<PAGE>

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

                                    FORM 10-QSB

(X)  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
      For the quarterly period ended DECEMBER 31, 1998
( )  TRANSITION REPORT UNDER 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)     

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

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


Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (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

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 February 10, 1999
     Common Stock, $.025 par value                        3,081,407

<PAGE>

                           CAMBRIDGE HOLDINGS, LTD.
                                  FORM 10-QSB

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                          <C>
Part I.  Financial Information.............................................      3

Balance Sheets as of December 31, 1998 and June 30, 1998...................  4 & 5

Statements of Operations for the six month periods ended December 31,
1998 and December 31, 1997.................................................      6

Statements of Cash Flows for the six month periods ended December 31,
1998 and December 31, 1997.................................................      7

Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................   8-11

Part II.  Other Information................................................     11

Signature Page.............................................................     12
</TABLE>


                                    Form 10-QSB
                                    Page 2 of 12
<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                                          
                                    FORM 10-QSB
                                          
                                 DECEMBER 31, 1998
                                          
                                          
                                          
                           PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

The unaudited financial statements reflect all adjustments and contain all
information necessary, in the opinion of management, for a fair presentation of
the financial position and results of operation for the interim periods reported
when these statements are read in conjunction with the notes to financial
statements included in the Registrant's Form 10-KSB for the year ended June 30,
1998.











                                    Form 10-QSB
                                    Page 3 of 12


<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                                   BALANCE SHEET


<TABLE>
<CAPTION>
                                                           DECEMBER 31,      JUNE 30,
                                                               1998            1998
                                                           (Unaudited)
<S>                                                        <C>              <C>
    ASSETS
CURRENT:
  Cash and cash equivalents                                $1,520,939      $1,674,523
  Investment securities - available for sale, net                    
     allowance for potential losses of $102,000               414,640         570,848
  Investment in Partnership                                         -         101,278
  Notes receivable-related party                              835,560         774,303
  Convertible notes receivable                                 36,338          42,500
  Prepaids and other                                           41,520          43,212
  Real estate developments                                    939,199         939,199
  Deferred Income Tax                                          48,000               -
------------------------------------------------------------------------------------- 
Total current assets                                        3,836,196       4,145,863
------------------------------------------------------------------------------------- 
LONG-TERM ASSETS
  Fixed assets                                                 32,192          38,600 
------------------------------------------------------------------------------------- 
                                                           $3,868,388      $4,184,463
------------------------------------------------------------------------------------- 
------------------------------------------------------------------------------------- 
</TABLE>


                                    Form 10-QSB
                                    Page 4 of 12

<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                                   BALANCE SHEET


<TABLE>
<CAPTION>
                                                           DECEMBER 31,     JUNE 30,
                                                              1998            1998
                                                           (Unaudited)
<S>                                                        <C>             <C>
   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accrued liabilities                                         $15,419         $12,393
  Deferred income taxes                                             -           6,054
  Notes Payable                                               668,341         670,789
------------------------------------------------------------------------------------- 
Total current liabilities                                     683,760         689,236
------------------------------------------------------------------------------------- 

STOCKHOLDERS' EQUITY:
  Common Stock - $.025 par value, 15,000,000
  shares authorized: 3,408,400 shares issued and
  outstanding as of December 31, 1998 and
  3,398,400 shares issued and outstanding as
  of June 30, 1998                                             85,211          84,960          
  Additional paid-in capital                                3,180,921       3,177,735
  Retained earnings                                           (24,538)        221,992
  Net unrealized gain (loss) on investment 
     securities available for sale                            (56,966)         10,540
------------------------------------------------------------------------------------- 
Total stockholders' equity                                  3,184,628       3,495,227
------------------------------------------------------------------------------------- 
                                                           $3,868,388      $4,184,463
------------------------------------------------------------------------------------- 
------------------------------------------------------------------------------------- 
</TABLE>
                                          

                                    Form 10-QSB
                                    Page 5 of 12
<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                              STATEMENTS OF OPERATIONS
                                    (unaudited)

<TABLE>
<CAPTION>
                                         THREE MONTHS     THREE MONTHS     SIX MONTHS     SIX MONTHS      
                                             ENDED            ENDED          ENDED          ENDED         
                                         DEC. 31, 1998   DEC. 31, 1997   DEC. 31, 1998   DEC. 31, 1997    
<S>                                      <C>             <C>             <C>             <C>              
REVENUES:
  Gain (loss) on sales of 
    investment securities                     (1,242)         (17,106)          (1,242)       (11,376)   
  Unrealized Gains (losses) on 
     securities held for trading              12,222                -          (28,928)             -    
  Loss on write-down of 
     partnership investment                        -                -         (101,278)             -    
  Interest and dividend income                 7,147           25,233           16,532         55,743    
  Misc. Income                                                      -                               -    
-----------------------------------------------------------------------------------------------------  
Total revenues                                18,127            8,127         (114,916)        44,367    
-----------------------------------------------------------------------------------------------------  
EXPENSES:
  Operating, general, and
  administrative                              67,273           40,071          101,474         76,072   
  Interest                                    15,056           14,422           30,140         25,285   
-----------------------------------------------------------------------------------------------------  
Total expenses                                82,329           54,493          131,614        101,357   
-----------------------------------------------------------------------------------------------------  
NET LOSS                                  $  (64,202)      $  (46,366)      $ (246,530)    $  (56,990)  
OTHER COMPREHENSIVE INCOME,
    NET OF TAX:
  Unrealized holding 
        gains (losses)                        18,689                -          (67,098)             -   
-----------------------------------------------------------------------------------------------------  
COMPREHENSIVE INCOME (LOSS)               $  (45,513)      $  (46,366)      $ (313,628)    $  (56,990)  
-----------------------------------------------------------------------------------------------------  
BASIC AND DILUTED INCOME (LOSS)
    PER COMMON SHARE:                          ($.01)           ($.01)           ($.09)         ($.02)  
-----------------------------------------------------------------------------------------------------  
-----------------------------------------------------------------------------------------------------  
WEIGHTED AVERAGE NUMBER OF 
  COMMON AND COMMON EQUIVALENT
  SHARES OUTSTANDING                       3,370,400        3,398,400        3,359,279      3,398,400  
-----------------------------------------------------------------------------------------------------  
-----------------------------------------------------------------------------------------------------  
</TABLE>

                                    From 10-QSB
                                    Page 6 of 12
<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                        STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                         SIX MONTHS      SIX MONTHS
                                                            ENDED           ENDED
                                                        DEC. 31, 1998   DEC. 31, 1997
<S>                                                     <C>             <C>
OPERATING ACTIVITIES:
  Net income (loss)                                         $(246,530)       $(56,990)
  Adjustment to reconcile net income (loss)
    to cash provided by operating activities:
  Realized (gains) losses on sales of investment 
    securities                                                  1,242          11,376
  Depreciation and amortization                                 6,406               -
  Loss on write-down of investments                           101,278               -
Changes in operating assets and liabilities:                         
      Prepaids and other                                        1,693          85,996
      Accounts payable and accrued liabilities                  3,026            (858)
-------------------------------------------------------------------------------------  
NET CASH PROVIDED BY (USED IN) 
   OPERATING ACTIVITIES                                      (132,885)         39,524
-------------------------------------------------------------------------------------  
INVESTING ACTIVITIES:
  Purchase of land                                                  -        (544,230)
  Purchase of investment securities                           (97,905)       (777,121)
  Proceeds from sales of investment securities                131,311         141,445
  Collections on note receivable                                6,162          57,500
  Purchase of note receivable-related party                   (61,257)       (366,393)
  Purchase of automobile                                            -         (43,657)
  Purchase of fixed assets                                          -          (5,332)
-------------------------------------------------------------------------------------  
NET CASH PROVIDED BY (USED
  IN) INVESTING ACTIVITIES                                    (21,689)     (1,537,788)
-------------------------------------------------------------------------------------  
FINANCING ACTIVITIES:    
  Principal payments on notes payable                          (2,447)         (1,872)
  Proceeds from Note Payable                                        -         675,000
  Proceeds from exercise of stock options                       3,437           3,200
-------------------------------------------------------------------------------------  
Net cash provided by                                              990         676,328
      financing activities
-------------------------------------------------------------------------------------  
DECREASE IN CASH                                             (153,584)       (821,936)
CASH AND CASH EQUIVALENTS,
  beginning of period                                       1,674,523       1,640,216
-------------------------------------------------------------------------------------  
CASH AND CASH EQUIVALENTS,
  end of period                                            $1,520,939        $818,280
-------------------------------------------------------------------------------------  
-------------------------------------------------------------------------------------  
</TABLE>

                                    Form 10-QSB
                                    Page 7 of 12

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

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


LIQUIDITY AND CAPITAL RESOURCES

During the quarter ended December 31, 1998, the Company commenced an offer to
its shareholders to tender shares of the Company's common stock to the Company
at a price of $.45 per Share.  The tender offer was concluded in January 1999. 
The Company purchased 361,370 shares for a total of $162,617 in the tender
offer.  

During the fiscal year ended June 30, 1997, the Company purchased in two
separate transactions from two different unaffiliated sellers of raw land in an
area known as Cordillera Valley Club in Eagle County, Colorado west of Vail. 
Each lot was conveyed to a limited liability company which the Company is a
member with a 50% interest (CVC Lot 2 LLC and CVC Lot 19 LLC).  Each lot has
been developed with a separate luxury residence and is offered for sale.  It is
presently unknown when these properties will be sold or what proceeds will be
realized upon sale.  Due to the delay on sale of these properties, the Company
is likely to incur a loss in these transactions and may be constrained in its
ability to engage in other transactions.

The Company is currently considering other real estate development activities,
as well as other business opportunities. In addition to real property
acquisitions, the Company may consider the possible acquisition of, or merger
with, another business entity, or other type of business transactions.  The
Company does not intend to limit its search to companies in real estate
activities. 

For the six month period ended December 31, 1998, operating activities used cash
of $132,900.  Prepaid expenses decreased by approximately $1,700 in the six
month period ended December 31, 1998.   The Company recorded depreciation on
fixed assets of $6,400.  Accounts payable and accrued liabilities decreased by
$3,000.

The Company wrote-down the value of an investment which was determined to be
worthless for $101,300.  The Company is considering taking legal action to
recover this investment, although no proceedings have started as of the date of
this document.  The prices of the securities held by the Company are often
highly volatile.  In addition, trading in these securities may be thin or there
may be other impediments to, or restrictions on transfer.

                                    Form 10-QSB
                                    Page 8 of 12
<PAGE>

Cash used for investing activities was $21,700 during the six month period ended
December 31, 1998, of which approximately $61,300 was loaned to related parties,
CVC #19 LLC and CVC #2 LLC, and $6,200 was received from the collection of notes
receivable.  

Financing activities during the six month period ended December 31, 1998
provided cash of $1,000 of which $3,400 was generated from the exercise of stock
options net of repurchases and $2,400 of principal payments on notes payable.  

At December 31, 1998, the Company had cash and cash equivalents of $1,521,000
and working capital of $3,152,436.  The Company believes that its working
capital is adequate for its present real estate expenditures as described above.
The Company has no understandings or agreements on any other particular property
or business.  Any such future acquisitions or other business arrangements could
involve substantial expenditures.  Moreover, the Company could incur substantial
expenses in connection with the evaluation of business opportunities.  In its
consideration of potential business opportunities, the Company expects to
consider the potential effect on its liquidity.

NET INCOME (LOSS) PER SHARE

Through June 30, 1998 the Company followed the provisions of Accounting
Principles Board Opinion (APB) No. 15, "Earnings Per Share".  Effective for the
year that will end June 30, 1998, the Company implemented Statement of Financial
Accounting Standards (SFAS) No. 128,  "Earnings Per Share".  SFAS No. 128
provides for the calculation of "Basic" and "Diluted" earnings per share.  Basic
earnings per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period.  Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar to
fully diluted earnings per share.  In loss periods, dilutive common equivalent
shares are excluded as the effect would be anti-dilutive.  Basic and diluted
earnings per share are the same for all periods presented.  

Options to purchase 130,000 shares of common stock were not included in the
compu- tation of diluted EPS because their effect was anti-dilutive for the six
months ended December 31, 1998.  None of the options were exercised as of the
date of this filing.     

NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1,1998, Cambridge Holdings, Ltd. adopted FASB Statement No. 130,
REPORTING COMPREHENSIVE INCOME.  Statement No. 130 requires the reporting of
comprehensive income in addition to net income from operations.  Comprehensive
income 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.


                                    Form 10-QSB
                                    Page 9 of 12
<PAGE>

The Company at the end of the quarter held securities classified as
available-for-sale, which have unrealized losses of $109,376 before tax.  The
before tax and after tax amount for the securities held, as well as the tax
(expense)/benefit of those securities held at December 31, 1998 is presented
below. 

<TABLE>
<CAPTION>
                                                            Tax
                                             Before      (Expense)/     After
                                               Tax         Benefit       Tax
                                               ---         -------       ---  
<S>                                         <C>           <C>         <C>
Six months ended Dec. 31, 1998                 
Unrealized holding losses                   $(109,376)    $ 42,278    $(67,098)
Reclassification adjustment for
  Gains/losses included in net income               -            -           -
                                            ---------     --------    --------  
                                            $(109,376)    $ 42,278    $(67,098)
                                            ---------     --------    --------  
                                            ---------     --------    --------  
</TABLE>


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

In February 1998, the FASB issued SFAS No. 132, "Employer' Disclosures about
adopted Pensions and Other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other postretirement benefits and
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis.  SFAS No. 132 is
effective for years beginning after December 15, 1997 and requires comparative
information for earlier years to be restated, unless such information is not
readily available.  Management believes the adoption of this statement will have
no material impact on the Company's financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
market value.  Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting.  The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows.  SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999.  Management believes
the adoption of this statement will have no material impact on the Company's
financial statements.

                                    Form 10-QSB
                                   Page 10 of 12
<PAGE>

YEAR 2000 COMPLIANCE

The Company has completed a review and risk assessment of all technology items
used in its operations.  The Company believes that the year 2000 problem should
not pose significant operational problems.  The Company's accounting software
program as well as other office software is expected to be upgraded during 1999
to be year 2000 compliant.  The Company estimates that the cost of the upgrades
will be approximately $1,000.  The Company is expected to review the status of
the year 2000 issues with its financial institutions.

RESULTS OF OPERATIONS.

SIX MONTH PERIOD ENDED DECEMBER 31, 1998 COMPARED TO SIX MONTH PERIOD ENDED
DECEMBER 31, 1997

The Company's revenues for the six month period ended December 31, 1998 totaled
approximately $18,100 consisting of interest on temporary cash on hand and other
money market instruments of $7,100, unrealized gains on securities held for
trading of $12,200 offset by losses on sales of investment securities of $1,200.
Revenues for the six month period ended December 31, 1997 totaled approximately
$44,400, which consisted of interest and dividend receipts of $55,700 and
realized losses of $11,400.

During the six month period ended December 31, 1998, the Company incurred a
write-down of investments of $101,300 and a net decrease in the valuation of
bonds and other securities held for trading of $28,928 compared to $0 for the
quarter ended December 31, 1997.  The investment written off during the quarter
was an investment in a partnership that management considers to be worthless.
The decrease in the value of the bonds is directly related to the decline in
market conditions.  Management does not believe that the six month results
of operations are indicative of the expected full-year results as the
partnership write-off is a one-time charge. 

During the six month periods ended December 31, 1998 and December 31, 1997, the
Company incurred operating, general and administrative costs of approximately
$101,474 and $76,072 respectively.  The Company had losses before any income
tax benefit for the six month period ended December 31, 1998 of approximately
$246,530 as compared with $56,990 for the six month period ended December 31,
1997. 

                             PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION

During the quarter ended December 31, 1998, the Company commenced an offer to
its shareholders to tender shares of the Company's common stock to the Company
at a price of $.45 per Share.  The tender offer was concluded in January 1999. 
The Company purchased 361,370 shares for a total of $162,617 in the tender
offer.  


                                    Form 10-QSB
                                   Page 11 of 12

<PAGE>

                              CAMBRIDGE HOLDINGS, LTD.
                                          
                                          
                                          
                                    FORM 10-QSB
                                          
                                 DECEMBER 31, 1998
                                          
                                          
                                          
                                     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.



February 16, 1999                      By: /s/ Gregory Pusey
                                          --------------------------------------
                                          Gregory Pusey
                                          President, Treasurer and Director





                                    Form 10-QSB
                                   Page 12 of 12