UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 Form
10-Q
 (Mark
One)
 
 x   QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
 For the
quarterly period ended March 31, 2010
 
 OR
 
 o  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 registrant as specified in its charter)
 
 
 Colorado
              84-0826695(State
      or other jurisdiction of
                incorporation
      or organization)
              (I.R.S.
      Employer Identification No.)
 
 106 S. University
      Blvd., #14 Denver, Colorado 80209(Address
      of principal executive offices) (Zip
Code)
 
 (303) 722-4008(Registrant's
      telephone number, including area
code)
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.     Yes  x    No 
o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
 Yes  o   
No  o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one)
 
 Large
      accelerated filer o
                
       Accelerated filer o           
       Non-accelerated filer o
                  Smaller
      reporting company x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes  o    No 
x
 The
number of shares of the registrant’s $.025 par value common stock outstanding as
of May 13, 2010 was 3,509,877.














CAMBRIDGE
HOLDINGS, LTD. HOLDINGS, LTD. PagePART
      1— Financial InformationItem
      1.      Financial StatementsBalance Sheet as of March 31, 2010 (unaudited) and June 30,
      2009
                
                
                
                3Statements of
      Operations and Comprehensive Income (Loss) For the Three and Nine
      MonthPeriods Ended March  31,
      2010 and 2009 (unaudited)
                
                
                
                4Statements of Cash Flows
      For the Nine Month Periods EndedMarch 31, 2010 and 2009
      (unaudited)
                
                
                
                5Notes to Unaudited
      Financial Statements
                
                
                
                6Item
      2.      Management's Discussion and Analysis of
      Financial Condition and Results of Operations
                
                
                
                8Item
      3.      Quantitative and Qualitative Disclosures
      About Market Risk
                
                
                
                11Item
      4.      Controls and Procedures
                
                
                
                11PART
      II - Other InformationItem
      1.      Legal Proceedings
                
                
                
                12Item
      1A.   Risk Factors
                
                
                
                12Item
      2.      Unregistered Sales of Equity Securities
      and Use of Proceeds
                
                
                
                12Item
      3.      Defaults Upon Senior
Securities
                
                
                
                12Item
      4.      Submission of Matters to a Vote of Security
      Holders
                
                
                
                12Item
      5.      Other Information
                
                
                
                12Item
      6.      Exhibits
                
                
                
                13Signatures
                
                
                
                14







Part
I.  Financial Information


CAMBRIDGE HOLDINGS, LTD.
 BALANCE SHEET
 March
      31,2010
                      
                      
                      June
      30,(Unaudited)
                      
                      
                      2009ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                      
                      $
                      22,930
                      
                      
                      $
                      60,109Investment
      securities
                      
                      
                      32,581
                      
                      
                      
                      783,836Prepaid
      and other assets
                      
                      
                      4,595
                      
                      
                      
                      17,216Total
      current assets
                      
                      
                      60,106
                      
                      
                      
                      861,161PROPERTY
      AND EQUIPMENT, net
                      
                      
                      -
                      
                      
                      
                      4,280$
                      60,106
                      
                      
                      $
                      865,441LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                      
                      $
                      2,717
                      
                      
                      $
                      1,808Deferred
      income tax liability
                      
                      
                      4,500
                      
                      
                      
                      215,000Total
      current liabilities
                      
                      
                      7,217
                      
                      
                      
                      216,808COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon
      Stock - $.025 par value, 15,000,000 SharesAuthorized:  3,509,877
      shares issued and outstanding
                      
                      
                      87,747
                      
                      
                      
                      87,747Additional
      paid-in capital
                      
                      
                      1,390,752
                      
                      
                      
                      1,803,232Accumulated
      (deficit)
                      
                      
                      (1,425,610
                      )
                      
                      
                      (1,242,346
                      )Total
      stockholders’ equity
                      
                      
                      52,889
                      
                      
                      
                      648,633$
                      60,106
                      
                      
                      $
                      865,441
  SEE
ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
  2
  
  
 CAMBRIDGE
HOLDINGS, LTD.
 STATEMENTS
OF OPERATIONS
 (UNAUDITED)
 Three
      months ended
                  
                  
                  Nine months
      endedMarch
      31,
                  
                  
                  March
      31,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Revenues:Net
      unrealized gains (losses) on  investment
    securities
                  
                  $
                  7,597
                  
                  
                  $
                  (1,323,644
                  )
                  
                  $
                  (38,711
                  )
                  
                  $
                  (1,389,660
                  )Net
      realized gains (losses) on investment securities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (243,478
                  )
                  
                  
                  -Interest
      and dividend income
                  
                  
                  -
                  
                  
                  
                  26
                  
                  
                  
                  2
                  
                  
                  
                  523Total
      revenues
                  
                  
                  7,597
                  
                  
                  
                  (1,323,618
                  )
                  
                  
                  (282,187
                  )
                  
                  
                  (1,389,137
                  )Expenses:Operating, general and administrative
                  
                  
                  22,836
                  
                  
                  
                  22,681
                  
                  
                  
                  141,293
                  
                  
                  
                  172,640Income
      (loss) before income taxes
                  
                  
                  (15,239
                  )
                  
                  
                  (1,346,299
                  )
                  
                  
                  (423,480
                  )
                  
                  
                  (1,561,777
                  )Income
      tax (benefit) expense (Note 4)
                  
                  
                  (1,500
                  )
                  
                  
                  (570,216
                  )
                  
                  
                  (240,216
                  )
                  
                  
                  (577,000
                  )Net
      income (loss)
                  
                  $
                  (13,739
                  )
                  
                  $
                  (776,083
                  )
                  
                  $
                  (183,264
                  )
                  
                  $
                  (984,777
                  )Basic
      and diluted income (loss) per common share:
                  
                  $
                  Nil
                  
                  
                  $
                  (.22
                  )
                  
                  $
                  (.05
                  )
                  
                  $
                  (.28
                  )Weighted
      average number of common
                    shares
      outstanding
                  
                  
                  3,509,877
                  
                  
                  
                  3,509,877
                  
                  
                  
                  3,509,877
                  
                  
                  
                  3,509,877
 SEE
ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
  3
 
 
 CAMBRIDGE
HOLDINGS, LTD.
 STATEMENTS
OF CASH FLOWS (UNAUDITED)
 Nine
      months ended March 31,2010
                    
                    
                    2009CASH
      FLOWS FROM (TO) OPERATING ACTIVITIES:Net
      (loss)
                    
                    $
                    (183,264
                    )
                    
                    $
                    (984,777
                    )Adjustments to reconcile net income (loss) to cashprovided (used) by operating  activities:Depreciation and amortization
                    
                    
                    1,152
                    
                    
                    
                    2,232Stock-based compensation
                    
                    
                    -
                    
                    
                    
                    96,100Noncash charges
                    
                    
                    56,616
                    
                    
                    
                    -Deferred income taxes
                    
                    
                    (210,500
                    )
                    
                    
                    (556,000
                    )Unrealized (gains) losses on trading investment securities
                    
                    
                    38,711
                    
                    
                    
                    1,389,660Realized (gains) losses on tradinginvestment securities
                    
                    
                    243,478
                    
                    
                    
                    -Realized Losses on Fixed Asset Disposal
                    
                    
                    3,098
                    
                    
                    
                    -Changes in:Other assets
                    
                    
                    12,621
                    
                    
                    
                    59,789Accrued expenses and other
                    
                    
                    909
                    
                    
                    
                    193Cash
      flows (used) by operating activities
                    
                    
                    (37,179
                    )
                    
                    
                    7,197CASH
      FLOWS FROM (TO) INVESTING ACTIVITIES:Cash flows (used) by investing activities
                    
                    
                    -
                    
                    
                    
                    -CASH
      FLOWS FROM (TO) FINANCING ACTIVITIES:Cash
      flows (used) by financing activities
                    
                    
                    -
                    
                    
                    
                    -NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                    
                    
                    (37,179
                    )
                    
                    
                    7,197CASH AND CASH
      EQUIVALENTS, beginning of
      period
                    
                    
                    60,109
                    
                    
                    
                    77,605CASH
      AND CASH EQUIVALENTS, end of period
                    
                    $
                    22,930
                    
                    
                    $
                    84,802Supplemental
      disclosure of cash flow information:Cash paid during the period for interest
                    
                    $
                    -
                    
                    
                    $
                    -Cash paid during the period for income taxes
                    
                    $
                    -
                    
                    
                    $
                    -Noncash financing – dividend distribution
                    
                    $
                    (412,480
                    )
                    
                    $
                    -
 SEE
ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
  4
 Cambridge Holdings,
Ltd.


Notes
to Unaudited Financial Statements





INTERIM
FINANCIAL STATEMENTS




The
accompanying financial statements of Cambridge Holdings, Ltd. (the “Company,”
“we,” “us,” or “our”) have been prepared in accordance with the instructions to
quarterly reports on Form 10-Q. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes in financial position
at March 31, 2010, and for all periods presented, have been made. Certain
information and footnote data necessary for a fair presentation of financial
position and results of operations in conformity with accounting principles
generally accepted in the United States of America have been condensed or
omitted. It is therefore suggested that these financial statements be read in
conjunction with the summary of significant accounting policies and notes to
financial statements included in the Company’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the “SEC”) for the year ended June
30, 2009. The results of operations for the period ended March 31, 2010 are not
necessarily an indication of operating results for the full year.




Loss per share




Loss per
share of common stock is computed based on the weighted average number of common
shares outstanding during the period. Stock options and warrants are not
considered in the calculation, as the impact of the potential common shares
(totaling 250,000 shares at March 31, 2010 and March 31, 2009) would be to
decrease loss per share. Therefore, diluted loss per share is equivalent to
basic loss per share.




Note
1 – Investment Securities





The
Company accounts for investment securities under the provisions of Financial Accounting Standards Board
Accounting Standards Codification ("ASC") 820 (formerly – Statement of
Financial Accounting Standard ("SFAS") No. 157), “Fair Value Measurements” ("ASC
820").  ASC 820 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements.  Under accounting principles generally
accepted in the United States of America ("GAAP"), fair value of such securities
is determined based upon a hierarchy that prioritizes the inputs to valuation
techniques used to measure fair values into three broad levels. Inputs generally
are summarized as: (i) Level I are available quoted prices in active markets,
(ii) Level II are other than available quoted market prices that are observable
for the investment and (iii) Level III are unobservable inputs for the
investment. The Company has valued its investment assets using quoted prices in
active markets for identical assets (Level 1).  There were no
purchases or sales during the period and unrealized gains and losses are as
reported in the statement of operations for the period.





In
December 2009, the Company completed a dividend distribution to its shareholders
consisting of 245,524 shares of AspenBio Pharma, Inc., (“AspenBio”) common stock
which had been held as an investment. The transaction for financial reporting
purposes was recorded by the Company as a return of capital at the AspenBio
shares’ then estimated fair value of $412,480.   Additionally,
13,700 shares of AspenBio common stock valued at $23,016 were transferred to pay
administrative costs incurred for processing the distribution and 20,000 shares
of AspenBio common stock valued at $33,600 for financial reporting purposes was
transferred to an officer as a bonus.





At March
31, 2010, the Company's market value of trading securities consisted primarily
of securities with a fair market value of approximately $32,600 and a cost of
approximately $20,700. Included were 14,263 common shares of AspenBio, at a cost
of approximately $11,500 and a fair market value of approximately $32,500. Also
included were 3,004 common shares (“PBAL”) and 5,000 common stock purchase
warrants ("PBALW") of PepperBall Technologies, Inc. ("PepperBall") at a cost of
$9,200 and a fair market value of $61.












At June
30, 2009, the Company's market value of trading securities consisted primarily
of securities with a fair market value of approximately $783,800 and a cost of
approximately $246,300. Included were 293,487 common shares of AspenBio, at a
cost of approximately $237,100 and a fair market value of approximately
$783,600. Also included were 3,004 PBAL shares and 5,000 PBALW warrants of
PepperBall at a cost of $9,200 and a fair market value of $200.




Note
2 – Property and Equipment




In
accordance with the Company’s plan of liquidation, all fixed assets were
reviewed.  It was determined that the furnishings and equipment had no
future value and they were written off as of December 31, 2009.




Property
and equipment consisted of the following:




March 31,
      2010
              (Unaudited)
            
            June
      30, 2009Furniture
      and fixtures
            
            $
            -
            
            
            $
            10,027Office
      equipment
            
            
            -
            
            
            
            3,519Less
      accumulated depreciation
            
            
            (-
            )
            
            
            (9,266
            )$
            -
            
            
            $
            4,280




Note
3 – Stockholders’ Equity and Stock Options





During
December 2009, the Company completed a dividend distribution to its
shareholders.  The distribution consisted of 245,524 shares of
AspenBio common stock which had been held as an investment.  The
distribution was made on the basis of .07 shares of AspenBio common stock for
each share of the Company’s common stock as of the November 30, 2009 record
date. As of the date the distribution was authorized, the fair market value for
financial reporting purposes of this distribution was estimated to be $412,480
and the dividend was accrued.   The Company determined that this
distribution was a return of capital and therefore it has been recorded as a
reduction of additional paid-in capital.





During
the nine months ended March 31, 2009, options to purchase a total of 250,000
shares of the Company’s common stock under the Company's 2001 Stock Option Plan
(the “Plan”) were issued to the Company’s directors. The options were vested
upon their grant, and options to purchase 150,000 shares of common stock are
exercisable at $0.42 and expire in ten years.  Options to purchase
100,000 shares of common stock are exercisable at $0.462 and expire in five
years. These options to purchase 250,000 shares of common stock had a weighted
average fair value at the grant date of $0.38 per option exercisable at an
average of $0.44 per share.




The
Company currently provides stock-based compensation to employees, directors and
consultants, under the Plan that has been approved by the Company’s
shareholders, providing for up to 650,000 common shares to be reserved for
issuance under the Plan. Stock options granted under the Plan generally vest
over periods of up to three years from the date of grant, as specified in the
Plan or by the compensation committee of the Company’s board of directors, and
are exercisable for a period of up to ten years from the date of grant. The
Company recognized stock-based compensation during the period ended March 31,
2009 totaling $96,100.













The
Company accounts for stock-based compensation under ASC 718 (formerly -SFAS No.
123 (revised 2004)), “Share-Based Payment” ("ASC
718"), using the modified prospective method. ASC 718 requires the recognition
of the cost of employee services received in exchange for an award of equity
instruments in the financial statements and is measured based on the grant date
fair value of the award. ASC 718 also requires the stock option compensation
expense to be recognized over the period during which an employee is required to
provide service in exchange for the award (generally the vesting period). The
Company estimated the fair value of each stock option at the grant date by using
the Black-Scholes option pricing model with the following weighted average
assumptions used for the grants in the nine months ended March 31,
2010.  Expected life; 5-10 years, Volatility, 126.3%, Risk-free
interest rate, 2.91% to 3.66%, Dividend yield, 0%, and estimated forfeitures
0%.




The
expected life of stock options represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. The expected volatility is based on the historical price volatility of
the Company’s common stock over the past six years, based upon management’s
assessment of the appropriate life to determine volatility. The risk-free
interest rate represents the U.S. treasury bill rate for the expected life of
the related stock options. The dividend yield represents the Company’s
anticipated cash dividend over the expected life of the stock options.
Forfeitures represent the weighted average estimate of future options to be
cancelled primarily due to terminations.




A summary
of stock option activity of options to employees, directors and advisors, for
the nine months ended March 31, 2010 is presented below:





Shares
              Under
              Option
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Life
      (Years)
            
            Aggregate
              Intrinsic
              ValueOutstanding
      at June 30, 2009
            250,000
            
            $
            0.44Granted
            —
            
            
            —Exercised
            —
            
            
            —Forfeited
            —
            
            
            —Outstanding
      at March 31, 2010
            250,000
            
            $
            0.44
            
            6.0
            
            $
            —Exercisable
      at March 31, 2010
            250,000
            
            $
            0.44
            
            6.0
            
            $
            —





The
aggregate intrinsic value in the table above represents the total intrinsic
value (the difference between our closing stock price on March 31, 2010 and the
exercise price, multiplied by the number of in-the-money options) that would
have been received by the option holders, had all option holders been able to
and in fact, had exercised their options on March 31, 2010.




As of
March 31, 2010, based upon employee, advisor and consultant options granted to
that point, there was no additional unrecognized compensation cost related to
stock options that will be recorded in future periods.

















Note
4 - Income Tax (Benefit)





At March
31, 2010, the Company had a deferred tax liability of $4,500, related primarily
to the unrealized gain on investment securities available for sale.





Income
tax (benefit) consisted of:




Nine months
      EndedMarch 31,2010
              
              
              2009Current income
      tax (benefit):Federal
              
              $
              (25,116
              )
              
              $
              (17,000
              )State
              
              
              (4,600
              )
              
              
              (4,000
              )(29,716
              )
              
              
              (21,000
              )Deferred
      income tax expense (benefit)Federal
              
              
              (184,500
              )
              
              
              (487,000
              )State
              
              
              (26,000
              )
              
              
              (69,000
              )(210,500
              )
              
              
              (556,000
              )Total income tax
      expense (benefit)
              
              $
              (240,216
              )
              
              $
              (577,000
              )


The
income tax benefit for the period ended March 31, 2010 was different from the
federal statutory rate as a result of the benefit arising from the prior years’
income taxes recovered as a result of the carry back of net operating losses to
such prior years combined with the change in the investment securities
distributed.








Item
2:   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





Cambridge
Holdings, Ltd. (the "Company," “we,” “us,” “our”), 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 United States Securities and Exchange Commission’s (the
“SEC”) regular review of our filings under the Securities Exchange Act of 1934,
we received correspondence from the SEC in 2005 asking, among other points,
whether we 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 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 the SEC’s correspondence, 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 our board have undertaken numerous discussions to investigate and
explore the best course of action. Based upon the investigation undertaken by
our management and our board, including work by or 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, on June 9, 2005, our board
of directors 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. The liquidation plan 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.  We 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.





Commencing
in December 2001, the Company made a series of investments in AspenBio Pharma,
Inc. ("AspenBio").  At June 30, 2009 the Company owned 293,487 common
shares of AspenBio.  In April 2007, the Company determined that, to
enhance shareholder value, the best course of action was to exercise a portion
of its AspenBio warrants that were either scheduled to be redeemed for nominal
value or were scheduled to expire, for cash to the extent it was prudent and the
balance on a cashless basis as provided in the terms of the
warrants.  The Company exercised warrants for cash resulting in the
issuance of 128,571 shares of AspenBio’s common stock. The Company thereupon
sold 100,000 shares of AspenBio common stock for approximately $445,000 in cash
in order to reduce the level of its investment assets.  Greg Pusey,
president of the Company, serves as vice chairman of AspenBio’s board of
directors and Jeffrey G. McGonegal, chief financial officer of the Company,
serves as AspenBio’s chief financial officer.





Commencing
in March 2002, the Company made a series of investments in PepperBall
Technologies, Inc. ("PepperBall") (formerly Security With Advanced Technology,
Inc.).  PepperBall, a public company, develops and markets non-lethal
and personal protection devices. The Company currently owns 3,004 common shares
and publicly traded warrants to purchase 5,000 shares of PepperBall’s common
stock.   Greg Pusey, president of the Company, serves on
PepperBall’s board of directors and Jeffrey G. McGonegal, chief financial
officer of the Company, serves as PepperBall’s chief financial
officer.





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 the Company’s
status as not being in compliance with the reporting requirements under the
Investment Company Act, 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
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 PepperBall and approximately 420,500 shares of
common stock of Bactolac Pharmaceutical, Inc., with a combined cost basis of
approximately $755,500.





In
December 2009, the Company completed a pro rata distribution to its shareholders
of 245,524 shares of AspenBio common stock, which for financial reporting
purposes was recorded by the Company as a dividend at the shares’ then estimated
fair value of $412,480.  This distribution represented the liquidation
of substantially all of the then remaining assets of the Company.















Management
of the Company is currently evaluating the most prudent methods and timing of
liquidating the remaining limited investments held by the Company. The
evaluation includes consideration of the perceived current and future value of
each holding and the most effective disposal method.




Results of
Operations





Three-month Period Ended
March 31, 2010 compared to Three-month Period Ended


March 31,
2009





The
Company's revenues for the three-month period ended March 31, 2010 was $7,600
resulting from unrealized gains in value of marketable securities.





The
Company's revenues for the three-month period ended March 31, 2009 were negative
$1,323,600. Unrealized losses from the decline in value of marketable securities
totaled $1,323,600.





Operating,
general and administrative expenses totaled $22,800 for the three-month period
ended March 31, 2010 and $22,700 for the three-month period ended March 31,
2009.





Nine-month Period Ended
March 31, 2010 compared to Nine-month Period Ended


March 31,
2009





The
Company's revenues for the nine-month period ended March 31, 2010 was a negative
$282,200 resulting from $38,700 in unrealized losses from the decline in value
of marketable securities and of a $243,500 realized loss on the marketable
securities from the distribution of the marketable securities.





The
Company's revenues for the nine-month period ended March 31, 2009 were negative
$1,389,100. Unrealized losses from the decline in value of marketable securities
totaled $1,389,700.




Operating,
general and administrative expenses totaled $141,300 for the nine-month period
ended March 31, 2010 and $172,600 for the nine-month period ended March 31, 2009
with the change primarily attributable to the stock-based compensation expense
arising from the stock option grants in 2009.





During
the nine-month period ended March 31, 2010 an income tax benefit of $240,200 was
recorded as compared to an income tax benefit of $577,000 during the nine-month
period ended March 31, 2009. The income tax amounts relate primarily to the
difference in investment securities amounts recorded for financial reporting and
income tax purposes.





Liquidity and Capital
Resources





At March
31, 2010, the Company had cash and cash equivalents of $22,900 and working
capital of $52,900. The Company is currently exploring possible corporate
alternatives for a merger or other corporate transaction.  Depending
upon the time required to complete such process, additional funding may be
required at some point in the future.





Due to
recent market events that have adversely affected all industries and the economy
as a whole, management has placed increased emphasis on monitoring the risks
associated with the current environment, particularly the investment parameters
of the investments securities, the fair value of assets, and the Company’s
liquidity.




Management
will continue to monitor the risks associated with the current environment and
their impact on the Company’s assets.




For the
nine-month period ended March 31, 2010 operating activities used cash of
$37,200. The loss of $183,300 was substantially due to $282,200 in
unrealized and realized losses on trading investment securities. A reduction of
deferred income taxes resulted in a benefit of $210,500.














For the
nine-month period ended March 31, 2009 operating activities provided cash of
$7,200. The loss of $984,800 was substantially due to a $1,389,700 decline in
the market value of investment securities net of the corresponding $556,000
reduction in deferred income taxes.  Stock-based compensation of
$96,100 was recorded in the period as a non-cash expense.





There was
no cash used by investing or financing during the nine-month periods ended March
31, 2010 or 2009.





CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS




Certain
statements in Management’s Discussion and Analysis of Financial Condition and
Results of Operations and other portions of this report are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and are subject to the safe harbor created thereby. These
statements relate to future events or our future financial performance and
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements or our
industry to be materially different from those expressed or implied by any
forward-looking statements. In some cases, forward-looking statements can be
identified by terminology such as “may,” “will,” “could,” “would,” “should,”
“expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,”
“potential” or other comparable terminology. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to be correct. Unless
otherwise required by applicable securities laws, we disclaim any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.




Item
3.   Quantitative and Qualitative Disclosures About Market
Risk




Not
applicable to smaller reporting companies.




Item
4.   Controls and Procedures




Evaluation of Disclosure Controls and
Procedures.


Our
management, including our chief executive officer and our chief financial
officer, has conducted an evaluation of the effectiveness of our disclosure
controls and procedures (as defined in the Securities Exchange Act of 1934 Rules
13a-15(e) and 15d-15(e)) as of the last day of the period of the accompanying
financial statements (the “Evaluation Date”). Based on that review and
evaluation, our chief executive officer and our chief financial officer
concluded that, as of the Evaluation Date and except as described below, our
disclosure controls and procedures were adequate and effective to ensure that
material information relating to us would be made known to them by others within
the Company in a timely manner, particularly during the period in which this
quarterly report on Form 10-Q was being prepared, and that no changes are
required at this time, except as described below.




The
Company did not maintain an effective control environment based on criteria
established in the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) framework. Specifically, the Company did not adequately
design in an effective manner the procedures necessary to support on a timely
basis the requirements of the financial reporting and closing
process.




Our
evaluation concluded that, although policies and procedures appropriate for
operating control activities were designed, and in large part instituted, the
Company has not been successful in designing and implementing polices for the
control environment. The control environment sets the tone of an organization,
influences the control consciousness of its people, and is the foundation of all
other components of internal control over financial reporting. A material
weakness in the control environment affects all other internal control
components.











We have
also identified conditions as of March 31, 2010 that we believe are significant
deficiencies in internal controls that include: 1) a lack of segregation of
duties in accounting and financial reporting activities and 2) the lack of a
sufficient number of qualified accounting personnel. We do not believe that
these deficiencies constitute material weaknesses because of the use of
temporary controllers, the review by our chief executive officer of accounting
information and reconciliations, and the use of outside
consultants.




Management
believes these deficiencies in internal control did not result in material
inaccuracies or omissions of material fact and, to the best of its knowledge,
believes that the financial statements for the nine months ended March 31, 2010
fairly present in all material respects the financial condition and results of
operations for the Company in conformity with GAAP. There is, however, a
reasonable possibility that a material misstatement of the annual or interim
financial statements would not have been prevented or detected as a result of
the control environment weaknesses.




Changes in Internal Control Over
Financial Reporting




There was
no change in internal controls over financial reporting (as defined in Rule
13a-15(f) promulgated under the Securities Exchange Act or 1934) identified in
connection with the evaluation described in the preceding paragraph that
occurred during the Company’s first fiscal quarter that has materially affected
or is reasonably likely to materially affect the Company’s internal control over
financial reporting.




PART
II   OTHER INFORMATION





Item
1.   Legal Proceedings




None.




Item
1A.   Risk Factors




The
Company’s business, financial condition, operating results and cash flows can be
impacted by a number of factors, any one of which could cause the Company’s
actual results to vary materially from recent results or from the Company’s
anticipated future results.  See Form 10-K for the year ended June 30,
2009 for the Company’s Risk Factors.




Item
2.   Unregistered Sales of Equity Securities and Use of
Proceeds




None.




Item
3.   Defaults Upon Senior Securities




None.




Item
4.   (Removed and Reserved)





Item
5.   Other Information




None.











Item
6.  Exhibits





31.1
            Certification
      of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the
      Securities Exchange Act of 1934 (1)31.2
            Certification
      of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the
      Securities Exchange Act of 1934 (1)


32.1
            Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to 18
      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (2)





(1) Filed
herewith.


(2)
Furnished.

































SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





CAMBRIDGE
      HOLDINGS, LTD.May
      13, 2010
                By:
                /s/ Gregory
      PuseyGregory
      PuseyChief
      Executive Officer, President, Treasurer and Director
 May
      13, 2010
                By:
                /s/ Jeffrey
      G. McGonegalJeffrey
      G. McGonegalSenior
      Vice President-Finance,
                  Chief
      Financial Officer and Director