SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2005

Commission file No. 0-24805

Littlefield Corporation

(Exact name of small business issuer as specified in its charter)

Delaware

74-2723809

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2501 North Lamar Blvd. Austin, Texas 78705

(Address of principal executive offices)

(512) 476-5141

(Issuer's telephone number)

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

Securities registered under Sections 12(g) of the Exchange Act: Common Stock

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.       [  ]

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           YES [ X ]       NO [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S- 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-KSB or any amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.                                                                             YES [  ]      NO [X]

Issuer's revenues for its most recent fiscal year:                                                           $  11,331,268

Aggregate market value of the issuer's common stock held by non-affiliates based on the average bid
and asked price as of March 1, 2006                                                                          $  7,215,058

Number of shares of the issuer's common stock outstanding as of March 1, 2006             8,589,355

Documents Incorporated By Reference

The issuer's Proxy Statement for its annual meeting of stockholders scheduled to be held on May 17, 2006, is incorporated by reference in this Form 10-KSB in Part III Item 9, Item 10, Item 11 and Item 12.

This report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements appear in a number of places in this Report and include all statements regarding the intent, belief or current expectations of the Company, its directors or its officers, with respect to, among other things: (i) the Company's financing plans; (ii) trends affecting the Company's financial condition or results of operations; (iii) the Company's growth strategy and operating strategy; and (iv) the declaration and payment of dividends. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors discussed herein and those factors discussed in detail in the Company's filings with the Securities and Exchange Commission.

PART I

ITEM I: DESCRIPTION OF BUSINESS

Littlefield Corporation develops, owns and operates charitable bingo halls, and owns and operates party rental and catering companies. We operate 31 charitable bingo halls in Texas, Alabama, and South Carolina. We also own and operate Littlefield Hospitality in Austin, Texas. The Hospitality division consists of Premiere Events and Rental, a party and tent rental company, and Word of Mouth Catering, a custom catering company.

We were incorporated in Delaware in 1994 as American Bingo and Gaming Corp. From inception through 1999 we suffered through a chaotic leadership structure. There have been five (5) separate Presidents or Chief Executive Officers during our brief history as well as a continuously changing Board of Directors. In mid-1999, Daniel W. Deloney was named a director, and immediately after the resignation of the Board of Directors and management, became interim Chief Executive Officer and Chairman of the Board. In July 1999, Jeffrey L. Minch was appointed a director and in October 1999, was named President. Current independent board members are Carlton Williams, Alfred Stanley and Michael Wilfley. Alfred Stanley and Michael Wilfley were reelected at the May 2004 annual meeting. Carlton Williams was named Chairman of the Board. The Board of Directors owns a substantial amount of stock.

CURRENT YEAR EVENTS:

January 2005 - Pondella Hall for Hire, Inc., d/b/a Eight Hundred v. American Bingo and Gaming, Case No.: 97-2750, Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida. This case was heard and judgment found against the Company in the amount of $1,280,000 plus attorney fees. The company is appealing this decision. The reserve for this case was booked in 2004 in the amount of $1,500,000.

In March 2005, the Company through it's wholly owned subsidiary Conway Bingo Inc., leased a facility in Conway, SC and opened a "C" hall doing business as Mill Pond Bingo.

In April 2005, the Company through it's wholly owned subsidiary Aiken Bingo Inc., leased a facility in Aiken, SC and opened a "C" hall doing business as Tally Ho! Bingo.

In September 2005, Columbia One Inc., a wholly owned subsidiary of the Company sold a shopping center located in Columbia, SC which originally was the Company Headquarters. The Company had two bingo halls located in the shopping center, American Bingo I and II, one a "B" bingo hall and one a "C" bingo hall, both of which were closed. In addition the Company signed a non-compete agreement pulling the Company out of the Columbia market.

In conjunction with the sale of the bingo hall in Columbia, SC, the Company assumed the lease on Galley Hall bingo in Charleston, SC which was operated by the purchaser of the shopping center. Galley Hall operates as a "C" bingo hall.

In October 2005, the Company completed the purchase of the Strike It Rich Bingo hall in San Angelo, Texas, which is operating under the wholly owned subsidiary San Angelo Charitable Bingo Inc.

All of these events are discussed more thoroughly in Item 6 - "Management's Discussion and Analysis of Financial Condition and Results of Operations".

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PRINCIPLE BUSINESS AND MARKETS

We currently have two distinct and separate business segments.

1.

"Littlefield Entertainment" owns and operates 31 charitable bingo halls. Of these 31 bingo halls, seventeen (17) are in Texas (Austin-1, Abilene-2, Amarillo-3, McAllen-3, Lubbock-3, Odessa-2, Midland-1, San Angelo-1 and San Antonio-1), three (3) are in Alabama (Montgomery-2 and Mobile-1) and eleven (11) are in South Carolina (Charleston-6, Georgetown-1, Goose Creek-1, Walterboro-1, Conway-1, and Aiken-1). The total segment comprised approximately 61% of our total revenues in 2005.

2.

"Littlefield Hospitality" consists of Austin Tents and Events which was acquired in November 2000, Premiere Party Rental which was acquired in July of 2001, and Word of Mouth Custom Catering which was acquired in August of 2001. Austin Tents and Events and Premiere Party Rental were subsequently combined and are now called Premiere Tents and Events. Revenues in our Hospitality division comprised 38% of total gross revenues in 2005.

LITTLEFIELD ENTERTAINMENT. Our main business is the management of charitable bingo halls. We might be called a "charitable bingo lessor" or "bingo conductor" or "bingo promoter" depending upon the jurisdiction in which we are operating.

A new charity bingo hall is created when we contract with a real estate landlord, through a long-term real estate lease, to rent premises suitable for a bingo hall. We engage in precise market, demographic and location research in order to ensure the suitability of a specific site for the development of a new bingo hall. We then develop the physical plant for a bingo hall based upon our expertise; and, attract the requisite number of charities for the use of the premises and the services provided to support the Charities' conduct of bingo operations.

In the due diligence of investing in a new start up bingo hall, the company anticipates recovering our entire investment (usually $100,000 to $400,000) within one to two years after the attainment of a stable and predictable operating environment (typically 6-12 months after the initiation of operations with a full contingent of charities). In 2004 we opened Coveralls Bingo in Walterboro, SC, which reached a stable and predictable environment in 2005 and should return our entire investment within the 2 year window. We had two new start up halls in South Carolina, neither of which has reached a stable and predictable operating environment to date. These halls are Mill Pond Bingo in Conway, SC and Tally Ho! Bingo in Aiken, SC.

In addition to starting up new charitable bingo halls, we may acquire other companies that also engage in the management of charitable bingo halls. We anticipate an immediate going in return of 25-35% on our entire investment and the ability to sustain that level of performance for a ten (10) year period, absent only regulatory environmental changes beyond our ability to predict or control. In the past three years we have purchased El Bingo Grande Bingo Hall, Bingo Idea and Bingo Barn. Of these Bingo Idea and Bingo Barn were purchased with the knowledge that we would not attain these goals, as these were strategic purchases that allowed us to take advantage of our market presence. The El Bingo Grande purchase has produced a 58% return since 2002. In 2002, the first year we operated the hall, we had 12% return, in 2003 a 16% return, in 2004 a 16% return and in 2005 a 20% return. In October 2005, we obtained the bingo operations of Strike It Rich Bingo in San Angelo, TX. This was an ongoing bingo hall, but one that was not operating at it's potential and in the 3 months that we have operated the hall, it has already generated a 5% return.

In 2005, our charitable bingo halls raised approximately $3,818,000 in charitable funding for those charities that operate in our bingo halls. We helped raise $667,000 for charities in South Carolina, $651,000 for charities in Alabama, and $2,500,000 for charities in Texas. Since 2001 our company has helped raise well over $16 million for charity.

Competition: The charitable bingo market is a fragmented business, often with operators who are individuals or partnerships, with no one dominant competitor. Competition also includes charitable organizations. From region to region there may be a dominant player in their immediate markets, but we are the only publicly traded bingo promoter with more than just a regional presence.

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Our unit of competition is an individual bingo hall. Competition is further subdivided by the time of day or night that a bingo hall operates. A bingo hall could generally be a daytime hall, a nighttime hall or a late night hall. In certain jurisdictions, we would like to operate at all three times. An individual bingo hall competes within a trade area of approximately fifteen (15) miles against other bingo halls operating at the same time. Within a larger market (e.g. Charleston, South Carolina) the presence of a number of bingo halls may not give rise to significant competition. In general, we believe that approximately one to one and a half percent (1-1.5%) of the population in a city of more than 100,000 are meaningful and consistent bingo players.

The principle methods of competition used, once an ideal location is obtained, include providing clean, safe and attractive facilities, creating customer loyalty through various marketing efforts, and other promotional programs to stimulate interest in not only playing the game of bingo, but in frequenting our bingo locations specifically. Our combined industry knowledge also gives us a competitive advantage when negotiating with the various charities to use our facilities for their operations. Direct advertising is not permitted under the local bingo regulations by the promoter's organizations in some jurisdiction and is permitted in others.

Regulation. We operate in Texas, Alabama and South Carolina, and each state regulates bingo operations differently.

In Texas, the Texas Lottery Commission regulates bingo and its rules are uniform throughout the State. In general, a bingo hall can contain up to seven (7) charities and can operate seven (7) days per week and conduct as many as fourteen (14) bingo sessions per week.

In South Carolina, the South Carolina Department of Revenue is the principal regulator for bingo. Its rules are uniform throughout the State. In general, a bingo hall can contain a single charity and can only operate five (5) sessions per week with a Class B license or everyday with a Class C license. In general, a Class C hall is permitted to play more often, but is required to pay out less money than a Class B hall.

In Alabama, bingo can only be played in counties that have a "local bill" authorizing bingo that has been passed by the state legislature. The local county sheriff is the principal regulator of bingo and regulations vary from county to county. In general, a bingo hall can contain up to ten (10) charities and can operate seven (7) days per week and conduct up to twenty-one (21) bingo sessions per week.

LITTLEFIELD HOSPITALITY:

In the last quarter of 2000, we began a diversification of our businesses with the acquisition of Austin Tents and Events, and with the purchase of Premiere Party Rental and Word of Mouth Custom Catering in the summer of 2001. These combined businesses had average revenue of approximately $4,500,000 per year and operated in the central Texas area in and around Austin, Texas. The companies engaged in the party rental business, catering, and installation of tents for events, parties, weddings, festivals, etc. as well as a small amount of event planning (music, flowers, catering, etc.).

Competition: The catering, party rental, tent installation, and event coordination market is very fragmented, especially in the local Austin area. There are numerous catering and party rental companies in the Austin area. While some companies do offer catering services and party rentals, they do not offer "one-stop shopping", that our combined companies can provide. The keys to success in the hospitality industry are to maintain quality-trained labor and to strive for consistency and excellence in customer service. The hospitality industry has a tradition of being fragmented and our combined acquisitions of Austin Tents and Events, Premiere Party Rental, and Word of Mouth Custom Catering give us a competitive edge in the Austin marketplace.

Regulation: There is no special regulation for this type of business, other than normal business taxes (sales & use, Texas Alcohol and Beverage Commission, franchise, property, etc.) and employment issues. Permits are often needed for certain site locations. We comply with all regulatory issues.

EMPLOYEES:

As of the report date, we had approximately two hundred forty five (245) employees and four (4) directors, of which one is a full time employee. Of the current employment level, nine (9) are at our headquarters in Austin, Texas, thirteen (13) are engaged in bingo operations, and two hundred twenty three (223) are with Littlefield Hospitality. Littlefield Hospitality consists of fifty six (56) full time employees and one hundred sixty seven (167) part time employees.

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ITEM 2 - DESCRIPTION OF PROPERTY

Our principal executive offices, which we own, are located at 2501 North Lamar Boulevard, Austin, Texas 78705. We lease space for the majority of our bingo operations in Texas, Alabama, and South Carolina and in turn sublease the bingo centers to various charities. We are responsible for real estate taxes, insurance, common area maintenance and repair expenses on some of our leases. We own two bingo centers. We believe the condition of our leased and owned properties is good. No single property, leased or owned, amounts to 10% or more of our total assets.

State

City

Location Purpose

Location Name

Status

Alabama

Mobile

Bingo Hall

Bingo Haven

Operating

Montgomery

Bingo Hall

Winners

Operating

Montgomery

Bingo Hall

Good Times

Operating

South Carolina

Charleston

(2) Bingo Halls (B&C)

Beacon

Operating

Charleston

(2) Bingo Halls (B&C)

Lucky I

Operating

Charleston

(2) Bingo Halls (B&C)

Shipwatch

Operating

Georgetown

Bingo Hall

By George! Bingo

Operating

Walterboro

Bingo Hall

Coverall Bingo

Operating

Conway

Bingo Hall

Mill Pond Bingo

Operating

Aiken

Bingo Hall

Tally Ho! Bingo

Operating

Goose Creek

Bingo Hall

Galley Hall

Operating

Texas

Abilene

Bingo Hall

Ambler Bingo

Operating

Abilene

Bingo Hall

Super Bingo

Operating

Amarillo

Bingo Hall

Hi-Plains Bingo

Operating

Amarillo

Bingo Hall

Goldstar II Bingo

Operating

Amarillo

Bingo Hall

Grandview Bingo

Operating

Austin

Corporate Headquarters

Corporate Hdqtrs

Occupied

Austin

Bingo Hall

American Paradise

Operating

Lubbock

Bingo Hall

Lucky Bingo

Operating

Lubbock

Bingo Hall

Goldstar I Bingo

Operating

Lubbock

Bingo Hall

Parkway Bingo

Operating

McAllen

Bingo Hall

Americana I

Operating

McAllen/San Juan

Bingo Hall

Triple City Bingo

Operating

McAllen

Bingo Hall

El Bingo Grande

Operating

Midland

Bingo Hall

Bingo Barn

Operating

Odessa

Bingo Hall

Strike It Rich

Operating

Odessa

Bingo Hall

Let It Ride

Operating

Austin

Warehouse

Premiere Party Rental

Operating

Austin

Kitchen & Offices

Word of Mouth

Operating

San Antonio

Bingo Hall

Blanco Bingo

Operating

San Angelo

Bingo Hall

Strike It Rich

Operating

ITEM 3 - LEGAL PROCEEDINGS

          Generally speaking, the Securities and Exchange Commission guidelines require a company to report any pending legal and/or regulatory proceedings that involves a claim for damages in excess of ten percent (10%) of its current assets. The litigation and proceedings discussed below do not necessarily meet this threshold, but are included in the interest of full disclosure. In general, the Company will vigorously defend itself against all claims to the fullest extent possible:

          Pondella Hall for Hire, Inc., d/b/a Eight Hundred v. American Bingo and Gaming, Case No.: 97-2750, Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida.

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          800438 Ontario Ltd v. American Bingo and Gaming Corporation, Case No.: 99-1161, Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida.

          These two related cases arise from a transaction carried out by a predecessor, American Bingo & Gaming Corporation ("American Bingo"), in July 1995, when American Bingo bought three Florida bingo centers from two corporations owed and controlled by Phillip Furtney. More specifically, American Bingo purchased the assets of Pondella Hall for Hire and Fountains Bingo from Pondella Hall for Hire, Inc., and the stock of Bingo Trail from 800438 Ontario Ltd. American Bingo paid the Furtney controlled entities over $450,000 at the time of purchase and agreed to pay additional compensation of $450,000 over a period of twenty-four months and transfer stock in American Bingo having a value of an additional $450,000. Several months after the acquisition of the three halls, the Florida Attorney General's office obtained an indictment and brought a civil proceeding related to two of the three halls for alleged gambling related offenses. This investigation had been ongoing at, and for some time prior to, the acquisition of the halls, but had not been disclosed to American Bingo by the sellers. As a result of these legal proceedings, and the very real threat of additional legal proceedings against the American Bingo and its officers, the halls were closed and sold to third parties. Additionally, American Bingo settled the litigation brought by the Florida Attorney General by pleading to misdemeanor sales tax violations, paying substantial fines, and agreeing to terms which precluded American Bingo from business in the state of Florida. (This prohibition has since been lifted as a result of further negotiations with the State of Florida.)

          American Bingo did not pay the remaining amounts under the acquisition contracts since they believed the sellers breached the contracts and committed fraud by failing to disclose the ongoing investigation by the Florida Attorney General's office. Pondella filed a two count Complaint against American Bingo in the Circuit Court for Manatee County, alleging breach of contract and common law conversion. At the same time, 800438 Ontario also filed a similar Complaint against American Bingo for breach of contract. American Bingo answered both Complaints by denying the essential allegations. Additionally, American Bingo brought Counterclaims against Pondella and 800438 for fraud, negligent misrepresentation, breach of warranties, contractual indemnity, breach of guaranty, deceptive and unfair trade practices, and violation of Chapter 517 of the Florida Statutes. American Bingo also brought claims against Furtney for his role. However, Furtney, a Canadian citizen and resident of Canada and Mexico, would not accept service of American Bingo's Complaints and American Bingo was unable to obtain service of its Complaints on Furtney. The Complaints against Furtney were dismissed before trial due to lack of service.

          A jury trial on all claims, except American Bingo's claims against Furtney, was conducted in January 2005. The Jury found for Pondella and 800438 Ontario on all their claims and against American Bingo on their claims against Pondella and 800438 Ontario. Following trial, the Judge granted American Bingo's motion for a directed verdict on Pondella's claim for conversion. The principal amount of Pondella's judgment is $410,000 and with interest and attorney's fees totals $802,039. The principal amount of 800438 Ontario's judgment is $450,000 and with interest and attorney's fees totals $808,996. The Company has appealed these judgments to the Florida Second District Court of Appeal and intends to vigorously pursue its rights on appeal. Additionally, the Company has bonded off both judgments, which precludes any efforts to collect on the judgments during the appeal. The range of potential loss on these two cases is between zero and the amount of the judgments, plus accrued interest. The company accrued a total of $1,610,000 on its financial statements related to these matters, $1,500,000 on the 2004 financial statements and $110,000 on its 2005 financial statements.

          Littlefield Corporation f/k/a/ American Bingo and Gaming v. Philip Furtney, Case No.: 2001 CA 4000, Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida.

          As set forth in the previous section, the Company also brought claims against Philip Furtney related to his failure to disclose the existence of the investigation of the Florida Attorney General regarding the bingo halls acquired by American Bingo from the Furtney controlled entities. These claims were dismissed from the original litigation based upon the Company's inability to serve the Complaints on Furtney, a foreign resident, when he refused to voluntarily accept service of the Complaints. This dismissal did not decide or relate to the merits of the claims against Furtney. The Company refiled the Complaints against Furtney in separate litigation and was finally successful in serving Furtney when he appeared in Florida for trial of the Pondella/800438 Ontario cases in January 2005. The Company intends to vigorously pursue its claims against Furtney. The case against Furtney is in discovery and the Company is awaiting a trial date.

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          Lenrich Associates LLC v. Littlefield Corporation, et al; Civil Action No. 00-CP-10-4742, South Carolina Court of Common Pleas, County of Charleston. Lenrich Associates brought this action against the Company based on a commercial lease guaranty that was signed by the Company. The tenant on the lease was Concessions Corp., a subsidiary of the Company and had been used as the location of the "Lucky II" facility, which was closed in early 2000. The lease expired in February 2003. Because rental payments under the lease were in arrears, Lenrich Associates sought to enforce the guaranty against the Company. The Company's liability under the guaranty was capped at the lesser of two years of fixed and additional rent or the amount of fixed and additional rent corresponding to the time period mandated by South Carolina law. A settlement agreement had been reached for $147,500, which has been accrued for by the Company in June 2002. However, the plaintiff withdrew their support of the settlement agreement shortly thereafter. The Company has petitioned the court to enforce the settlement agreement and is currently awaiting this decision. Effective January 1, 2006 a settlement was reached between the two parties in which Littlefield will pay a sum of $500,000. The Company accrued for the remaining balance of approximately $353,000 in the 2005 financial statements. The terms call for payments to be made in one lump sum payment of $250,000 due January 3, 2006 and then $10,000 a month for 25 months. The $250,000 payment and subsequent monthly payments have been made as scheduled.

          Littlefield Corp. v. Dye, Civil Action No. 2002-cp-08-478. The Company filed an action on March 6, 2002, in Berkeley County, South Carolina for collection on a note signed by Danny C. Dye. The note, which was executed on December 10, 1998, was in the amount of $80,000. The Company alleges that Dye still owes $58,481 toward the principle balance, plus $19,257 in accrued interest through December 31, 2002. On January 14, 2003, Mr. Dye amended his answer to assert counterclaims against the Company for fraudulent breach of contract and violation of the South Carolina Payment of Wages Act based on allegations that the Company failed to pay Dye amounts due under an employment contract. Mr. Dye has alleged that the Company owes him $375,000 in unpaid salary and is seeking treble damages under the Payment of Wages Act for a total amount of $1,250,000 in damages. The Company believes that the counterclaims are without merit and the Company plans to contest them vigorously.

          Collins Entertainment Corp. v. Coats and Coats Rental Amusement, d/b/a Ponderosa Bingo and Shipwatch Bingo, Wayne Coats, individually, and American Bingo and Gaming Corp.; American Bingo and Gaming Corp. v. Coats and Coats Rental Amusement, d/b/a Ponderosa Bingo and Shipwatch Bingo, Wayne Coats, individually, Civil Action No. 97-CP-10-4685, South Carolina Court of Common Pleas, Charleston County. On October 9, 1997, Collins Entertainment, Inc., filed a lawsuit alleging the Defendants had engaged in civil conspiracy and tortiously interfered with the Plaintiff's contract, violating the South Carolina Unfair Trade Practices Act. The Plaintiff sought actual damages in excess of $350,000 and an unspecified amount of punitive damages. The Company believed this lawsuit was completely without merit; however, a judgment was issued on February 12, 2001 in favor of the plaintiff. Damages of $157,000 were awarded in addition to punitive damages of $1,570,000. The Company appealed this decision with the South Carolina appellate court, and the judgment was affirmed. The Company applied for a re-hearing with the appellate court, which threw out their original opinion. However, their new opinion also reaffirmed the judgment. The Company filed an appeal with the South Carolina Supreme Court. The appeal has been heard and the Company is awaiting judgment from the South Carolina Supreme Court. The potential outcomes in this matter fall within a range of $0 in the event of a full and final reversal of the judgment to the full judgment amount plus accrued simple interest of 12% from the date of judgment plus court costs. The company has accrued $1,570,000 on its financial statements related to this matter. The actual damages of $157,000 were paid in 2001.

George M. Harrison, et al. v. Littlefield Corporation Civil Action No. 4:04-1038-25 This action is currently pending in the United States District Court for the District of South Carolina, Florence Division. Plaintiffs were the owners of a parcel of real property in Darlington, South Carolina that was leased to Darlington Music Company, a former subsidiary of Littlefield Corporation. In 1990, Plaintiffs, who were also the owners of Darlington Music Company at that time, caused Darlington Music Company to enter into a 15-year lease of the real property they owned. Darlington Music Company was later acquired from Plaintiffs by Littlefield Corporation's predecessor, American Bingo & Gaming. This business continued to operate as a wholly-owned subsidiary until such time as changes in South Carolina law regarding video gaming required that the business be wound down. In May 2001, Plaintiffs later received a judgment in the amount of $199,148 against Darlington Music Company for nonpayment of rent. Through this action, Plaintiffs are now attempting to enforce that judgment against Littlefield Corporation on the basis of various legal theories. Littlefield intends to vigorously defend this action and will also ask, if possible, to have the underlying judgment against its former subsidiary reexamined. This case was settled in June 2005 with Littlefield agreeing to pay $95,000 to the Plaintiffs.

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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the stockholders during the fourth quarter of 2005.

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is traded on the OTC Bulletin Board under the symbol "LTFD". The following table shows the range of reported high and low closing bid prices for our common stock for the periods indicated as reported on a daily basis by the OTC Bulletin Board.

2005:

High

Low

2004:

High

Low

First Quarter

$0.75

$0.57

First Quarter

$1.22

$0.65

Second Quarter

$0.75

$0.56

Second Quarter

$0.94

$0.59

Third Quarter

$0.72

$0.60

Third Quarter

$0.64

$0.45

Fourth Quarter

$0.73

$0.57

Fourth Quarter

$0.75

$0.50

Security Holders

As of March 1, 2006, our common stock was held by approximately 1,182 beneficial shareholders.

Dividends

We have never paid, and currently have no intention to pay, any cash dividends on our common stock.

Securities Authorized For Issuance Under Equity Compensation Plans

Plan Category

Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights

Weighted average exercise
price of outstanding
options, warrants and
rights

Number of securities
remaining available for
future issuance

            (a)            

            (b)            

            (c)            

Equity compensation plans approved by security holders

1,006,555

1.18

1,993,445

Equity compensation plans not approved by security holders

NA

NA

NA

Total

1,006,555

1.18

1,993,445

Recent Sales of Unregistered Securities

There were no sales of unregistered securities in 2005.

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Overview

The year 2005 brought continued growth in our bingo division and significantly lower losses in our hospitality division.

In March 2005, the Company through it's wholly owned subsidiary Conway Bingo Inc., leased a facility in Conway, SC and opened a "C" hall doing business as Mill Pond Bingo.

In April 2005, the Company through it's wholly owned subsidiary Aiken Bingo Inc., leased a facility in Aiken, SC and opened a "C" hall doing business as Tally Ho! Bingo.

In September 2005, Columbia One Inc., a wholly owned subsidiary of the Company sold a shopping center located in Columbia, SC which originally was the Company Headquarters. The Company had two bingo halls located in the shopping center, American Bingo I and II, one a "B" bingo hall and one a "C" bingo hall, both of which were closed. In addition the Company signed a non-compete agreement pulling the Company out of the Columbia market.

In conjunction with the sale of the bingo hall in Columbia, SC, the Company assumed the lease on Galley Hall bingo in Charleston, SC which was operated by the purchaser of the shopping center. Galley Hall operates as a "C" bingo hall.

In October 2005, the Company completed the purchase of the Strike It Rich Bingo hall in San Angelo, Texas, which is operating under the wholly owned subsidiary San Angelo Charitable Bingo Inc. This is the only bingo hall in a city of approximately 100,000 persons.

In Alabama, bingo operations continued to be faced with competition from Native American Casinos and a race track in the area. These casinos and the race track, which are mini-gaming centers, operate under different rules with different pay-out structures than our charitable bingo halls in the same market. Despite these pressures our operations continue to improve. This is an improvement that began in the 4^th quarter of 2004.

In South Carolina, we continue to grow the South Carolina operations. In 2005 we opened Millpond Bingo in Conway, Tally Ho! Bingo in Aiken and assumed a lease on Galley Hall Bingo in which we moved a charity from Columbia to.

Our Hospitality division showed an improvement in 2005. Despite the increase in revenues, net income remained negative, though we lost 300% less for the year than in 2004. Direct and indirect expenses were up from 2004, largely due to increased costs associated with the increase in activity. These costs would include personnel costs, supplies, food, etc. The Company took strategic steps in mid and late 2005 to increase the margin in the both areas of the hospitality divisions that will come into full use in early 2006 reversing the trend of higher revenues and lower net income.

General & Administrative cost are down due to a large legal accrual in 2004. With the legal accruals removed G&A expenses were up in 2005 due to legal expenses. There was substantial activity within the current cases. With the change in legal expenses removed General & Administrative were lower by $18,000. Other income increased due to the settlement of a note receivable and the sale of the shopping center in South Carolina.

Results of Operations

The breakdown in revenues, net profit, and assets by segment is as follows:

Entertainment

Hospitality

     Other     

Total   
Company

Gross revenues

6,908,000  

4,327,000  

96,000 

11,331,000

Net income (loss)

3,207,000  

(250,000) 

(1,854,000)

1,103,000

Total assets

24,913,000  

1,604,000  

(10,289,000)

16,228,000

The "Other" column consists of corporate overhead, other income and expenses, income taxes, inter-company eliminations.

9

Comparison of 2005 to 2004

Note: All figures discussed below have been rounded off to the nearest thousand and are approximate.

Net Income

2005

2004

Change

Total Net Income

$    1,103,000   

$  (1,097,000)   

$    2,200,000   

Entertainment

3,207,000   

2,312,000    

895,000   

Hospitality

(250,000)  

(489,000)   

239,000   

We had a net income in 2005 totaling $1,103,000 compared to net loss in 2004 of $1,097,000. The large net income is a result of two non-operating and non-recurring transactions the sum of which totals approximately $1,757,000. The first of those being the settlement of a Note Receivable and the second the sale of a shopping center in South Carolina. Net income was negatively affected by approximate legal fees of $1,403,000.

Broken down by segments, net income from bingo operations (Littlefield Entertainment) less the gain on the sale of the shopping center in South Carolina was $2,400,000 in 2005 compared to $2,312,000 in 2004, an increase of $88,000. The hospitality division had a net loss from operations of $250,000 in 2005, compared to a net loss of $489,000 in 2004, an improvement of 49%. The increase was a result of increased revenues and reduced interest expense. This trend began in late Q3 2004 and carried through to the end of the 2005. Revenues were up 21% over the same period in 2004.

Revenues

2005

2004

Change

% Change

Total Revenues

$   11,331,000   

$    9,928,000   

$    1,403,000   

14% 

Entertainment

6,908,000   

6,484,000   

424,000   

7%

   Texas

3,939,000   

4,075,000   

(136,000)  

(3%)

   South Carolina

1,439,000   

1,209,000   

230,000   

19% 

   Alabama

1,530,000   

1,200,000   

330,000   

28% 

Hospitality

4,327,000   

3,409,000   

918,000   

27% 

Revenues were up from the prior year, held back slightly by the Texas operations in the Entertainment Division. Texas revenues are down slightly as a result of an adjustment to rent contracts in markets where we are in heavy competition and it is a strategic move to improve our long term position. This move coupled with other strategic planning is expected to increase revenues in 2006 for the Texas division. While the Alabama operations were hurt by increased competition in the form of casinos on the Indian Reservations and electronic gaming machines at a horse race track in the adjoining counties revenues improved in 2005. The Alabama operations began their rebound in the latter part of 2004 and we anticipate this trend to continue in the coming year. Alabama revenues were up 28% from the prior year. South Carolina revenues are up 19%, as a result of targeted marketing and the additional income from the hall that that was opened in 2004 that became stable in 2005. Hospitality's revenues were up 27% from the prior year, a trend that begin late in 2004 and continued throughout the year. We anticipate 2006 to continue to show improvement in the economy and continued revenue growth in the Hospitality division.

Gross Margins

     2005     

     2004     

     Change     

% Change

Total Gross Margins

$      2,368,000      

$     2,109,000      

$        259,000       

12% 

Entertainment

2,509,000      

2,506,000      

3,000       

.1%

Hospitality

(221,000)     

(427,000)     

206,000       

48% 

Gross Margin in 2005 was $2,368,000 or 21% of revenue, compared to gross margin in 2004 of $2,109,000. This represents an increase in gross margin of $259,000. This represents an increase in gross margin of 12%.

10

Broken down by segments, the Entertainment (bingo) division had gross margin in 2005 of $2,509,000 or 36% of revenue compared to gross margin in 2004 of $2,506,000 or 21% of revenue. This represents an increase in gross margin of $3,000 or .1%. The Hospitality division had negative gross margin in 2005 of $221,000 compared to negative gross margin in 2004 of $427,000.

Gross margin as discussed above includes all direct and indirect expenses, depreciation, and goodwill impairment.

General & Administrative Expenses

Corporate overhead, also called general and administrative expense, was $2,529,000 in 2005 compared to $2,920,000 in 2004, a decrease in overhead expense of $391,000. The decrease is a result of a large legal settlement accrual in 2004.

Other Income and Expenses

Interest and investment income was up 300% to $40,000 in 2005 from $10,000 in 2004. The increase is a result of the sale of some investments in a security deposit account and largely from interest earned on the note receivable related to the sale of the shopping center in South Carolina. Interest expense was down 11% in 2005 to $253,000 from $285,000 in 2004. We had accrued $1,200,000 for legal settlements and $300,000 in post judgment interest on a separate case in 2004, in 2005 we accrued approximately $463,000 related to ongoing cases. We had a gain on the sale of fixed assets in 2005 of $996,000 compared to a gain on the sale of fixed assets of $3,000 in 2004. The gain on the sale of fixed assets in 2005 was the result of the sale of the shopping center in South Carolina.

Our income tax expense for 2005 was approximately $77,000 compared to $60,000 in 2004, all of which is related to state income taxes. The Company currently has a net operating loss available for carryover on its federal income taxes of approximately $6,800,000.

Liquidity and Capital Resources

Cash flow from operations of $310,208 and cash provided by investing was sufficient to fund all financing activities in 2005. At year end, net cash and cash equivalents increased by approximately $92,000 compared to last year. 2004 included a $1,500,000 accrual for legal settlements. The Company has notes payable coming due in the next twenty four months amounting to $483,000 in 2006 and $186,000 in 2007. Of these notes payable, there is only one balloon payment of $106,000 to a related party, allowing for manageable debt repayments on a monthly and quarterly basis. The related party debt, is fully expected to be restructured.

Debt/Lease Schedule

12 months 
2006

24 Months 
2007

36 Months 
2008

48 Months 
2009

60 Months 
2010

Thereafter

Totals

Related Parties

$    105,650

$    105,650

Notes Payable

$    377,557

$    185,755

$    194,651

$    206,286

$    213,028

$ 1,651,211

$ 2,828,488

Capital Leases

$      65,668

$     65,668

Operating Leases

$ 1,553,843

$ 1,217,463

$    952,968

$    567,751

$    412,021

$ 1,023,014

$ 5,727,060

Total Obligations

$ 2,102,718

$ 1,403,218

$ 1,147,619

$    774,037

$    625,049

$ 2,674,225

$ 8,726,866

11

We have reserved approximately $3,700,000 for punitive damages related to legal judgments that were rendered against the Company, of this amount $3,237,000 was for judgments rendered or accrued for prior to 2005. Of the $3,237,000, $1,500,000 was accrued for in 2004 on a January 2005 judgment. In 2005 we accrued approximately $463,000 of legal expense, approximately $353,000 related to a settlement in January 2006 and approximately $110,000 related to an ongoing case. All cases are on appeal or recently settled, if we lose our appeals we plan to set up a payout arrangement with the plaintiff to pay off the amounts due in installments.

Current assets totaled approximately $4,122,000 at December 31, 2005, leaving the Company with negative working capital of approximately $1,504,000 and a current ratio of .73 to 1. This is an decrease of the deficit from 2004 of $2,262,000 which had current assets of $1,374,000, negative working capital of approximately $3,766,000 and a current ratio of .27 to 1. However, a legal reserve of $3,700,000 is included in the 2005 current liabilities. In 2004 the legal reserve was $3,237,000. The legal cases are currently on appeal or awaiting judgment in South Carolina and Florida. The reduction was largely a result of cash received from the settlement of a note receivable and the addition of a new note receivable from the sale of a capital asset. Net cash flow from operations that approximated $310,000 in 2005 was sufficient to cover all operating activities, which included approximately $950,000 in paid legal expenses. In 2006, we plan to continue to use our cash generated from operations to make leasehold improvements and renovations in our bingo operations. We also plan to use advantageous combinations of bank financing, seller financing, treasury stock, and cash on new bingo hall acquisitions when favorable terms can be obtained. The Company is confident in its ability to structure a payout arrangement in the legal cases should it exhaust all of its appeals. In Florida, the Company has already secured a bond in the event it is unsuccessful on its appeal(s).

Critical Accounting Policies

Statement of Financial Accounting Standards No. 149, Derivative Instruments and Hedging Activities - amends SFAS 133 effective after June 30, 2003 for "Financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity - establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Effective for financial instruments entered into or modified after May 31, 2003 and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 151, Inventory Costs - an amendment to ARB No. 43, Ch 4, clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage), requires items those items to be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal" and that allocation of fixed production overheads to the costs of conversions be based on the normal capacity of the production facilities effective November 2004. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 152, Accounting for Real Estate Time-Sharing Transaction - an amendment to FASB No. 66 & 67 amends No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. It also amends FASB No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. This is effective the fiscal year beginning after June 15, 2005. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets - an amendment to APB No. 29 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

12

Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections - this statement replaces APB Opinion No. 20 Accounting Changes and FASB Statement No. 3 Reporting Accounting Changes in Interim Financial Statements and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific provisions, those provisions should be followed. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments - this Statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. It clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133. It establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation. It also clarifies that concentrations of credit risk in the form of a subordination are not embedded derivatives and amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The Company does not believe that the adoption of this pronouncement will have a material effect on its financial statements.

Statement of Financial Accounting Standards No. 123 (R), Share Based Payments - an amendment to SFAS 123 amends SFAS 123 to establish standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services. It also address transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided in Statement 123 as originally issued and EITF Issue No. 96-18, "Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services. This statement is effective for public entities that file as small business issuers as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. The financial impact of adopting SFAS 123(R) can not be predicted; however, it will likely have a material impact on the Company's financial statements.

Item 7 - Financial Statements

The independent auditors' report, consolidated financial statements and notes thereto included on the following pages are incorporated herein by reference.

Report of Sprouse & Anderson, L.L.P.

F-2

Consolidated Balance Sheet

F-3

Consolidated Statements of Operations

F-4 - F-5

Consolidated Statements of Stockholders' Equity

F-6

Consolidated Statements of Cash Flows

F-7 - F-8

Notes to Consolidated Financial Statements

F-9 - F-27

Item 8 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 8A - Controls and Procedures

Evaluation of Disclosure Controls

13

We evaluated the effectiveness of our disclosure controls and procedures ("Disclosure Controls") as of the end of the 2004 fiscal year. This evaluation ("Controls Evaluation") was done with the participation of our president and chief executive officer ("CEO") and chief financial officer ("CFO").

Disclosure Controls are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 ("Exchange Act") is recorded processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure Controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our Disclosure Controls or our internal controls over financial reporting ("Internal Controls") will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Littlefield Corporation have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Conclusions

Based upon the Controls Evaluation, our CEO and CFO have concluded that, subject to the limitations noted above, the Disclosure Controls are effective in providing reasonable assurance that material information relating to Littlefield Corporation is made known to management on a timely basis during the period when our periodic reports are being prepared.

Internal control over financial reporting is a framework incorporating processes designed to assure that transactions are booked properly initially and find their way to the appropriate place on the company's financial statements. There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting..

PART III

14

Item 9 - Directors and Executive Officers; Compliance With Section 16(a) of the Exchange Act

In response to this item, the information included in our proxy statement for the annual meeting of stockholders to be held on May 17, 2006, which proxy statement will be filed with the Securities and Exchange Commission no later than April 17, 2006, is incorporated herein by reference.

Item 10 - Executive Compensation

In response to this item, the information included in our proxy statement for the annual meeting of stockholders to be held on May 17, 2006, which proxy statement will be filed with the Securities and Exchange Commission no later than April 17, 2006, is incorporated herein by reference.

Item 11 - Security Ownership of Certain Beneficial Owners and Management

In response to this item, the information included in our proxy statement for the annual meeting of stockholders to be held on May 17, 2006, which proxy statement will be filed with the Securities and Exchange Commission no later than April 17, 2006, is incorporated herein by reference.

Item 12 - Certain Relationships and Related Transactions

In response to this item, the information included in our proxy statement for the annual meeting of stockholders to be held on May 17, 2006, which proxy statement will be filed with the Securities and Exchange Commission no later than April 17, 2006, is incorporated herein by reference.

15

Item 13 - Exhibits, Lists and Reports on Form 8-K

Exhibit

Description

3.1

Certificate of Incorporation of the Company dated September 8, 1994, as amended October 17, 1994, and further amended July 31, 1997 and August 13, 1998, and September 22, 1999 (incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-QSB filed by the Company on November 15, 1999, for the quarter ended September 30, 1999).

3.2

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Quarterly Report on Form 10-QSB filed by the Company on November 15, 1999, for the quarter ended September 30, 1999).

10.1*

Amended and Restated 1994 Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-KSB filed by the Company on March 18, 1999, for the year ended December 31, 1998).

10.2*

Amended and Restated 1995 Employee Stock Option Plan (incorporated by reference to Exhibit 10.2 of the Annual Report on Form 10-KSB filed by the Company on March 18, 1999, for the year ended December 31, 1998).

10.3*

1995 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.12 of the Annual Report on Form 10-KSB filed by the Company for the year ended December 31, 1994).

10.4*

Amended and Restated 1996 Employee Stock Option Plan (incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-KSB filed by the Company on March 18, 1999, for the year ended December 31, 1998).

10.5*

Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.5 of the Quarterly Report on Form 10-QSB filed by the Company on August 14, 1998 for the quarter ended June 30, 1998).

10.6*

American Bingo 7 Gaming Corp. Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Quarterly Report on From 10-QSB filed by the Company on August 16, 1999, for the quarter ended June 30, 1999).

10.7

Master Coin Machine Agreement dated November 9, 1998, by and among the Company, Gold Strike, Inc., Mims & Dye Enterprises, LLC, Michael W. Mims and Danny C. Dye (incorporated by reference to Exhibit 10.20 of the Annual Report on Form 10-KSB filed by the Company on March 18, 1999, for the year ended December 31, 1998).

10.8

Settlement Agreement dated January 27, 1997 with the State of Florida (incorporated by reference to Exhibit 10.21 of the Quarterly Report on Form 10-QSB filed by the Company on August 14, 1998 for the quarter ended June 30, 1998).

10.9*

Employment Agreement effective as of April 1, 2002, with Jeffrey L. Minch.

21.1

Subsidiaries of the Company

31.1

Certification Pursuant to Rules 13a-14(a)

31.2

Certification Pursuant to Rules 13a-14(a)

32.1

Certification Pursuant to 18 U.S.C. 1350

32.2

Certification Pursuant to 18 U.S.C. 1350

*

Denotes a management contract or compensatory plan or arrangement.

16

In response to this item, the information included in our proxy statement for the annual meeting of stockholders to be held on May 17, 2006, which proxy statement will be filed with the Securities and Exchange Commission no later than April 17, 2006, is incorporated herein by reference.

Item 14 Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed to the Company by Sprouse & Anderson, L.L.P. for the audit of Littlefield Corporation and Subsidiaries' annual financial statements included in the 10K and for the review of the financial statements included in its quarterly reports on Form 10-Q for the fiscal years ended December 31, 2005 and 2004 totaled $34,400 and $62,925, respectively.

Tax Fees

The aggregate fees billed to the Company by Sprouse & Anderson, L.L.P. for services rendered to the Company during the fiscal years ended December 31, 2005 and 2004 for tax compliance, tax advice or tax planning was $19,050 and $15,000, respectively.

It is the audit committee's policy to pre-approve all services provided by Sprouse & Anderson, L.L.P. All services provided by Sprouse & Anderson, L.L.P. during the years ended December 31, 2005 and 2004 were pre-approved by the audit committee.

Reports on Form 8-K

January 11, 2005

Outcome of Florida Lawsuit

January 28, 2005

Q4 2004 Earnings Press Release

April 15, 2005

Q1 2005 Earnings Press Release

November 14, 2005

Q3 2005 Earnings Press Release

November 15, 2005

Q3 2005 Earnings Press Release

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: February 15, 2006

LITTLEFIELD CORPORATION

(Registrant)

By:  /s/ Jeffrey L. Minch

        Jeffrey L. Minch

        President and CEO

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

17

Signature 

Title

Date

/s/ Jeffrey L. Minch
Jeffrey L. Minch

President and Chief Executive Officer, Directory

February 15, 2006

/s/ Carlton Williams
Carlton Williams

Chairman of the Board

February 15, 2006

/s/ Alfred Stanley
Alfred Stanley

Director

February 15, 2006

/s/ Michael Wilfley
Michael Wilfley

Director

February 15, 2006

18

LITTLEFIELD CORPORATION & SUBSIDIARIES

DECEMBER 31, 2005

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITORS' REPORT

F-2

FINANCIAL STATEMENTS:

            Consolidated Balance Sheet as of December 31, 2005

F-3

            Consolidated Statements of Operations for the
            Years Ended December 31, 2005 and 2004

F-4 - F-5

            Consolidated Statements of Stockholders' Equity for the
            Years Ended December 31, 2005 and 2004

F-6

            Consolidated Statements of Cash Flows for the
            Years Ended December 31, 2005 and 2004

F-7 - F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-9 - F-27

INDEPENDENT AUDITORS' REPORT

Board of Directors

Littlefield Corporation

We have audited the accompanying consolidated balance sheet of Littlefield Corporation and Subsidiaries ("Company") as of December 31, 2005, and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended December 31, 2005 and 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Littlefield Corporation and Subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the years ended December 31, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America.

SPROUSE & ANDERSON, L.L.P.

Austin, Texas

March 2, 2006

F-2

Littlefield Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2005

ASSETS

Current Assets:

        Cash and cash equivalents

$       618,972 

        Accounts receivable, net of allowance for doubtful accounts of $79,455

1,192,022 

        Equity securities, available for sale

3,130 

        Other current assets

205,367 

        Note Receivable

1,184,214 

        Restricted Cash

        918,290  

        Total Current Assets

$    4,121,995 

Property and Equipment - at cost, net of accumulated depreciation and amortization

$    6,346,847 

Other Assets:

        Goodwill

4,905,111 

        Intangible assets, net

652,662 

        Other non-current assets

201,076 

        Total Other Assets

$    5,758,849 

TOTAL ASSETS

$  16,227,691 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

        Obligations under capital lease

$         65,668 

        Long term debt, current portion

377,557 

        Long term debt-related party, current portion

105,650 

        Trade accounts payable

425,665 

        Reserve for settlements

3,700,000 

        Accrued expenses

506,791 

        Other current liabilities-related party

444,605 

        Total Current Liabilities

$    5,625,936 

Long-term Liabilities:

        Long term debt, net of current portion

2,450,931 

        Total Long-term Liabilities

$    2,450,931 

Total Liabilities

$    8,076,867 

Stockholders' Equity:

        Common stock, $.001 par value, (authorized 20,000,000 shares, issued 10,176,890
           shares, outstanding 8,589,355 shares)

10,177 

        Additional paid-in-capital

23,546,020 

        Treasury stock - 1,587,535 shares, at cost

(2,019,707)

        Accumulated other comprehensive income

(2,100)

        Accumulated deficit

  (13,383,566)

        Total Stockholders' Equity

$   8,150,824 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$  16,227,691 

See notes to consolidated financial statements

F-3

Littlefield Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

      2005     

      2004     

REVENUES:

        Entertainment

$  6,908,360 

$  6,484,397

        Hospitality

4,326,891 

3,409,328

        Other

         96,017 

         33,972

TOTAL REVENUES

 11,331,268 

   9,927,697

DIRECT COSTS AND EXPENSES:

        Direct salaries and other compensation

2,600,475 

2,390,147

        Rent and utilities

2,301,728 

2,163,388

        Other direct operating costs

3,207,902 

2,388,390

        Depreciation and amortization

787,685 

821,077

        License expense

        65,075 

        55,318

TOTAL COSTS AND EXPENSES

   8,962,865 

   7,818,320

GROSS MARGIN

2,368,403 

2,109,377

GENERAL AND ADMINISTRATIVE EXPENSES

        Salaries and other compensation

542,890 

533,144

        Legal and accounting fees

1,050,549 

376,667

        Reserve for legal settlements

462,500 

1,500,000

        Depreciation and amortization

93,505 

106,806

        Other general and administrative

      379,645 

      403,333

        TOTAL GENERAL AND ADMINISTRATIVE EXPENSES

  2,529,089 

  2,919,950

GAIN ON DISPOSITION OF FIXED ASSETS

      995,838 

         3,154

OPERATING INCOME (LOSS)

835,152 

(807,419)

OTHER INCOME AND EXPENSES:

        Interest and investment income

39,560 

9,713

        Interest expense

(253,360)

(284,571)

        Gain/(Loss) on sale of investment assets

14,184 

    45,057 

        Other Income

       544,429 

            -     

TOTAL OTHER INCOME AND EXPENSES

344,813 

   (229,801)

INCOME (LOSS) BEFORE INCOME TAXES

1,179,965 

(1,037,220)

PROVISION FOR INCOME TAXES

         76,529 

      60,000 

NET INCOME (LOSS)

1,103,436 

(1,097,220)

Unrealized Gain (Loss) on Marketable Securities

        (1,381) 

    (37,148) 

OTHER COMPREHENSIVE INCOME (LOSS), Net of Tax of $0 and $0

        (1,381) 

    (37,148) 

NET COMPREHENSIVE INCOME (LOSS)

$  1,102,055 

$(1,134,368)

See notes to consolidated financial statements

F-4

Littlefield Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

Years Ended December 31,

      2005     

      2004     

EARNINGS (LOSS) PER SHARE (NET INCOME):

        Basic earnings (loss) per share

$         .13 

$         (.13)

        Diluted earnings (loss) per share

$         .13 

$         (.13)

Weighted average shares outstanding - basic

8,535,706

8,378,954 

Weighted average shares outstanding - diluted

8,587,634

8,474,785 

See notes to consolidated financial statements

F-5

Littlefield Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

-Common Stock-

Additional
Paid-in

Treasury

Subscriptions

Accumulated

Accumulated Other Comprehensive

               Description              

  Shares  

 Value 

  Capital  

Stock

 Receivable 

    Deficit    

    Income    

    Total    

Balance at December 31, 2003

8,307,373 

$  10,177 

$23,743,847 

$(2,384,945)

$       (6,631) 

$(13,389,782)

$         36,429 

$     8,009,095 

Issuance of treasury stock under deferred compensation plan

25,000

(14,750)

32,000 

17,250 

Issuance of treasury stock pursuant to employee stock purchase plan and employee 401K deferrals

46,581

(14,071)

59,455 

6,631

52,015 

Comprehensive income for the year ended 12/31/04

(37,148)

(37,148)

Net income for the year ended 12/31/04

  (1,097,220)

    (1,097,220)

Balance at December 31, 2004

8,378,954

$   10,177

$23,715,026 

$(2,293,490)

$                0

$(14,487,002)

 $            (719)

$     6,943,992 

Issuance of treasury stock under deferred compensation plan

40,000

(26,300)

51,550 

25,250 

Issuance of treasury stock pursuant to employee stock purchase plan and employee 401K deferrals

45,401

(40,225)

60,002 

19,777 

Options Excercised by employees

125,000

(102,481)

162,231 

59,750 

Comprehensive income for the year ended 12/31/05

(1,381)

(1,381)

Net income for the year ended 12/31/05

1,103,436 

1,103,436 

Balance at December 31, 2005

8,589,355

$   10,177

$ 23,546,020

($ 2,019,707)

$               0

$(13,383,566)

$         (2,100)

$     8,150,824 

See notes to consolidated financial statements

F-6

Littlefield Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

       2005       

       2004      

CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income (loss)

$ 1,103,436 

$  (1,097,220)

    Adjustments to reconcile net loss to net cash provided by operating activities:

    Depreciation, amortization, and goodwill impairment

881,189 

927,883 

    Bad debt allowance and write-offs

79,455 

18,405 

    (Gain)/loss on sales of investment assets

(9,312)

(45,057)

    (Gain) on disposal of property and equipment

(995,838)

(3,154)

    Increase (decrease) in cash flows as a result of changes in asset and liability
       account balances:

             Accounts receivable

(640,743)

32,168 

             Prepaid expenses and other assets

(757,256)

(15,900)

             Trade accounts payable

133,758 

(95,036)

             Accrued expenses and other liabilities

    515,519 

1,483,511 

NET CASH PROVIDED BY OPERATING ACTIVITIES

310,208 

1,205,600 

CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sales of securities

43,946 

521,451 

    Purchase of property and equipment

(288,573)

(364,802)

    Purchase of goodwill/intangibles

(296,083)

(39,983)

    Proceeds from sale of property and equipment

631,528 

2,875 

    Proceeds from repayment of note receivable

    860,786 

           ---  

NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES

951,604 

119,541 

CASH FLOWS FROM FINANCING ACTIVITIES:

    Payments on notes payable and capital leases

(1,229,693)

(1,089,259)

    Proceeds from options exercised

59,750 

---  

    Collections of subscribed receivables

---  

6,631 

    Purchase of Treasury Stock

           ---  

         (790)

NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES

(1,169,943)

(1,083,418)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

91,869

241,723 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

    527,103 

    285,380 

CASH AND CASH EQUIVALENTS AT END OF YEAR

$    618,972 

$    527,103 

See notes to consolidated financial statements

F-7

Littlefield Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

     2005     

     2004     

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash payments:

        Interest

$243,360

$288,553

        Income taxes

$  64,878

$  56,685

Non-cash transactions:

        Acquisition of property and equipment in exchange for notes payable

$      -0-  

$  94,155

        Acquisition of intangibles in exchange for notes payable

$350,000

$224,062

        Acquisition of equipment under notes payable

$  17,850

$      -0-  

        Issuance of treasury stock under deferred compensation plan

$  25,250

$  32,000

        Issuance of treasury stock under employee stock purchase plan

$  19,777

$      -0-  

See notes to consolidated financial statements

F-8

Littlefield Corporation - Notes to Consolidated Financial Statements

December 31, 2005

NOTE 1 - BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Littlefield Corporation actively participates in the U.S. charitable bingo market, and the event planning/hospitality business. The Company's corporate headquarters is located in Austin, Texas, and the Company operates primarily through wholly owned subsidiaries in Texas, South Carolina and Alabama. The Company generates its revenues from bingo centers in all three states and the event planning/hospitality market in Texas.