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ITEM 1. 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.
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. Cardiff International, Inc. is the parent company for the Mission Tuition Rewards program, which is targeted to families focused on saving money for educational needs.
In January 2006, Cardiff changed its fiscal year end to December 31st from September 30th.
Cardiff International, Inc., a tech company who has developed a proprietary software system to track and manage consumer purchases from unlimited businesses: service companies, retailers, merchants, health industry, insurance industry, most consumer orientated businesses. Our software infrastructure tracks all commissions, rebates, discounts providing the public the ability to track all savings regardless of what program they participate in as long as the program utilizes the Cardiff technology.
Cardiff’s first national program launched in the third quarter of 2011 is “Mission Tuition”, a rewards program that helps solve a real need for families – saving for education. The Mission Tuition program is easy to understand and use, and is emotionally positioned to appeal to all consumers. The Mission Tuition Rewards program will become the rewards program of preference for every day spending for families with young children.
The program leverages the two biggest economic forces in society – consumer spending and consumer savings –to create the most unique value-added rewards program in decades.
The potential success of the Mission Tuition program involves the participation of three groups: (i) Cardiff as the marketer, (ii) The merchant coalition, (iii) the member. As a result of our merchant coalition and cash rebate program we expect that the member will become loyal customers of the coalition merchants and participating banks.
Participating merchants provide Cardiff a commission to drive customers to their site or location and Cardiff shares this commission with the merchant. Cardiff will provide a cash rebate on all purchases between made which goes directly into their personal educational savings account . The cash back contribution can be supplemented by additional cash rebates by using the Mission Tuition MasterCard. This issuing bank contribution is applicable no matter where the cardholder shops, therefore encouraging regular and daily usage of the Mission Tuition MasterCard.
What Is Mission Tuition
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 Cardiff provides members with substantial savings and/or a cash rebate to their educational savings account. Members have thousands of leading retailers to shop and save. Our tax-free educational savings program provides a platform for “educational savings” which encourages regular and daily use of the program. Cardiff’s Mission Tuition program helps families save for college. Mission Tuition encourages members to contribute to their educational savings with contributions generated by on-line and in-store purchases.
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The Mission Tuition MasterCard
The Mission Tuition MasterCard is a unique credit card that provides the user the opportunity to earn additional cash contributions anywhere MasterCard is honored. Regardless a Mission Tuition merchant or not the user earns additional cash rewards on total spending. Thousands leading retailers are part of our tuition rewards program. Contributions range from 1% to 30% on total purchases plus with the use of the Mission Tuition MasterCard users can earn additional cash rebates.
The Mission Tuition Card is the result of years of development, focus groups and other market research studies. Our brand, image, programming, sales and marketing have been carefully crafted to appeal to virtually every concerned American parent and grandparent, since our card addresses every family’s critical need -- saving for college -- and every family's fear -- not having enough when the time comes, to send junior to college.
Wells Fargo Bank
The Omnibus account will reside at Wells Fargo Bank. Cardholders who elect not to activate a 529 immediately will have the option to participate in Higher Educational Omnibus Savings program residing at Wells Fargo Bank. Once the cardholder reaches the required amount ($250 minimum in most states) Cardiff will notify Mission Tuition members they now qualify for their state’s 529 program providing them the necessary information to designate a State Fund Manager.
Omnibus Account
Cardiff opened an account with Wells Fargo Bank so all cash rebates will go directly into this account prior to any transfer to a 529 State Managed account.
State Managed 529 Plans
Each state has entered into a contractual agreement with accredited fund managers (i.e.) Alliance Bernstein, JP Morgan, CIAA-CREF, Wells Fargo, etc. to manage and administer their 529 programs.
Description of Section 529 Plans
Section 529 plans were authorized by congress to provide tax incentives 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 passed in 1996 allows 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 agency or instrumentality thereof. Most states have outsourced the management of their programs to investment advisory or financial service 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.
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.
Launching Mission Tuition
Cardiff International, Inc. is poised to achieve spectacular success. With over five years of investment, hard work, and hard learning, we believe that our company has the contractual arrangements, functional abilities, and most significantly, the revolutionary “best widget” that has ever been actualized in our sphere. Tying together these factors, we are pleased to offer our partners an undeniable business model.
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Cardiff Merchant Coalition
As of December 31, 2011, over 20,000 businesses were part of the Cardiff Merchant Coalition, several with multiple locations throughout America.
Issuer of the Mission Tuition MasterCard
Cardiff entered into an agreement with Amalgamated Bank of Chicago.
Various Agreements
In connection with the activities related to the Mission Tuition Rewards program Cardiff has entered into two agreements with merchant providers. It is intended that each of these providers will continue to provide services to Cardiff which will aid in the marketing of the Mission Tuition.
Employees
Cardiff currently has three employees but anticipates it will hire additional personnel as the Mission Tuition program 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.
ITEM 1A. RISK FACTORS
Operating History:. We commenced active operations during the third quarter of 2011. Potential investors should be aware that there is only a limited basis upon which to evaluate our prospects for achieving our intended business objectives.
The Company will derive its revenues from five different revenue streams:
commissions earned from merchants; interest earned on member’s savings accounts; credit card activation fees, 20bts on all credit card transactions; 10bts on interest earned on revolving credit balances; and an annual renewal fee. After additional testing in July -August 2011, changes were made to the home page and the site launched on a national level in late September and October. There is generally a 90 day waiting period between when the customer makes the purchase and the funds are transmitted to Cardiff.
After the September launch the company immediately obtained 1,200 members. By the end of December the company had 7,500 members. Based upon the awareness of the site and the marketing efforts the company expects that during 2012 the membership will increase at a similar pace. As the membership increases, the usage of the member ship will increase, and the associated revenues will follow.
Google rated the site between a 4 and 5 (five being the highest) for ease of navigation and time spent per visitor to our site.
Possibility of Total Loss of Investment: An investment in Cardiff is a 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.