Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 4

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly periodfiscal year endedDecember 31, 20142017

Commission File Number000-49709

_______________________

CARDIFF INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

_______________________

401 East Las Olas Blvd., UnitSuite 1400, Ft. Lauderdale, FL 33301

(Address of principal executive offices)

(844) 628-2100

(Registrant's telephone no., including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Par Value $0.001 Common Stock

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] ☐    No [x]☒.

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] ☐    No [x]☒.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ ]☒     No [x]☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ]☒     No [x]☐

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is contained in this form and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. [x]

☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “accelerated filer,” “large accelerated filer,’’” “accelerated filer”, “smaller reporting company”, and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]      Accelerated filer [  ]      Non-accelerated filer [  ]     Smaller reportingIf an emerging growth company, [x]

indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]☐    No [x]

☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $1,378,430.

Common shares outstanding at June 20, 2016April 16, 2018 is 13,251,47770,715,527 with a par value of $0.001.

FORM 10-K

CARDIFF INTERNATIONAL, INC.

INDEX

INDEX

For purposes of this report, unless otherwise indicated or the context otherwise requires, all references herein to “Cardiff International,” “the Company”, “we,” “us,” and “our,” refer to Cardiff International, Inc., a Colorado corporation.Florida corporation, and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-lookingForward- looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-lookingforward- looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

PART I

Item 1. DESCRIPTION OF BUSINESS.

History of the Business

Legacy Card Company (“Legacy”) was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, Legacy converted from a California Limited Liability Company to a Nevada Corporation. On November 10, 2005, Legacy merged with Cardiff International, Inc. (“Cardiff”, the “Company”), a publicly held corporation presently incorporated in Florida. Legacy was formed as a California limited liability company inColorado. On August 2001. In April 2005, Legacy was converted into a Nevada corporation.

As part of the Merger, the officers and directors of27, 2014 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.  Cardiff International, Inc. is the parent company for the Mission Tuition Rewards program, which is targetedredomiciled to families focused on saving money for educational needs.

On February 7, 2006, Cardiff changed its fiscal year end to December 31st from September 30th.Florida.

In the first quarter of 2013, it was decided to restructure Cardiff into a holding company that adopted a new business model known as "Collaborative Governance," a form of governance enabling businesses to take advantage of the power of a public company. Cardiff began targeting the acquisition of undervalued, niche companies with high growth potential, income-producing commercial real estate properties, and high return investments, all designed to pay a dividend to our shareholders. The reason for this strategy was to protect our shareholders by acquiring profitable small- to minimum-sized businesses with little to no debt, seeking support with both financing and management that had the ability to offer a return to investors. The plan is to establish new classes of preferred stock to streamline voting rights, negate debt, and acquire new businesses. By December of 2013, we had negatedwere able to reduce more than 90% of all its debt; by July of 2014, we had completed the acquisition of three businesses: We Three, LLC; Romeo’s NY Pizza; and Edge View Properties, Inc. We delayed the filing of its Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 20142015 due to difficulty obtaining information from another acquisition, which was subsequently unwound.

In By December of 2013 Daniel Thompson was issued 63%2016 we completed the acquisition of the Common Shares, 720,000 Series B Preferred Shares, $0.001 par value3 additional businesses and 1 Series A Preferred Share, $0.00001 par value. In addition, over 3 Million dollars in debt was removed by Novation Agreements issuing Series B and C Preferred Shares.have 2 currently pending lender approvals.

BUSINESS DEVELOPMENTS

The following business developments have been reported in our reports filed with the Securities and Exchange Commission (the “SEC”), which are referenced in Part IV, Item 15, of this Annual Report:

InFDR Enterprises, Inc. acquired on August 10, 2016;

Refreshment Concepts, LLC acquired on August 10, 2016;

Repicci’s Franchise Group, LLC acquired on August 10, 2016;

On May 25, 2017 the Company terminated its auditing firm KLJ & Associates

July 11, 2017 increased authorized common shares to 500,000,000 at par value of 2014, Kathleen Robertson was appointed CEO/President$0.001

July 20, 2017 Engaged Malone Bailey as Cardiff’s new auditors

July 24, 2017 Unwound the [purchase of Cardiff International.CSSC acquisition

In May of 2014, We Three LLC was acquired with a tax free exchange for 280,069 Series F preferred shares, $0.001 par value.

In May of 2014, we adopted a new business governance referred to as “Collaborative Commonwealth™”.

In July of 2014, we acquired Romeo’s New York Pizza with a tax free exchange of 400,000 Series D preferred shares, $0.001 par value.

In July of 2014, we acquired Edge View Properties, Inc. with a tax free exchange of 241,199 Series E Preferred Shares, $0.001 par value.

Current Business Operations

We areCardiff is a public holding company, that adoptedmuch like a new business model known as "Collaborative Governance.” To date, we are not aware of any other domestic holding company using the same business philosophy or governing policies. Our business footprint is to acquire strongcooperative, leveraging proven management in private companies that meetbecome subsidiaries under our umbrella. Our focus is not based on a specific industry or geographic location, but rather on a proven management, market, and historical operating margin. We target acquisitions of mature, high growth, niche companies. Cardiff’s strategy identifies and empowers select income-producing middle market private businesses and commercial real estate properties.

The target company’s management team typically maintains control of the following criteria: (1) in business for a minimum of two years; (2) profitable; (3) good management team; (4) littleday to no debt; and (5) assetsday operations. Acquisitions become standalone autonomous subsidiaries that gain the advantages of a minimumpublicly traded company without losing their independent management control. Management enjoys the advantage of $1,000,000. We continue to practice all business ethics under the Securities Exchange Act of 1934(“1934 Act”)improved valuation, liquidity, synergies, and acknowledges that there are more than 43 successful business development companies subject to the Investment Company Act of 1940 (“1940 Act”), all of which may be considered competition to ussupport, along with diversification and that are establishedasset appreciation through collective subsidiary performance. Diversification and available to the public for investment. These companies offer experienced management, dividendspooled resources leverage value and financial security.mitigate risk.

Cardiff provides these companies both 1) the enhanced ability to raise money for operations or expansion, and 2) an equity exit and liquidity strategy for the owner, heirs, and/or Investors.

For investors, Cardiff provides a diversified lower risk to protect and safely enhance their investment by continually adding assets and holdings.

Cardiff employs a merge, acquire, and hold strategy to maximize value and potential of private, often family run, enterprises while providing diversification and risk mitigation for all shareholders.

Cardiff is led by strong and talented roster of executives and advisors providing expert acquisition, market guidance and added value for subsidiaries and investors. To date, Cardiff consists of: Mission Tuition, Inc. (www.missiontuition.com), of the following whole-owned subsidiaries:

We Three, LLC (Affordable Housing Initiative); acquired on May 15, 2014; Romeo’s NY Pizza; and Pizza acquired on June 30, 2014;

Edge View Properties, Inc acquired on July 16, 2014; FDR Enterprises, Inc. acquired on August 10, 2016;

Repicci’s Franchise Group, LLC acquired on August 10, 2016; Refreshment Concepts, LLC acquired on August 10, 2016.

Organization

We are comprised of one corporation. All of our operationsparent corporation and six subsidiaries. Operations are primarily conducted through this corporation.the subsidiaries of the Company.

Employees

Collectively, Cardiff at currentcurrently has 26approximately 40 employees and anticipates hiring additional personal with new acquisitions.

Competition

We are a Small Cap holding company who adoptedenabling businesses to take advantage of the power of a new business model known as "Collaborative Commonwealth™"public company. Cardiff began targeting the acquisition of undervalued, niche companies with high growth potential, income-producing commercial real estate properties, and high return investments, all designed to pay a new form of governance. To date, we are not aware of any other Holding Company using the same business philosophy or governing policies. Our competition is substantially larger. Berkshire Hathaway is closestdividend to our governance model undershareholders. The reason for this strategy was to protect our shareholders by acquiring profitable small- to minimum-sized businesses with little to no debt, seeking support with both financing and management that had the (1934 Act)ability to offer a return to investors. The plan is to establish new classes of preferred stock to streamline voting rights, negate debt, and there are approximately 43 plus successful business development companies (1040 Act) all who are considered our competition and are established and available to the public for investment. These companies offer experienced management; dividends and financial security.acquire new businesses.

Proprietary Information

We own the following trademarks: Cardiff USA; Mission Tuition, Collaborative Governance, Legacy Card and Small Cap Rescue.

Government Regulation

We do not expect to be subject to material governmental regulation. However, it is our policy to fully comply with all governmental regulation and regulatory authorities.

Research and Development

We have spent funds on research and development offor our proprietary software system.system related to Social Media, as well as building a new website representing the Company’s new direction, keeping investors more informed, etc. We plan to spend further funds on research and development activities in the future as the development of our software continues.

Environmental Compliance

We believe that we are not subject to any material costs for compliance with any environmental laws.

How to Obtain our SEC Filings

We file annual, quarterly, and special reports, proxy statements, and other information with the Securities Exchange Commission (SEC). Reports, proxy statements and other information filed with the SEC can be inspected and copied at the public reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such material may also be accessed electronically by means of the SEC's website at www.sec.gov.

Our investor relations department can be contacted at our principal executive office located at, 401 East Las Olas Blvd. Unit 1400, Fort Lauderdale, FL 33301. Our telephone number is (844-628-2100).

Item 1A. RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information in this document before deciding to invest in shares of our common stock.

The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating result. In this case, the trading price of our common stock could decline and you might lose all or part of your investment.

During our startup phase we were not profitable and generated minimal revenue and no profit.

As of this filing, though still not profitable, Cardiff is generating revenue which helps mitigate the risk. Currently we have a small amount of consolidated stockholders’ equity. As a result, though pleased with our current results, we may never become profitable, and could go out of business.

Through inception until December 2014, we have restructured ourselves into ana holding company and have acquired threeseven additional businesses; We Three, Inc. d/b/a Affordable Housing Initiative, Romeo’s NY Pizza, and Edge View Properties.Properties, FDR Enterprises, Inc. Repicci’s Franchise Group and Refreshment Concepts.

Future sales will no longer depend on missiontuition.com, future revenuesbut will comebe derived from our new acquisitions. We cannot guarantee we will ever develop a substantial revenue from our subsidiary companies and as required, we must state there is no assurance that we will become a profitable company.achieve profitability.

Because we had incurred operating losses from our inception, we would still consider ourselves a going concern.

For the fiscal years ended December 31, 20142016 and December 31, 2013,2015, our accountants have expressed concern about our ability to continue as a result ofgoing concern due to our continued net losses.losses and need for additional capital. However, we believe our ability to achieve and maintain profitability and positive cash flow is dependent upon:

Based upon current plans, we may incur operating losses in future periods becauseperiods. Also, we may, from time to time, be incurring expenses but not generating sufficient revenues. We expect approximately $800,000$600,000 in operating costs to be incurred over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or obtaining other fundsfinancing in the future to cover these operating costs. Additionally, financing may not be available on terms favorable to the Company. Failure to generate sufficient revenues willmay cause us to go out of business.

Since we are a start-upan early stage company that has generated minimal revenue, an investment in theour shares offered herein is highly risky and could result in a complete loss of your investment if we are unsuccessful in our business plans.

We were incorporated in August 2001 and have focused all of our efforts on the development of our product and we have generated minimal amounts revenue. Based upon current plans, we do expect to incur little to no operating losses in future periods. Further, there is no guarantee that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any shares you hold, and could result in the loss of your entire investment.

Future acquisitions are important to our success. We cannot predict when or if we will produce revenues which could result in a total loss of your investment if we are unsuccessful inmay not be able to successfully integrate our business plans.

We have generated limited revenues from operations since inception. In order for us to continue withacquisitions into our plans and open the business, we must generate revenue or find another source of capital. There can be no assurance that we will generate revenues or that revenues will be sufficient to maintain our business. As a result, one could lose all of one’s investment if we are not successful in our proposed business plans.operations.

Commencement and development of operations will depend on the acquisitions acquired. If CDIF acquires the wrong businesses it could lead to a loss of revenue which could result in a failure of businesses and a loss of any investment one makes in the shares.

The acquisition of these new companies is central to our business model and critically important to our success. WeAlthough we generally seek companies that have positive cash flows, we cannot be certain that the company’s acquired will remain profitablecash flow positive and could possibly looselose revenues. In addition, there are no assurances that the acquisitions acquired will continue as profitable businesses and could adversely affect our business and any possible revenues.

If the businesses acquisitions fail, then

Successful implementation of our business would be materially affected,strategy depends on factors specific to acquiring successful businesses. Adverse changes in our acquisition process could undermine our business strategy and have a material adverse effect on our business, financial condition, and results of operations and cash flow:

There are no substantial barriers to acquire established businesses and because we can acquire businesses in all types of industries, there is no guarantee the Company will acquire additional businesses, which could severely limit our proposed sales and revenues. If we cannot acquire established businesses, it could result in the loss of your entire investment.

Our Collaborative CommonwealthSince we have no copyright protection, unauthorized persons may attempt to copy aspects of our business, model dependsincluding our governance design or functionality, services or marketing materials. Any encroachment upon our corporate information, including the unauthorized use of our brand name, the use of a similar name by a competing company or a lawsuit initiated against us for infringement upon another company's proprietary information or improper use of their copyright, may affect our ability to create brand name recognition, cause customer confusion and/or have a detrimental effect on our acquired companiesbusiness. Litigation or proceedings before the U.S.or International Patent and Trademark Offices may be necessary in the future growthto enforce our intellectual property rights, to protect our trade secrets and management. There can be no assurance that we will generate revenues asdomain name and/or to determine the validity and scope of the proprietary rights of others. Any such infringement, litigation or adverse proceeding could result in substantial costs and diversion of resources and could seriously harm our current acquisitions may fail.business operations and/or results of operations. As a result, onean investor could lose all of the one’s investment if we select the wrong acquisition.his or her entire investment.

The loss of the services of the current officers and directors could severely impact our business operations and future development, which could result in a loss of revenues and one’s ability to ever sell any shares.

TheOur performance is substantially dependent upon the professional expertise of the current officers and board of directors. Each has extensive expertise in business development and acquisitions and we are dependent on their abilities. If they are unable to perform their duties, this could have an adverse effect on business operations, financial condition and operating results if we are unable to replace them with other individuals qualified to develop and market our business. The loss of their services could result in a loss of revenues, which could result in a reduction of the value of any shares you hold as well as the complete loss of your investment.

Our stock has limited liquidity.

Our common stock trades on the OTCQB market. Trading volume in our shares may be sporadic and the price could experience volatility. If we cannot remain competitive in a way that allows us to generate the amount of revenue necessary to fund our operations, it could affect our business and result in the loss of your investment.

There can be no assurance that we can compete successfully in this market. As a result,adverse market conditions exist, you may never be able to liquidate or sell anyhave difficulty selling your shares.

We have been successful in implementing our business strategy, however, new acquisitions could adversely affect our business which could adversely affect our financial condition, results of operations and cash flows. If we cannot successfully implement our business strategy, it could result in the loss of your investment.

Successful implementation of our business strategy depends on factors specific to acquiring successful businesses. Adverse changes in our acquisition process could undermine our business strategy and have a material adverse effect on our business, financial condition, and results of operations and cash flow:

There are no substantial barriers to acquire established businesses and because we can acquire businesses in all types of industries, there is no guarantee the Company will acquire additional businesses, which could severely limit our proposed sales and revenues. If we cannot acquire established businesses, it could result in the loss of your investment.

Since we have no copyright protection, unauthorized persons may attempt to copy aspects of our business, including our governance design or functionality, services or marketing materials. Any encroachment upon our corporate information, including the unauthorized use of our brand name, the use of a similar name by a competing company or a lawsuit initiated against us for infringement upon another company's proprietary information or improper use of their copyright, may affect our ability to create brand name recognition, cause customer confusion and/or have a detrimental effect on our business. Litigation or proceedings before the U.S. or International Patent and Trademark Offices may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets and domain name and/or to determine the validity and scope of the proprietary rights of others. Any such infringement, litigation or adverse proceeding could result in substantial costs and diversion of resources and could seriously harm our business operations and/or results of operations. As a result, an investor could lose his or her entire investment.

Our stock has no public trading market and there is no guarantee a trading market will ever develop for our securities. As a result, it may be difficult or impossible for you to liquidate your investment.

There has been, and continues to be, no public market for our common stock. An active trading market for our shares has not, and may never develop or be sustained. If you purchase shares of common stock, you may not be able to resell those shares at or above the initial price you paid. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following:

The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations. You may not be able to resell your shares at or above the public sale price.

The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock.

In general, buying low-priced penny stocks is very risky and speculative. Our shares are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission.Commission. You may not able to sell your shares when you want to do so, if at all.

Our shares are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000,

$200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealerbroker- dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to such sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.

Because of our size and limited resources, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. GAAP and securities laws, and which could cause a materially adverse impact on our financial statements, the trading of our common stock and our business.

We are a small holding company that lacks the financial resources and qualified personnel to implement and sustain adequate internal controls As a result, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet proper internal control standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, material weaknesses or lack of compliance could result in restatements of our historical financial information, cause investors to lose confidence in our reported financial information, have an adverse impact on the trading price of our common stock, adversely affect our ability to access the capital markets and our ability to recruit personnel, lead to the delisting of our securities from the stock exchange on which they are traded, lead to litigation claims, thereby diverting management’s attention and resources, and which may lead to the payment of damages to the extent such claims are not resolved in our favor, lead to regulatory proceedings, which may result in sanctions, monetary or otherwise, and have a materially adverse effect on our reputation and business.

We do not expect to pay dividends on common stock in the foreseeable future.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock for the year. Earnings, if any, that we may realize will be retained in the business for further development and expansion.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. DESCRIPTION OF PROPERTY.

We

The Company had operating leases of $115,862 and $160.840 for the year ended December 31, 2017 and 2016, respectively, consisting of the followings.

The Company has property leases that are currently operating outrenewable on an annual basis, with no long term property leases.

Edge View Properties consists of our office space located at 411 N. New30 prime acres of land; 23.5 acres zoned MDR (Medium Density Residential) with 12 lots already platted and 48 lots zoned HDR (High Density Residential), 4 acres of dedicated river front property zoned for recreation on the Salmon River, Drive E, Unit 2202, Fort Lauderdale, FL 33301. This spaceIdaho's premier whitewater river and 2.5 acres zoned for commercial use. All land is consideredin the city limits of Salmon and adjacent to be sufficient for us at the present time.Frank church Wilderness Park (the largest wilderness park in the lower 48 states).

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings, nor is our property the subject of any material legal proceeding.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Holders

As of December 31, 2014,2017 there were 772853 record holders of our common stock, and there were 4,928,68264,414,091 shares of our common stock outstanding.

Public Market for Common Stock

Our common stock, par value $.001 per share (the “Common Stock”), is currently quoted on the OTCQB under the symbol “CDIF”. The OTCBB is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter, or the OTC, equity securities. An OTCBB equity security generally is any equity that is not listed or traded on a national securities exchange. The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTCBB quotation service. These bid prices represent prices quoted by broker-dealers on the OTCBB quotation service. The quotations reflect inter-dealerinter- dealer prices, without retail mark-up, mark-downmark- down or commissions, and may not represent actual transactions.

Price range of common stock

The market price of our common stock will be subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

The Securities Enforcement and Penny Stock Reform Act of 1990

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

A purchaser is purchasing penny stock which limits the ability to sell the stock. The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealersbroker- dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealerbroker- dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.

Dividend Policy

We have not previously declared or paid any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable future. The payment of dividends on our common stock is within the discretion of our board of directors. We intend to retain any earnings for use in our operations and the expansion of our business. Payment of dividends in the future will depend on our future earnings, future capital needs and our operating and financial condition, among other factors that our board of directors may deem relevant. We are not under any contractual restriction as to our present or future ability to pay dividends.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis or Plan of Operation contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may”, “will”, “should”, “anticipate”, “believe”, “expect”, “plan”, “future”, “intend”, “could”, “estimate”, “predict”, “hope”, “potential”, “continue”, or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including, but not limited to, the matters discussed in this report under the caption “Risk Factors”. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

The following discussion of our consolidated financial condition and consolidated results of operations should be read in conjunction with our consolidated financial statements and the related notes included in this report.

The following table provides selected financial data about us for the fiscal years ended December 31, 20142017 and December 31, 2013.2016. For detailed financial information, see the audited Financial Statements included in this report.

Balance Sheet Data:

Key actual and pro forma financial data

Segment reporting for the yearyears ended December 31, 20142017 and 2016 were as follows:

Results of Operations

Sales.Revenues. We had very limited operating history upon which to evaluate our intended business and had no revenues in 2013. In addition, we have a historythe amount of losses. As a result,$1,744,655 and $1,150,251 for the Company’s independent registered public accounting firm,years ended December 31, 2017 and 2016, respectively. The increase in its report on the Company’s 2014 and 2013 consolidated financial statements, has raised substantial doubt about our ability to continue as a going concern. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully acquire new established businesses that generate revenues. By July of 2014, we had completed the acquisition of three businesses: We Three, LLC; Romeo’s NY Pizza; and Edge View Properties, Inc. The revenues of $890,401revenue was primarily associated with increases in 2014 was a direct result of such acquisitions of businesses, of which $833,531 were from the sales of pizza in Romeo’s NY Pizza,ice cream. We expect revenue to increase during 2017, as we will realize a full operating cycle for our current operating subsidiaries and $56,870 were rental income from the mobile home rental managed by We Three LLC. The pro forma revenues would be $1,727,049 in the full year of 2014, of which $1,643,072 were from the sales of pizza in Romeo’s NY Pizza, and $83,977 were rental income from the mobile home rental managed by We Three LLC.planned expansion.

Cost of Goods Sold. We had nocosts of sales in the amount of $1,356,408 and $797,073 for the years ended December 31, 2017 and 2016, respectively. The increase in cost of sales in 2013 duewere also primarily attributable to no revenues generated activities. In 2014, we had $653,871increase in cost of goods sold, of which $618,336 were in connection the sales of pizza, including but not limited to direct material of $234,340 and direct labor of $300,033. The remaining cost of sales in amount of $35,535 were in connection withice cream locations during the mobile home rental. The pro forma cost of sales would be $1,264,725 in the full year of 2014, of which $1,218,195 were in connection the sales of pizza, including but not limited to direct material of $464,301 and direct labor of $590,798. The remaining cost of sales in amount of $46,530 were in connection with the mobile home rental.year.

Operating ExpensesExpenses.. Operating expenses which consisted of research and developmentdepreciation, amortization and general and administrative expenses. We had operating expenses of $3,230,474 and $2,512,794 for the yearyears ended December 31, 2014, were $976,751, as compared to the2017 and 2016, respectively. The operating expenses for the year ended December 31, 2013 of $2,908,231. The difference is related to a decrease of staff members and marketing costs in 2014. The pro forma operating expense would be $1,223,565 in the full year of 2014, of which $466,9962016 were primarily attributable to the operations in Pizza restaurants, and $62,662 were attributable to the operations in We Three LLC.

Employee stock compensation. During the year ended December 31, 2014, we issued 4,427,200issuance of 7,728,589 shares of common stock for marketing, management and 600,000 shares of Series B preferred stock to officers for services rendered. The fair value of the common stock issuance was determined by the fair value of our common stock on the grant date, at a price of approximately $2.3 per share; and the fair value of Series B preferred stock issuance was determined by the private placement price of $2.5 per sharefinancial strategies, resulting in the arms-length transactions. Accordingly, we recognized officernon-cash stock based compensation of $11,682,560 to$1,020,602 during the consolidated statements of operations for the year ended December 31, 2014. There were no2016. Comparatively, we had non-cash stock based compensation of $501,567 in 2017 due to employees in the priorissuance of 1,306,907 shares of common stock during the year and we had a loss due to impairment of goodwill of $932,529 and loss on disposal of assets of $17,647 from our Romeo’s Pizza stores, Other operating expenses remained relatively fixed for the year.

Non-employee stock compensation. During the yearyears ended December 31, 2014,2017 and 2016, we issued 11,999a total of 1,306,907 and 7,728,589 shares of Series B preferredcommon stock, and 1 share of Series C preferred stockrespectively, to certainfour different consultants for marketing, services rendered.management and financial strategies. The fair value of thisthe stock issuance was determined by the private placement pricefair value of $2.5the Company’s common stock on the grant date, at prices ranging from $0.05-$0.11 per share in the arms-length transactions.share. Accordingly, we recognized stock based compensation of $30,000 to non-employees to the consolidated statements of operations$501,567 and $1,020,602 for the yearyears ended December 31, 2014. Comparatively, we issued 3,248,919 shares of Series B preferred stock2017 and 54 shares of Series C preferred stock to certain investors of the organization2016, respectively, in 2013. The aggregate costs amounted to a non-operating expense of $8,131,481.

Gain on conversion of debt. In December 2013, the Company issued 1,232,300 shares of Series B preferred stock and 21 shares of Series C preferred stockconnection with these issuances. These amounts are included in exchange for outstanding debt of the organization. The aggregate exchange amounted a reduction of accounts payable related party of $273,565, a reduction of severance payable of $47,250, a reduction of officer salary payable of $857,942 and a reduction of principal and accrued interest of $1,485,580 and $1,028,528, respectively. We recorded a gain on the conversion of debt in the amount of $520,558 for the year end December 31, 2013. During the year ended December 31, 2014, we had a gain on settlement of debt in the amount of $822,080 due to a settlement of accounts payable.our financial statements.

Change in value of derivative liability. During the years ended December 31, 20142017 and 2013,2016 the change in value of derivative liability amounted to $(35,590)$(1,386,055) and $41,945,$1,731, respectively. In 2014,2017, we issued 10 convertible promissory notes totaling $705,177, all of which were convertible into shares of the convertible notes with accrued interestCompany’s common stock at discount to the market. As a result, we had change in amountvalue of $32,010 were converted into 2,496 shares.derivative liability amounted to $1,386,055 We remeasuredpremeasured the fair value of the converted amount at the conversion date and increased the derivative liabilities to $132,981,$2,419,337, which was credited to additional paid-in capital at the conversion.

Interest Expense. During during the years end December 31, 20142017 and 2013,2016, interest expense amounted to $61,109$111,606 and $505,586,$48,789, respectively. The decreaseincrease in interest was a result of fewernew borrowings in 2014 and write-off of the debt discount upon the conversion of the notes payable to preferred stock.2017.

Net Loss.As a result of the foregoing, we had a net loss of $13,131,697$5,00,319 for the fiscal year ended December 31 2014,December 31, 2017, which is compared to the net loss for the year ended December 31 2013December 31, 2016 of $10,982,785. The pro forma net loss would be $13,151,074 in the full year of 2014, of which $37,690 were attributable to the operations in Pizza restaurants, and $25,215 were attributable to the operations in We Three LLC.$2,254,492.

Our activities have been completely directed at developing our business plan for eventually generatinga focus on growing revenue. We operated at a loss in all relevant periods.plan to continue this strategy into 2018.

To try to operate at a break-even level based upon our current level of proposed business activity, we believe that we must generate approximately $20,000,000 in revenue per year. Each dollar of revenue is not directly tied to increasing costs. We believe that we can become profitable without incurring additional costs under our current operating cost structure. However, if our forecasts are inaccurate, we will need to raise additional funds. In the event that we need additional capital, our directors have orally agreed to loan such funds as may be necessary through December 31, 20152017 for working capital purposes, although they have no obligation to do so.

On the other hand, if we decide that we cannot operate at a profit in our current configuration, we may choose to scale back our operations to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current operations. In such event, we will probably not be profitable. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, the development of new or enhanced services or products, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.

We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect approximately $800,000$600,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business.

Liquidity and Capital Resources

As of December 31, 2014,2017, we had cash and cash equivalents of $46,311.$68,986 and a working capital deficit of $4,709,734. As of December 31, 2013,2016, we had cash and cash equivalents of $4,676.$62,948 and a working capital deficit of $3,897,131.

Net cash used for operating activities was $(696,728)$(663,830) for the year ended December 31 2014,December 31, 2017, which was comparable to the net cash used in operating activities of $(204,926)$(198,135) for the year ended December 31 2013. This isDecember 31, 2016. The increase in the amount of net cash used in operating activities in 2016 compared to last year was primarily attributable to our net losses in the amountsa greater amount of $13,131,697 and $10,982,795 for the years ended December 31, 2014 and 2013, respectively less non-cash charges related to stock based compensation of $11,712,560 and $2,470,818 for the years ended December 31, 2014 and 2013, respectively. We had a non-recurring charge to operationsitems during the year ended December 31, 20142016 such as common stock issued for services, accrued expenses and loss on impairment of $1,407,327 for an impairment loss of goodwill, net of gain of $299,826 on investment, which did not require the use of cash and is added back to the net loss. We had no such impairment in the preceding year.Goodwill.

We had noNet cash used in investing activities was $14,468 for the December 31, 2017 compared with cash provided by investing activities of $12,972 during the December 31 December 31, 2016. The cash flows fromprovided by investing activities forin 2016 was primarily attributable to the years ended December 31, 2014 and 2013.purchase of fixed assets in, offset by the cash from disposal of fixed assets in the discontinued operations.

Cash flows provided by financing activities were $738,363$684,336 for the year ended December 31 2014,December 31, 2017, which compares to cash flows provided by financing activities of $207,750$176,519 for the year ended December 31 2013.December 31, 2016. These cash flows were related to sales of stock in the amounts of $596,314$40,000 and $207,750$136,500 during the years ended December 31, 20142017 and 2013,2016, respectively. Suring the year ended December 31, 2014, financing activities provided $28,942In addition, during 2017, we had $705,177 in proceeds from a related party, and $113,107 in proceeds from a notes payable, of which $25,075$-0- was with a related party. These amounts were partially offset by repayments of $53,341 to certain notes payable. Comparatively, during 2016, financing activities provided $28,264 in proceeds from notes payable, which included $11,124 from a related party related party, partially offset by note payable repayments of $61,279 during the year.

Over the next twelve months we do not expect any materialsignificant capital costs to develop operations.operations since we have plans for acquisitions in 2018. Our operating costs of $800,000 will primarily be used for operations, but none will be used to pay salaries.

Our principal source of liquidity will be our operations or from additional financings. We expect variation in revenues to account for the difference between a profit and a loss. Also business activity is closely tied to the stock market and trading industry as a whole. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop our products and our ability to generate revenues.

In any case, we try to operate with minimal overhead. Our primary activity will be to seek to develop clients for our services and, consequently, our sales. If we succeed in developing clients for our services and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful. If we are unable to obtain such profitability we will need to obtain additional financing. We cannot assure that additional financing will be available when needed on favorable terms, or at all.operations.

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. We are currently attempting to obtain additional working capital in a term loan transaction.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements with any party.

Plan of Operation

The following milestones are assessments only. The working capital requirements and the projected milestones are approximations only and subject to adjustment based on sales, costs and needs.

In first quarter of 2013, it was decided that we restructure into a new holding company who adopted a new business model known as "Collaborative Commonwealth™" a new form of governance enabling businesses to take advantage of the power of a public Company. Targeting the acquisition of undervalued, niche companies with high growth potential, income-producing commercial real estate properties and high return investments, all designed to pay a dividend to our shareholders. The reason for this was to protect our shareholders by acquiring small to minimum size businesses seeking support with both financing and management. The plan was to establish new classes of Preferred stock to streamline voting rights, negate debt and acquire new businesses. By December of 2013 the Company negated 90% plus of all debt; by May of 2014 we acquired three businesses, We Three, LLC; Romeo’s NY Pizza and Edge View Properties, Inc. In August 2016, we completed additional three acquisitions, FDR Enterprises, Inc.; Repicci’s Franchise Group, LLC and Refreshment Concepts, LLC.

Recent Developments

As of this filing, we have acquired We Three, LLC (d/b/a Affordable Housing Initiative) (“AHI”), Romeo’s NY Pizza Chain, and Edge View Properties, Inc., FDR Enterprises, Inc., Repicci’s Franchise Group, LLC and Refreshment Concepts, LLC.

Current Business Operations

Cardiff International, Inc., is currently structured as a company with holdings of various companies.

The following milestones are estimates only. The working capital requirements and the projected milestones are approximations only and subject to adjustment based on sales, costs and needs.

Cardiff International, Inc.,CARDIFF INTERNATIONAL, INC. is a public Holding company utilizing a new form of Collaborative Governance™*. Cardiff targets acquisitions of undervalued, niche companies with high growth potential, income-producing businesses, including commercial real estate properties all of which offer high returns for our investors. Our goal is to provide a form of governance enabling businesses to take advantage of the power of a public company without losing management control. Cardiff provides companies the ability to raise money and investors a low risk environment that protects their investment.

MISSION TUITION (www.missiontuition.com):Cardiff through Mission Tuition has built one of the largest merchant shopping networks in America consisting of all the top name merchants; offering in-store savings and coupon savings with local, regional and national merchants throughout America. With each purchase members earn rebates which goes directly into their educational savings account. Our Tax-Free educational savings program provides a platform for families to start an "educational savings" program that encourages regular and daily use of the program. The Mission Tuition program helps families save for college. Mission Tuition encourages members to contribute to their educational savings with contribution from work, family members or just rebates generated by online and in- store purchases. The Mission Tuition program leverages the two biggest economic forces in society –– consumer spendedspent and the cost of education –– to create the most unique value-added rewards program in decades. Cardiff’smissiontuition.comhelps solve a real need for America's families – saving for your child's college education.

WE THREE, LLC (D/B/A AFFORDABLE HOUSING INITIATIVE) (“AHI”):AHI is located in Maryville, Tennessee. AHI acquires both mobile homes and mobile home parks offering an alternative to traditional housing. Their mobile home business is a popular option for a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage payments and high property taxes. If bad credit is an issue preventing people from purchasing a traditional house, AHI will provide a financial leasing option with "O" interest on the lease providing a "lease to own" option for their family home. Most homes are 3 bedroom/2bath homes making the dream of owning a home possible.

ROMEO'S NY PIZZA, INC.:Romeo's NY Pizza - Established in Paterson, New Jersey in 1945. Romeo's NY Pizza makes authentic NY pizza, making their dough in-house, using the finest cheese and ingredients available. No soggy crust or watered down pizza sauce, only the best. They also serve Chicken Wings, Philly Steak Subs, Calzones and Salads. Romeo's NY Pizza is currently in negotiations to open a "quick serve" Romeo's location in the Hartfield International Airport in Atlanta.

EDGE VIEW PROPERTIES LLC:Edge View Properties consists of 30 prime acres of land; 23.5 acres zoned MDR (Medium Density Residential) with 12 lots already platted and 48 lots zoned HDR (High Density Residential), 4 acres of dedicated river front property zoned for recreation on the Salmon River, Idaho's premier whitewater river and 2.5 acres zoned for commercial use. All land is in the city limits of Salmon and adjacent to the Frank church Wilderness Park (the largest wilderness park in the lower 48 states).

REPICCI’S GROUP:Repicci’s Group offers franchisees for the operation of “Repicci’s Italian Ice” franchises. These franchised stores specialize in the distribution of nonfat frozen confections.

The Company has developed a new “Mobile Franchise Opportunity”. The total investment for the new opportunity ranges from $155,600 to $165,000, as follows:

$125,000 for a new Mercedes Sprinter Van, customized for the franchisee, $25,000 for the franchise fee, the balance for product. The Company’s obligation is as above, except for Item #3, training is specific to the new opportunity.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. We base our estimates on experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. On an on-going basis, we evaluate the appropriateness of our estimates and we maintain a thorough process to review the application of our accounting policies. Our actual results may differ from these estimates.

We consider our critical accounting estimates to be those that (1) involve significant judgments and uncertainties, (2) require estimates that are more difficult for management to determine, and (3) may produce materially different results when using different assumptions. We have discussed these critical accounting estimates, the basis for their underlying assumptions and estimates and the nature of our related disclosures herein with the audit committee of our Board of Directors. We believe our accounting policies specific to share-based compensation expense and estimation of the fair value of derivative liability involve our most significant judgments and estimates that are material to our consolidated financial statements. They are discussed further below.

Derivative Liability

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the probability weighted average Black-Scholes-MertonLattice Binomial models to value the derivative instruments at inception and on subsequent valuation dates through the December 31, 20142017 reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Share-based compensation expense

We account for the issuance of stock, stock options and warrants for services from employees and non-employees based on an estimate of the fair value of options and warrants issued using the Black-Scholes pricing model. This model’s calculations include the exercise price, the market price of shares on grant date, weighted average assumptions for risk-free interest rates, expected life of the option or warrant, expected volatility of our stock and expected dividend yield.

The amounts recorded in the financial statements for share-based expense could vary significantly if we were to use different assumptions. For example, the assumptions we have made for the expected volatility of our stock price have been based on the historical volatility of our stock, measured over a period generally commensurate with the expected term. If we were to use a different volatility than the actual volatility of our stock price, there may be a significant variance in the amounts of share-based compensation expense from the amounts reported.

Inflation

We do not believe that inflation will negatively impact our business plans.

Recent Accounting Pronouncements

ASU 2014-10, Development Stage Entities

On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other things, the amendments in this update removed the definition of development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows and shareholders’ equity, (2) label the financial statements as those of a development stage entity; (3) disclose a description of the development stage activities in which the entity is engaged and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments are effective for annual reporting periods beginning after December 31, 2014 and interim reporting periods beginning after December 15, 2015, however entities are permitted to early adopt for any annual or interim reporting period for which the financial statements have yet to be issued. The Company has elected to early adopt these amendments and accordingly have not labeled the financial statements as those of a development stage entity and have not presented inception-to-date information on the respective consolidated financial statements.

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”.The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In June 2014, ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”.The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities.

Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In August 2014, the FASB issued ASU No. 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”.  This Update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments in this Update are effective for public and nonpublic entities for annual periods ended after December 15, 2016. We are currently assessing the impact of the adoption of ASU No. 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.

In July 2015, FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS).  The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In August 2015, FASB issued ASU No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.

Seasonality.

We do not expect our revenues to be impacted by seasonal demands for our services.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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INDEX TO FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Cardiff International, Inc.

We have audited the accompanying consolidated balance sheets ofCardiff International, Inc. (the “Company”) as of December 31, 2014 and 2013 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2014 and 2013. Cardiff International, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, based upon our audit the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cardiff International, Inc. as of December 31, 2014 and 2013 and the results of its operations and its cash flows for the years ended December 31, 2014 and 2013,in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, The Company has suffered net losses and has had negative cash flows from operating activities during the year ended December 31, 2014. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

/s/ KLJ & Associates, LLP

KLJ & Associates, LLP

Edina, MN

July 28, 2016  

CARDIFF INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 20142017 AND 2013DECEMBER 31, 2016

(AUDITED)

The accompanying notes are an integral part of these financial statements

CARDIFF INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

The accompanying notes are an integral part of these consolidated financial statements

CARDIFF INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)OPERATIONS

FOR THEYEARS ENDED DECEMBER 31, 20132017 AND 20142016

(AUDITED)

The accompanying notes are an integral part of these financial statements

CARDIFF INTERNATIONAL, INC.

CONSOLIDATED STATEMENTSSTATEMENT OF CASH FLOWSSHAREHOLDERS' EQUITY (DEFICIENCY)

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 20132015, 2016 and 2017

The accompanying notes are an integral part of these financial statements

CARDIFF INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 and 2017

(continued)