**U.S.
        SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-KSB/A**
 
 o ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
        EXCHANGE ACT OF 1934
 For
        the
        fiscal year ended December 31, 2005
 OR
 ý TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
        EXCHANGE ACT OF 1934
 Commission
        file number 000-49709
 
 **CARDIFF
        INTERNATIONAL, INC.**
 (Name
        of
        Small Business Issuer as specified in its charter)
 
 Colorado
              
              84-1044583(State
                  or other jurisdiction of
              
              (I.R.S.
                  employerincorporation
                  or organization)
              
              identification
                  No.)
 
 16255
        Ventura Boulevard, Suite 525
 Encino,
        CA 91436
 (Address
        of principal executive offices)
 
 Issuer’s
        telephone number, including area code: **** (818)
        879-9722
 
 Securities
        registered pursuant to Section 12(b) of the Exchange Act: None
 
 Securities
        registered pursuant to Section 12(g) of the Exchange Act:
 No
        Par
        Value Common Stock
 
 Check
        whether the Issuer (1) has filed all reports required to be filed by Section
        13
        or 15(d) of the Exchange Act during the preceding 12 months (or for such
        shorter
        period that the registrant was required to file such reports), and (2) has
        been
        subject to such filing requirements for the past 90 days. (1) Yes ý No o ; (1)
        Yes ý No o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of Issuer’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K 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 o
 
 The
        Issuer’s revenues for the fiscal year ended December 31, 2005 were
        $-0-
 
 As
        of
        April 13, 2006, there were 21,389,176 shares of the Issuer’s common stock issued
        and outstanding of which 11,975,800 were held by non-affiliates. As of April
        13,
        2006, there was no active market for the Issuer’s common stock.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE: NONE
 
  
  TABLE
        OF
        CONTENTS
 
 PagePART
                  I
              1Item
                  1. Description of Business
              1Item
                  2. Properties
              5Item
                  3. Legal Proceedings
              6Item
                  4. Submission of Matters to a Vote of Security Holders
              6PART
                  II
              6Item
                  5. Market for the Registrant’s Common Stock and Related Security Holder
                  Matters
              6Item
                  6. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operation
              10Item
                  7. Financial Statements
              16Item
                  8. Changes and Disagreements with Accountants on Accounting and
                  Financial
                  Disclosure
              31Item
                  8A. Controls and Procedures
              31Item
                  8B. Other Information
              31PART
                  III
              32Item
                  9. Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act
              32Item
                  10. Executive Compensation
              33Item
                  11. Security Ownership of Certain Beneficial Owners and
                  Management
              35Item
                  12. Certain Relationships and Related Party Transactions
              36Item
                  13. Exhibits
              36Item
                  14. Principal Accountant Fees and Services
              37
 
 
  ii
   **PART
        I**
 
 **ITEM1.
        DESCRIPTION OF BUSINESS**
 
 On
        November 10, 2005, Cardiff International, Inc. (“Cardiff”), a Colorado
        corporation, acquired Legacy Card Company, Inc. (“Legacy”), a privately held
        Nevada corporation in a triangular merger transaction (the “Merger”). The
        effective date of the Merger was November 10, 2005. As a result of the Merger,
        Legacy is now a wholly-owned subsidiary of Cardiff and the stockholders of
        Legacy prior to the Merger are now the controlling stockholders of Cardiff.
 
 Legacy
        was formed as a California limited liability company in August 2001. In April
        2005, Legacy was converted into a Nevada corporation.
 
 The
        Plan
        of Merger provided for the issuance by Cardiff to the stockholders of Legacy
        of
        an aggregate of 18,000,000 shares of Cardiff common stock, no par value per
        share in connection with the Merger. As a result of the Merger, the former
        stockholders of Legacy are now the controlling stockholders of Cardiff. As
        part
        of the Merger, the officers and directors of Cardiff, resigned from their
        positions as officers and directors of Cardiff and the officers and directors
        of
        Legacy were appointed as officers and directors of Cardiff at the effective
        time
        of the Merger.
 
 As
        a
        result of the Merger described above, on November 1, 2005 Legacy became a
        subsidiary of Cardiff. Legacy is a marketing and sales firm that has developed
        the Simply Brilliant Tuition Card, which combines a Section 529 College Savings
        Plan with the credit card (the Simply Brilliant Tuition Card). Legacy is
        currently in final negotiations with a national bank to be the issuing bank.
        The
        Simply Brilliant Tuition Card is not currently available but it is expected
        to
        be launched in St. Louis, Missouri in the third or fourth quarter of
        2006.
 
 In
        January 2006, Cardiff changed its fiscal year end to December 31 st from
        September 30 th to have
        the same year end as Legacy.
 
 **Description
        of Business of Legacy**
 
 Legacy
        was formed to offer and market a unique credit card. Legacy is a marketing
        and
        sales firm that has developed the Simply Brilliant Tuition Card, a credit
        card
        that provides card users with an opportunity to save for their children’s
        education on a tax-free basis while making purchases utilizing this credit
        card.
        The Simply Brilliant Tuition Card has been developed to be tied into a card
        user’s “529 College Savings Plan” which is described below. The Simply Brilliant
        Tuition Card is a regular credit card but with the tax-free savings added
        benefits to the card holder. There are numerous credit cards that offer users
        cash back or other rewards. Legacy management believes that the Simply Brilliant
        Tuition Card program is a unique value-added credit card program that allows
        consumers using the credit card to save for a child’s college education while
        making normal consumer purchases. The Simply Brilliant Tuition Card is a
        unique,
        tax-free educational savings reward credit card that concentrates consumer
        loyalty and buying on national retailers in the Legacy merchant coalition.
  
  The
        potential success of the Simply Brilliant Tuition Card involves the
        participation of four groups: (i) Legacy as the marketer of the credit card,
        (ii) a national bank as the issuer of the credit card, (iii) a coalition
        of
        merchants who will make contributions to the consumer’s designated 529 Education
        Account, and (iv) the card user. As a result of contributions made to a card
        user’s 529 Savings Plan, we expect that the card user will be loyal customers
        of
        coalition merchants and the national bank.
  The
        Simply Brilliant Tuition Card is expected to be launched in St. Louis, Missouri
        during the third or fourth quarter of 2006. Several retailers have signed-on
        to
        the Legacy rewards program. These retailers will contribute an anticipated
        1% to
        10% a card user spends to the cardholder’s child’s “529” tax-free educational
        fund account. This retailer contribution is expected to be supplemented by
        a
        0.5% to 1.0% contribution from a national bank, the credit card issuer. The
        national bank contribution is applicable no matter where the cardholder shops,
        encouraging regular and daily use of the Simply Brilliant Tuition card.
 
 The
        Legacy Card Company marketing plan ** is
        the
        result of four years development, focus groups and other market research
        studies. The Simply Brilliant brand, image, programming, sales and marketing
        have been designed with the intent to appeal to American parents and
        grandparents saving for a child’s college expenses.
 
 ***Description
        of Section 529 Plans***
 
 Section
        529 plans were authorized by congress to provide tax incentives for savings
        for
        qualified higher education expenses (QHEE). Earnings in 529 plans are tax-free
        if withdrawals are made for QHEE, otherwise there is a 10% penalty on the
        earnings, which are taxed at ordinary rates. Although nonqualified withdrawals
        are subject to a 10% penalty on the earnings, taxes on the earnings are deferred
        until withdrawal. Federal legislation was passed in 1996 to allow states
        to
        create section 529 plans.
 
 Section
        529 plans are of two types. One is a tuition credit plan and the other is
        a
        savings plan. Section 529 provides that ‘qualified state tuition programs’ shall
        be exempt from taxation. Such plans must be established and maintained by
        a
        State or agency or instrumentality thereof. Most states have outsourced the
        management of their programs to investment advisory or financial services
        firms.
        While each state has its own specific requirements, the salient requirements
        applicable to all plans are:
 
 1.
        Only
        cash contributions are allowed.
 
 2.
        There
        must be separate accounting for each designated beneficiary.
 
 3.
        There
        may be no investment direction by any contributor to, or designated beneficiary
        under, such program. The account owner may choose among several broad-based
        investment options once per year.
 
 4.
        No
        interest in the program may be used as security for a loan.
  2
  5.
        The
        program must provide adequate safeguards to prevent contributions on behalf
        of a
        designated beneficiary in excess of those necessary to provide for the QHEE
        of
        the beneficiary.
 
 6.
        There
        must be a penalty imposed on distributions from an account that are not used
        for
        QHEE, except death or disability of the designated beneficiary, or to the
        extent
        the designated beneficiary receives a scholarship.
 
 QHEE
        include tuition, fees, books, supplies, and equipment required for the
        enrollment or attendance of a designated beneficiary at an eligible educational
        institution. Reasonable costs for room and board are also QHEE for students
        who
        are enrolled at least half-time. An eligible educational institution is one
        which is described in section 481 of the Higher Education Act of 1965 (20
        U.S.
        C. 1088) and which is eligible to participate in a program under Title IV
        of
        such act. The designated beneficiary is the individual designated at the
        commencement of participation in the qualified state tuition program. If
        the
        designated beneficiary is changed, the new beneficiary must be a member of
        the
        original designated beneficiary’s family (as defined in the code) to avoid
        treatment as a nonqualified withdrawal.
 
 ***Launching
        the Simply Brilliant Tuition Card***
 
 We
        anticipate that the Simply Brilliant Tuition Card ** will
        be
        launched in St. Louis, Missouri, during the third or fourth quarter of 2006.
        Local participation from the Chamber of Commerce has assisted Legacy in
        obtaining merchant participation and in structuring events for card
        solicitation. Our event marketing program is anticipated to include stadium
        events, concerts, sporting events, shopping malls, etc. Additional local
        advertising will include radio coverage, billboard/outdoor advertising, and
        public relations. Legacy believes that special event marketing efforts will
        provide a platform allowing it to have access to a large base of potential
        card
        holders.
 
 The
        Simply Brilliant Tuition Card is more than a credit card. Legacy believes
        it is
        a unique new way for America’s families to save for college while spending.
        Unlike most other rewards programs (airline miles, 1% cash back), the Legacy
        reward program brings to bear a strong emotive pull—saving for the card users’
child. Legacy’s consumer benefit analysis suggests that typical American parents
        using the Legacy credit card will save over $7,500 toward their child’s college
        tuition.
  To
        produce these tangible benefits for its cardholders, Legacy has established
        a
        merchant coalition. Each of its merchants involved in the Simply Brilliant
        Tuition Card Plan has agreed to make a 1-10% (average 3%) contribution to
        the
        cardholder’s child’s 529 account. For families, they “save while they spend,” on
        purchases they would have made anyway. For our coalition merchants, we have
        introduced a new marketing dynamic that is expected to change consumer buying
        patterns/preferences, increasing consumer expenditures at participating
        merchants.
 
 Legacy
        believes its program has significant advantages for the credit card issuer,
        by
        inducing consumers to maintain their credit card with the issuing bank during
        the period college savings is of concern for parents.
  3
  ***Legacy
        Merchant Coalition***
 
 As
        of
        March 31, 2006, approximately 500 St. Louis area Merchants have signed up
        to
        participate in the Legacy Merchant Coalition. These Merchants include, but
        are
        not limited to the following: Alamo Car Rental, National Car Rental, The
        Ritz
        Carlton Hotel, Silver Dollar City, Six Flaggs, St. Louis Zoo, St. Louis Science
        Center, White Waters Amusement Parks, Harrah’s Casino, Ameristar Casino’s,
        Medicine Shoppe (16 locations), Clarkson Eye Care Centers, Schnuck Groceries
        (49
        locations), Bass Pro, U-Gas (30 locations), and Kinko’s.
 
 Each
        merchant participating in the Legacy Merchant Coalition enters into an agreement
        with Legacy to contribute a portion of the purchases made by the Simply
        Brilliant Tuition cardholder, to the cardholder’s 529 Savings Plan.
 
 ***Issuer
        of the Simply Brilliant Tuition Card***
 ·
 ·  Legacy
        is
        in final negotiations with several major national banks to become the issuer
        of
        the Simply Brilliant Tuition Card.
 ·
 ***Section
        529 Plan Fund Managers***
 
 One
        or
        more Section 529 Fund Managers will administer the 529 Plans for cardholders.
        These administrators are expected to be national brokerage firms. We anticipate
        that the Fund Managers will compensate Legacy as follows:
 
 ·
            $2-
                $4 average per activation for each new account
                activated. 
 ·
            100
                basis points for all Section 529 funds held under management from
                the
                Simply Brilliant Tuition Cards. 
 ***Various
        Agreements***
 
 In
        connection with the activities related to the launch of the Simply Brilliant
        Tuition Card in St. Louis, Legacy has entered into several short-term agreements
        with independent marketing, advertising and other consultants. It is intended
        that each of the consultants will provide services to Legacy which will aid
        in
        the marketing of the Simply Brilliant Tuition Card. These consulting agreements
        include the following:
 
 Consultant
              Contract
                  Date
              Termination
                  Date
              Monthly
                  FeeDelray
                  Consulting & Management
              9/1/05
              December
                  2006
              $4,000-
                  $5,000(1)Buck
                  Communication Group
              1/1/06
              December
                  2006
              $5,000(1)Delta
                  One Investments
              3/23/05
              Monthly
              (2)
 
  4
  (1)  In
        addition to the monthly fee, the consultant will be paid a royalty based
        upon
        the number of Simply Brilliant Tuition Cards issued to customers of certain
        associations. The royalty is to be paid for a period of three
        years.
 
 (2)  An
        initial retainer of $5,000 was paid to the consultant. The consultant charges
        $200 per hour for services actually rendered.
 
 Legacy
        entered into an “Outsourcing of Services Agreement” with CDR, LLC. (“CDR”). CDR
        is in the business of tracking of credit card transactions and
        micro-contributions, and related administrative services.
 
 ***Employees***
 
 Legacy
        currently has six employees but anticipates it will hire additional personnel
        as
        the Simply Brilliant Tuition Card is launched.
 
 **Overview
        of Cardiff Prior to the Merger**
 
 Prior
        to
        the Merger, Cardiff was an inactive, publicly held, SEC reporting company.
        Cardiff was incorporated under the laws of the State of Colorado under the
        name
“Cardiff Financial, Inc.,” on October 14, 1986. Effective April 1989, Cardiff
        completed an acquisition transaction with, and changed its name to, United
        American, Inc. The transaction was subsequently rescinded and on December
        4,
        1989, Cardiff changed its name from United American, Inc., to Cardiff
        International, Inc. Since that time, Cardiff has been a shell corporation
        seeking to commence active business operations by acquiring a business
        opportunity.
 
 Immediately
        prior to the Merger with Legacy, there were approximately 725,000 shares
        of
        Cardiff common stock issued and outstanding. Following the Merger, there
        were
        approximately 19,900,000 shares of Cardiff common stock issued and outstanding.
 
 Legacy
        Acquisition Corp. (“LAC”) was a Nevada corporation which, prior to the Merger,
        was a wholly-owned subsidiary of Cardiff. LAC was formed solely to facilitate
        the Merger. As a result of the Merger, LAC was merged into Legacy and no
        longer
        exists as of the effective time of the Merger.
  **ITEM2.
        PROPERTIES**
 
 We
        have
        has not entered into any lease agreements for office facilities. We are
        currently using facilities in St. Louis, Missouri provided by the St. Louis
        Chamber of Commerce and facilities in Encino, California provided by a firm
        that
        provides certain professional services to us. We will obtain additional
        facilities as needed.
 
  5
  **ITEM3.
        LEGAL PROCEEDINGS**
 
 Except
        as
        provided herein, there have been no events under any bankruptcy act, no criminal
        proceedings and any judgments or injunctions material to the evaluation of
        the
        ability and integrity of any director or executive officer during the last
        five
        years.
 
 Adrian
        Butash v. Legacy Card Company, et al. LASC Case No.: SC 081 779. Mr.
        Butash filed a Complaint against Legacy Card Company, and individual officers,
        Daniel Thompson and Gary Teel, for claimed back wages. He alleges that his
        employment was not terminated in January of 2002 but continued for a period
        of
        time thereafter under the terms and conditions of the original contract.
        The
        matter was forced to trial on or about June 2, 2005 without counsel representing
        Legacy Card Company and/or the individual officers. The Court issued its
        Ruling
        and Order which was subsequently challenged by the individuals and the Company.
        Consequently, the Court found that Butash was entitled to a sum of $261,958.42
        in back pay under the breach of contract theory. The Court also found Daniel
        Thompson joint and severally liable for this sum allegedly paying himself
        a
        salary and not paying Mr. Butash. Legacy and Mr. Thompson made a motion for
        a
        new trial and such motion has been granted and the original judgment has
        been
        set aside. We are unable to predict the ultimate outcome of this
        matter.
 
 **ITEM4.
        SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
 
 No
        matters were submitted to Cardiff’s shareholders for a vote during the quarter
        ended December 31, 2005.
 
 **PART
        II**
 
 **ITEM5.
        MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED SECURITY
        HOLDER MATTERS**
 
 Our
        common stock is quoted on the OTC “Bulletin Board” under the symbol “CDIF”.
        During the last two years, there has only been limited trading in our common
        stock.
 
 **Shares
        Issued in Unregistered Transactions**
 
 We
        issued
        shares of our common stock in unregistered transactions during 2005. All
        of the
        following shares of common stock issued were issued in non registered
        transactions in reliance on Section 4(2) of the Securities Act of 1933, as
        amended (the “Securities Act”). As
        a
        result of the Merger, Cardiff issued 18,000,000 shares of its common stock
        to
        the shareholders of Legacy pursuant to the terms of the Plan of
        Merger.
  6
  
 Shareholder
              Shares
                  Issued
              ConsiderationBAM
                  Venture Partners
              80,000
              MergerJack
                  Benudiz
              40,000
              MergerMitchell
                  J. Block Trust
              88,000
              MergerSamuel
                  Cornelius Boland
              1,000
              MergerSean
                  Mikal Boland
              1,000
              MergerRuthven
                  A. Bonaparte
              16,000
              MergerKathryn
                  & Robert Bregman
              80,000
              MergerMichael
                  J. Cagley
              6,664
              MergerTim
                  Caldwell
              8,000
              MergerKenneth
                  Kai Chang
              200,000
              MergerJack
                  Chegwidden
              16,000
              MergerMichael
                  F. Coady
              689,980
              MergerJohn
                  S. & Robin G. Cone
              40,000
              MergerJoel
                  A. Davidson
              17,000
              MergerMark
                  J. Davidson
              17,000
              MergerLisa
                  M. Davis
              16,000
              MergerStanley
                  and Silvia Davis Trust Agreement
              16,000
              MergerWLD
                  Davis Holdings, LLC
              80,000
              MergerDorsar
                  Partners
              320,000
              MergerJames
                  & Alison Doub
              20,000
              MergerBob
                  Dougherty
              6,000
              MergerDavid
                  & Diane Dougherty
              40,000
              MergerRobert
                  Fall
              4,000
              MergerJudith
                  Foreman
              72,000
              MergerJohn
                  Forrester
              10,000
              MergerJimmy
                  Fung
              40,000
              MergerRandolph
                  K. Ginsberg
              5,000
              MergerCesar
                  A. Giraldo
              20,000
              MergerLucy
                  Gordon & Mark Ptashne
              120,000
              MergerChristopher
                  M. Gregoire
              50,000
              MergerCrystal
                  Griffith
              1,000
              MergerMichael
                  E. Halpern & Julie A Witt
              116,000
              MergerDavid
                  Ingram
              40,000
              MergerHoward
                  Jacobson Trust
              20,000
              MergerHoward
                  Jacobson
              292,000
              MergerSultan
                  Ali Jamal & Laurie Jamal
              254,664
              MergerJack
                  Kay
              20,000
              MergerJennifer
                  Shin Kim
              200,000
              MergerB.
                  Brand Konheim
              100,000
              MergerChad
                  Ladd
              1,000
              MergerLorie
                  Ladd
              1,000
              MergerMike
                  Ladd
              1,000
              Merger
  7
  
 Shareholder
              Shares
                  Issued
              ConsiderationNickol
                  Ladd
              1,000
              MergerLebow
                  Family Revocable Trust
              1,032,000
              MergerRaul
                  Lehmann
              8,000
              MergerLeslie
                  Levine
              10,000
              MergerLincoln
                  Trust Co./Leslie Levine IRA
              20,000
              MergerJ.
                  Levy
              350,000
              MergerLarry
                  A. & Carol F. Miller
              769,980
              MergerMargaret
                  D. Moore
              80,000
              MergerWilliam
                  E. & Darlene N. Murphy
              8,000
              MergerGayle
                  J. Nagy
              50,000
              MergerKenneth
                  R. Natori
              40,000
              MergerGary
                  R. O'Brien
              60,000
              MergerCindy
                  O'Donnell
              40,000
              MergerDawn
                  M. Philosophas
              20,000
              MergerLloyd
                  & Bethe Pilch Family Trust
              4,000
              MergerCurtis
                  B. Pickert MD
              20,000
              MergerJack
                  Polevoi
              518,664
              MergerWilliam
                  Alvin Robson, Jr.
              10,000
              MergerPeggy
                  Scheer
              140,000
              MergerHoward
                  and Linda Shrier
              120,000
              MergerRoy
                  Scott
              20,000
              MergerBurt
                  R. Shapiro
              8,000
              MergerRonald
                  Sobol
              10,000
              MergerNicole
                  Mallory Staben
              80,000
              MergerJames
                  Steinberg
              60,000
              MergerJeffrey
                  Steinberg
              60,000
              MergerSunbelt
                  Investment Company
              90,000
              MergerSundance
                  Homes of California
              200,000
              MergerTeel
                  Family Trust
              2,400,000
              MergerGary
                  R. Teel
              3,934,848
              MergerThompson
                  Family Trust
              1,600,000
              MergerDaniel
                  R. Thompson
              1,478,528
              MergerWarren
                  C. Thompson
              40,000
              MergerTools
                  for the Trade
              200,000
              MergerLarry
                  Turobiner
              160,000
              MergerAlan
                  Varsha
              46,672
              MergerClelland
                  J. Ward
              4,000
              MergerRobert
                  Weiss
              60,000
              MergerJerome
                  White
              60,000
              MergerDeniece
                  White
              100,000
              MergerKenneth
                  Wilding
              920,000
              MergerDr.
                  Michael Datlow
              18,181
              $20,000
  8
  
 Shareholder
              Shares
                  Issued
              ConsiderationThe
                  Escalera Living Trust
              45,000
              $49,500Shant
                  Karlubian
              25,000
              $27,500Robert
                  A. Williams
              18,181
              $20,000Jack
                  Polevoi
              100,000
              $110,000Carol
                  Vorberg
              150,000
              $165,000James
                  Lewis
              200,000
              $220,000James
                  H. Lehr
              45,454
              $50,000Keith
                  D. Yoder
              50,000
              $55,000John
                  Poetker
              50,000
              $55,199Neil
                  V. Moody
              50,000
              $55,000Duane
                  Jenson
              45,454
              $50,000Sheila
                  and Scott Maylin
              10,000
              $11,000Robert
                  W. Koch
              25,000
              $27,500Russell
                  C. Garner
              25,000
              $27,500Maricopa
                  Equity Management
              300,000
              $220,000Gregg
                  N. Dyste
              50,000
              $55,000Alice
                  Kelly
              22,727
              $25,000Gregory
                  D. Farnam
              25,000
              $27,500
 
 No
        underwriter or placement agent was involved in the above referenced
        transactions. Cardiff is relying on the exemption from registration provided
        by
        Section 4(2) of the Securities Act of 1933, as amended, (the “Securities Act”),
        and Rule 506 of Regulation D promulgated by the Securities Act.
 
 **Holders**
 
 As
        of
        April 13, 2006, there were 21,389,176 shares of common stock outstanding
        and
        approximately 714 stockholders of record of common stock.
 
 **Dividends**
 
 We
        have
        not paid any cash dividends since our inception and do not anticipate or
        contemplate paying dividends in the foreseeable future.
 
 **Purchases
        of Equity Securities by the Small Business Issuer and Affiliated
        Purchasers**
 
 None
 
  9
  **Limitation
        on Directors’ Liability, Charter Provisions and Other
        Matters**
 
 Colorado
        law authorizes corporations to limit or eliminate the personal liability
        of
        directors to corporations and their stockholders for monetary damages for
        breach
        of directors’ fiduciary duty of care. The duty of care requires that, when
        acting on behalf of the corporation, directors must exercise an informed
        business judgment based on all material information reasonably available
        to
        them. Absent the limitations authorized by Colorado law, directors are
        accountable to corporations and their stockholders for monetary damages for
        conduct constituting gross negligence in the exercise of their duty of care.
        Colorado law enables corporations to limit available relief to equitable
        remedies such as injunction or rescission. Our Certificate of Incorporation
        limits the liability of our directors to us or to our stockholders (in their
        capacity as directors but not in their capacity as officers) to the fullest
        extent permitted by Colorado law.
 
 The
        inclusion of this provision in the Certificate of Incorporation may have
        the
        effect of reducing the likelihood of derivative litigation against directors
        and
        may discourage or deter stockholders or management from bringing a lawsuit
        against directors for breach of their duty of care, even though such an action,
        if successful, might otherwise have benefited the Company and its stockholders.
 
 Our
        Bylaws provide indemnification to our officers and directors and certain
        other
        persons with respect to certain matters. Insofar as indemnification for
        liabilities arising under the 1933 Act may be permitted to our directors
        and
        officers, we have been advised that in the opinion of the Securities and
        Exchange Commission, such indemnification is against public policy as expressed
        in the 1933 Act and is, therefore, unenforceable.
 
 **Transfer
        Agent and Registrar**
 
 Our
        transfer agent is Atlas Stock Transfer, 5899 South State Street, Salt Lake
        City,
        Utah 84107; telephone (801) 266-7151.
 
 
 **ITEM6.
        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATION**
  
 The
        following discussion of our financial condition and results of operations
        should
        be read in conjunction with our Financial Statements and Notes thereto for
        the
        same period. This Management’s Discussion and Analysis of Financial Condition
        and Results of Operations contain descriptions of our expectations regarding
        future trends affecting our business. These forward-looking statements and
        other
        forward-looking statements made elsewhere in this document are made in reliance
        upon safe harbor provisions of the Private Securities Litigation Reform Act
        of
        1995. The following discussion sets forth certain factors we believe could
        cause
        actual results to differ materially from those contemplated by the
        forward-looking statements.
 
  10
  ***Overview***
 
 Cardiff
        International, Inc. (“Cardiff”), acquired Legacy Card Company, Inc. (“Legacy”)
        in a merger transaction in November 2005. The transaction was accounted for
        as a
        reverse merger transaction whereby Legacy, although a subsidiary of Cardiff,
        was
        deemed to be the surviving entity for accounting purposes. In January 2006,
        Cardiff changed its fiscal year end to December 31 st from
        September 30 th to have
        the same year end as Legacy.
 
 Legacy
        is
        a marketing and sales firm that has developed the Simply Brilliant Tuition
        Card.
        Legacy anticipates the credit card will be available to the public commencing
        in
        the third or fourth quarter of 2006. Legacy’s business plan calls for revenue to
        be generated as customers sign up for the credit card and when purchases
        are
        made with the credit card. Legacy has generated no revenues since its inception
        and has expended considerable funds in developing its business plan and funding
        its operations to date.
 
 Legacy
        was formed as a limited liability company in August 2001. In April 2005,
        Legacy
        was converted into a Nevada corporation.
 
 The
        auditors’ report for the years ended December 31, 2005 and 2004 include a going
        concern qualification.
  ***Liquidity
        and Capital Resources***
 
 **At
        December 31, 2005**
 
 Since
        inception, the principal sources of cash have been funds raised from the
        sale of
        common stock, advances from shareholders, and loans in the form of debentures
        and convertible notes. At December 31, 2005 we had no cash or cash equivalents,
        and total assets amounted to $53,248 which included fixed assets and other
        assets.
 
 Net
        cash
        used in operating activities was $1,098,940 and $542,665 for the years ended
        December 31, 2005 and 2004, respectively. The increase in the amount of net
        cash
        used in operating activities during 2005 compared to 2004 was attributable
        to
        increased compensation expense, increased interest expense and increased
        costs
        of issuance of common stock and warrants.
  Net
        cash
        provided by financing activities was $1,096,296 and $547,928 for the years
        ended
        December 31, 2005 and 2004, respectively. The cash flows from financing
        activities in 2005 were attributable to proceeds from sale of common stock
        of
        $277,000, proceeds from unaffiliated third party convertible notes of
        $1,098,699, proceeds from a note of $100,000, and $162,414 of proceeds from
        shareholder advances. The cash flows from financing activities in 2004 were
        attributable to proceeds from unaffiliated third party notes of $451,428,
        and
        $96,500 of proceeds from member advances.
 
 We
        have
        incurred operating losses since its inception and at December 31, 2005, it
        had
        an accumulated deficit of $5,518,564.
  11
  Current
        liabilities at December 31, 2005 consisted primarily of accounts payable
        of
        $841,522, amounts due to shareholders of $453,135, convertible and
        non-convertible promissory notes in the amount of $718,000, and accrued interest
        in the amount of $103,183.
 
 Gary
        R.
        Teel and Daniel Thompson, the officers and directors of the Company, have
        entered into employment agreements calling for a monthly salary of $25,000
        ($300,000 annually); however, both have waived their unpaid salaries. This
        waiver of salary not only reduced our operating expenses and loss, it reduced
        the amount of capital needed to fund our operations. During the year ended
        December 31, 2005, we repaid $258,600 to Mr. Teel and $291,180 to Mr. Thompson
        on outstanding loans.
 
 There
        can
        be no assurance that we will be able to obtain sufficient capital from debt
        or
        equity transactions or from operations in the necessary time frame or on
        terms
        acceptable to us. Should we be unable to raise sufficient funds, we may be
        required to curtail our operating plans and possibly relinquish rights to
        portions of our technology or products. In addition, increases in expenses
        or
        delays in product development may adversely impact our cash position and
        may
        require cost reductions. No assurance can be given that we will be able to
        operate profitably on a consistent basis, or at all, in the future.
 
 In
        order
        to continue our operations, development of our products, and implementation
        of
        our business plan, we need additional financing. During the first quarter
        of
        2006 we raised $453,600 from the sale of 430,545 shares of our common stock
        and
        $35,500 in new loan transactions. We
        are
        also attempting to obtain additional working capital in a term loan transaction.
        Additionally, we anticipate that our credit card will be launched in the
        third
        or fourth quarter of 2006 thereby commencing the generation of revenue shortly
        thereafter. In addition, we also anticipate that we will continue to operate
        at
        a loss for the foreseeable future. There can be no assurance that we will
        be
        successful in obtaining financing or in our efforts to increase revenues
        and
        decrease operating costs. If we are unable to obtain additional financing,
        we
        may be required to reduce operations, reduce or discontinue further research
        and
        development, and/or reduce or eliminate further acquisition
        activities.
 
 ***Results
        of Operations***
 
 **For
        the Years Ended December 31, 2005 and 2004**
 
 We
        had no
        operating revenues for the years ended December 31, 2005 or December 31,
        2004.
 
 We
        had
        operating expenses of $1,569,743 for the year ended December 31, 2005 and
        $1,040,047 for the year ended December 31, 2004, representing an increase
        of
        $529,696. The increase in operating expenses in 2005 was primarily due to
        increases in consulting fees, advertising fees, and travel and entertainment
        costs.
 
 We
        had a
        net loss of $1,668,498 for the year ended December 31, 2005 and a net loss
        of
        $1,058,911 for the year ended December 31, 2004, representing an increase
        of
        $609,587.
 
  12
  ***Inflation***
 
 We
        do not
        believe that inflation will negatively impact our business plans.
 
 **Plan
        of Operation**
 
 Our
        current business plan is described in “Item 1 - Description of Business”
 
 **Critical
        Accounting Policies**
 
 This
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations discuss the Company’s Financial Statements, which have been prepared
        in accordance with accounting principles generally accepted in the United
        States.
 
 We
        have
        not yet commenced active operations. The preparation of our financial statements
        requires management to make estimates and assumptions that affect reported
        amounts of assets and liabilities and the disclosure of contingent assets
        and
        liabilities at the date of the financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. On an ongoing basis,
        management evaluates its estimates and assumptions. We anticipate that
        management will base its estimates and judgments on historical experience
        of the
        operations we may acquire and on various other factors that are believed
        to be
        reasonable under the circumstances, the results of which form the basis for
        making judgments about the carrying value of assets and liabilities that
        are not
        readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions.
 
 Management
        believes the following critical accounting policies, among others, will affect
        its more significant judgments and estimates used in the preparation of our
        Consolidated Financial Statements:
 
 We
        utilize the fair value based method of accounting for stock-based compensation,
        in accordance with Statement of Financial Accounting Standards No.
        123.
 
  13
  **Recent
        Accounting Pronouncements**
 
 In
        May
        2005, the FASB issued Statement of Financial Accounting Standards (SFAS)
        No.
        154, "Accounting Changes and Error Corrections", an amendment to Accounting
        Principles Bulletin (APB) Opinion No. 20, "Accounting Changes", and SFAS
        No. 3,
        "Reporting Accounting Changes in Interim Financial Statements". Though SFAS
        No.
        154 carries forward the guidance in APB No. 20 and SFAS No. 3 with respect to
        accounting for changes in estimates, changes in reporting entity, and the
        correction of errors, SFAS No. 154 establishes new standards on accounting
        for
        changes in accounting principles, whereby all such changes must be accounted
        for
        by retrospective application to the financial statements of prior periods
        unless
        it is impracticable to do so. SFAS No. 154 is effective for accounting changes
        and error corrections made in fiscal years beginning after December 15, 2005,
        with early adoption permitted for changes and corrections made in years
        beginning after May 2005. The Company will implement SFAS No. 154 in its
        fiscal
        year beginning January 1, 2006. We are currently evaluating the impact of
        this
        new standard, but believe that it will not have a material impact upon the
        Company's financial position, results of operations or cash flows.
 
 In
        February 2006, the FASB issued Statement of Financial Accounting Standards
        No.
        155, "Accounting for Certain Hybrid Financial Instruments" ("SFAS 155"),
        which
        amends SFAS No. 133, "Accounting for Derivatives Instruments and Hedging
        Activities" ("SFAS 133") and SFAS No. 140, "Accounting for Transfers and
        Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS 140").
        SFAS 155 amends SFAS 133 to narrow the scope exception for interest-only
        and
        principal-only strips on debt instruments to include only such strips
        representing rights to receive a specified portion of the contractual interest
        or principle cash flows. SFAS 155 also amends SFAS 140 to allow qualifying
        special-purpose entities to hold a passive derivative financial instrument
        pertaining to beneficial interests that itself is a derivative instruments.
        The
        Company believes that this new standard will not have a material impact on
        the
        Company's financial position, results of operations or cash flows.
 
  14
  **Forward
        Outlook and Risks**
  This
        Form
        10-KSB contains and incorporates by reference certain “forward-looking
        statements” within the meaning of Section 27A of the Securities Act and Section
        21E of the Exchange Act with respect to results of our operations and
        businesses. All statements, other than statements of historical facts, included
        in this Form 10-KSB, including those regarding market trends, our financial
        position, business strategy, projected costs, and plans and objectives of
        management for future operations, are forward-looking statements. In general,
        such statements are identified by the use of forward- looking words or phrases
        including, but not limited to, “intended,” “will,” “should,” “may,” “expects,”
“expected,” “anticipates,” and “anticipated” or the negative thereof or
        variations thereon or similar terminology. These forward-looking statements
        are
        based on our current expectations. Although we believe that the expectations
        reflected in such forward-looking statements are reasonable, there can be
        no
        assurance that such expectations will prove to be correct. Because
        forward-looking statements involve risks and uncertainties, our actual results
        could differ materially. Important factors that could cause actual results
        to
        differ materially from our expectations are disclosed hereunder and elsewhere
        in
        this Form 10-KSB. These forward-looking statements represent our judgment
        as of
        the date of this Form 10-KSB. All subsequent written and oral forward-looking
        statements attributable to Cardiff are expressly qualified in their entirety
        by
        the Cautionary Statements. We disclaim, however, any intent or obligation
        to
        update our forward-looking statements.
 
 ***Operating
        History.*** We have
        not commenced active business operations. We anticipate we will commence
        active
        operations during the third or fourth quarter of 2006. Potential investors
        should be aware that there is only a limited basis upon which to evaluate
        our
        prospects for achieving our intended business objectives. We have limited
        resources and have had no revenues since our formation.
 
 ***Possibility
        of Total Loss of Investment.*** An
        investment in Cardiff is an extremely high risk investment, and should not
        be
        made unless the investor has no need for current income from the invested
        funds
        and unless the investor can afford a total loss of his or her investment.
 
 ***Additional
        Financing Requirements.*** We will
        likely be required to seek additional financing in order to fund our operations
        and carry out our business plan. In order to fund our operations and effect
        additional acquisitions, we will be required to obtain additional capital.
        There
        can be no assurance that such financing will be available on acceptable terms,
        or at all. We do not have any arrangements with any bank or financial
        institution to secure additional financing and there can be no assurance
        that
        any such arrangement, if required or otherwise sought, would be available
        on
        terms deemed to be commercially acceptable and in our best
        interest.
 
 ***No
        Public Market for Securities*** .
        There
        is no active public market for our common stock and we can give no assurance
        that an active market will develop, or if developed, that it will be sustained.
 
  15
  ***Auditor’s
        Opinion has a Going Concern Qualification*** .
        Our
        auditor’s report dated March 24, 2006 for the years ended December 31, 2005 and
        2004 and for the period from inception through December 31, 2005 includes
        a
        going concern qualification which states that our significant recurring
        operating losses and negative working capital raise substantial doubt about
        our
        ability to continue as a going concern.
 
 ***We
        do not anticipate paying any dividends and any gains from your investment
        in our
        stock will have to come from increases in the price of such
        stock.*** **** We
        currently intend to retain any future earnings for use in our business and
        do
        not anticipate paying any cash dividends in the foreseeable future.
 
 ***We
        Operate in a Competitive Market.*** The
        credit card industry is competitive and new offerings and technologies are
        becoming available regularly. We cannot guarantee that we will compete
        successfully against our potential competitors, especially those with
        significantly greater financial resources or brand name
        recognition.
  **ITEM7.**  **FINANCIAL
        STATEMENTS**
 
 **Index
        to Financial Statements**
 
 
 
 **Page**Independent
                  Auditors’ Report
              17Balance
                  Sheets
              18Statements
                  of Operations
              19Statements
                  of Cash Flows
              20-21Statements
                  of Shareholders’ Equity
              22Notes
                  to Financial Statements
              23
                  - 30
 
  16
   **REPORTOF
        INDEPENDENT REGISTERED**
 **PUBLIC
        ACCOUNTING FIRM**
 
 
 
 
 To
        the
        Board of Directors and Members
 Cardiff
        International, Inc. dba Legacy Card Company
 
 We
        have
        audited the accompanying consolidated balance sheets of Cardiff International,
        Inc. dba Legacy Card Company (a development stage company) (the “Company”) as of
        December 31, 2005 and 2004 and the related statements of operations,
        shareholders’ equity and cash flows for the years then ended and for the period
        from inception through December 31, 2005. These financial statements are
        the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audits.
  
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
  
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Cardiff International,
        Inc.
        dba Legacy Card Company as of December 31, 2005 and 2004, and the results
        of its
        operations and cash flows for the years then ended and for the period from
        inception through December 31, 2005, in conformity with accounting principles
        generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        financial statements, the Company has sustained operating losses since its
        inception and has negative working capital and an accumulated deficit during
        the
        years ended December 31, 2005 and 2004. These conditions raise substantial
        doubt
        about the Company's ability to continue as a going concern. Management's
        plans
        regarding those matters also are described in Note 1. The financial statements
        do not include any adjustments that might result from the outcome of this
        uncertainty.
  
 /s/
        Rose,
        Snyder & Jacobs
 A
        Corporation of Public Accountants
 
 Encino,
        California
 March
        24,
        2006
 
  17
    **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **BALANCESHEETS**
 **DECEMBER
        31, 2005 AND 2004**
 
 ASSETS2005
              
              2004CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              -
              
              $
              5,144Deposit
                  in escrow account
              
              
              -
              
              
              442,000TOTAL
                  CURRENT ASSETS
              
              
              -
              
              
              447,144FIXED
                  ASSETS:Artwork
              
              
              6,536
              
              
              6,536Computer
                  equipment
              
              
              71,050
              
              
              71,050Domain
                  names
              
              
              1,250
              
              
              1,250Furniture
                  and fixtures
              
              
              72,984
              
              
              70,484Leasehold
                  improvements
              
              
              9,201
              
              
              9,201Office
                  equipment
              
              
              31,180
              
              
              31,180Software
              
              
              1,596
              
              
              1,596Accumulated
                  depreciation
              
              
              (156,149
              )
              
              (136,146
              )FIXED
                  ASSETS, NET
              
              
              37,648
              
              
              55,151OTHER
                  ASSETS:Deposits
              
              
              600
              
              
              600Loan
                  fees, net
              
              
              15,000
              
              
              37,500TOTAL
                  ASSETS
              
              $
              53,248
              
              $
              540,395LIABILITIES
                  AND SHAREHOLDERS' EQUITY (DEFICIT)CURRENT
                  LIABILITIES:Book
                  overdraft
              
              $
              26,408
              
              $
              -Accounts
                  payable
              
              
              841,522
              
              
              818,387Interest
                  payable
              
              
              103,183
              
              
              27,316Payroll
                  and payroll tax payable
              
              
              -
              
              
              6,205Advances
                  from shareholders
              
              
              453,135
              
              
              826,591Note
                  payable - Legacy Investors, current
              
              
              618,000
              
              
              -Note
                  payable - Maricopa Equity ManagementCorporation,
                  current
              
              
              100,000
              
              
              -TOTAL
                  CURRENT LIABILITIES
              
              
              2,142,248
              
              
              1,678,499NONCURRENT
                  LIABILITIES:Note
                  payable - Legacy Investors, noncurrent
              
              
              -
              
              
              1,000,000TOTAL
                  LIABILITIES
              
              
              2,142,248
              
              
              2,678,499SHAREHOLDERS
                  EQUITY (DEFICIT):Common
                  stock, no par value; 30,000,000 sharesauthorized;
                  20,892,724 and 17,519,328 sharesissued
                  and outstanding
              
              
              3,236,991
              
              
              1,711,962Additional
                  paid in capital
              
              
              208,474
              
              
              -Deferred
                  compensation
              
              
              (15,901
              )
              
              -Deficit
                  accumulated during the development stage
              
              
              (5,518,564
              )
              
              (3,850,066
              )TOTAL
                  SHAREHOLDERS' EQUITY (DEFICIT)
              
              
              (2,089,000
              )
              
              (2,138,104
              )TOTAL
                  LIABILITIES AND SHAREHOLDERS'EQUITY
                  (DEFICIT)
              
              $
              53,248
              
              $
              540,395
 
 See
        independent auditors’ report
 and
        notes
        to financial statements.
   18
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTSOF
        OPERATIONS**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD**
 **AUGUST
        29, 2001 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2005**
 
 August
                  29, 2001(Date
                  of Inception)Years
                  Ended December 31,
              
              through2005
              
              2004
              
              December
                  31, 2005REVENUE
              
              $
              -
              
              $
              -
              
              $
              -COST
                  OF SALES
              
              
              -
              
              
              -
              
              
              -GROSS
                  PROFIT
              
              
              -
              
              
              -
              
              
              -OPERATING
                  EXPENSES:Consulting
                  and outside services
              
              
              622,986
              
              
              113,784
              
              
              1,256,849Advertising
              
              
              200,000
              
              
              23,800
              
              
              363,800Legal
                  services
              
              
              167,560
              
              
              253,956
              
              
              577,348Rent
              
              
              4,934
              
              
              204,951
              
              
              411,586Guaranteed
                  payments
              
              
              -
              
              
              178,561
              
              
              512,958Salaries
                  and wages
              
              
              -
              
              
              45,791
              
              
              630,946Other
                  operating expenses
              
              
              574,263
              
              
              219,204
              
              
              1,610,517TOTAL
                  OPERATING EXPENSES
              
              
              1,569,743
              
              
              1,040,047
              
              
              5,364,004NET
                  INCOME (LOSS) FROMOPERATIONS
              
              
              (1,569,743
              )
              
              (1,040,047
              )
              
              (5,364,004
              )OTHER
                  INCOME AND (EXPENSES):Sublease
                  rental income
              
              
              -
              
              
              55,979
              
              
              55,979Interest
                  income
              
              
              -
              
              
              -
              
              
              6,768Misc.
                  income
              
              
              48,812
              
              
              -
              
              
              48,812Interest
                  expense
              
              
              (147,567
              )
              
              (74,843
              )
              
              (266,119
              )TOTAL
                  OTHER INCOMEAND
                  (EXPENSES)
              
              
              (98,755
              )
              
              (18,864
              )
              
              (154,560
              )INCOME
                  (LOSS) BEFOREINCOME
                  TAXES
              
              
              (1,668,498
              )
              
              (1,058,911
              )
              
              (5,518,564
              )NET
                  INCOME (LOSS)
              
              $
              (1,668,498
              )
              $
              (1,058,911
              )
              $
              (5,518,564
              )Basic
                  and diluted earnings (loss)per
                  share
              
              
              (0.09
              )
              
              (0.06
              )Weighted
                  average sharesoutstanding
              
              
              18,296,085
              
              
              17,617,325
 
 See
        independent auditors’ report
 and
        notes
        to financial statements
 
  19
   **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTSOF
        CASH FLOWS**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD**
 **AUGUST
        29, 2001 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2005**
 
 August
                  29, 2001(Date
                  of Inception)Years
                  Ended December 31,
              
              through2005
              
              2004
              
              December
                  31, 2005CASH
                  FLOW FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (1,668,498
              )
              $
              (1,058,911
              )
              $
              (5,518,564
              )Adjustments
                  to reconcile net loss tonet
                  cash used in operating activities:Depreciation
                  and amortization
              
              
              42,502
              
              
              53,607
              
              
              186,148Compensation
                  expense
              
              
              106,839
              
              
              -
              
              
              106,839Issuance
                  of common stock for loan costs
              
              
              110,000
              
              
              -
              
              
              110,000Issuance
                  of warrants as loan costs
              
              
              85,734
              
              
              -
              
              
              85,734(Increase)
                  decrease in:Deposits
              
              
              -
              
              
              16,430
              
              
              (600
              )Increase
                  (decrease) in:Accounts
                  payable
              
              
              83,135
              
              
              371,270
              
              
              963,094Interest
                  payable
              
              
              147,553
              
              
              71,908
              
              
              260,973Payroll
                  and payroll tax payable
              
              
              (6,205
              )
              
              3,031
              
              
              -NET
                  CASH USED INOPERATING
                  ACTIVITIES
              
              
              (1,098,940
              )
              
              (542,665
              )
              
              (3,806,376
              )CASH
                  FLOW FROM INVESTING ACTIVITIESAcquisition
                  of equipment
              
              
              (2,500
              )
              
              -
              
              
              (193,797
              )NET
                  CASH USED ININVESTING
                  ACTIVITIES
              
              
              (2,500
              )
              
              -
              
              
              (193,797
              )CASH
                  FLOW FROM FINANCING ACTIVITIESProceeds
                  from shareholder advances
              
              
              162,414
              
              
              96,500
              
              
              902,901Repayments
                  of shareholder advances
              
              
              (568,225
              )
              
              -
              
              
              (568,225
              )Proceeds
                  from note payable-Legacy Investors
              
              
              -
              
              
              451,428
              
              
              451,428Proceeds
                  from note payable-Maricopa Equity
              
              
              100,000
              
              
              -
              
              
              100,000Proceeds
                  from convertible notes payable
              
              
              1,098,699
              
              
              -
              
              
              1,098,699Proceeds
                  from sale of common stock
              
              
              277,000
              
              
              -
              
              
              1,988,962Book
                  overdraft
              
              
              26,408
              
              
              -
              
              
              26,408NET
                  CASH PROVIDED BYFINANCING
                  ACTIVITIES
              
              
              1,096,296
              
              
              547,928
              
              
              4,000,173NET
                  INCREASE (DECREASE)IN
                  CASH
              
              
              (5,144
              )
              
              5,263
              
              
              -CASH
                  AT BEGINNING OF THE YEAR
              
              
              5,144
              
              
              (119
              )
              
              -CASH
                  AT END OF YEAR
              
              $
              -
              
              $
              5,144
              
              $
              -SUPPLEMENTAL
                  DISCLOSURESInterest
                  paid in cash
              
              $
              -
              
              $
              2,935
              
              $
              5,132
 
 See
        independent auditors’ report and notes to financial
        statements
   20
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTS
        OF CASH FLOWS**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD**
 **AUGUST
        29, 2001 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2005**
 
 NON-CASH
        ACTIVITIES
 
 Accrued
        interest in the amounts of $32,356, $44,592 and $122,273 were capitalized
        to
        shareholder advances for the years ended December 31, 2005 and 2004, and
        for the
        period from August 29, 2001 (inception) through December 31, 2005,
        respectively.
 
 During
        the year ended December 31, 2005, convertible debt in the amount of $1,098,699
        plus the related accrued interest of $39,330, was converted into 998,635
        shares
        of common stock.
 
 Out
        of
        the $1,000,000 debentures from Legacy Investors, $106,572 was used to pay
        loan
        related fees, and $442,000 remained in an escrow account at December 31,
        2004.
        During the year ended December 31, 2005, the escrow funds were returned to
        Legacy Investors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
        independent auditors’ report
 and
        notes
        to financial statements
  21
   **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTSOF
        SHAREHOLDERS’ EQUITY**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD**
 **AUGUST
        29, 2001 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2005**
 
 AdditionalCommon
                  Stock
              
              Paid
                  in
              
              Deferred
              
              AccumulatedShares
              
              Amount
              
              Capital
              
              Compensation
              
              Deficit
              
              TotalBALANCE,
                  AUGUST 29, 2001(Date
                  of Inception)
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Issuance
                  for cash, 2001
              
              
              2,066,717
              
              
              200,833
              
              
              -
              
              
              -
              
              
              -
              
              
              200,833Issuance
                  for cash, 2002
              
              
              10,703,678
              
              
              1,040,129
              
              
              -
              
              
              -
              
              
              -
              
              
              1,040,129Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,182,273
              )
              
              (1,182,273
              )BALANCE,
                  DECEMBER 31, 2002
              
              
              12,770,395
              
              
              1,240,962
              
              
              -
              
              
              -
              
              
              (1,182,273
              )
              
              58,689Issuance
                  for cash, 2003
              
              
              4,846,930
              
              
              471,000
              
              
              -
              
              
              -
              
              
              -
              
              
              471,000Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,608,882
              )
              
              (1,608,882
              )BALANCE,
                  DECEMBER 31, 2003
              
              
              17,617,325
              
              
              1,711,962
              
              
              -
              
              
              -
              
              
              (2,791,155
              )
              
              (1,079,193
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,058,911
              )
              
              (1,058,911
              )BALANCE,
                  DECEMBER 31, 2004
              
              
              17,617,325
              
              
              1,711,962
              
              
              -
              
              
              -
              
              
              (3,850,066
              )
              
              (2,138,104
              )Issuance
                  for cash, March 2005
              
              
              360,175
              
              
              35,000
              
              
              -
              
              
              -
              
              
              -
              
              
              35,000Issuance
                  for cash, April 2005
              
              
              22,500
              
              
              45,000
              
              
              -
              
              
              -
              
              
              -
              
              
              45,000Stock
                  options issued, May 2005
              
              
              -
              
              
              -
              
              
              63,790
              
              
              -
              
              
              -
              
              
              63,790Stock
                  options issued, August 2005
              
              
              -
              
              
              -
              
              
              39,869
              
              
              -
              
              
              -
              
              
              39,869Issuance
                  for consideration of loan,October
                  2005
              
              
              100,000
              
              
              110,000
              
              
              -
              
              
              -
              
              
              -
              
              
              110,000Conversion
                  of notes payable,November
                  2005
              
              
              998,635
              
              
              1,138,029
              
              
              -
              
              
              -
              
              
              -
              
              
              1,138,029Warrants
                  issued in connection withnotes
                  payable , November 2005
              
              
              -
              
              
              -
              
              
              85,734
              
              
              -
              
              
              -
              
              
              85,734Stock
                  options issued, November 2005
              
              
              -
              
              
              -
              
              
              19,081
              
              
              (15,901
              )
              
              -
              
              
              3,180Recapitalization
                  of common equity,note
                  5
              
              
              1,615,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Issuance
                  for cash, November 2005
              
              
              135,908
              
              
              149,500
              
              
              -
              
              
              -
              
              
              -
              
              
              149,500Issuance
                  for cash, December 2005
              
              
              43,181
              
              
              47,500
              
              
              -
              
              
              -
              
              
              -
              
              
              47,500Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,668,498
              )
              
              (1,668,498
              )BALANCE,
                  DECEMBER 31, 2005
              
              
              20,892,724
              
              $
              3,236,991
              
              $
              208,474
              
              $
              (15,901
              )
              $
              (5,518,564
              )
              $
              (2,089,000
              )
 
 See
        independent auditors’ report and notes to financial statements.
  22
   **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTESTO
        FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 1.  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES
  Organization
        and Nature of Operations
 Legacy
        Card Company was formed as a Limited Liability Company on August 29, 2001.
        On
        April 18, 2005, the Company converted from a California Limited Liability
        Company to a Nevada Corporation. On November 10, 2005, the Company merged
        with
        Cardiff International, Inc. (“Cardiff”), a publicly held corporation. The
        purpose of the Company is to develop a co-marketing agreement with a premier
        national bank to offer an integrated financial program to consumers. Legacy
        Card
        Company, LLC is a credit card marketing company. The Company offers a new
        credit
        card that takes advantage of Internal Revenue Code Section 529 educational
        savings tax-reform legislation, providing significant tax-free savings and
        economic incentives for families to save early and often for college tuition
        and
        related expenses. The Company will derive its revenues from new credit card
        one-time account fees, new mutual (ESA) one-time account fees, credit card
        dollar purchase fees, any negotiated mutual fund (ESA) annual account management
        fees and any negotiated credit card annual renewal fees. The Company expects
        to
        commence the launch of their credit card in a test market in Spring
        2006.
 
 Development
        Stage Activities
 The
        Company is focusing its efforts in two areas during the development stage.
        First, the Company is devoting substantial time to the development of the
        credit
        card technology software, which will be used to capture information at the
        credit card transaction level. Second, the Company is working to contract
        with
        merchants to participate in the program and add incentives for consumers
        to both
        use the credit card and make purchases from these merchants.
 
 Going
        Concern
 The
        Company has sustained operating losses since its inception and has negative
        working capital and an accumulated deficit. The accompanying financial
        statements have been prepared on a going concern basis of accounting, which
        contemplates continuity of operations, realization of assets and liabilities
        and
        commitments in the normal course of business. The accompanying financial
        statements do not reflect any adjustments that might result if the Company
        is
        unable to continue as a going concern. The ability of the Company to continue
        as
        a going concern and appropriateness of using the going concern basis is
        dependent upon, among other things, additional cash infusions. Management
        has
        prospective investors, and believes the raising of capital will allow the
        Company to pursue the development of its credit card business.
 
 Cash
        and Cash Equivalents
 The
        Company considers all highly liquid investments with an original maturity
        of
        three (3) months or less to be cash equivalents.
  See
        independent auditors’ report
  23
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 1.  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Property
        and Equipment
 Property
        and equipment are carried at cost. Expenditures for major renewals and
        betterments that extend the useful lives of property and equipment are
        capitalized. Expenditures for maintenance and repairs are charged to expense
        as
        incurred. Depreciation and amortization of property and equipment is provided
        using the straight-line method for financial reporting purposes at rates
        based
        on the following estimated useful lives:
  
 YearsArtwork
              
              7Computer
                  equipment
              
              3Domain
                  and software
              
              3Furniture
                  and fixtures
              
              5Office
                  equipment
              
              5Leasehold
                  improvements
              
              life
                  of lease
 
 During
        the years ended December 31, 2005 and 2004, depreciation expense was $42,502
        and
        $53,607, respectively.
 
 Advertising
        Costs
 Advertising
        costs are charged to expense when incurred. During the years ended December
        31,
        2005 and 2004, the amount charged to expense was $200,000 and $23,800,
        respectively.
 
 Research
        and Development
 Research
        and development costs are charged to expense when incurred. These costs
        primarily include the costs associated with the development of the credit
        card
        software technology. During the years ended December 31, 2005 and 2004, the
        amount charged to expense was $0 and $36,410, respectively.
 
 Use
        of
        Estimates
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect certain reported amounts and disclosures. Management uses its historical
        records and knowledge of its business in making these estimates. Accordingly,
        actual results could differ from those estimates.
 
 
 
 
 See
        independent auditors’ report
  24
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 1.  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Income
        Taxes
 The
        Company was treated as a partnership for federal income tax purposes up to
        April
        18, 2005, when it converted to a Nevada Corporation. Consequently, federal
        income taxes were not payable by, or provided for, the Company. Members were
        taxed individually on their shares of the Company’s earnings. The Company’s net
        income or loss was allocated among the members in accordance with the
        regulations of the Company.
 
 Earnings
        (Loss) per Share
 Earnings
        (loss) per share is computed using the weighted average number of common
        shares
        outstanding during the periods presented. Warrants and options to purchase
        shares of the Company’s stock may have a dilutive effect on the Company’s
        earnings per share in the future, but are not included in the calculation
        for
        the years ended December 31, 2005 and 2004 because they have an antidilutive
        effect in those periods.
 
 Stock
        options
 The
        Company accounts for its stock options under SFAS No. 123.
 
 2.  RELATED
        PARTY TRANSACTIONS
 
 Advances
        from Shareholders
 The
        Company borrows funds from Daniel Thompson and Gary Teel, both are Shareholders
        and Officers of the Company. The terms of repayment stipulate the loans are
        due
        twenty-four (24) months after the launch of the Legacy Tuition Card at an
        annual
        interest rate of six (6) percent. The balance due to both Daniel Thompson
        and
        Gary Teel at December 31, 2005 and 2004, including accrued interest, is as
        follows:
 December
                  312005
              
              2004Daniel
                  Thompson
              $
                  226,568
              
              $
                  413,296Gary
                  Teel
              226,567
              
              413,295Total
              $
                  453,135
              
              $826,591
 
 Currently,
        the Company’s headquarters are located in the home of one of the officers and no
        rent is charged to the Company.
 
 Employment
        Agreements
 The
        employment agreements that both Daniel Thompson and Gary Teel have with the
        Company provides for their compensation to be $25,000 each, per month. Both
        Daniel Thompson and Gary Teel have waived their right to receive any unpaid
        balances.
 
 See
        independent auditors’ report
  25
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 3.  NOTES
        PAYABLE, ESCROW DEPOSIT & LOAN FEES
 
 Legacy
        Investors, LLC
 On
        August
        5, 2004, the Company entered into a loan agreement with Legacy Investors,
        LLC, a
        Florida limited liability company. The initial loan amount of $1,000,000
        (the
“Initial Loan Amount”) was made by Legacy Investors, LLC upon the satisfaction
        of the post-closing covenant, comprising of a convertible debenture in the
        amount of $500,000 and an initial debenture for the amount of $500,000. Lenders
        required funds to be deposited into an escrow account. Disbursements were
        required to be from an escrow agent.
 
 The
        convertible debenture in the amount of $500,000 bears an interest rate of
        10.00%
        per year and matures in August 2006, when the principal and accrued interest
        is
        due and payable in full. The indebtedness was convertible into Series A
        Preferred Membership interests of the Company.
 
 The
        initial debenture in the amount of $500,000 bears an interest rate of 10.00%
        per
        year. Principal payments shall be payable in thirty-six (36) consecutive
        monthly
        installments, commencing August 2004, and are payable out of the distributable
        net cash of the Company.
 
 Under
        an
        event of default, the interest rate on both debentures increases to 18% and
        the
        terms of repayment and the maturity dates are subject to change. Although
        Legacy
        Investors, LLC has raised an issue that the loan might be in default, management
        does not believe they are in breach of the terms of the agreement, and therefore
        no additional liability has been recorded relating to a higher interest
        rate.
 
 The
        Company entered into a security agreement stating that the assets of the
        Company
        as well as the stock pledges are collateral on this loan.
 
 As
        of
        December 31, 2004, the Company received $451,428 of these funds, assumed
        $106,572 of fees and the balance of $442,000 was deposited in an escrow account.
        The balance remaining in the escrow account at December 31, 2005 and 2004
        was $0
        and $442,000, respectively. In May 2005, $382,000 was paid back to Legacy
        Investors, LLC and $60,000 of fees was left with the escrow agent. Management
        believes this $60,000 was not owed to the escrow agent, but, nevertheless
        excluded the $60,000 from its assets. The balance on the note payable was
        $618,000 at December 31, 2005.
 
 The
        loan
        fees related to the portion of loan funds that were not received by the Company
        as of December 31, 2005, was expensed during the year, leaving an amortized
        balance of loan fees of $15,000.
 
 
 See
        independent auditors’ report
  26
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 3.  NOTES
        PAYABLE, ESCROW DEPOSIT & LOAN FEES (Continued)
 
 Corporate
        Capital Management, LLC and VentureBanc, Inc.
 On
        March
        28, 2005, the Company entered into a loan agreement of approximately $1,000,000
        with Corporate Capital Management, LLC and VentureBanc, Inc. Simultaneously
        with
        the merger with Cardiff International, Inc. (See Note 5), Corporate Capital
        Management, LLC and VentureBanc, Inc. agreed to loan an additional $875,000
        to
        the Company. These notes bear interest at 8% per annum and the term of the
        notes
        is 6 months after receipt of the loan. At the date of the merger, the balance
        outstanding of $1,027,296 (including accrued interest) converted into 898,635
        shares of common stock of the Company at the rate of $1.10 per share. In
        addition, the holders of the notes received warrants to purchase 50% of the
        shares into which the notes are convertible. The term of the warrants is
        5 years
        and the exercise price is $1.75 per share. The value of the warrants,
        established at $85,734 under the Black Scholes method was expensed in
        2005.
 
 Convertible
        Promissory Note
 On
        October 19, 2005, the Company entered into a loan agreement in the amount
        of
        $110,000 with an unaffiliated third-party. The loan bears interest at 8%
        per
        annum and matures on April 16, 2006, 6 months after the date of issuance.
        At the
        date of the merger, the balance outstanding of $110,733 (including accrued
        interest) converted into 100,000 shares of common stock of the Company at
        the
        rate of $1.10 per share.
 
 Maricopa
        Equity Management Corporation
 On
        October 27, 2005, the Company entered into a loan agreement in the amount
        of
        $100,000 with Maricopa Equity Management Corporation. The loan bears interest
        at
        8% per annum and became due at the closing of the merger with Cardiff
        International, Inc. As of December 31, 2005, the balance of the loan of $100,000
        remained outstanding. In connection with their loan, the Company issued 100,000
        shares of common stock ($110,000), which was expensed in 2005.
 
 4.  COMMITMENTS
        AND CONTINGENCIES
 
 Operating
        Leases
 On
        February 1, 2003, the Company signed a lease with Red Bull North America,
        Inc.
        for office space. The lease commenced February 1, 2003 and was to expire
        March
        31, 2006. The Company vacated the premises in 2004. On April 22, 2003, the
        Company signed a lease with Pitney Bowes for mailing equipment. This lease
        commenced April 22, 2003 and expires October 30, 2006. In July 2006, the
        Company
        assumed auto leases from the two officers of the Company, of which one expires
        in December 2006 and the other expires in July 2008. Future minimum rental
        payments under these leases are:
 
 See
        independent auditors’ report
 
  27
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 4.  COMMITMENTS
        AND CONTINGENCIES (Continued)
 
 Operating
        Leases (Continued)
 
 2006
              
              $
                  73,3112007
              
              16,3142008
              
              9,517Total
              
              $
                  99,142
 
 Rent
        expense for the years ended December 31, 2005 and 2004 was $4,934 and $201,951,
        respectively.
 
 In
        April
        2004, the Company began subletting their office on a month-to-month basis.
        During the years ended December 31, 2005 and 2004, the Company received rental
        income of $0 and $55,979, respectively.
 
 Litigation
 On
        June
        2, 2005, the Company went to trial for a complaint filed by a prior officer
        of
        the Company, alleging that his employment was not terminated in January 2002,
        and claiming back wages. The Court issued a ruling and order that found that
        the
        officer was entitled to back pay. At December 31, 2005 and 2004, the Company
        had
        $261,958 accrued as a payable to this officer, which does not include interest,
        should the officer be entitled to interest. The Company is disputing this
        claim.
        The officer also claimed approximately $56,000 for pre judgment interest.
        The
        Company does not believe it owes this money and has not accrued this
        $56,000.
 
 The
        Company is in negotiation with its landlord, Red Bull North America, Inc.,
        who
        is holding the Company’s property and equipment as collateral for the balance
        owed.
 
 On
        December 15, 2005, the Company settled a mutual dispute with Sheppard Mullin
        Richter and Hampton concerning the representation of the Company. In full
        and
        final settlement, the Company is released from all sums claimed by Sheppard
        Mullin Richter and Hampton under the contract and the Company released Sheppard
        Mullin Richter and Hampton of all claims, which resulted in a gain of
        $48,812.
 
 From
        time
        to time, the Company is also involved in claims and litigations arising during
        the course of business.
 
 
 
 
 See
        independent auditors’ report
  28
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 5.  RECAPITALIZATION
 
 In
        November 2005, Legacy Card consummated a transaction, pursuant to which Cardiff
        International, Inc. acquired all the outstanding shares of Legacy Card, with
        Legacy Card surviving as a wholly-owned subsidiary of Cardiff International.
        Legacy Card recorded this transaction as a recapitalization followed by the
        issuance of shares to the shareholders of Cardiff International. Prior to
        the
        recapitalization transaction, Cardiff International was not an operating
        company, and had no assets. Under the terms of the transaction, Cardiff
        International issued 18,000,000 shares of Cardiff International common stock
        to
        the former shareholders of Legacy Card in exchange for all the outstanding
        shares of Legacy Card.
 
 6.  INCOME
        TAXES
 
 The
        Company has loss carryforwards that it can use to offset a certain amount
        of
        taxable income in the future. The loss carryforwards are subject to significant
        limitations due to change in ownership. The Company is currently analyzing
        its
        amount of loss carryforwards, but has recorded a valuation allowance for
        the
        entire benefit due to the uncertainty of its realization.
 
 7.  STOCK
        OPTIONS AND WARRANTS
 
 Stock
        Options
 The
        Company granted stock options to consultants and employees during 2005. These
        stock options have been valued using the Black Scholes method, with the
        following assumptions:
 
 Interest
                  rate
              
              4.01
              %Dividend
                  yield
              
              -Term
              
              5
                  YearsExpected
                  volatility
              
              30.00
              %
 
 The
        following is a schedule summarizing stock option activity for the year ended
        December 31, 2005:
 Number
                  of
              
              Weighted-AverageOptions
              
              Exercise
                  PriceOutstanding
                  at January 1, 2005
              
              $
                  -
              
              $
                  -Granted
              
              425,000
              
              1.37Exercised
              
              -
              
              -Forfeited
              
              -
              
              -Outstanding
                  at December 31, 2005
              
              $
                  425,000
              
              $
                  1.37Exercisable
                  at December 31, 2005
              
              $
                  341,667
              
              $
                  1.37
 
 See
        independent auditors’ report
  29
  **CARDIFF
        INTERNATIONAL, INC. dba LEGACY CARD COMPANY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005 AND 2004**
 
 7.
              STOCK
                  OPTIONS AND WARRANTS (Continued)
 
 Stock
        Options (Continued)
 
 Information
        about stock options outstanding at December 31, 2005 is summarized
        below:
 
 Weighted
                  Average
              
              WeightedExercise
              
              Number
              
              Remaining
              
              Average
              
              Number
              
              Weighted
                  AveragePrice
              
              Outstanding
              Contractual
                  Life
              
              Exercise
                  Price
              
              Exercisable
              Exercise
                  Price$
                  1.25
              
              325,000
              
              5
                  years
              
              $
                  1.25
              
              325,000
              
              $
                  1.25$
                  1.75
              
              100,000
              
              5
                  years
              
              $
                  1.75
              
              16,667
              
              $
                  1.75
 
 Warrants
 
 The
        Company also issued warrants to purchase shares of common stock in 2005.
        The
        following is a summary of the warrants outstanding at December 31,
        2005:
 
 Number
                  of Warrants
              
              Exercise
                  Price
              
              Maturity449,318
              
              $1.75
              
              April-August
                  2010
 
 8.  SUBSEQUENT
        EVENTS
 
 In
        the
        first quarter of 2006, $453,600 was contributed to the Company in exchange
        for
        430,545 shares of common stock.
 
 On
        January 3 rd and
        4 th ,
        2006
        new notes totaling $35,500 were issued. These notes bear interest at 8% per
        annum and the repayment is due on July 3 rd and
        4 th ,
        2006.
        These notes are convertible into shares of common stock of the Company at
        the
        option of the holder at the rate of $1.10 per share. In addition, the holders
        of
        the notes will receive warrants to purchase 50% of the shares into which
        the
        notes are convertible. The term of the warrants is 5 years and the exercise
        price is $1.75 per share.
 
 
 
 
 
 
 See
        independent auditors’ report
 
 
 30
 **ITEM8.
        CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE**
 
 On
        March
        15, 2006 we filed a Form 8-K to announce the resignation of our previous
        independent registered public accounting firm and the appointment of Rose
        Snyder
& Jacobs as our new independent registered public accounting firm. There
        were no disagreements with the former accountant on any matter of accounting
        principles or practices, financial statement disclosure, or auditing scope
        or
        procedure.
 
 **ITEM8A.
        CONTROLS AND PROCEDURES** ****
 
 We
        maintain disclosure controls and procedures designed to ensure that information
        required to be disclosed in our reports filed under the Securities Exchange
        Act
        of 1934, as amended (the Exchange Act), is recorded, processed, summarized,
        and
        reported within the required time periods, and that such information is
        accumulated and communicated to our management, including our Chief Executive
        Officer and Chief Financial Officer, as appropriate, to allow for timely
        decisions regarding disclosure.
 
 There
        has
        been no change in our internal control over financial reporting during the
        year
        ended December 31, 2005 that has materially affected, or is reasonably likely
        to
        materially affect, our internal control over financial reporting. Since the
        most
        recent evaluation date, there have been no significant changes in our internal
        control structure, policies, and procedures or in other areas that could
        significantly affect our internal control over financial reporting.
 
 ***The
        Sarbanes-Oxley Act of 2002 (the “Act”)*** imposed
        many requirements regarding corporate governance and financial reporting.
        One
        requirement under section 404 of the Act, beginning with our annual report
        for
        the year ended December 31, 2007, is for management to report on Cardiff
        International’s internal controls over financial reporting and for our
        independent registered public accountants to attest to this report.
  **ITEM8B.
        OTHER INFORMATION**
 
 We
        must
        disclose under this item any information required to be disclosed in a report
        on
        Form 8-K during the fourth quarter of the year covered by this Form 10-KSB,
        but
        not reported, whether or not otherwise required by this Form 10-KSB. If
        disclosure of such information is made under this item, it need not be repeated
        in a report on Form 8-K which would otherwise be required to be filed with
        respect to such information or in a subsequent report on Form 10-KSB.  No
        additional disclosure is required under this item.
 
  31
  **PART
        III**
 
 **ITEM9.
        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
        PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
        ACT.**
 
 **Identification
        of Directors and Executive Officers**
 
 The
        current directors and officers of Cardiff who will serve until the next annual
        meeting of shareholders or until their successors are elected or appointed
        and
        qualified, are set forth below:
 
 Name
              
              PositionGary
                  R. Teel
              
              Chairman
                  of the Board/Secretary/TreasurerDaniel
                  Thompson
              
              CEO/President/Director
 
 Background
        information about the Company’s officers and directors is as
        follows:
 
 **Gary
        Teel.** Mr. Teel
        has over 20 years experience in national advertising sales, and the provision
        of
        product placement services for the entertainment industry. He has launched
        several co-branded credit cards including special card programs for the cities
        of Branson MO; Pigeon Forge TN; and Myrtle Beach SC. Gary is past president
        of
        Premier Entertainment Services Inc., a product placement company that
        specialized in generating valuable exposure for branded products on television
        and in feature films. His major corporate clients included The Coca-Cola
        Company
        and General Mills. He later formed Creative Film Promotions, Inc., where
        he was
        involved in all aspects of film production. Previously, he was as a partner
        of
        Teel-Weir Advertising Agency. Mr. Teel has a BA degree from the University
        of
        Nebraska.
 
 **Daniel
        Thompson.** Mr.
        Thompson was appointed CEO/President of Legacy in June 2002. Formerly a
        television and entertainment industry professional with a 30-year career
        that
        embraces network and cable advertising sales programming production and product
        placement, Mr. Thompson was president of Creative Entertainment Services,
        which
        he founded and successfully sold in a transaction worth over $5 million.
        Mr.
        Thompson also founded and successfully sold an industry service company -
        Creative Television Marketing, a producer of short-form advertising concepts:
        Closed-Captioning Sponsorships, 10-Second Promotional Advertising vehicles,
        and
        network Game Show Merchandising. He also oversaw new business for A Creative
        Group, a full service entertainment marketing company. Mr. Thompson also
        founded
        CableRep USA, a media sales firm specializing in local market cable advertising,
        which he sold to Cox Cable in 1981. Mr. Thompson attended Wayne State
        University, Bellevue College, and College of Continuing Studies at University
        of
        Nebraska at Omaha.
 
 **Other
        Involvement in Certain Legal Proceedings**
 
 There
        have been no events under any bankruptcy act, no criminal proceedings and
        any
        judgments or injunctions material to the evaluation of the ability and integrity
        of any director or executive officer during the last five
        years.
  32
  **Code
        of Ethics**
 
 We
        adopted a code of ethics that applies to all officers, directors and employees
        of the Company, a copy of which was filed as Exhibit 14 to this Form 10-KSB.
        We
        intend to satisfy the disclosure requirements under Item 5.05 of Form 8−K
        regarding an amendment to, or waiver from, a provision of this code of ethics,
        if any, by filing a Form 8-K.
 
 **Committees
        of the Board of Directors**
  We
        do not
        have any committees established by our Board of Directors. Accordingly we
        have
        no audit committee, compensation committee, nominating committee or any other
        committee. Cardiff’s common stock is currently traded on the OTCBB. If Cardiff
        were ever to meet the qualifications for listing on a securities exchange
        or for
        quotation on NASDAQ, it would be required to have an audit committee and
        possibly other board committees.
 
 **Communications
        with Board Members**
 
 We
        have
        not adopted a formal process by which stockholders may communicate with the
        Board of Directors. Until a formal process occurs, stockholders may contact
        our
        CEO/President at dthompson@legacycard.com, or (818)879-9722.
 
 **Compliance
        with Section 16(a)**
 
 Section
        16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
        directors and executive officers, and persons who beneficially own more than
        10%
        of a registered class of the Company’s equity securities, to file reports of
        beneficial ownership and changes in beneficial ownership of the Company’s
        securities with the SEC on Forms 3 (Initial Statement of Beneficial Ownership),
        4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual
        Statement of Beneficial Ownership of Securities). Directors, executive officers
        and beneficial owners of more than 10% of the Company’s Common Stock are
        required by SEC regulations to furnish the Company with copies of all Section
        16(a) forms that they file. The Company believes that, during the year ended
        December 31, 2005, the Reporting Persons met all applicable Section 16(a)
        filing
        requirements.
 
 **ITEM10.
        EXECUTIVE COMPENSATION**
 
 **Summary
        Compensation Table**
 
 The
        following table sets forth certain information concerning compensation for
        services rendered for the past three years to the Company’s Chief Executive
        Officer and to the Company’s most highly compensated officers other than the
        CEO, whose annual salary and bonus exceeded $100,000:
  33
  
 Name
                  and Other Annual Principal Position
              Year
              Salary
              Bonus
              Other
                  Annual Compensation
              Stock
                  Awards
              Options/
                SAR’s
                  (#)
              LTIP
                  Payouts
              Other
                  CompensationGary
                  R. Teel
              2005
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-Chairman
              2004
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-2003
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-Daniel
                  Thompson
              2005
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-CEO
              2004
              -0-
              -0-
              $67,500
              -0-
              -0-
              -0-
              -0-2003
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
 
 Mr.
        Teel
        and Mr. Thompson each waived their unpaid salary since the inception of Legacy.
        We anticipate salaries will be paid to each of them commencing in the first
        quarter of 2006.
 
 **Employment
        Agreements**
 
 On
        June
        3, 2002 we entered into employment agreements with each of Gary R. Teel and
        Daniel Thompson. The terms of the agreements are similar and include the
        following terms: (1) monthly salaries of $25,000, (ii) annual bonus of 2%
        pre-tax profits, (iii) five year term; (iv) medical and health benefits;
        (v)
        termination without cause results in compensation paid for four years, (vi)
        the
        sale of the Company results in compensation paid for three years. Mr. Teel
        and
        Mr. Thompson each waived there salary since the inception of Legacy. We
        anticipate salaries will be paid to each of them commencing in the third
        quarter
        of 2006.
 
 On
        August
        3, 2005, Legacy entered into an employment agreement with Ruth Martin Fisher.
        Under the agreement, Ms. Fisher will be Legacy’s Executive Vice President,
        Strategic Marketing. The term of the agreement is 60 months. The agreement
        provides for a monthly salary of $15,000. In addition to her base salary,
        Ms.
        Fisher is entitled to an annual performance bonus of 1⁄2 of 1% of Gross Pre-Tax
        Profit. The agreement provides for an option to purchase 200,000 shares at
        $1.25. The option vests six months after employment was commenced. The agreement
        provides for a vehicle allowance of $15,000 per year commencing 30 days after
        the Simply Brilliant Tuition Card is launched. If Ms. Fisher is terminated
        without cause or if Legacy is sold, she is entitled to five years of current
        salary.
 
 On
        August
        5, 2005, Legacy entered into an employment agreement with Jacob Herschend.
        Under
        the agreement, Mr. Herschend is Legacy’s Vice President of Corporate Marketing
        and Sales. The term of the agreement is 60 months. The agreement provides
        for a
        monthly salary of $6,266, which will increase to $8,333 when the St. Louis
        Pilot
        Program is completed.. In addition to his base salary, Mr. Herschend is entitled
        to an annual performance bonus of 1⁄2 of 1% of Gross Pre-Tax Profit. The agreement
        provides for an option to purchase 125,000 shares at $1.25. If Mr. Herschend
        is
        terminated without cause, he is entitled to three months compensation. If
        Legacy
        is sold, he is entitled to six months of compensation.
 
 **Stock
        Options Granted in the Last Fiscal Year**
 
 No
        options to purchase shares of our common stock were granted to our officers
        or
        directors during 2005.
  34
  **Aggregated
        Option Exercises in Last Fiscal Year and Fiscal Year-end Option
        Values**
 
 No
        officer or director of Cardiff any options during 2005.
 **Equity
        Compensation Plan Information**
 
 We
        have
        not adopted any equity compensation plans as of the date of this Form 10-KSB
        .
        It is likely that one or more equity compensation plans may be adopted in
        the
        near future.
 
 **ITEM11.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT**
 
 **Security
        Ownership of Certain Beneficial Owners**
 
 The
        following table sets forth information regarding shares of our Common Stock
        beneficially owned as of April 13, 2006 by: (1) each of our officers and
        directors; (ii) all officers and directors as a group; and (iii) each person
        known by us to beneficially own five percent or more of the
        outstanding shares of its common stock.
 
 Shareholder
              
              Common
                  Stock(1)
              
              PercentageGary
                  R. Teel(2)
              
              6,334,848(3)
              
              29.6%Daniel
                  Thompson(2)
              
              3,078,528(4)
              
              14.4%All
                  officers and directors as agroup
                  2 persons
              
              9,413,376
              
              44.0%TOTAL
              
              21,389,176
              
              100
                  %
 
 (1)
              For
                  purposes of this table “beneficial ownership” is determined in accordance
                  with Rule 13d-3 under the Securities Exchange Act of 1934, pursuant
                  to
                  which a person or group of persons is deemed to have “beneficial
                  ownership” of any common shares that such person or group has the right to
                  acquire within 60 days after April 13, 2006. For purposes of computing
                  the
                  percentage of outstanding common shares held by each person or
                  group of
                  persons named above, any shares that such person or group has the
                  right to
                  acquire within 60 days after April 13, 2006 are deemed outstanding
                  but are
                  not deemed to be outstanding for purposes of computing the percentage
                  ownership of any other person or group.
 
 (2)  These
        are
        the officers and directors of the Company.
 
 (3)
              Includes
                  3,934,848 shares issued in the name of Mr. Teel, 1,200,000 shares
                  owned by
                  the Teel Family Trust, and 1,200,000 shares owned by Mr. Teel’s children.
 
 (4)  Includes
        1,478,528 shares issued in the name of Mr. Thompson, 1,000,000 shares owned
        by
        the Thompson Family Trust, and 600,000 shares owned by Mr. Thompson’s minor
        children.
  35
  **Outstanding
        Options and Warrants**
 
 Information
        about outstanding options and warrants are included in foot note 7 of the
        financial statements included as Item 7 to this Form 10-KSB
 
 **ITEM12.
        CERTAIN RELATIONSHIPS AND RELATED PARTY
        TRANSACTIONS**
 
 In
        connection with the Merger transaction described in Item 1 of this Form 10-KSB,
        our officers and directors exchanged their shares of Legacy for shares of
        Cardiff. The number of shares issued are described in Item 5 of this Form
        10-KSB.
 
 During
        the year end December 31, 2005, we repaid loans to officers/ directors Gary
        Teel
        and Daniel Thompson. A total of $258,600 was repaid to Mr. Teel and $291,180
        was
        repaid to Mr. Thompson.
 
 **ITEM13.**  **EXHIBITS**
 
 A.
              Exhibits
 
 Exhibit
                Number
              Exhibit3.1
              Article
                  of Incorporation (1)3.2
              Bylaws
                  (1)10.1
              Promissory
                  Note- Maricopa (attached)10.2
              Loan
                  Agreement to be filed under cover of Form 8-K14.1
              Code
                  of Ethics (attached)21.1
              Subsidiaries
                  of Registrant - Legacy Card Company, Inc.31.1
              Certification
                  of Chief Executive Officer in accordance with 18 U.S.C. Section
                  1350, as
                  adopted by Section 302 of the Sarbanes-Oxley Act of 2002
                  (attached)31.2
              Certification
                  of Principal Financial Officer in accordance with 18 U.S.C. Section
                  1350,
                  as adopted by Section 302 of the Sarbanes-Oxley Act of 2002
                  (attached)32.1
              Certification
                  of Chief Executive Officer in accordance with 18 U.S.C. Section
                  1350, as
                  adopted by Section 906 of the Sarbanes-Oxley Act of 2002
                  (attached)32.2
              Certification
                  of Chief Financial Officer in accordance with 18 U.S.C. Section
                  1350, as
                  adopted by Section 906 of the Sarbanes-Oxley Act of 2002
                  (attached)
 
 (1)  Previously
        filed
 
  36
  **ITEM14.
        PRINCIPAL ACCOUNTING FEES AND SERVICES**
 
 **Independent
        Auditors**
  Rose,
        Snyder & Jacobs has been appointed to audit the consolidated financial
        statements of Cardiff for the year ending December 31, 2005 and to report
        the results of their audit to the Board of Directors. Schumacher &
Associates served as the auditor for Cardiff for the year ending December
        31,
        2004 and provided services during 2005.
  
 **Fees
        billed to Cardiff by Rose, Snyder & Jacobs and Schumacher &
Associates**
 
 **Rose,
                  Snyder & Jacobs**
              **2005**
              
              **2004**(1)
              Audit
                  Fees
              $
              59,290
              
              $
              -0-(2)
              Tax
                  Fees
              $
              -0-
              
              $
              -0-(3)
              All
                  Other Fees
              $
              -0-
              
              $
              -0-
 
 **Schumacher
                  & Associates**
              **2005**
              
              **2004**(1)
              Audit
                  Fees
              $
              2,950
              
              $
              2,950(2)
              Tax
                  Fees
              $
              -0-
              
              $
              -0-(3)
              All
                  Other Fees
              $
              2,600
              
              $
              2,250
 
 (1)
            Audit
                fees billed to Cardiff by Rose, Snyder & Jacobs were for all
                professional services performed in connection with the audit of Cardiff's
                annual financial statements. Review of our quarterly reports on
                Form 10-QSB were performed by Schumacher & Associates. 
 (2)
            Tax
                services generally include fees for services performed related to
                tax
                compliance, consulting services. 
 (3)
            Neither
                Rose, Snyder & Jacobs or Schumacher & Associates billed Cardiff
                for other services during 2005 and 2004. 
 All
        audit
        and non-audit services and fees are pre-approved by the Audit Committee or
        by
        the Chairman of the Audit Committee pursuant to delegated authority.
 
 Effective
        May 6, 2003, the Securities and Exchange Commission adopted rules that require
        that before Rose, Snyder & Jacobs is engaged by us to render any auditing or
        permitted non-audit related service, the engagement be:
 
 ·
            approved
                by our Audit Committee (our entire Board serves as our audit committee);
                or 
 ·
            entered
                into pursuant to pre-approval policies and procedures established
                by the
                Audit Committee, provided the policies and procedures are detailed
                as to
                the particular service, the Audit Committee is informed of each service,
                and such policies and procedures do not include delegation of the
                Audit
                Committee’s responsibilities to management. 
  37
  Under
        the
        direction of our Chairman, Gary Teel, our Board of Directors acting as our
        audit
        committee pre-approves all services provided by our independent auditors.
        All of
        the above services and fees were reviewed and approved by the Board of Directors
        either before or after the respective services were rendered. The Board of
        Directors has considered the nature and amount of fees billed by Rose, Snyder
        & Jacobs and Schumacher & Associates and believes that the provision of
        services for activities unrelated to the audit is compatible with maintaining
        both firms independence.
 
 
 SIGNATURES
 
 In
        accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
        the
        Registrant caused this report to be signed on its behalf by the undersigned,
        thereunto duly authorized.
 
 Cardiff
                  International, Inc.Dated:
                  June 23, 2006
              By:
                  /s/ Daniel ThompsonChief
                  Executive Officer/PresidentDated:
                  June 23, 2006
              By:
                  /s/ Gary R. TeelChief
                  Financial
                  Officer/Secretary/Chairman
 
 In
        accordance with the Securities Exchange Act, this report has been signed
        below
        by the following persons on behalf of the Company and in the capacities and
        on
        the dates indicated.
 
 Signature
              Capacity
              Date/s/
                  Daniel Thompson
              CEO/President/Director
              June
                  23, 2006/s/
                  Gary R. Teel
              CFO/Secretary/Chairman/Director
              June
                  23, 2006
 
 
 
 38