,694,018                   48.3%
106 S. University Blvd. #14
Denver, CO 80209 (1)

Jeffrey G. McGonegal                       141,075                    4.0%
1905 W. Valley Vista Drive
Castle Rock, CO 80109

All officers and directors as a           1,937,523                   55.2%
group (3 persons) (1)



<PAGE>
E. Jeffrey Peierls                         302,224                    8.6%
73 S. Holman Way
Golden, CO 80401 (2)

Brian Peierls                              219,011                    6.2%
7808 Harvestman Cove
Austin, TX  78731 (3)


     (1) Includes 18,604 shares owned jointly by Mr. Pusey with his wife, and an
aggregate of 68,909 shares owned by Mrs. Pusey, individually or their daughter.

     (2) Does not include 219,011 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.

     (3) Does not Include 302,224 shares held of record by E. Jeffrey Peierls.


Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an oral agreement with Livingston, which is an affiliate of Gregory
Pusey, the Company pays $500 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
addition, the Company has provided a car for Gregory Pusey which will expire
upon the termination of the current lease in October 2006.

In December 2001, in connection with an equity investment, the Company acquired
310,000 warrants of AspenBio Pharma, Inc. ("AspenBio"). The 310,000 warrants to
purchase AspenBio common stock are exercisable at $1 per share and expire
January 1, 2007. During August 2004, in connection with an additional
investment, the Company received a warrant to acquire 28,571 shares of common
stock at $1.50 per share, expiring in August 2009. In connection with a previous
bank loan guarantee on July 5, 2002, AspenBio issued a warrant to the Company to
purchase 100,000 shares of AspenBio common stock at $1.50 per share, expiring
July 5, 2007. Greg Pusey is a director and Jeffrey G. McGonegal is the chief
financial officer of AspenBio.



<PAGE>
In September 2002, the Company completed a pro rata distribution to its
shareholders of 496,296 shares of the AspenBio common stock, which was recorded
by the Company as a dividend at the shares' then estimated fair value of
$150,000. In March 2005, the Company's Board of Directors approved a
distribution of 532,275 shares of the then remaining total AspenBio common stock
owned by the Company at that time. This distribution was made on a pro rata
basis to all shareholders of record as of the close of business on March 24,
2005 and was recorded as a dividend at the shares' estimated value for financial
reporting purposes of approximately $475,000. The Company's Board of Directors
made the decision to distribute this investment based upon the following
considerations; 1) to begin the process of reducing the Company's level of
investment assets, following the SEC's inquiry as to Cambridge's status as not
being in compliance with the reporting requirements under the Investment Company
Act of 1940, and 2) the Board of Directors did not believe that the market value
of the shares of the Company reflected to value of the underlying investments
and therefore to increase the value to its shareholders.

In July and September of 2003, the Company made two separate loans of $20,000,
each to AspenBio. These loans were repaid in December 2003 with interest. In
July 2004, the Company loaned $10,000 to AspenBio that was repaid later in July
2004 with interest.

In August 2002, under an amended agreement with Advanced Nutraceuticals, Inc.
("ANI"), all of the principal of an outstanding 7% convertible $250,000 note
payable plus accrued interest were converted into 475,118 shares of ANI common
stock. Greg Pusey and Jeff McGonegal, officers and directors of the Company, are
also officers of ANI and Mr. Pusey is also a director of ANI. During June 2004,
a warrant for 50,000 shares was converted into 40,384 common shares of ANI on a
"cashless" exercise basis.

Commencing in December 2002 through August 2004, the Company made a series of
loans to A4S Security, Inc. (formerly, A4S Technologies, Inc.) ("A4S"). A4S,
which completed an initial public offering of its securities in July 2005,
markets high resolution mobile digital video recording systems for security and
surveillance. Cumulatively approximately $557,000 was invested in A4S with
$132,000 (through debt conversion and warrants exercises) represented by 18,801
common shares of A4S and $425,000 represented by 6% convertible notes payable,
as of June 30, 2005. In connection with the public offering by A4S in July 2005,
the convertible notes and accrued interest were converted into a total of
439,000 common shares of A4S. In connection with certain of the note
investments, the Company received 7,133 warrants to acquire common stock of A4S.
The warrants are exercisable at an average exercise price of $5.65 per share. In
connection with the initial transaction, Gregory Pusey, President of the
Company, became a member of the A4S Board of Directors and subsequently became
the chairman. Mr. Pusey also served as the agent for the various purchasers
pursuant to certain agreements made in connection with the A4S loans. Mr. Pusey
and members of his family currently hold 7,626 shares of A4S common stock which
they received in note conversions and warrant exercises. Additionally, they hold
warrants to purchase an aggregate of 4,197 shares of A4S common stock. Jeffrey
G. McGonegal currently holds an aggregate of 24,335 shares of A4S common stock,
which was received in note conversions and warrant exercises. Messrs. Pusey (and
members of his family) and McGonegal purchased their A4S securities under the
same terms and conditions as the Company. Gregory Pusey became a member of the
Board of Directors of A4S in January 2003 in connection with the Company's
initial loan to A4S and Chairman in 2004. During August 2006 5,435 of the
warrants owned that were exercisable at $1.66 each were exercised for total cash
consideration of $9,022.



<PAGE>

Item 13.  EXHIBITS

     (a) EXHIBITS.

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



Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     (a)  Audit Fees. During the fiscal years ended June 30, 2006 and 2005, the
aggregate fees billed by the Company's previous auditors, for services rendered
for the audit of our annual financial statements and the review of the financial
statements included in our quarterly reports on Form 10-QSB for services
provided in connection with the statutory and regulatory filings or engagements
for those fiscal years, was $12,500 and $11,000, respectively.

     (b)  Audit-Related Fees. During fiscal years ended June 30, 2006 and 2004
our auditors did not receive any fees for any audit-related services other than
as set forth in paragraph (a) above.

     (c)  Tax Fees. Our auditors did not provide tax compliance or tax planning
advice during the fiscal years ended June 30, 2006 and 2005.


                                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.


<PAGE>
     (10)(n) 2001 Stock Option Plan filed as Exhibit 10(n) in the Registrant's
Report on Form 10-KSB for the year ended June 30, 2001 is incorporated herein by
this reference.

     (10)(t) Promissory Note dated June 30, 2003, in the original principal
amount of $160,000, made by A4S Security, Inc. to the Company filed as Exhibit
10(t) in the Registrant's Report on Form 10-KSB for the year ended June 30, 2005
is incorporated herein by reference.

     (10)(t)(1) Allonge dated August 31, 2004 to Promissory Note dated June 30,
2003 filed as Exhibit 10(t)(1) in the Registrant's Report on Form 10-KSB for the
year ended June 30, 2005 is incorporated herein by reference.

     (10)(u) Promissory note dated October 2, 2003 in the original principal
amount of $100,000, made by A4S Security, Inc. to the Company and Allonge dated
August 31, 2004 filed as Exhibit 10(u) in the Registrant's Report on Form 10-KSB
for the year ended June 30, 2005 is incorporated herein by reference.

     (10)(v) Promissory notes dated February 22, 2004, February 23, 2004 and May
12, 2004 in the aggregate original principal amount of $104,945, made by A4S
Security, Inc. to the Company and Allonges dated August 31, 2004 filed as
Exhibit 10(v) in the Registrant's Report on Form 10-KSB for the year ended June
30, 2005 is incorporated herein by reference.

     (10)(w) Promissory note dated August 24, 2004 in the original principal
amount of $67,352, made by A4S Security, Inc. for the Company filed as Exhibit
10(w) in the Registrant's Report on Form 10-KSB for the year ended June 30, 2005
is incorporated herein by reference.

     31.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
          2002.

     31.2 CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
          2002.

     32   CEO and CFO Certification pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

                                   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: September 28, 2006               By:   /s/ Gregory Pusey
                                             ------------------
                                             Gregory Pusey
                                             President, Treasurer and Director

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

Date: September 28, 2006               By:   /s/ Gregory Pusey
                                             ------------------
                                             Gregory Pusey
                                             President, Treasurer and Director



Date: September 28, 2006               By:   /s/ Jeffrey G. McGonegal
                                             ------------------------
                                             Jeffrey G. McGonegal
                                             Senior Vice President-Finance,
                                             Secretary and Director


Date: September 28, 2006               By:   /s/ Scott Menefee
                                             -----------------------
                                             Scott Menefee, Director




<PAGE>