**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549








**FORM
      10-QSB**








(Mark
      One)


x
              QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934
 
 For
                the quarterly period endedSeptember
                30, 2005.




o
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                  ACT


For
      the
      transition period from _______________ to
      _______________




Commission
      file number **001-15383**






**CARDINAL
                COMMUNICATIONS,
                INC.**(Exact
                name of small business issuer as specified in its
                charter)







**NEVADA**
            **91-2117796**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)




**390
                INTERLOCKEN CRESCENT, SUITE 900, BROOMFIELD, COLORADO
                80021**(Address
                of principal executive offices)**(303)
                285-5379**(Issuer’s
                telephone number)(Former
                name, former address and former fiscal year, if changed since last
                report)




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
o




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




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**


**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section l2, 13 or 15(d) of the Exchange Act after
      the
      distribution of securities under a plan confirmed by a court. Yes o No
o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date:





As
      of
      November 18, 2005, there were 292,186,611 shares of the issuer’s outstanding
      common stock.




Transitional
      Small Business Disclosure Format (Check one):    Yes o No
x







**Table
        of Contents**




**PART
      I - Financial Information**




**Item
      1.**  **Financial
      Statements**





**CARDINAL
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


(formerly
      known as Usurf America, Inc.)




**FINANCIAL
      STATEMENTS**




**TABLE
      OF CONTENTS**


PAGEConsolidated
                Balance Sheet as of September 30, 2005
                (Unaudited)
            3Consolidated
                Statements of Operations and Comprehensive Loss
                for the three and nine months ended September 30, 2005 and 2004
                (Unaudited)
            5Consolidated
                Statements of Cash Flows for the nine months ended
                September 30, 2005 and 2004 (Unaudited)
            6Notes
                to Consolidated Financial Statements
                (Unaudited)
            14








-2-
 **Table
          of Contents**




CARDINAL
                    COMMUNICATIONS, INC. AND SUBSIDIARIES(formerly
                    known as Usurf America, Inc.)CONSOLIDATED
                    BALANCE SHEETSEPTEMBER
                    30, 2005 (UNAUDITED)
  ASSETSCash
                    and cash equivalents
                
                $
                700,746Marketable
                    securities
                
                $
                38,000Accounts
                    receivable, net
                
                $
                820,631Other
                    receivables
                
                $
                384,826Unamortized
                    financing costs
                
                $
                81,637Deposits
                    and prepaid expenses
                
                $
                783,788Property
                    and equipment, net
                
                $
                3,806,160Real
                    estate and land inventory
                
                $
                44,925,223Intangibles,
                    net
                
                $
                10,097,952Other
                    assets
                
                $
                625,975Total
                    Assets
                
                $
                62,264,938The
                    accompanying notes are an integral part of these
                    statements.








-3-
 **Table
          of Contents**




CARDINAL
                    COMMUNICATIONS, INC. AND SUBSIDIARIES(formerly
                    known as Usurf America, Inc.)CONSOLIDATED
                    BALANCE SHEET (Continued)SEPTEMBER
                    30, 2005 (UNAUDITED)
  LIABILITIES
                        AND STOCKHOLDER'S EQUITY
 Accounts
                        payable
                    
                    $
                    3,210,845Accrued
                        expenses and other liabilities
                    
                    
                    3,379,353Deferred
                        revenue
                    
                    
                    557,031Land
                        and construction loans
                    
                    
                    33,866,367Related
                        party debt
                    
                    
                    4,738,534Notes
                        payable, net of discount
                    
                    
                    9,674,326Total
                        Liabilities
                    
                    
                    55,426,456Commitments
                        and ContingenciesPreferred
                        Stock Committed
                    
                    
                    2,037,750Minority
                        Interest
                    
                    
                    4,194,583Stockholders'
                        equity:Preferred
                        stock; par value $0.0001; issuable in series; authorized
                        100,000,000Series
                        A Convertible Preferred stock; issued and outstanding
                        10,000
                    
                    
                    1Series
                        B Convertible Preferred stock; issued and outstanding
                        100,000
                    
                    
                    10Common
                        stock; par value $0.0001; authorized 800,000,000; issued
                        and outstanding
                        278,797,571
                    
                    
                    27,879Additional
                        paid-in capital
                    
                    
                    69,201,338Deferred
                        consulting
                    
                    
                    -Comprehensive
                        (loss)
                    
                    
                    (41,601
                    )Accumulated
                        deficit
                    
                    
                    (562,000
                    )(68,019,478
                    )Total
                        Stockholders' Equity
                    
                    
                    606,149Total
                        Liabilities and Stockholders' Equity
                    
                    $
                    62,264,938
 The
                      accompanying notes are an integral part of these
                      statements.





-4-
 **Table
          of Contents**


CARDINAL
                    COMMUNICATIONS, INC. AND SUBSIDIARIES(formerly
                    known as Usurf America, Inc.)CONSOLIDATED
                    STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                    (LOSS)THREE
                    AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004(UNAUDITED)
  Three
                      Months Ended September 30,
                  
                  Nine
                      Months Ended September 30,2005
                  
                  2004
                  
                  2005
                  
                  2004REVENUESRevenues
                  
                  $
                  7,037,440
                  
                  $
                  2,638,971
                  
                  $
                  19,888,737
                  
                  $
                  5,098,714Cost
                      of goods sold
                  
                  
                  (5,480,602
                  )
                  
                  (918,791
                  )
                  
                  (12,938,379
                  )
                  
                  (2,471,969
                  )Gross
                      profit
                  
                  
                  1,556,838
                  
                  
                  1,720,180
                  
                  
                  6,950,358
                  
                  
                  2,626,745OPERATING
                      EXPENSESDepreciation
                      and amortization
                  
                  
                  443,151
                  
                  
                  303,674
                  
                  
                  1,162,497
                  
                  
                  717,293Professional
                      fees
                  
                  
                  528,803
                  
                  
                  1,456,136
                  
                  
                  2,692,364
                  
                  
                  4,283,727Rent
                  
                  
                  158,184
                  
                  
                  23,043
                  
                  
                  344,411
                  
                  
                  95,001Salaries
                      and commissions
                  
                  
                  1,921,117
                  
                  
                  467,475
                  
                  
                  4,554,890
                  
                  
                  1,030,871Selling,
                      general and administrative
                  
                  
                  1,152,812
                  
                  
                  1,401,954
                  
                  
                  3,189,635
                  
                  
                  2,993,418Total
                      operating expenses
                  
                  
                  4,204,067
                  
                  
                  3,652,281
                  
                  
                  11,943,797
                  
                  
                  9,120,309(LOSS)
                      FROM OPERATIONS
                  
                  
                  (2,647,229
                  )
                  
                  (1,932,102
                  )
                  
                  (4,993,439
                  )
                  
                  (6,493,565
                  )OTHER
                      INCOME (EXPENSE)Other
                      income (expense)
                  
                  
                  576
                  
                  
                  (30,666
                  )
                  
                  (28,854
                  )
                  
                  (55,112
                  )Accretion
                      of interest (expense) on convertible debt
                  
                  
                  (207,670
                  )
                  
                  (206,011
                  )
                  
                  (580,431
                  )
                  
                  (990,036
                  )Litigation
                      settlement
                  
                  
                  (351,801
                  )
                  
                  0
                  
                  
                  (351,801
                  )
                  
                  0Failed
                      Acquisition Costs
                  
                  
                  0
                  
                  
                  (3,273,258
                  )
                  
                  0
                  
                  
                  (3,273,258
                  )Loss
                      on Debt Modification
                  
                  
                  0
                  
                  
                  (1,568,688
                  )
                  
                  0
                  
                  
                  (1,568,688
                  )Gain
                      (loss) on disposition of assets
                  
                  
                  0
                  
                  
                  75,613
                  
                  
                  (25,764
                  )
                  
                  75,613Interest
                      (expense)
                  
                  
                  (264,984
                  )
                  
                  (80,425
                  )
                  
                  (694,430
                  )
                  
                  (143,494
                  )Total
                      other (expense)
                  
                  
                  (823,879
                  )
                  
                  (5,083,434
                  )
                  
                  (1,681,280
                  )
                  
                  (5,954,974
                  )(LOSS)
                      BEFORE MINORITY INTEREST
                  
                  
                  (3,471,108
                  )
                  
                  (7,015,536
                  )
                  
                  (6,674,719
                  )
                  
                  (12,448,539
                  )(Income)
                      loss attributable to minority interest
                  
                  
                  30,925
                  
                  
                  0
                  
                  
                  (180,065
                  )
                  
                  0NET
                      (LOSS) before imputed dividend
                  
                  
                  (3,440,183
                  )
                  
                  (7,015,536
                  )
                  
                  (6,854,784
                  )
                  
                  (12,448,539
                  )Imputed
                      Dividend
                  
                  
                  0
                  
                  
                  (850,000
                  )
                  
                  0
                  
                  
                  (850,000
                  )NET
                      (LOSS) before comprehensive loss
                  
                  
                  (3,440,183
                  )
                  
                  (7,865,536
                  )
                  
                  (6,854,784
                  )
                  
                  (13,298,539
                  )OTHER
                      COMPREHENSIVE (LOSS) - unrealized holding (loss)
                  
                  
                  (10,800
                  )
                  
                  0
                  
                  
                  (562,000
                  )
                  
                  0COMPREHENSIVE
                      (LOSS)
                  
                  $
                  (3,450,983
                  )
                  $
                  (7,865,536
                  )
                  $
                  (7,416,784
                  )
                  $
                  (13,298,539
                  )Net
                      (loss) per common share
                  
                  $
                  (0.0132
                  )
                  $
                  (0.0448
                  )
                  $
                  (0.0282
                  )
                  $
                  (0.0853
                  )Weighted
                      average number of shares outstanding
                  
                  
                  260,556,939
                  
                  
                  175,491,835
                  
                  
                  243,349,435
                  
                  
                  155,878,255
  The
                      accompanying notes are an integral part of these
                      statements.





-5-
 **Table
          of Contents**




CARDINAL
                    COMMUNICATIONS, INC. AND SUBSIDIARIES(formerly
                    known as Usurf America, Inc.)CONSOLIDATED
                    STATEMENTS OF CASH FLOWS(Unaudited)
  Nine
                      Months Ended September 30,2005
                  
                  2004CASH
                      FLOWS FROM (TO) OPERATING ACTIVITIESNet
                      (loss) before minority interest
                  
                  $
                  (6,674,719
                  )
                  $
                  (12,448,539
                  )Adjustments
                      to reconcile net (loss) to net cash provided by (used) in operating
                      activities:Depreciation
                      and amortization
                  
                  
                  1,162,497
                  
                  
                  717,293Stock
                      issued for consulting, fees and compensation
                  
                  
                  3,412,444
                  
                  
                  4,249,930Stock
                      options issued for consulting services
                  
                  
                  18,375
                  
                  
                  0Accretion
                      of interest expense on convertible debt
                  
                  
                  580,431
                  
                  
                  990,036Loss
                      on debt modification
                  
                  
                  0
                  
                  
                  1,568,688Failed
                      acquisition costs
                  
                  
                  0
                  
                  
                  1,830,000Non
                      cash change in Minority Interest
                  
                  
                  264,374
                  
                  
                  0(Gain)
                      Loss on sale of assets
                  
                  
                  25,764
                  
                  
                  (99,847
                  )Changes
                      in Operating Assets and Liabilities:Accounts
                      receivable
                  
                  
                  (7,249
                  )
                  
                  (104,502
                  )Financing
                      costs
                  
                  
                  292,741
                  
                  
                  0Accounts
                      payable
                  
                  
                  1,128,246
                  
                  
                  287,514Accrued
                      expenses and other liabilities
                  
                  
                  2,064,680
                  
                  
                  66,835Deferred
                      revenue
                  
                  
                  309,981
                  
                  
                  198,312Other
                      assets and liabilities
                  
                  
                  (461,973
                  )
                  
                  (445,783
                  )Real
                      estate and land inventory
                  
                  
                  (7,652,027
                  )
                  
                  0Net
                      cash (used in) operating activities
                  
                  
                  (5,536,435
                  )
                  
                  (3,190,063
                  )CASH
                      FLOWS FROM (TO) INVESTING ACTIVITIESPurchases
                      of property and equipment
                  
                  
                  (194,711
                  )
                  
                  (709,412
                  )Cash
                      paid for acquisitions
                  
                  
                  (294,765
                  )
                  
                  (1,045,000
                  )Purchases
                      of intangibles & other assets
                  
                  
                  0
                  
                  
                  (1,319,028
                  )Cash
                      acquired through acquisition
                  
                  
                  1,352,147
                  
                  
                  0Proceeds
                      from sale of assets
                  
                  
                  9,284
                  
                  
                  0Net
                      cash provided by (used in) investing activities
                  
                  
                  871,955
                  
                  
                  (3,073,440
                  )CASH
                      FLOWS FROM (TO) FINANCING ACTIVITIESProceeds
                      from notes payable
                  
                  
                  20,730,438
                  
                  
                  4,963,000Proceeds
                      from related party notes payable
                  
                  
                  732,215
                  
                  
                  0Payments
                      on notes payable
                  
                  
                  (16,872,384
                  )
                  
                  (111,300
                  )Collections
                      on subscriptions receivable
                  
                  
                  44,585
                  
                  
                  0Issuance
                      of common stock for cash
                  
                  
                  0
                  
                  
                  1,600,000Net
                      cash provided by (used in) financing activities
                  
                  
                  4,634,854
                  
                  
                  6,451,700Net
                      increase (decrease) in cash
                  
                  
                  (29,626
                  )
                  
                  188,197Cash
                      and cash equivalents, beginning of period
                  
                  
                  730,372
                  
                  
                  72,597Cash
                      and cash equivalents, end of period
                  
                  $
                  700,746
                  
                  $
                  260,794SUPPLEMENTAL
                      DISCLOSURE OF CASH FLOW INFORMATIONCash
                      paid for interest
                  
                  $
                  360,821
                  
                  $
                  3,019Stock
                      issued for acquisition of assets
                  
                  $
                  5,705,000
                  
                  $
                  2,656,999Stock
                      issued for forgiveness of debt
                  
                  $
                  471,538
                  
                  $
                  0
  The
                      accompanying notes are an integral part of these
                      statements.




-6-
 **Table
          of Contents**




**SUPPLEMENTAL
      DISCLOSURE****OF
      NON-CASH INVESTING AND****OTHER
      CASH FLOW INFORMATION**





**Nine
      Months Ended September 30, 2005**





In
      January 2005, we issued 1,250,000 shares under a consulting agreement, which
      shares were valued at $105,000.00.





In
      January 2005, we issued 3,077,809 shares under a consulting agreement, which
      shares were valued at $249,303.00.





In
      January 2005, we issued 1,423,550 shares under a consulting agreement, which
      shares were valued at $121,714.00.





In
      February 2005, we issued 1,508,100 shares under a consulting agreement, which
      shares were valued at $135,729.00.





In
      February 2005, we issued 2,265,000 shares under a consulting agreement, which
      shares were valued at $191,393.00.





In
      March
      2005, we issued 1,756,000 shares under a consulting agreement, which shares
      were
      valued at $156,284.00.





In
      March
      2005, we issued 2,376,500 shares under a consulting agreement, which shares
      were
      valued at $201,290.00.





In
      April
      2005, we issued 6,156,500 shares under a consulting agreement, which shares
      were
      valued at $437,112.00.





In
      April
      2005, we issued 950,000 shares under a consulting agreement, which shares were
      valued at $58,425.00.





In
      May
      2005, we issued 1,300,000 shares under a consulting agreement, which shares
      were
      valued at $74,750.00.





In
      May
      2005, we issued 800,000 shares under a consulting agreement, which shares were
      valued at $36,000.00.





In
      June
      2005, we issued 275,000 shares under a consulting agreement, which shares were
      valued at $18,013.00.





In
      June
      2005, we issued 275,000 shares under a consulting agreement, which shares were
      valued at $18,013.00.





In
      June
      2005, we issued 4,166,667 shares under a consulting agreement, which shares
      were
      valued at $245,833.00.





In
      June
      2005, we issued 3,264,000 shares under a consulting agreement, which shares
      were
      valued at $174,624.00.





In
      June
      2005, we issued 61,820 shares to an employee through an employee stock purchase
      plan, which shares were valued at $3,740.00.





In
      June
      2005, we issued 39,125 shares to an employee through an employee stock purchase
      plan, which shares were valued at $2,367.00.




-7-
 **Table
          of Contents**





In
      June
      2005, we issued 18,520 shares to an employee through an employee stock purchase
      plan, which shares were valued at $1,120.00.





In
      June
      2005, we issued 46,300 shares to an employee through an employee stock purchase
      plan, which shares were valued at $2,801.00.





In
      June
      2005, we issued 3,705 shares to an employee through an employee stock purchase
      plan, which shares were valued at $224.00.





In
      June
      2005, we issued 474,830 shares to an employee through an employee stock purchase
      plan, which shares were valued at $28,727.00.





In
      June
      2005, we issued 37,040 shares to an employee through an employee stock purchase
      plan, which shares were valued at $2,241.00.





In
      June
      2005, we issued 48,415 shares to an employee through an employee stock purchase
      plan, which shares were valued at $2,929.00.





In
      June
      2005, we issued 89,730 shares to an employee through an employee stock purchase
      plan, which shares were valued at $5,429.00.





In
      June
      2005, we issued 37,040 shares to an employee through an employee stock purchase
      plan, which shares were valued at $2,241.00.





In
      June
      2005, we issued 91,800 shares to an employee through an employee stock purchase
      plan, which shares were valued at $4,911.00.





In
      June
      2005, we issued 82,600 shares to an employee through an employee stock purchase
      plan, which shares were valued at $4,419.00.





In
      June
      2005, we issued 111,700 shares to an employee through an employee stock purchase
      plan, which shares were valued at $5,976.00.





In
      July
      2005, we issued 121,212, shares under a consulting agreement, which shares
      were
      valued at $6,970.00.





In
      July
      2005, we issued 121,212, shares under a consulting agreement, which shares
      were
      valued at $6,970.00.





In
      July
      2005, we issued 625,000, shares under a consulting agreement, which shares
      were
      valued at $35,938.00.





In
      July
      2005, we issued 209,920 shares to an employee through an employee stock purchase
      plan, which shares were valued at $10,000.00.





In
      July
      2005, we issued 104,250 shares to an employee through an employee stock purchase
      plan, which shares were valued at $5,525.00.





In
      July
      2005, we issued 77,135 shares to an employee through an employee stock purchase
      plan, which shares were valued at $4,088.00.





In
      July
      2005, we issued 101,360 shares to an employee through an employee stock purchase
      plan, which shares were valued at $5,372.00.




-8-
 **Table
          of Contents**





In
      July
      2005, we issued 86,860 shares to an employee through an employee stock purchase
      plan, which shares were valued at $4,604.00.





In
      September 2005, we issued 900,000, shares under a consulting agreement, which
      shares were valued at $36,900.00.





In
      September 2005, we issued 95,138 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $3,901.00.





In
      September 2005, we issued 57,436 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $2,355.00.





In
      September 2005, we issued 138,042 shares to an employee through an employee
      stock purchase plan, which shares were valued at $5,660.00.





In
      September 2005, we issued 11,756 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $482.00.





In
      September 2005, we issued 14,246 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $584.00.





In
      September 2005, we issued 184,942 shares to an employee through an employee
      stock purchase plan, which shares were valued at $7,583.00.





In
      September 2005, we issued 82,679 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $3,175.00.





In
      September 2005, we issued 82,679 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $3,183.00.





In
      September 2005, we issued 82,679 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $3,183.00.





In
      September 2005, we issued 86,599 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $3,334.00.





In
      September 2005, we issued 2,584 shares to an employee through an employee stock
      purchase plan, which shares were valued at $100.00.





In
      September 2005, we issued 2,584 shares to an employee through an employee stock
      purchase plan, which shares were valued at $100.00.





In
      September 2005, we issued 52,673 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $2,028.00.





In
      September 2005, we issued 51,184 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $1,971.00.





In
      September 2005, we issued 72,658 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $2,797.00.





In
      September 2005, we issued 70,053 shares to an employee through an employee
      stock
      purchase plan, which shares were valued at $2,697.00.




-9-
 **Table
          of Contents**





**Nine
      Months Ended September 30, 2004**





In
      January 2004, the Company issued 57,550 shares under a consulting agreement,
      which shares were valued at $13,812.00.





In
      January 2004, the Company issued 55,380 shares under a consulting agreement,
      which shares were valued at $13,291.00.





In
      January 2004, the Company issued 28,000 shares under a consulting agreement,
      which shares were valued at $7,840.00.





In
      January 2004, the Company issued 246,000 shares under a consulting agreement,
      which shares were valued at $59,040.00.





In
      January 2004, the Company issued 130,000 shares under a consulting agreement,
      which shares were valued at $24,000.00.





In
      January 2004, the Company issued 273,000 shares under a consulting agreement,
      which shares were valued at $65,520.00.





In
      January 2004, the Company issued 320,000 shares under a consulting agreement,
      which shares were valued at $76,800.00.





In
      January 2004, the Company issued 300,000 shares under a consulting agreement,
      which shares were valued at $72,000.00.





In
      January 2004, the Company issued 175,000 shares under a consulting agreement,
      which shares were valued at $43,750.00.





In
      January 2004, the Company issued 61,000 shares under a consulting agreement,
      which shares were valued at $14,640.00.





In
      January 2004, the Company issued 61,000 shares under a consulting agreement,
      which shares were valued at $14,640.00.





In
      January 2004, the Company issued 612,350 shares under a consulting agreement,
      which shares were valued at $89,490.00.





In
      January 2004, the Company issued 66,500 shares under a consulting agreement,
      which shares were valued at $11,280.00.





In
      January 2004, the Company issued 134,000 shares to a new employee as an
      inducement to employment, which shares were valued at $36,180.00.





In
      February 2004, the Company issued 49,150 shares under a consulting agreement,
      which shares were valued at $13,762.00.





In
      February 2004, the Company issued 34,000 shares under a consulting agreement,
      which shares were valued at $9,520.00.





In
      February 2004, the Company issued 25,000 shares under a consulting agreement,
      which shares were valued at $7,000.00.





In
      February 2004, the Company issued 81,600 shares under a consulting agreement,
      which shares were valued at $22,848.00.




-10-
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          of Contents**





In
      February 2004, the Company issued 73,500 shares under a consulting agreement,
      which shares were valued at $20,580.00.





In
      February 2004, the Company issued 75,000 shares to an employee as compensation
      for services rendered, which shares were valued at $5,250.00.





In
      February 2004, the Company issued 50,000 shares to an employee as compensation
      for services rendered, which shares were valued at $11,000.00.





In
      February 2004, the Company issued 60,000 shares to an employee as compensation
      for services rendered, which shares were valued at $9,600.00.





In
      February 2004, the Company issued 250,000 shares under a one-year consulting
      agreement for services rendered during 2003, which shares were valued at
      $17,500.00.





In
      February 2004, the Company issued 300,000 shares under a one-year consulting
      agreement for services rendered during 2004, which shares were valued at
      $72,000.00.





In
      February 2004, the Company issued 600,000 shares as full payment of principal
      and accrued interest under a promissory note, which shares were valued at
      $96,000.00.





In
      February 2004, the Company issued 1,514,500 shares to a new employee as an
      inducement to employment, which shares were valued at $302,900.00.





In
      February 2004, the Company issued 1,514,500 shares to a new employee as an
      inducement to employment, which shares were valued at $302,900.00.





In
      February 2004, the Company issued 160,000 shares to a new employee as an
      inducement to employment, which shares were valued at $32,000.00.





In
      February 2004, the Company issued 120,000 shares to a new employee as an
      inducement to employment, which shares were valued at $24,000.00.





In
      February 2004, the Company issued 120,000 shares to a new employee as an
      inducement to employment, which shares were valued at $24,000.00.





In
      February 2004, the Company issued 200,000 shares to a new employee as an
      inducement to employment, which shares were valued at $40,000.00.





In
      February 2004, the Company issued 431,818 shares to acquire certain assets,
      which shares were valued at $95,000.00.





In
      February 2004, the Company issued 1,188,679 shares to acquire certain assets,
      which shares were valued at $199,698.00.





In
      February 2004, the Company issued 282,031 shares to acquire certain assets,
      which shares were valued at $47,381.00.





In
      February 2004, the Company issued 39,189 shares to acquire certain assets,
      which
      shares were valued at $6,584.00.





In
      February 2004, the Company issued 849,786 shares to acquire certain assets,
      which shares were valued at $142,764.00.





In
      February 2004, the Company issued 494,482 shares to acquire certain assets,
      which shares were valued at $83,073.00.




-11-
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In
      March
      2004, the Company issued 50,000 shares to a vendor as payment for services
      rendered or to be rendered, which shares were valued at $3,000.00.





In
      April
      2004, the Company issued 1,333,334 shares to obtain exclusive licensing rights
      in certain intellectual property, which shares were valued at
      $200,000.00.





In
      April
      2004, the Company issued 14,250,000 shares to acquire a business, which shares
      were valued at $1,425,000.00.





In
      April
      2004, the Company issued 450,000 shares to an employee as compensation for
      services rendered, which shares were valued at $27,000.00.





In
      April
      2004, the Company issued 375,000 shares to an employee as compensation for
      services rendered, which shares were valued at $22,500.00.





In
      April
      2004, the Company issued 250,000 shares to a former employee as compensation
      for
      services rendered, which shares were valued at $15,000.00.





In
      April
      2004, the Company issued 125,000 shares to an employee as compensation for
      services rendered, which shares were valued at $7,500.00.





In
      April
      2004, the Company issued 175,000 shares to an employee as compensation for
      services rendered, which shares were valued at $10,500.00.





In
      April
      2004, the Company issued 1,250,000 shares to acquire a business, which shares
      were valued at $90,000.00.





In
      May
      2004, the Company issued 1,000,000 shares under a consulting agreement for
      services to be rendered during 2004, which shares were valued at
      $120,000.00.





In
      May
      2004, the Company issued 1,000,000 shares to a new employee as an inducement
      to
      employment, which shares were valued at $100,000.00.





In
      May
      2004, the Company issued 1,000,000 shares to a new employee as an inducement
      to
      employment, which shares were valued at $100,000.00.





In
      May
      2004, the Company issued 1,000,000 shares to a new employee as an inducement
      to
      employment, which shares were valued at $100,000.00.





In
      May
      2004, the Company issued 400,000 shares to an employee as compensation for
      services rendered, which shares were valued at $40,000.00.





In
      May
      2004, the Company issued 50,000 shares for professional services to be rendered
      during 2004, which shares were valued at $5,000.00.





In
      May
      2004, the Company issued 625,000 shares for consulting services rendered in
      connection with a business acquisition, which shares were valued at
      $75,000.00.





In
      June
      2004, the Company issued 122,000 shares to a vendor as payment for services
      rendered or to be rendered, which shares were valued at $12,200.00.





In
      June
      2004, the Company issued 475,000 shares for consulting services rendered in
      connection with a financing transaction, which shares were valued at
      $47,500.00.




-12-
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In
      June
      2004, the Company issued 250,000 shares for consulting services rendered in
      connection with a financing transaction, which shares were valued at
      $25,000.00.





In
      June
      2004, the Company issued 275,000 shares for consulting services rendered in
      connection with a financing transaction, which shares were valued at
      $27,500.00.





In
      June
      2004, the Company issued 100,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $10,000.00.





In
      June
      2004, the Company issued 25,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $2,500.00.





In
      June
      2004, the Company issued 15,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $1,500.00.





In
      June
      2004, the Company issued 50,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $5,000.00.





In
      June
      2004, the Company issued 15,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $1,500.00.





In
      June
      2004, the Company issued 15,000 shares to an employee as bonus compensation
      for
      services rendered in 2003, which shares were valued at $1,500.00.





In
      June
      2004, the Company issued 600,000 shares for professional services to be rendered
      during 2004, which shares were valued at $60,000.00.





In
      June
      2004, the Company issued 950,000 shares for consulting services rendered in
      connection with a business acquisition, which shares were valued at
      $95,000.00.





In
      June
      2004, the Company issued 750,000 shares for consulting services rendered in
      connection with a business acquisition, which shares were valued at
      $75,000.00.





In
      June
      2004, the Company issued 2,000,000 shares under a consulting agreement for
      services to be rendered during 2004, which shares were valued at
      $200,000.00.





In
      June
      2004, the Company issued 250,000 shares for consulting services rendered in
      connection with a business acquisition, which shares were valued at
      $25,000.00.





In
      June
      2004, the Company issued 154,000 shares for consulting services rendered in
      connection with a business acquisition, which shares were valued at
      $15,030.00.





In
      June
      2004, the Company issued 175,000 shares to a vendor for services to be rendered
      during the next twelve months, which shares were valued at
      $17,500.00.





In
      June
      2004, the Company issued 175,000 shares to a vendor for services to be rendered
      during the next twelve months, which shares were valued at
      $17,500.00.





In
      June
      2004, the Company issued 280,000 shares to an employee as compensation for
      services rendered during the first half of 2004, which shares were valued at
      $21,000.00.





In
      June
      2004, the Company issued 480,000 shares to an employee as compensation for
      services rendered during the first half of 2004, which shares were valued at
      $36,000.00.





In
      June
      2004, the Company issued 200,000 shares to an employee as compensation for
      services rendered during the fourth quarter of 2003 and the first quarter of
      2004, which shares were valued at $40,000.00.




In
      July
      2004, the Company issued 80,000 shares for consulting services, which shares
      were valued at $5,600.





In
      September 2004, the Company issued 75,000 shares for consulting services, which
      shares were valued at $13,500.





In
      September 2004, the Company issued 2,200,000 shares for consulting services,
      which shares were valued at $132,000.





In
      September 2004, the Company issued 1,200,000 shares for consulting services,
      which shares were valued at $72,000.





-13-
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          of Contents**





**CARDINAL
      COMMUNICATIONS, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**


**(UNAUDITED)**








**Note
      1. Interim Consolidated Financial Statements**





In
      the
      opinion of management, the accompanying consolidated financial statements as
      of
      September 30, 2005 and for the nine months ended September 30, 2005 and 2004,
      reflect all adjustments (consisting only of normal recurring adjustments)
      necessary to present fairly the financial condition, results of operations
      and
      cash flows of Cardinal Communications, Inc. and subsidiaries (“Company”), and
      include the accounts of the Company and all of its subsidiaries.




The
      financial statements included herein have been prepared by the Company, without
      audit, pursuant to the rules and regulations of the Securities and Exchange
      Commission (“SEC”). Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with generally accepted
      accounting principles in the United States have been condensed or omitted
      pursuant to such rules and regulations. These unaudited financial statements
      should be read in conjunction with the financial statements and notes thereto
      included in the Company’s Annual Report on Form 10-KSB/A for the year ended
      December 31, 2004 filed with the SEC on April 6, 2005 and the current report
      filed on Form 8-K/A with the SEC on August 4, 2005. Certain reclassifications
      and adjustments may have been made to the categories presented in the financial
      statements for the comparative period of the prior fiscal year to conform to
      the
      2005 presentation. The results of operations for the interim periods are not
      necessarily indicative of the results to be obtained for the entire
      year.





**Note
      2. Critical Accounting Policies**





The
      Company continues to implement and expand its business plan as a provider of
      enhanced telephone (voice) services, cable television (video) and Internet
      (data) services to business and residential customers. Since the completion
      of
      the acquisition of Sovereign Partners, LLC in February 2005, the Company also
      offers integrated construction and construction management services, as well
      as
      broadband communications design, implementation, and operations services to
      other large developers and municipalities seeking to deploy broadband services.





**Principles
      of Consolidation**




The
      accompanying consolidated financial statements include all of the accounts
      of the
      Company and all
      majority owned and/or controlled subsidiaries. At September 30, 2005 the Company
      has recorded minority interest of $4,194,583 representing third party ownership
      of the entities not wholly owned by the Company. Sovereign Partners, LLC a
      wholly owned subsidiary of the Company consolidates all operations of its
      subsidiaries due to a controlling financial interest or a controlling management
      interest in these subsidiaries. Currently the company is formally dissolving
      Usurf Communications, Inc., Usurf TV, Inc. and Heritage Condominiums, LLC.
      As
      the Company finalizes construction projects, certain other entities will be
      dissolved in 2005.





The
      equity method of accounting is used for affiliated entities over which the
      Company has significant influence; generally this represents partnership equity
      of at least 20% and not more than 50%. Under the equity method of accounting,
      the Company recognizes its pro rata share of the profits and losses of these
      entities.




The
      cost
      method of accounting is used for investments in which the Company has less
      than
      a 20% ownership interest and does not have the ability to exercise significant
      influence.





Inter-company
      transactions and balances have been eliminated in the
      consolidation.




**Segment
        Information**
 
 The
        Company has two reportable segments: communications services and real
        estate activities. Communications services include individual, voice, video
        and
        data services as well as various combinations of bundled packages of these
        communications services. Real estate activities includes sales of residential
        single family units, rental from commercial properties and fees from mortgage
        operations.
 
 The
        accounting policies of the segments are the same as those described in the
        summary of critical accounting policies. The Company's business
        is
        conducted through separate legal entities. Each entity is managed separately
        as
        each business has a distinct customer base and requires different strategic
        and
        marketing efforts. The following table reflects the income statement and
        balance
        sheet information for each of the reporting segments:
 
  **Real
                  Estate**
              
              **Communications**
              
              **Total**Revenue
              
              $
              13,333,384
              
              $
              6,555,353
              
              $
              19,888,737Net
                Income (Loss)
              
              
              431,834
              
              
              (7,286,618
              )
              
              (6,854,784
              )Interest
                (Expense)
              
              
              (211,305
              )
              
              (483,125
              )
              
              (694,430
              )Depreciation
                and Amortization
              
              
              276,867
              
              
              885,630
              
              
              1,162,497Assets
              
              
              46,608,169
              
              
              15,656,769
              
              
              62,264,938
  **Stock-Based
      Compensation**




Transactions
      in equity instruments with non-employees for goods or services are accounted
      for
      on the fair value method, as described in SFAS No. 123  *Accounting
      for Stock-Based Compensation* .
      No
      options have been granted to employees, officers or directors during
      2005.




-14-
 **Table
          of Contents**




**Stock
      for Services**




The
      Company has issued stock pursuant to various consulting agreements. Deferred
      consulting costs which are valued at the stock price on the date of a particular
      agreement or the value of services, are recorded as a reduction of stockholders’
      equity and are amortized over the useful lives of the respective
      agreements .




**Revenue
      Recognition**




The
      Company charges video and data customers monthly service fees and recognizes
      the
      revenue in the month the services are provided or equipment is sold. The Company
      bills monthly for voice (telephone) services in advance and generally receives
      payments during the month in which the services are provided. To the extent
      that
      revenue is received, but not earned, the Company records these amounts as
      deferred revenue.





The
      Company recognizes revenue from the sale of real estate when cash is received,
      title possession and other attributes of ownership have been transferred to
      the
      buyer and the Company is not obligated to perform significant additional
      services after sale and delivery. During construction, all direct material
      and
      labor costs and those indirect costs related to acquisition and construction
      are
      capitalized, and all customer deposits are treated as liabilities. Capitalized
      costs are charged to earnings upon revenue recognition. Costs incurred in
      connection with completed homes and selling, general and administrative costs
      are charged to expense as incurred.





For
      the
      mortgage brokerage operations, the Company only acts as an agent to place
      mortgages with third parties. The Company recognizes revenue on fees received
      from the mortgage lenders on the day the loan is closed, which is also the
      day
      the Company receives payment. The Company receives a percentage of the loan
      closing by the third party sponsor based on the interest rate charged to the
      consumer. The Company also recognizes loan origination fees from borrowers.





The
      Company recognizes revenue from non-development construction consulting service
      activities when performed and there are no remaining service
      obligations.





**Real
      Estate and Land Inventory**





Inventories,
      consisting of single and multi family residential units and commercial projects,
      are stated at the lower of accumulated cost or net realizable value. Inventories
      under development or held for development are stated at accumulated cost, unless
      certain facts indicate such cost would not be recovered from the cash flows
      generated by future disposition. In this instance, such inventories are measured
      at fair value.





Sold
      units are expensed on a specific identification basis. Under the specific
      identification basis, cost of sales includes the construction cost of the unit,
      an average lot cost by project based on land acquisition and development costs,
      and closing costs and commissions. Construction related overhead and salaries
      are also capitalized and allocated proportionately to projects being developed.
      Construction cost of the unit includes amounts paid through the closing date
      of
      the unit.





Major
      components of inventory at September 30, 2005 were:


Residential/Commercial
                units under construction
            
            $
            21,407,365Land
                under development
            
            
            23,517,858Total
                real estate and land inventory
            
            $
            44,925,223





-15-
 **Table
          of Contents**




**Bad
      Debt**





The
      Company estimates the amount of uncollectible accounts receivable and records
      an
      allowance for bad debt. Uncollectible accounts receivable are then charged
      against this allowance.





**Goodwill**





Goodwill
      was recorded at its purchase price and is not being amortized. Pursuant to
      SFAS
      142 *Goodwill
      and Other Intangible Assets* and SFAS
      144 *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,
      the
      Company at December 31, 2004 evaluated its goodwill for impairment and
      determined the fair value of its goodwill exceeded the book cost. In 2005,
      $6,966,257 has been recorded as goodwill in relation to the acquisition of
      Sovereign Partners LLC. See Note 5. Acquisitions below.





**Intangibles**





Classification
      of intangible assets and accumulated amortization at September 30, 2005 were
      as
      follows:


DescriptionRight
                of entry agreements
            
            $
            95,000Customer
                base
            
            
            1,955,084Goodwill
            
            
            8,787,081Totals
            
            
            10,837,165Accumulated
                amortization
            
            
            (739,213
            )Intangibles,
                net
            
            $
            10,097,952





For
      the
      nine months ended September 30, 2005, the Company recognized $638,831 of
      amortization expense.


In
      September 2005, the company decided to not extend its contracts available under
      the 2002 Neighborlync purchase and subsequently wrote off $166,835 of
      unamortized intangibles related to the initial Neighborlync
      purchase.





**Loss
      Per Common Share**





The
      loss
      per common share is presented in accordance with the provisions of SFAS No.
      128 *Earnings
      Per Share* .
      Basic
      loss per common share has been computed by dividing the net loss available
      to
      the common stockholder by the weighted average number of shares of common stock
      outstanding for the period. The effect of considering all potential dilutive
      securities is not presented as the effects would be anti-dilutive.





**Marketable
      Securities and Comprehensive Loss**





In
      May
      2004, the Company sold Children's Technology Group, Inc., d/b/a MomsandDads,
      to
      ZKID Network Company (OTCBB: ZKID). The terms of the sale provided for ZKID
      to
      pay the Company $600,000 in stock consideration (the "Purchase Price'). At
      closing the Company received 4,000,000 shares of ZKID common stock valued at
      $0.15 per share. The terms of the purchase and sale agreement provided that
      if
      the shares issued to the Company do not have a market value of at least
      $600,000, then ZKID would issue additional shares to the Company for the
      difference. At this time there is substantial doubt that Zkid Network will
      be
      able to fully satisfy the terms of this agreement and therefore the Company
      is
      recording the unrealized loss on ZKID’s stock as comprehensive loss. At
      September 30, 2005 the market value of the 4,000,000 shares was $38,000 and
      therefore the Company has recorded a $562,000 comprehensive loss.





**Note
      3. Stock, Option and Warrant Issuances**





During
      the nine months ended September 30, 2005, the Company issued options, warrants
      and shares of common stock and Convertible Series B Preferred stock, as
      follows:





500,000
      options with an option price of $0.07 and expire in 2010 in exchange for
      consulting services;




-16-
 **Table
          of Contents**





1,666,666
      warrants with a strike price of $0.07 and expire in 2010 related to a
      note;





35,000,000
      shares of common stock to acquire various businesses or business
      assets;





45,623,313
      shares of common stock in exchange for consulting, compensation and other
      services;





9,671,667
      shares of common stock in exchange for debt forgiveness;





2,727,403
      shares of common stock for employee compensation; and





100,000
      shares of convertible Series B Preferred Stock to acquire various business
      or
      business assets. Each share of convertible Series B Preferred Stock is
      convertible into 100 shares of common stock.





**Note
      4. Financing Transactions**





**Senior
      Secured Debt**





The
      Company and Evergreen Venture Partners, LLC (“Evergreen”) entered into a
      Surrender and Exchange Agreement effective as of February 18, 2005, the Closing
      date of the acquisition of Sovereign. Under the terms of the Surrender and
      Exchange Agreement, Evergreen surrendered 17,000,000 shares of the Company’s
      common stock owned by it (the “Surrendered Shares”). Evergreen also surrendered
      warrants to purchase 15,316,667 shares of common stock (the “Surrendered
      Warrants”). The Surrendered Shares and the Surrendered Warrants have been
      canceled and are of no further force or effect. In consideration of the
      Surrendered Shares and Surrendered Warrants, the Company issued to Evergreen
      a
      new promissory note in the principal amount of $750,000 (the “Note”). The Note
      provides for the lump sum payment of the principal amount of the Note on July
      1,
      2006. However, should the trading price of the Company’s common stock be greater
      than $0.21 per share for a consecutive thirty day period, the Note shall
      terminate and the Company will have no further obligation to Evergreen under
      the
      Note.





Additionally,
      in February 2005 the Company modified the terms of its 2004 private placement
      agreements with Crestview Capital Master Fund, LLC (Crestview”) and other
      affiliates of Crestview totaling $4,420,000 (the “Modification”) such that a
      maximum of 40,000,000 shares are to be issued upon conversion of the debentures
      and the warrants issued in connection with the private placements to purchase
      an
      aggregate of 31,626,372 shares of common stock were surrendered and canceled.
      If
      the Company’s common share price exceeds $0.25 per share for 30 consecutive
      days, payment of debentures totaling $2,250,000 shall be forgiven by the
      debenture holders.





In
      September 2005, the Company entered into a Secured Promissory Note with
      Crestview Capital Master Fund, LLC. The principal amount of the note was
      $500,000 bearing interest at the rate of LIBOR plus 6%. The note is due August
      1, 2006. As partial consideration for the note, the Company issued to the Payee
      a five year warrant to purchase 1,666,666 shares of common stock at an exercise
      price of $0.07. A note origination fee of $10,000 was recorded in relation
      this
      note and a debt discount value was calculated based upon the Black-Scholes
      model
      applied to the warrants; and over the life of the note $34,972 of additional
      interest will be recorded relating to the accretion of the note to its face
      value. For the Black-Scholes model the average risk free interest rate used
      was
      5%, volatility was estimated at 83% and the expected life was five
      years.





At
      September 30, 2005 total notes payable under the above is $5,670,000 with debt
      discount of $318,758 netted against the balance resulting in a senior, secured
      notes payable balance of $5,351,242 .





During
      the nine months ended September 30, 2004, the Company borrowed $543,000 under
      a
      convertible loan agreement bringing the balance to $600,000. This amount was
      subsequently converted into 5,000,000 shares of common stock and 10,000,000
      warrants (the warrants were canceled in 2005 in connection with the Surrender
      and Exchange Agreement described above). The entire proceeds from the
      convertible promissory note were allocated to the warrants and the beneficial
      conversion feature based on a calculation using the Black-Scholes model. During
      the nine months ended September 30, 2004 interest expense of $555,800 was
      recorded relating to the accretion of the convertible promissory note to its
      face value.





In
      March
      2004, the Company completed a private placement with Crestview Capital Master
      Fund, LLC and other affiliates of Crestview totaling $2,095,000 represented
      by
      convertible debentures convertible into common stock at $0.10 per share, with
      125% warrant coverage with an exercise price of $0.12 per share. The convertible
      debentures, if not converted, are due July 1, 2006 and bear interest at six
      percent (6%) payable quarterly. The entire proceeds from the convertible
      debentures were allocated to the warrants and the beneficial conversion feature
      based on a calculation using the Black-Scholes model. The interest expense
      related to the accretion of the convertible debentures to their face value
      totals $934,798 and is being amortized over eighteen months, the term of the
      convertible note. As of September 30, 2004 interest expense of $207,733 was
      amortized and recorded as additional interest expense. The $2,095,000 and
      related warrants were included in the 2005 Modification described
      above.




-17-
 **Table
          of Contents**





During
      the second quarter of 2004, the Company completed the closing of additional
      private placements totaling $1,575,000, consisting of $1,575,000 in convertible
      debentures convertible into common stock at $0.08 per share, with 75% warrant
      coverage at an exercise price of $0.12 per share. The convertible debentures,
      if
      not converted, are due June, 2006 and bear interest at eight percent (8.0%)
      payable quarterly. Under the terms of these private placements, the investors
      have the right to purchase up to an amount equal to, at the election of such
      investors, $1,500,000 principal amount of additional debentures. Any additional
      investment will be on terms identical those set forth in the private placements.
      The entire proceeds from the convertible debentures were allocated to the
      warrants and the beneficial conversion feature based on a calculation using
      the
      Black-Scholes model. The interest expense related to the accretion of the
      convertible debentures to their face value totals $491,830 and will be amortized
      over 24 months, the term of the convertible note. The $1,575,000 and related
      warrants were included in the 2005 Modification described above.





**Construction
      Lines-of-Credit**





Through
      the Company’s subsidiary Sovereign Partners, LLC, the Company maintains secured
      revolving construction lines-of-credit with several lending institutions for
      its
      construction projects. At September 30, 2005 the aggregate borrowings under
      the
      lines-of-credit total $17,021,606. Borrowings on the lines are repaid in
      connection with the sale of completed units. The lines-of-credit are secured
      by
      the project being constructed. Each construction line is personally guaranteed
      by the individual members of each development entity. Interest rates range
      from
      4.25% to 8.0%, and have maturity dates ranging from November 2005 through
      November 2006, with two exceptions with maturities in May 2011 and July 2034,
      unless extended. As of September 30, 2005, the construction lines-of-credit
      outstanding amounts range from $292,510 to $3,499,406, utilizing seven different
      lenders.





**Notes
      Payable and Related Party Debt**





In
      May
      2005 the Company and a related party, Jantaq, Inc. entered into a $50,000 note.
      A principal of Jantaq, Inc. John Weisman is the brother of our former CEO David
      Weisman. The terms of the agreement were for 12% per annum interest and the
      note
      was due June 8, 2005. On June 1, 2005 we amended the note to increase the
      balance due to $125,000.  This
      note
      plus accrued interest was satisfied in June 2005 with 2,357,477 shares of the
      Company’s common stock. The Company issued 1,809,190 shares as a non-cash
      conversion penalty and therefore financing expense of $119,708 was recorded
      in
      relation to the stock conversion.





In
      June
      2005, the Company entered into a $500,000 note payable agreement with a related
      party, Ed Buckmaster. Mr. Buckmaster is the general partner of AEJM Enterprises
      Limited Partnership, a shareholder of the Company and father-in-law of the
      current CEO, Mr. Edouard Garneau. The terms of the agreement are for 12% simple
      interest over the life of the note and the note was due September 1, 2005.
      The
      Company is currently negotiating an amendment and extension on the balance
      of
      this note.





In
      July
      2005, the Company secured a $10 million credit line from Jantaq, Inc. No
      borrowings were made on this line of credit and in September 2005, the Board
      of
      Directors voted to close this line of credit.





In
      August
      2005 the Company and a related party, Jantaq, Inc. entered into a $150,000
      note.
      A principal of Jantaq, Inc. John Weisman is the brother of our former CEO David
      Weisman. The terms of the agreement were for 10% per annum interest and the
      note
      was due September 1, 2005. In September, the company satisfied the note and
      interest with 5,505,000 shares of the Company’s common stock. Financing expense
      of $75,705 was recorded in relation to the stock conversion.




-18-
 **Table
          of Contents**





Through
      the Company’s subsidiary Sovereign Partners, LLC the Company has both debt
      collateralized by real estate and other unsecured term debt. These notes payable
      totaled $21,167,847 at September 30, 2005. Interest rates range from 5% to
      10%,
      and have maturity dates ranging from November 2005 through December 2011. As
      of
      September 30, 2005, the notes payable outstanding amounts range from $43,000
      to
      $4,172,052, utilizing thirteen different lenders.





The
      Company has related party debt of $4,738,534 at September 30, 2005, utilizing
      twelve different related parties. Interest rates range from 6.00% to 16.00%,
      and
      have maturity dates ranging from September 2005 through October 2007, with
      three
      exceptions. Two notes amortize over thirty years maturing April 2033 and
      February 2034, and one note is interest only, with no stated maturity date.
      As
      of September 30, 2005, the related party debts outstanding amounts range from
      $1,000 to $818,973, utilizing nine different lenders.





**Note
      5. Acquisitions**





**Sovereign
      Partners, LLC** ****





On
      February 18, 2005, the Company closed on the acquisition with Sovereign
      Partners, LLC (“Sovereign”) to acquire 100% of the membership interests of
      Sovereign from the Members in exchange for the issuance of 35,000,000 shares
      of
      the Company’s common stock and 100,000 shares of the Company’s newly created
      Series B Convertible Preferred Stock. Under the terms of the Acquisition
      Agreement the members are to be issued an additional 125,000 shares of Series
      B
      Preferred Stock on January 1, 2006 and July 1, 2006. As a result of the
      acquisition, Sovereign is now owned and operated as a wholly owned subsidiary
      of
      the Company. Sovereign operations include real estate development and the
      related communications infrastructure for residential, multiple dwelling unit
      (apartment) and planned community developments. See “Sovereign Acquisition”
      under Item 2. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations below.





Conditionally,
      the original Members of Sovereign may earn an additional 250,000 shares of
      Preferred Stock at such time as the Net Operating Income of Sovereign after
      January 1, 2005 is equal to or greater than $6,000,000; and 400,000 shares
      of
      Preferred Stock if the Net Operating Income of Sovereign ending on the period
      twenty-four months following the closing of the acquisition is equal to or
      greater than $5,000,000. For the purposes of the Acquisition Agreement, Net
      Operating Income means for any period the “EBITDA” on a consolidated basis for
      Sovereign and all of its subsidiaries, in accordance with generally accepted
      accounting principles. “EBITDA” means earnings before interest, taxes,
      depreciation and amortization.





The
      Members may earn additional shares of Common Stock or Preferred Stock if the
      average annualized Net Operating Income for the period commencing on the closing
      and ending on the twenty-four month anniversary date of the closing is: (A)
      greater than $5,000,000, but less than or equal to $6,000,000, then the Members
      will receive in the aggregate an additional 0.05 shares of Preferred Stock
      for
      each dollar that the average annualized Net Operating Income for that period
      exceeds $5,000,000; (B) greater than $6,000,000 but less than or equal to
      $7,000,000, then the Members will receive in the aggregate an additional 0.10
      shares of Preferred Stock for each dollar that the average annualized Net
      Operating Income for that period exceeds $5,000,000; (C) greater than $7,000,000
      but less than or equal to $8,000,000, then the Members will receive in the
      aggregate 0.15 shares of Preferred Stock for each dollar that the average
      annualized Net Operating Income for that period exceeds $5,000,000; or (D)
      greater than $8,000,000 for that period, then the Members will receive in the
      aggregate 0.20 shares of Preferred Stock for each dollar that the average
      annualized Net Operating Income for that period exceeds $5,000,000
      (collectively, the “Twenty-Four Month Issuances”).





In
      addition, the Members may earn additional shares of Common Stock or Preferred
      Stock as follows: if the average annualized Net Operating Income for the period
      commencing on the Closing and ending on the thirty-six month anniversary date
      of
      the closing is: (A) greater than $5,000,000, but less than or equal to
      $6,000,000, the Members will receive in the aggregate an additional 0.10 shares
      of Preferred Stock for each dollar that the average annualized Net Operating
      Income for that period exceeds $5,000,000; (B) greater than $6,000,000 but
      less
      than or equal to $7,000,000, then the Members will receive in the aggregate
      an
      additional 0.20 shares of Preferred Stock for each dollar that the average
      annualized Net Operating Income for that period exceeds $5,000,000; (C) greater
      than $7,000,000 but less than or equal to $8,000,000, then the Members will
      receive in the aggregate 0.30 shares of Preferred Stock for each dollar that
      the
      average annualized Net Operating Income for that period exceeds $5,000,000;
      or
      (D) greater than $8,000,000 for that period, then the Members will receive
      in
      the aggregate 0.40 shares of Preferred Stock for each dollar that the average
      annualized Net Operating Income for that period exceeds $5,000,000. Such
      issuances will be reduced by the number of shares of Common Stock or Preferred
      Stock received pursuant to the Twenty-Four Month Issuances, if any.




-19-
 **Table
          of Contents**





Under
      the
      terms of the Acquisition Agreement, the aggregate number of shares of capital
      stock of the Company issuable to the Members is limited to 300,000,000 shares
      of
      Common Stock or such number of shares of Preferred Stock that is convertible
      into 300,000,000 shares of Common Stock, or any combination of Preferred Stock
      and Common Stock which does not exceed 300,000,000 shares of Common Stock in
      total.





The
      Company may suspend the issuance of additional shares of Common Stock or
      Preferred Stock upon certain “breaches” by Sovereign defined in the Acquisition
      Agreement. In the event of a breach, any shares that have not yet been issued
      to
      the Members under the terms of the Acquisition Agreement may be withheld by
      the
      Company until the earlier of (i) twelve months from the date such shares would
      have otherwise been issued to the Members or (ii) such time as any such breach
      has been cured by Sovereign.





This
      transaction was accounted for using the purchase method and, accordingly, the
      purchase price has been allocated to net assets acquired based on their
      estimated fair values at the date of acquisition. The preliminary allocation
      resulted in goodwill totaling approximately $6,996,257. Goodwill was recorded
      at
      its purchase price and is not being amortized. Pursuant to SFAS 142 (“Goodwill
      and Other Intangible Assets”) and SFAS 144 *Accounting
      for the Impairment or Disposal of Long-Lived Assets* the
      Company evaluates its goodwill for impairment annually. Pro forma results of
      operations are presented on a Current Report on Form 8-K by amendment filed
      August 4, 2005. Financial statements for years ended 2002, 2003 and 2004 are
      included in the August 4, 2005 Current Report on Form 8-K/A.


Sovereign
                  Preliminary Purchase Price AllocationConsiderationStock
              
              $
              5,705,000Transaction
                  costs
              
              
              294,765Minority
                  Interest
              
              
              4,750,672Assumption
                  of liabilities
              
              
              43,158,387Adjusted
                  Purchase Price
              
              
              53,908,824Allocation
                  to Assets
              
              
              (46,912,567
              )Residual
                  Value of Goodwill
              
              $
              6,996,257
 The
      preliminary estimate of assets represents management’s best estimate based on
      currently available information; however, such estimate may be revised within
      the one-year period following the acquisition date. The Company has engaged
      a
      third party business valuation expert to assess the fair market value of
      Sovereign and its assets.





The
      following unaudited proforma condensed statements of operations assumes the
      Sovereign Partners, LLC acquisition occurred on January 1, 2005 and presents
      proforma financial information for the nine months ended September 30, 2005.





In
      the
      opinion of management, only a proforma adjustment to expenses is currently
      necessary to present fairly such unaudited proforma condensed statements of
      operations.




-20-
 **Table
          of Contents**




2005January
                  1 to
              
              January
                  1 toSeptember
                  30
              
              February
                  18
              
              Proforma
              
              ProformaCardinal
              
              Sovereign
              
              Adjustments
              
              CombinedRevenues
              
              $
              19,888,737
              
              $
              3,240,113
              
              $
              –
              
              $
              23,128,850ExpensesCosts
                  of Goods Sold
              
              
              12,938,379
              
              
              2,852,894
              
              
              
              
              
              15,791,273Depreciation
                  and amortization
              
              
              1,162,497
              
              
              37,842
              
              
              
              
              
              1,200,339General
                  and administrative
              
              
              10,781,300
              
              
              647,051
              
              
              4,375
              
              
              11,432,726Total
                  Operating Expenses
              
              
              24,882,176
              
              
              3,537,787
              
              
              4,375
              
              
              28,424,338Operating
                  (loss)
              
              
              (4,993,439
              )
              
              (297,674
              )
              
              (4,375
              )
              
              (5,295,488
              )Other
                  (expense)
              
              
              (1,681,280
              )
              
              (59,319
              )
              
              
              
              
              (1,740,599
              )Net
                  (loss) before minority interest
              
              $
              (6,674,719
              )
              $
              (356,993
              )
              $
              (4,375
              )
              $
              (7,036,087
              )Net
                  (loss) per common share
              
              
              (0.03
              )
              
              
              
              
              
              
              
              (0.03
              )Weighted
                  average shares outstanding
              
              
              243,349,435
              
              
              
              
              
              
              
              
              243,349,435
 **Note
      5. Subsequent Events**





Subsequent
      to quarter end, effective November 4, 2005, Mr. David A. Weisman resigned his
      positions as Chairman of the Board of Directors and Chief Executive Officer
      of
      the Company. The Company and Mr. Weisman have mutually agreed to his departure
      and the Board of Directors has accepted his resignations. Mr. Edouard Garneau
      was appointed Chief Executive Officer of the Company. Mr. Garneau previously
      served as the Chief Operating Officer of the Company and Mr. Garneau will
      continue to serve as a member of the Board of Directors. Mr. Richard E. Wilson
      was appointed Chairman of the Board of Directors of the Company. Mr. Wilson
      has
      been a member of the Board of Directors of the Company since March 2003. More
      information can be found the Company’s Current Report on Form 8-K filed with the
      SEC on November 10, 2005.





During
      the nine months ended September 30, 2005, the Company issued an aggregate of
      22,683,430 shares to five consultants under the Company’s 2005 Employee
      Incentive Plan. The Company has subsequently determined that such shares may
      not
      have been eligible for registration on its Registration Statement on Form S-8.
      The Company will be exchanging such shares for restricted shares of the
      Company’s common stock, or other accommodation, upon agreement of the parties.
      As disclosed under Part II, Item 2 of the Company’s Report on Form 10-QSB for
      the period ended September 30, 2005, the Company has disclosed the issuance
      of
      an aggregate of 22,683,430 shares as unregistered and restricted.





Item
      2.Management’s
      Discussion And Analysis Of Financial Condition And Results Of
      Operations





The
      following information should be read in conjunction with the consolidated
      financial statements, including the notes thereto, included elsewhere in this
      Form 10-QSB, and the Management's Discussion and Analysis of Financial Condition
      and Results of Operations included in our 2004 Annual Report on Form 10-KSB
      filed with the Securities and Exchange Commission.




**Forward-Looking
      Statements and Associated** **Risks**




This
      report contains forward-looking statements, including statements regarding,
      among other things, (a) our growth strategies, (b) anticipated trends in our
      industry, (c) our future financing plans and (d) our ability to obtain financing
      and continue operations. In addition, when used in this filing, the words
      "believes," "anticipates," "intends," "in anticipation of," and similar words
      are intended to identify certain forward-looking statements. These
      forward-looking statements are based on our expectations and are subject to
      a
      number of risks and uncertainties, many of which are beyond our control. Actual
      results could differ materially from these forward-looking statements as a
      result of changes in trends in the economy and our industry, reductions in
      the
      availability of financing and other factors. In light of these risks and
      uncertainties, the forward-looking statements contained in this report may
      not
      occur. Except to fulfill our obligation under the United States securities
      laws,
      we do not undertake any obligation to publicly release the results of any
      revisions to these forward-looking statements that may be made to reflect any
      future events or circumstances.




-21-
 **Table
          of Contents**





**Overview
      of Our Business**





During
      2004 and through September 30, 2005, we continued to implement and expand our
      business plan as a provider of enhanced telephone (voice) services, cable
      television (video) and Internet (data) services to business and residential
      customers. Since the completion of the acquisition of Sovereign Partners, LLC
      in
      February 2005, we also offer integrated construction and construction management
      services, as well as broadband communications design, implementation, and
      operations services to other large developers and municipalities seeking to
      deploy broadband services. Our current business plan involves obtaining, through
      internal growth, as many voice, video and data customers as possible offering
      various combinations of bundled packages of communications services. Our growth
      strategy also includes acquisitions of telecommunications-related businesses
      and/or properties that would provide an immediate or potential customer base
      for
      our services.





**Sovereign
      Acquisition**





On
      January 26, 2005, we entered into a Securities Purchase Agreement with Sovereign
      Partners, LLC, a Colorado limited liability company and each of the Members
      of
      Sovereign (the “Acquisition”). We closed on the Acquisition on February 18,
      2005. As a result of the Acquisition, Sovereign is now owned and operated as
      a
      wholly owned subsidiary of our Company. Sovereign operations include real estate
      development and the related communications infrastructure for residential,
      multiple dwelling units (apartment) and planned community developments
      (“developments”). As part of these new developments, all communications
      infrastructure (voice, video, data, fiber to the home, etc) will be engineered
      jointly by Cardinal and Sovereign. The communications facilities will be owned
      by Cardinal and the ongoing communications services, after sale of the
      developments, will be provided and operated by a Cardinal subsidiary, resulting
      in residual revenue streams to Cardinal. The terms of the agreement are
      described on Company's Current Report on Form 8-K filed with the SEC on February
      22, 2005 and amended August 4, 2005.





**Certain
      Relationships and Related Transactions**





On
      December 20, 2004, Mr. Ed Garneau became a member of our Board of Directors.
      On
      February 18, 2005, we closed on the acquisition of Sovereign Partners LLC
      (described above under “Recent Developments” under Note 5 and Item 2 of this
      Quarterly Report). At the time the Acquisition was negotiated, signed and
      closed, Mr. Garneau was both an indirect shareholder and Director of our Company
      and the Manager of Sovereign Partners, LLC. Mr. Garneau also owned direct and
      indirect economic interests in Sovereign at and prior to the closing of the
      Acquisition. Upon the closing of the Acquisition, Mr. Garneau entered into
      an
      Employment Agreement assumed the title of Chief Operating Officer of the
      Company.





Additionally,
      in connection with the acquisition of Sovereign, we assumed certain of the
      obligations of Sovereign, including certain debt owed to individuals and/or
      entities that are considered to be related parties for SEC reporting purposes.





The
      following table sets forth the individual amounts totaling $ 4,738,534 due
      as of
      September 30, 2005 to related parties, and entities:




**Interest**
            
            **Due****Name
                and Relationship**
            
            **Amount**
            
            **Rate**
            
            **Date**Byron
                Young, Director and Shareholder
            
            $
            1,000
            
            
            0
            %
            
            NoneBrandon
                Young, Shareholder
            
            
            40,000
            
            
            0
            %
            
            NoneEd
                Buckmaster (1)
            
            
            450,000
            
            
            12
            %
            
            Dec
                ‘05Jeffrey
                Fiebig, Director and Shareholder
            
            
            112,000
            
            
            16
            %
            
            Dec
                ‘05AEJM
                Enterprises, Limited Partnership,(1)
            
            
            700,000
            
            
            10
            %
            
            Oct
                ‘05Thunderbird
                Management Limited Partnership, Shareholder
            
            
            800,000
            
            
            10
            %
            
            Aug
                ‘06Thunderbird
                Management Limited Partnership, Shareholder
            
            
            702,682
            
            
            12
            %
            
            NoneBob
                Searls, Shareholder(2)
            
            
            813,973
            
            
            6
            %
            
            May
                ‘33Investors
                and/or Partners in Sovereign Partners as a group
            
            
            1,118,879
            
            
            4-12
            %
            
            Oct
                ‘05 - May
                ‘34Total
            
            $
            4,738,534





(1)
            The
                general partner of AEJM Enterprises Limited Partnership, Ed Buckmaster
                is
                a shareholder of the Company and Ed Garneau’s
                father-in-law.


(2)
            Mr.
                Searls is also the general partner of Searls Family LLLP which is
                a
                shareholder of the Company.






-22-
 **Table
          of Contents**





**Segment
      Information**





We
      have
      two reportable segments: communications services and real estate activities.
      Communications services include individual, voice, video and data services
      as
      well as various combinations of bundled packages of these communications
      services. Real estate activities includes sales of residential single family
      units, rental from commercial properties and fees from mortgage operations.





The
      accounting policies of the segments are the same as those described in the
      summary of critical accounting policies. Our business is conducted through
      separate legal entities. Each entity is managed separately as each business
      has
      a distinct customer base and requires different strategic and marketing efforts.
      The following table reflects the income statement and balance sheet information
      for each of the reporting segments:


**Real
                  Estate**
              
              **Communications**
              
              **Total**Revenue
              
              $
              13,333,384
              
              $
              6,555,353
              
              $
              19,888,737Net
                  Income (Loss)
              
              
              431,834
              
              
              (7,286,618
              )
              
              (6,854,784
              )Interest
                  (Expense)
              
              
              (211,305
              )
              
              (483,125
              )
              
              (694,430
              )Depreciation
                  and Amortization
              
              
              276,867
              
              
              885,630
              
              
              1,162,497Assets
              
              
              46,608,169
              
              
              15,656,769
              
              
              62,264,938
 **Current
      Sovereign Projects**





Mountain
      View at West T-Bone Ranch, Greeley, CO




Mountain
      View at West T-Bone Ranch is a 21 acre multi-dwelling unit development located
      in southwest Greeley, Colorado with onsite amenities including a clubhouse
      with
      pool, hot tub, and fitness room. The completed project will have 215 units
      consisting of two-story flats with detached garages, along with 7-unit and
      4-unit townhomes with attached garages. 82 units have been sold to-date with
      an
      average sale price of $136,231.





The
      Renaissance at Fox Hill, Greeley, CO




The
      Renaissance at Fox Hill is a 13 acre multi-dwelling unit development located
      in
      Greeley, Colorado. The completed project will contain 123 dwelling units
      consisting of two story stacked flats/carriage units with direct access garages
      and 4-unit townhomes with attached garages. 40 units have been sold to-date
      with
      an average sale price of $176,714.





Colony
      Ridge Condominiums, (Settler’s Chase) Thornton, CO




The
      Colony Ridge Condominiums are a mix of 4 three-story stacked flats over one
      level of underground parking with elevators, and 98 townhome-style residences
      on
      an 11.65 acre parcel in Thornton, Colorado. Colony Ridge at Settler’s Chase is
      the final phase in the master planned community of Settler’s Chase, located in
      Thornton, Colorado. 21 units have been sold to-date with an average sale price
      of $180,219.




-23-
 **Table
          of Contents**





SR
      Condominiums, Parker, CO




The
      SR
      Condominiums are a mix of two and three story stacked flats with detached
      garages marketed as Hunter’s Chase Condominiums in Parker, Colorado. The
      completed project will include 188 dwelling units situated on a 13 acre parcel
      located at the corner of Stroh Road and Motsenbacker Road in Parker, and
      includes a clubhouse featuring an outdoor swimming pool and spa. 22 units have
      been sold to-date with an average sale price of $155,975.





Millstone
      at Clear Creek, Golden, CO




The
      Millstone at Clear Creek consists of three four-story condominium buildings
      each
      with a ground level parking structure located on approximately 1.7 acre parcel
      in Golden, Colorado. The completed project will have 78 dwelling units and
      is
      located on 12 th street
      between Washington Street and Ford Street adjacent to Clear Creek. 37 units
      have
      been put contracted for, to-date with an average sale price of
      $300,770.





Sovereign
      Pumpkin Ridge, Greeley, CO




The
      Pumpkin Ridge development consists of 78 lots in the Pumpkin Ridge subdivision
      located in west Greeley, Colorado. The plan is to build single and two-story
      single family detached residences on each of the lots. 14 units have been sold
      to-date with an average sale price of $259,524.





Settler’s
      Commercial Development, Thornton, CO




Settler’s
      Commercial Development is the commercial/retail component of a master planned
      community. This 3.8 acre parcel is the final piece of the Settler’s Chase
      subdivision to be developed and is located in Thornton, Colorado. Building
      construction is scheduled to start in December of 2005, with delivery of space
      scheduled for summer 2006. 3 Margaritas Restaurant will anchor the site and
      negotiations with other tenants are ongoing.





Sovereign
      Parker Commercial, Parker, CO




Parker
      Commercial consists of 18.5 undeveloped commercial acres located within the
      downtown core of Parker, Colorado, and is situated between Twenty Mile Road
      and
      Dransfeldt Road. This property is currently on the market for approximately
      $3.5
      million.





Legacy
      of Shorewood, Shorewood (Milwaukee), WI





Legacy
      of
      Shorewood is a 40 unit condominium project in the Village of Shorewood, a suburb
      of Milwaukee. It is a single building, converted from its prior use as an
      assisted living facility, renovated and rebuilt into 40 individual condominiums.
      It is a 4-story structure with underground parking and elevator access. To-date
      21 units have been sold with an average sales price of $231,883.





Riverplace
      Condominiums, Rochester, MN





Riverplace
      Condominiums consists of approximately 4 acres of multi-family land on the
      Zumbro River in Rochester, Minnesota. The proposed project consists of a single,
      4-story building with underground parking and elevator access. Currently the
      project has not started construction.





Stonegate
      Summit, Rochester, MN





Stonegate
      Summit consists of approximately 20 acres of multi-family land on top of a
      hill
      in Rochester, Minnesota. The site is planned for 155 townhome and condominium
      units. Initial site grading has commenced, but infrastructure work is currently
      on-hold pending acceptable construction financing.




-24-
 **Table
          of Contents**





**Going
      Concern**





Our
      auditor stated in its report on our financial statements for the period ended
      December 31, 2004 that we have experienced recurring losses and, as a result,
      there exists substantial doubt about our ability to continue as a going concern.
      For the nine months ended September 30, 2005, we incurred a net loss of
      $6,854,784 . As of September 30, 2005, Cardinal had an accumulated deficit
      of
      $68,019,478 . We are actively seeking customers for our services. The financial
      statements do not include any adjustments relating to the recoverability and
      classification of recorded assets, or the amounts and classification of
      liabilities that might be necessary in the event we cannot continue in
      existence. These factors raise substantial doubt about our ability to continue
      as a going concern.





**Critical
      Accounting Policies**





Management’s
      Discussion and Analysis discusses the results of operations and financial
      condition as reflected in our consolidated financial statements, which have
      been
      prepared in accordance with accounting principals generally accepted in the
      United States. The preparation of financial statements in conformity with
      accounting principals generally accepted in the United States requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities, disclosure of contingent assets and liabilities at
      the
      date of the financial statements and reported amounts of revenues and expenses
      during the reporting period. On an ongoing basis, management evaluates its
      estimates and judgments, including those related to accounts receivable,
      inventory valuation, amortization and recoverability of long-lived assets,
      including goodwill, litigation accruals and revenue recognition. These critical
      accounting policies are described in more detail under Item 6 in the section
      entitled "Management's Discussion and Analysis of Financial Condition and
      Results of Operations" in our Annual Report on Form 10-KSB/A for the year ended
      December 31, 2004 filed with the Securities and Exchange Commission on April
      6,
      2005 and the current report filed on Form 8-K/A with the Securities and Exchange
      Commission on August 4, 2005. Management bases its estimates and judgments
      on
      its historical experience and other relevant factors, the results of which
      form
      the basis for making judgments about the carrying values of assets and
      liabilities that are not readily apparent from other sources.





While
      we
      believe that the historical experience and other factors considered provide
      a
      meaningful basis for the accounting policies applied in the preparation of
      our
      consolidated financial statements, we cannot guarantee that our estimates and
      assumptions will be accurate. If such estimates and assumptions prove to be
      inaccurate, we may be required to make adjustments to these estimates in future
      periods.





**Results
      of Operations**





**Nine
      months Ended September 30, 2005 And 2004**





**Revenues**





For
      the
      nine months ended September 30, 2005 and 2004, Cardinal had revenue of
      $19,888,737 and $5,098,714 , respectively, an increase of $14,790,023 . This
      increase is primarily due to the acquisitions of Sovereign Partners, LLC in
      February 2005. The communications operations had revenue of $6,555,353 , which
      represents an increase of $1,456,639 over the previous period in 2004, The
      telecommunications increase is attributable to being able to recognize a full
      nine months of Connect Paging, Inc. d/b/a Get A Phone’s (GAP) revenue compared
      to only recognizing 6 months of GAP’s revenues in 2004. The Company’s 2005
      revenues were derived primarily from the sale of telecommunication services,
      internet access services, telecommunications-related hardware and services,
      satellite-based CATV access services, residential units, rental from commercial
      properties, fees from mortgage operations and construction management services.
      These revenues are recognized and recorded as services are performed and
      properties are sold or rented.





**Operating
      Expenses**





For
      the
      nine months ended September 30, 2005 and 2004, operating expenses were
      $11,943,797 and $9,120,309, respectively. During the nine months ended September
      30, 2005, operating expenses consisted primarily of professional and consulting
      fees of $2,692,364 , of which $1,049,015 were paid in stock, salaries and
      commissions of $4,554,890 of which $120,504 were paid in stock, and other
      general and administrative expenses of $3,189,635 of which $2,242,925 were
      paid
      in stock. The general and administrative expenses consisted of bad debt related
      to Get-A-Phone of $756,422 , software expense of $229,016 , Long Distance
      Telephone expense of $143,864 and numerous small expenses. The increase of
      $2,823,488 in operating expenses is directly attributable to the Company’s 2005
      acquisition of Sovereign Partners, LLC in February 2005.




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**Net** **Loss**





For
      the
      nine months ended September 30, 2005, we had a net loss of $6,854,784 or $0.028
      per share. In the comparable period of the prior year, we had a net loss of
      $12,448,539 , or $0.085 per share. The decrease in net loss period over period
      is directly attributable to the Sovereign Partners, LLC acquisition adding
      net
      income to the Company and in 2004 we recorded large expenses for debt
      modification and large expenses related to the failed acquisition of Sunwest
      Communications, Inc.




**Liquidity**





Currently,
      we believe we have sufficient working capital, cash on hand and cash to be
      generated from operations, to continue current business operations indefinitely.
      For the nine months ended September 30, 2005 our operations used $5,536,435
      of
      cash and at September 30, 2005 we had cash on hand of $700,746 . Although our
      operations used cash of $5,536,435 overall through financing and investing
      our
      cash on hand only dropped $29,626 during the first 9 months of 2005. As we
      grow
      we expect operations to continually use cash since our construction projects
      use
      a large portion of operational cash which is provided by construction lines
      of
      credit. As construction projects are finished and sold the construction lines
      of
      credit are satisfied and the projects provide profit and long term liquidity.





We
      anticipate that any additional capital needs will be met through financing
      transactions. We may also seek other sources of financing to fund operations,
      although we may not be successful in such efforts. We may not be able to secure
      adequate capital as necessary which would severely limit our ability to
      grow.





**Cash
      Used in Operating Activities**





During
      the nine months ended September 30, 2005, our operations used cash of $5,536,435
      compared to using $3,190,063 during the same period in 2004. For the nine months
      ended September 30, 2005, the use of cash was a direct result of expanded
      construction projects. For the nine months ended September 30, 2004, the use
      of
      cash was a direct result of the lack of revenues compared to operating expenses.
      During the nine months ended September 30, 2005, $580,431 of accreted interest
      expense was recorded in relation to our notes payable with beneficial conversion
      features; during the same period in 2004 we incurred accreted interest expense
      of $990,036 and recorded $1,568,688 loss on debt modification.




**Cash
      Used in Investing Activities**





During
      the nine months ended September 30, 2005, we engaged in a significant amount
      of
      capital investment activity, primarily through the acquisition of business
      assets from other companies including the acquisition of cash from Sovereign
      of
      $1,352,147. The total value of capital investments for the period resulted
      in a
      net cash gain for the period of $871,955 compared to using $3,073,440 for the
      same period in 2004.





**Cash
      Provided by Financing Activities**





During
      the nine months ended September 30, 2005, we increased our notes payable by
      $4,590,269 which when netted with our other financing activity resulted in
      financing providing cash of $4,634,854 compared to $6,451,700 provided during
      the same period in 2004. Further detail of our financing activities is provided
      in the Notes to Consolidated Financial Statements, Note 4.




**Off-Balance
      Sheet Financing Activities**





We
      do not
      have any off-balance sheet arrangements that have, or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenue or expenses, results of operations, liquidity, capital
      expenditures or capital resources that are material.




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**Factors
      Affecting our Business and Prospects**





There
      are
      many factors that affect our business and the results of our operations, some
      of
      which are beyond our control. These factors include:





·
            we
                have a limited operating history with significant
                losses;





·
            the
                market price of our common stock is very volatile and the value of
                your
                investment may be subject to sudden
                decreases;





·
            a
                low market price may severely limit the potential market for our
                common
                stock, and





·
            our
                stock is categorized as a "penny
                stock."





For
      a
      discussion of these and other factors affecting our business and prospects,
      see
      "Item 1. - Description of Business--Risk Factors Concerning Us and Our Common
      Stock" in our Annual Report on Form 10-KSB for the year ended December 31,
      2004.
      In addition, the following factors may affect our business, the results of
      our
      operations and the market price of our securities:





OUR
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXPRESSED IN THEIR AUDIT REPORT
      RELATED TO OUR FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2004,
      SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.





In
      its
      opinion on our financial statements for the year ended December 31, 2004, our
      independent auditor, AJ. Robbins PC expressed substantial doubt about our
      ability to continue as a going concern because of our recurring losses and
      negative working capital.





WE
      HAVE A
      HISTORY OF SIGNIFICANT LOSSES AND WE MAY NEVER ACHIEVE OR SUSTAIN PROFITABILITY.
      IF WE ARE UNABLE TO BECOME PROFITABLE, OUR OPERATIONS WILL BE ADVERSELY
      EFFECTED.





We
      have
      incurred annual operating losses since our inception. As a result, at September
      30, 2005, we had an accumulated deficit of $68,019,478  .
      Our
      gross revenues for the nine months ended September 30, 2005 and 2004, were
      $19,888,737 and $5,098,714 with losses from operations of $4,993,439 and
      $6,493,565 and net losses of $6,854,784 and $12,448,539 respectively.





As
      we
      pursue our business plan, we expect our operating expenses to increase
      significantly, especially in the areas of sales and marketing. As a result
      of
      these expected cost increases, we will need to generate increased revenues
      to
      become profitable. Accordingly, we cannot assure you that we will ever become
      or
      remain profitable. If our revenues fail to grow at anticipated rates or our
      operating expenses increase without a commensurate increase in our revenues,
      our
      financial condition will be adversely affected. Our inability to become
      profitable on a quarterly or annual basis would have a materially adverse effect
      on our business and financial condition.





WE
      ARE
      DEPENDENT UPON LONG-TERM FINANCING. IF WE ARE UNABLE TO RAISE CAPITAL AS WE
      NEED
      IT, OUR OPERATIONS COULD BE JEOPARDIZED.





Our
      ability to implement our business plan and grow is dependent on raising a
      significant amount of capital. We have sustained our operations in large part
      from sales of our equity. We may not be able to successfully generate revenues
      or raise additional funds sufficient to finance our continued operations. In
      the
      long term, failure to generate sufficient revenues or obtain financing would
      have a material adverse effect on our business and would jeopardize our ability
      to continue our operations.




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WE
      HAVE
      IN THE PAST AND MAY IN THE FUTURE ENGAGE IN ACQUISITIONS, WHICH WILL CAUSE
      US TO
      INCUR A VARIETY OF COSTS AND WHICH MAY NOT ACHIEVE ANTICIPATED OR DESIRED
      RESULTS. WE MAY NOT ACHIEVE THE RESULTS WE ANTICIPATE AND DESIRE FROM OUR
      ACQUISITION OF THE SOVEREIGN COMPANIES.





From
      time
      to time we engage in discussions with third parties concerning potential
      acquisitions of businesses, products, technologies and other assets.
      Acquisitions may require the Company to make considerable cash outlays and
      can
      entail the need for the Company to issue equity securities, incur debt and
      contingent liabilities, incur amortization expenses related to intangible
      assets, and can result in the impairment of goodwill, which could harm our
      profitability. Acquisitions involve a number of additional risks, including:





·
            difficulties
                in and costs associated with the assimilation of the operations,
                technologies, personnel and products of the acquired companies,





·
            assumption
                of known or unknown liabilities or other unanticipated events or
                circumstances,





·
            risks
                of entering markets in which we have limited or no experience, and





·
            potential
                loss of key employees.





Any
      of
      these risks could harm our ability to achieve profitability of acquired
      operations or to realize other anticipated benefits of an acquisition.





On
      February 18, 2005 we acquired Sovereign Partners, LLC which we now own and
      operate as a subsidiary in the residential and planned community (real estate
      and communications infrastructure) development industry. In connection with
      the
      acquisition, we issued common stock and newly created Series B preferred stock.
      That issuance was dilutive to our shareholders. We are obligated to issue more
      shares of preferred stock, which is convertible to common stock on a hundred
      for
      one basis, under the terms of the acquisition agreement with Sovereign. There
      are also contingent shares of common and preferred stock which may be issuable
      to the original members of Sovereign based upon the subsidiaries operating
      performance. More detail can be found in Note 5. Acquisitions in the financial
      statements above. All such issuances will be dilutive to our shareholders.
      In
      addition, the preferred stock we are issuing is senior to the rights of our
      common stock holders upon liquidation. If we are unable to assimilate
      Sovereign's management and operations, or if we incur unforeseen liabilities,
      or
      if the operations of Sovereign do not continue to grow or if they diminish,
      we
      will not obtain recognizable benefits from the acquisition and our shareholders
      will have suffered material dilution.





WE
      HAVE
      SENIOR SECURED CONVERTIBLE DEBENTURES TOTALING $4,420,000 DUE IN 2006,
      COLLATERALIZED BY ALL OUR ASSETS. WE DO NOT HAVE THE FUNDS AVAILABLE TO PAY
      THESE DEBENTURES IF NOT CONVERTED INTO COMMON STOCK. IF THE DEBENTURES ARE
      NOT
      PAID OR CONVERTED, THE DEBENTURE HOLDERS COULD FORECLOSE ON OUR ASSETS.





During
      2004, we entered into a series of private placements totaling $4,420,000 in
      senior secured debentures, convertible into common stock. If not converted,
      the
      debentures are due on July 2, 2006. The debentures bear interest at rates from
      six percent (6%) to twelve percent (12%) and are collateralized by our assets.
      We do not currently have the funds to pay these debentures and we cannot assure
      you that we will have the funds to pay them on the due dates. If the debentures
      are not paid or converted, the debenture holders could foreclose on our assets.





In
      March
      2005 the terms of the agreements were modified such that a maximum of 40,000,000
      shares are to be issued upon conversion of the debentures. If our common share
      price exceeds $0.25 per share for 30 consecutive days, payment of debentures
      totaling $2,250,000 shall be forgiven by the debenture holders.





WE
      HAVE A
      NOTE PAYABLE TO EVERGREEN VENTURE PARTNERS, LLC DUE IN 2006. WE CURRENTLY DO
      NOT
      HAVE THE FUNDS AVAILABLE TO PAY THIS NOTE WHEN DUE.





In
      March
      2005 we entered into an agreement with Evergreen Venture Partners, LLC to
      repurchase 17,000,000 unregistered shares of our common stock for a $750,000
      note payable. The terms of the agreement call for payment of the note plus
      accrued interest on July 1, 2006, provided however, if our common share price
      exceeds $0.21 per share for 30 consecutive days, payment of the note shall
      be
      forgiven.




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WE
      RELY
      ON LOCAL TELEPHONE COMPANIES AND OTHER COMPANIES TO PROVIDE CERTAIN
      TELECOMMUNICATIONS SERVICES. A DISRUPTION OF THESE SERVICES COULD HAVE AN
      ADVERSE EFFECT ON OPERATIONS.





Our
      wholly owned subsidiary, Connect Paging, Inc. d/b/a Get-A-Phone is a Texas-based
      communications company operating as a local exchange carrier in areas currently
      served by SBC and Verizon Southwest. We buy certain telecommunications from
      SBC
      and Verizon and resell these to our customers. If we were not able to buy these
      services or if we experienced a disruption of these services, it would adversely
      affect our ability to operate in these areas.





WE
      HAVE
      THE ABILITY, WITHOUT SHAREHOLDER APPROVAL, TO ISSUE PREFERRED STOCK AND
      DESIGNATE THE RIGHTS, PREFERENCES AND PRIVILEGES THAT MAY BE SENIOR TO COMMON
      STOCK.





In
      November 2004, we issued 10,000 shares of Series A Convertible Preferred Stock
      ("Series A Stock") at $100.00 per share, for a total consideration of
      $1,000,000. The Series A Stock is convertible into our common stock at a
      conversion price ranging from $0.05 to $0.075 as calculated in accordance with
      the Certificate of Designation. The Series A Stock has a liquidation preference
      ahead of the common stock in the event of any dissolution or winding up of
      our
      Company and is entitled to any dividends that may be declared from time to
      time
      by the Board of Directors.





In
      February 2005, we issued 35,000,000 shares of our common stock and 100,000
      shares of our newly created Series B Convertible Preferred Stock in the
      acquisition of the Sovereign Partners LLC. The Series B Preferred Stock is
      convertible into our common stock at a conversion rate of one hundred (100)
      shares of common stock for each one (1) share of Series B Preferred Stock,
      in
      accordance with the Certificate of Designation. The Series B Preferred Stock
      has
      a liquidation preference ahead of the common stock in the event of any
      dissolution or winding up of our Company and is entitled to any dividends that
      may be declared from time to time by our Board of Directors. We have the ability
      to issue an additional 2,900,000 shares of Series B Preferred Stock without
      shareholder approval.





We
      have a
      total of 100,000,000 authorized shares of preferred stock. The Board of
      Directors may determine, without shareholder approval, the rights, preferences
      and privileges of the preferred stock. Depending on the rights, preferences
      and
      privileges granted when the preferred stock is issued, it may have the effect
      of
      delaying, deferring or preventing a change in control without further action
      by
      the shareholders, may discourage bids for our common stock at a premium over
      the
      market price of the common stock and may adversely affect the market price
      of
      and the voting and other rights of the holders of our common stock.





WE
      CAN
      ISSUE COMMON STOCK WITHOUT SHAREHOLDER APPROVAL THAT MAY CAUSE DILUTION TO
      EXISTING SHAREHOLDERS.





We
      have
      800,000,000 authorized shares of common stock that can be issued by the Board
      of
      Directors. At September 30, 2005, we had 388,271,800 shares of common stock
      available for issue. Under most circumstances the Board of Directors has the
      right to issue these shares. If all of these shares were issued, it would
      substantially dilute the existing shareholders.





OUR
      COMMON STOCK HAS EXPERIENCED SIGNIFICANT PRICE VOLATILITY IN THE PAST AND WE
      EXPECT IT TO EXPERIENCE HIGH VOLATILITY IN THE FUTURE. THIS HIGH VOLATILITY
      SUBSTANTIALLY INCREASES THE RISK OF LOSS TO PERSONS OWNING OUR COMMON STOCK.





The
      trading price for our common stock has been, and we expect it to continue to
      be,
      highly volatile. For example, the closing bid price of our stock has fluctuated
      between $0.03 and $0.35 per share since January 1, 2002. The price at which
      our
      common stock trades depends upon a number of factors, including our historical
      and anticipated operating results and general market and economic conditions,
      which are beyond our control. In addition, the stock market has, from time
      to
      time, experienced extreme price and volume fluctuations. These broad market
      fluctuations may lower the market price of our common stock. Moreover, during
      periods of stock market price volatility, share prices of many
      telecommunications companies have often fluctuated in a manner not necessarily
      related to their operating performance. Accordingly, our common stock may be
      subject to greater price volatility than the stock market as a
      whole.




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FUTURE
      SALES OF COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.





Future
      sales of substantial amounts of common stock pursuant to Rule 144 under the
      Securities Act of 1933 or otherwise by certain shareholders could have a
      material adverse impact on the market price for the common stock at the time.
      As
      of the date of this report, there are 122,999,022 outstanding shares of our
      common stock held by shareholders which are deemed "restricted securities"
      as
      defined by Rule 144 under the Securities Act. Under certain circumstances,
      these
      shares may be sold without registration pursuant to the provisions of Rule
      144.
      In general, under Rule 144, a person (or persons whose shares are aggregated)
      who has satisfied a one-year holding period may, under certain circumstances,
      sell within any three-month period a number of restricted securities which
      does
      not exceed the greater of one (1%) percent of the shares outstanding or the
      average weekly trading volume during the four calendar weeks preceding the
      notice of sale required by Rule 144. In addition, Rule 144 permits, under
      certain circumstances, the sale of restricted securities without any quantity
      limitations by a person who is not an affiliate of ours and has satisfied a
      two-year holding period. Any sales of shares by shareholders pursuant to Rule
      144 may cause the price of our common stock to decline.





SOVEREIGN
      PARTNERS, LLC IS ROUTINELY INVOLVED IN LITIGATION MATTERS ARISING FROM ACCIDENTS
      AND WARRANTY RELATED CLAIMS; ALTHOUGH WE STRIVE TO KEEP THE LITIGATION COSTS
      AND
      PAYMENTS IF ANY, TO A MINIMUM, AND WE MAINTAIN LIABILITY INSURANCE, WE CANNOT
      BE
      ASSURED THAT LITIGATION WILL NOT HAVE AN ADVERSE IMPACT ON THE OPERATIONS AND
      FINANCIAL PERFORMANCE OF THE COMPANY TAKEN AS A WHOLE.





Sovereign
      Partners, LLC (“Sovereign”), a wholly owned subsidiary of the Company, performs
      residential and commercial construction activities directly and through
      sub-contractors. Such activities frequently give rise to warranty claims and
      personal injury claims against Sovereign and other job contractors. Although
      Sovereign has procedures in place to assist in the prevention of such claims,
      litigation arising from accidents and warranty issues are an inevitable part
      of
      the business. While Sovereign maintains insurance for such claims in reasonable
      amounts to protect it from losses, we cannot predict if any pending or future
      claims will have an adverse impact on our financial condition and results of
      operations. Also, we cannot be certain that liability insurance will continue
      to
      be available to Sovereign on terms acceptable to Sovereign, if at all. Loss
      of
      Sovereign’s liability insurance could have an adverse impact on our financial
      condition and results of operations.





OUR
      COMMON STOCK IS SUBJECT TO PENNY STOCK RULES WHICH MAY BE DETRIMENTAL TO
      INVESTORS.





Our
      common stock has traded at a price substantially below $5.00 per share,
      subjecting trading in the stock to certain SEC rules requiring additional
      disclosures by broker-dealers. These rules generally apply to any non-NASDAQ
      equity security that has a market price of less than $5.00 per share, subject
      to
      certain exceptions, commonly referred to as a "penny stock." Such rules require
      the delivery, prior to any penny stock transaction, of a disclosure schedule
      explaining the penny stock market and the risks associated therewith and impose
      various sales practice requirements on broker-dealers who sell penny stocks
      to
      persons other than established customers and institutional or wealthy investors.
      For these types of transactions, the broker-dealer must make a special
      suitability determination for the purchaser and have received the purchaser's
      written consent to the transaction prior to the sale. The broker-dealer also
      must disclose the commissions payable to the broker-dealer, current bid and
      offer quotations for the penny stock and, if the broker-dealer is the sole
      market maker, the broker-dealer must disclose this fact and the broker-dealer's
      presumed control over the market. Such information must be provided to the
      customer orally or in writing before or with the written confirmation of trade
      sent to the customer. Monthly statements must be sent disclosing recent price
      information for the penny stock held in the account and information on the
      limited market in penny stocks. The additional burdens imposed upon
      broker-dealers by such requirements could discourage broker-dealers from
      effecting transactions in our common stock. These disclosure requirements may
      have the effect of reducing the level of trading activity in the secondary
      market for a stock that becomes subject to the penny stock rules.




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WE
      OPERATE IN A HIGHLY COMPETITIVE MARKET, AND WE MAY NOT BE ABLE TO COMPETE
      EFFECTIVELY AGAINST ESTABLISHED COMPETITORS WITH GREATER FINANCIAL RESOURCES
      AND
      MORE DIVERSE STRATEGIC PLANS.





We
      face
      competition from many communications providers with significantly greater
      financial, technical and marketing resources, longer operating histories,
      well-established brand names, larger customer bases and diverse strategic plans
      and technologies. Intense competition has led to declining prices and margins
      for many communications services. We expect this trend to continue as
      competition intensifies in the future. We expect significant competition from
      traditional and new communications companies, including local, long distance,
      cable modem, Internet, digital subscriber line, fixed and mobile wireless and
      satellite data service providers, some of which are described in more detail
      below. If these potential competitors successfully focus on our market, we
      may
      face intense competition which could harm our business. In addition, we may
      also
      face severe price competition for building access rights, which could result
      in
      higher sales and marketing expenses and lower profit margins.





REGULATION
      OF THE INTERNET





Due
      to
      the increasing popularity and use of the Internet by broad segments of the
      population, it is possible that laws and regulations may be adopted with respect
      to the Internet pertaining to content of Web sites, privacy, pricing, encryption
      standards, consumer protection, electronic commerce, taxation, and copyright
      infringement and other intellectual property issues. No one is able to predict
      the effect, if any, that any future regulatory changes or developments may
      have
      on the demand for our Internet access or other Internet-related services.
      Changes in the regulatory environment relating to the Internet access industry,
      including the enactment of laws or promulgation of regulations that directly
      or
      indirectly affect the costs of telecommunications access or that increase the
      likelihood or scope of competition from national or regional telephone
      companies, could materially and adversely affect our business, operating results
      and financial condition.




**Item
      3.****Controls
      and procedures**




As
      of the
      period covered by this report, we carried out an evaluation, under the
      supervision and with the participation of our Chief Executive Officer and
      Principal Accounting Officer of the effectiveness of the design and operation
      of
      our disclosure controls and procedures. Our disclosure controls and procedures
      are designed to ensure that information required to be disclosed in our reports
      filed under the Securities Act of 1934 is recorded, processed, summarized,
      and
      reported within the time periods specified in the SEC's rules and forms. Based
      on this evaluation, our Chief Executive Officer and Principal Accounting Officer
      have concluded that our controls and procedures are effective in timely alerting
      them to material financial information required to be disclosed and included
      in
      our periodic SEC filings. There has been no change in our internal control
      over
      financial reporting that occurred during the period covered by this report
      that
      has materially affected, or is reasonably likely to materially affect, our
      internal control over financial reporting. Our internal control over financial
      reporting is designed to provide reasonable assurance regarding the reliability
      of our financial reporting and preparation of financial statements for external
      reporting purposes in accordance with generally accepted accounting
      principles.





**PART
      II- OTHER INFORMATION**





**Item
      1.****Legal
      proceedings**




Initially,
      Sovereign Companies, LLC (“Sovereign”), Mountain View at T-Bone, LLC (“Mountain
      View”), and Mr. Edouard A. Garneau filed a declaratory relief action against
      certain members of Mountain View seeking a determination of the various rights
      and obligations of the members. The action is titled Sovereign Companies, LLC;
      Mountain View at T-Bone, LLC, et al. v. Yale King, et al., pending in Larimer
      County District Court in Colorado. The declaratory relief action seeks to
      clarify the roles and responsibilities of certain members and the operational
      authority of the individual managers of Mountain View. Subsequently, Sovereign
      and Mountain View have filed an amended complaint alleging additional claims
      against certain members of Mountain View. Mr. Garneau is a member of the
      Company’s Board of Directors and indirectly owns and controls shares of the
      Company’s common stock and preferred stock.




-31-
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In
      a
      related action, Sovereign and Mr. Edouard A. Garneau (“Garneau”) in his capacity
      as Manager of Sovereign and Mountain View at T-Bone, LLC (“Mountain View”), were
      named in a lawsuit brought by several individual members of Mountain View
      claiming unspecified damages for breach of contract by Sovereign and Garneau,
      and for other causes of action against Garneau individually, seeking unspecified
      damages. The suit is entitled Yale King, et al, v. Sovereign Companies LLC
      and
      Edouard A. Garneau, and was filed in Weld County District Court in Colorado.
      That action has been dismissed by the judge in Weld County, with leave to refile
      in other Colorado counties within fifteen days. Garneau is a member of the
      Company’s Board of Directors and indirectly owns and controls shares of the
      Company’s common stock and preferred stock. Sovereign disputes the allegations
      and intends to vigorously defend the action should the plaintiffs refile within
      the timeframe permitted by the judge’s order. However, the Company and the
      defendants cannot control the outcome and the extent of the losses, if any,
      that
      may be incurred.





Rocky
      Mountain Panel, LLC (a dissolved wholly-owned subsidiary of Sovereign Partners,
      LLC, a wholly-owned subsidiary of the Company), is a defendant in a lawsuit
      known as Baker Commons HOA v. Nicholas Construction, Inc. pending in the
      District Court, Denver County. The framing division of Rocky Mountain Panel,
      LLC, performed as a framing subcontractor to Nicholas Construction, Inc., at
      the
      Baker Commons development site in Denver, Colorado. The Baker Commons homeowners
      have filed a lawsuit alleging, among other things, defective construction
      against Nicholas Construction, Inc. for unspecified damages. Rocky Mountain
      Panel, LLC is represented by insurance counsel under a reservation of rights
      by
      the insurance carrier. At this time it is impossible to estimate the dollar
      amount of this potential claim. Rocky Mountain Panel, LLC and the Company intend
      to vigorously defend this action, however, the Company cannot control the
      outcome and the extent of the losses, if any, that may be incurred.





Rocky
      Mountain Panel, LLC (a dissolved wholly-owned subsidiary of Sovereign Partners,
      LLC, a wholly-owned subsidiary of the Company) is a subcontractor to a general
      contractor named in a lawsuit known as Carlyle Park HOA v. Trimark
      Communities/D.R. Horton Inc., et al. pending in the District Court, Arapahoe
      County, Colorado. The framing division of Rocky Mountain Panel, LLC, performed
      as a framing subcontractor to Trimark Communities/D.R. Horton Inc. at the
      Carlyle Park residential project in Highlands Ranch, Colorado. Rocky Mountain
      Panel was contracted to perform “finish” framing after another framing
      subcontractor performed at the project. The Carlyle Park homeowners have filed
      a
      lawsuit against Trimark Communities/D.R. Horton Inc., alleging certain defects
      in workmanship at the project, including framing. Rocky Mountain Panel has
      been
      invited by the general contractor to participate in a global mediation among
      all
      of the companies who worked on the project. In coordination with its insurance
      carrier, who is actively investigating the matter under a reservation of rights,
      Rocky Mountain Panel has thus far declined to participate in the mediation
      process. At this time it is impossible to estimate the dollar amount of this
      potential claim, as Rocky Mountain Panel has not been joined in the lawsuit.
      Should Rocky Mountain Panel, LLC, become involved in the lawsuit, the Company
      intends to vigorously defend this action. However, the Company cannot control
      the outcome and the extent of the losses, if any, that may be
      incurred.





King
      Concrete, LLC (a dissolved wholly-owned subsidiary of Sovereign Partners, LLC,
      a
      wholly-owned subsidiary of the Company), is a defendant in a proceeding known
      as
      ABCO Development Corporation v. Systems Contractors, Inc., pending in the
      Superior Court for the County of Los Angeles, California. The lawsuit alleges
      defective construction claims with respect to certain concrete components
      performed by King Concrete at a project site in Lakewood, Colorado, and seeks
      unspecified damages. King Concrete disputes these allegations and is represented
      by insurance counsel in the matter under a reservation of rights. King Concrete
      and the Company intend to vigorously defend this action, however, the Company
      cannot control the outcome and the extent of the losses, if any, that may be
      incurred.





Cardinal
      Communications, Inc, the Company is a defendant in a proceeding known as
      Exceleron v. Cardinal pending in the Dallas County of Texas District Court
      since
      August 22, 2005. Exceleron software is seeking damages of $78,848.25 together
      with interest and attorney’s fees for early termination of a billing software
      contract. Connect Paging, Inc. d/b/a Get A Phone, a wholly owned subsidiary
      of
      the Company, as intervenor is claiming damages against Exceleron the amount
      of
      which have yet to be determined. The Company intends to vigorously defend this
      action, however, the Company cannot control the outcome and the extent of the
      losses, if any, that may be incurred.




-32-
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Usurf
      TV,
      formerly known as Neighborlync, a wholly owned subsidiary of the Company that
      ceased operations in early 2005 was sued by Platte Valley Bank in Scotts Bluff
      County Court (Nebraska). The proceeding was known as Platte Valley Bank v.
      USURF
      TV, f/k/a/ Neighborlync. The Plaintiff obtained judgment for $45,000 on
      September 12, 2005, however the defendant is deemed judgment proof based on
      absence of assets and no ongoing business. The Company has recorded a $45,000
      liability in connection with this lawsuit.





Cardinal
      Communications, Inc, the Company is a defendant in an arbitration proceeding
      known as Douglas O. McKinnon v. Cardinal Communications, Inc. The hearing
      location is with the American Arbitration Association in Denver, Colorado.
      The
      arbitration was filed on July 29, 2005. Mr. McKinnon is seeking $360,000 (2
      years salary pursuant to an Employment Agreement). The Company intends to
      vigorously defend this action, however, the Company cannot control the outcome
      and the extent of the losses, if any, that may be incurred.





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




1.
            (a)
                Securities Issued. In February 2005; 9,721,950 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to DD
      Family Properties, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





2.
            (a)
                Securities Issued. In February 2005; 27,777 shares of the Company's
                series
                B convertible preferred stock
                were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to DD
      Family Properties, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





3.
            (a)
                Securities Issued. In February 2005; 3,332,700 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to
      Thunderbird Management Limited Partnership.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





4.
            (a)
                Securities Issued. In February 2005; 9,522 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to
      Thunderbird Management Limited Partnership.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-33-
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          of Contents**





5.
            (a)
                Securities Issued. In February 2005; 3,747,800 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Searls
      Family, LLLP.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





6.
            (a)
                Securities Issued. In February 2005; 10,708 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Searls
      Family, LLLP.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





7.
            (a)
                Securities Issued. In February 2005; 3,123,400 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Krantz
      Family, LLLP.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





8.
            (a)
                Securities Issued. In February 2005; 8,924 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Krantz
      Family, LLLP.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





9.
            (a)
                Securities Issued. In February 2005; 2,998,450 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Dolphin
      Bay, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-34-
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          of Contents**





10.
            (a)
                Securities Issued. In February 2005; 8,567 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Dolphin
      Bay, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





11.
            (a)
                Securities Issued. In February 2005; 993,300 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to New
      Opportunities, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





12.
            (a)
                Securities Issued. In February 2005; 2,838 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to New
      Opportunities, LLC.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





13.
            (a)
                Securities Issued. In February 2005; 7,923,650 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Kenneth
      Miller.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





14.
            (a)
                Securities Issued. In February 2005; 22,639 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Kenneth
      Miller.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-35-
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15.
            (a)
                Securities Issued. In February 2005; 470,750 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Jeffery
      Schetgen.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





16.
            (a)
                Securities Issued. In February 2005; 1,345 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Jeffery
      Schetgen.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





17.
            (a)
                Securities Issued. In February 2005; 875,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Thomas
      Beck.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





18.
            (a)
                Securities Issued. In February 2005; 2,500 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Thomas
      Beck.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





19.
            (a)
                Securities Issued. In February 2005; 875,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Brent
      E. Couch.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





20.
            (a)
                Securities Issued. In February 2005; 2,500 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Brent
      E. Couch.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-36-
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          of Contents**





21.
            (a)
                Securities Issued. In February 2005; 350,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Jeffrey
      W. Fiebig.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





22.
            (a)
                Securities Issued. In February 2005; 1,000 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Jeffrey
      W. Fiebig.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





23.
            (a)
                Securities Issued. In February 2005; 350,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Craig
      A. Cook.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





24.
            (a)
                Securities Issued. In February 2005; 1,000 shares of the Company's
                series
                B convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Craig
      A. Cook.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





25.
            (a)
                Securities Issued. In February 2005; 119,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Curt
      A.
      Bushman.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-37-
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          of Contents**





26.
            (a)
                Securities Issued. In February 2005; 340 shares of the Company's
                series B
                convertible preferred stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Curt
      A.
      Bushman.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





27.
            (a)
                Securities Issued. In February 2005; 119,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Michael
      P. Petrusich.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





28.
            (a)
                Securities Issued. In February 2005; 340 shares of the Company's
                Series B
                convertible Preferred Stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Michael
      P. Petrusich.





(c)
      Consideration. Such shares were issued pursuant to a stock purchase agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





29.
            (a)
                Securities Issued. In May 2005; 5,625,000 shares of the Company's
                common
                stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Michael
      Blank.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





30.
            (a)
                Securities Issued. In June 2005; 2,170,000 shares of the Company's
                common
                stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Edwin
      Buckmaster.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the
      Company.




-38-
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          of Contents**





31.
            (a)
                Securities Issued. In July 2005; 540,000 shares of the Company's
                common
                stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Edwin
      Buckmaster.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





32.
            (a)
                Securities Issued. In August 2005; 6,717,160 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to Edwin
      Buckmaster.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





33.
            (a)
                Securities Issued. In August 2005; 2,126,270 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to
      Beatrice Welles.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





34.
            (a)
                Securities Issued. In August 2005; 5,505,000 shares of the Company's
                common stock were issued.





(b)
      Underwriter, Purchaser or Recipient. Such shares of stock were issued to John
      Weisman.





(c)
      Consideration. Such shares were issued pursuant to a debt consulting agreement.





(d)
      Exemption from Registration. These securities are exempt from registration
      under
      the Securities Act of 1933, as amended, pursuant to the provisions of Section
      4(2) thereof, as a transaction not involving a public offering. This purchaser
      is a sophisticated investor capable of evaluating an investment in the Company.





**Item
      3.****Defaults
      upon senior securities**




None.




**Item
      4.****Submission
      of matters to a vote of security holders**




None.





**Item
      5.****Other
      Information**




**Securities
      Purchase Agreement**





On
      February 18, 2005, we acquired 100% of the membership interests of Sovereign
      Partners, LLC (“Sovereign”) from its Members in exchange for the issuance of
      shares of our common stock and shares of our newly created Series B Convertible
      Preferred Stock, $0.0001 par value per share (the "Preferred Stock"). As a
      result of the Acquisition, Sovereign is now owned and operated as a wholly
      owned
      subsidiary of our Company. Sovereign operations include real estate development
      and the related communications infrastructure for residential, multiple dwelling
      unit (apartment) and planned community developments ("developments"). See
“Sovereign Acquisition” included in Item 2. Management’s Discussion And Analysis
      Of Financial Condition And Results Of Operations above for a detail description
      of the transaction and information related to the purchase.




-39-
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          of Contents**





**ByLaws
      Amendments**




In
      connection with the Acquisition Agreement, we amended our Bylaws to provide
      that
      the provisions of Nevada Revised Statutes Sections 78.378 to 78.3793 do not
      apply to the acquisition of our capital stock by Sovereign Partners, LLC, its
      Members or its affiliates in connection with the Acquisition Agreement. These
      sections would have triggered compliance with certain take-over measures that
      our Board of Directors determined should not apply to this
      transaction.





In
      addition, on April 20, 2005, we amended our Bylaws to provide that vacancies
      on
      the Board of Directors may be filled by a majority vote of the remaining
      Directors, and that such newly appointment Director shall serve out the term
      of
      his or her predecessor and if no such term is designated, until the next annual
      meeting of shareholders.





**Item
      6.****Exhibits
      and Reports on Form 8-K**




EXHIBIT
                NO.
            
            DESCRIPTION(1)
            3.1
            
            Articles
                of Incorporation of Registrant.(6)
            3.2
            
            Bylaws
                of Registrant, as amended April 20, 2005.(3)
            3.5
            
            Articles
                of Amendment to Articles of Incorporation of
                Registrant.(4)
            3.6
            
            Articles
                of Amendment to Articles of Incorporation of
                Registrant.(8)
            3.7
            
            Certificate
                of Designation of Series A Convertible Preferred Stock.(6)
            3.8
            
            Certificate
                of Designation of Series B Convertible Preferred Stock.(8)
            3.9
            
            Articles
                of Amendment to Articles of Incorporation of
                Registrant.(2)
            4.1
            
            Specimen
                Common Stock Certificate.(5)
            4.2
            
            Specimen
                Series A Preferred Stock Certificate.(5)
            4.3
            
            Specimen
                Series B Preferred Stock Certificate.(7)
            4.4
            
            Proxy
                Statement Pursuant to Section 14(a) of the Securities Act of 1934.


(6)
            21.1
            
            Subsidiaries
                of Registrant.#
            31.1
            
            Certification
                pursuant to rules 13A-14 and 15D-14 of the Securities Exchange Act
                of 1934
                of President and CEO.#
            31.2
            
            Certification
                pursuant to rules 13A-14 and 15D-14 of the Securities Exchange Act
                of 1934
                of Principal Accounting Officer.#
            32.1
            
            CERTIFICATION
                PURSUANT TO18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
                906 OF
                THE SARBANES-OXLEY ACT OF 2002 of CEO and Principal Accounting
                Officer.





(1)
            Incorporated
                by reference from Registrant's Registration Statement on Form S-1,
                Commission File No. 333-26385.


(2)
            Incorporated
                by reference from Registrant's Registration Statement on Form S-1,
                Commission File No. 333-96027.


(3)
            Incorporated
                by reference from Registrant's Current Report on Form 8-K filed with
                the
                SEC on July 29, 1998.


(4)
            Incorporated
                by reference from Registrant's Current Report on Form 8-K filed with
                the
                SEC on July 13, 1999.


(5)
            Incorporated
                by reference from Registrant’s Annual Report on Form 10-KSB filed with the
                SEC on March 31, 2005 and amended on April 6,
                2005.


(6)
            Incorporated
                by reference from Registrant’s Report on Form 10-QSB filed with the SEC on
                June 3, 2005.


(7)
            Incorporated
                by reference from Registrant’s Proxy Statement Pursuant to Section 14(a)
                of the Securities Act of 1934 filed with the SEC on May 4, 2005.


(8)
            Incorporated
                by reference from Registrant’s Report on Form 10-QSB filed with the SEC on
                August 18, 2005.


**#**
            **Filed
                Herewith**






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 **Table
          of Contents**





**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.




**CARDINAL
              COMMUNICATIONS, INC.**Date: November
              21, 2005
            By:
            /s/ *Edouard
              A. Garneau*Edouard
                A. Garneau
              Chief Executive
                Officer







-41-