UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549

FORM 10-Q

(Mark One)

☒
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ~~ended September 30, 2022~~ended: March 31, 2023

ORor

☐
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ~~______________~~_____________

Commission ~~file number:~~ File Number: 000-49709

~~Cardiff Lexington Corporation~~

~~(Name of registrant as specified in its charter)~~

~~Nevada~~	~~84-1044583~~CARDIFF LEXINGTON CORPORATION
(Exact name of registrant as specified in its charter)

Nevada		84-1044583
(State or other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~organization)		(I.R.S. Employer ~~identification~~Identification No.)

3200 Bel Air Drive, Las Vegas, NV		89109

~~400 Las Olas Blvd., Fort Lauderdale, Florida, Unit 1400~~	~~33301~~
(Address of principal executive ~~offices~~offices)		(Zip Code)

~~844-628-2100~~

~~(Registrant’s telephone number, including area code)~~

844-628-2100

(Registrant’s telephone number, including area code)

~~N/A~~

~~(Former name or former address and former fiscal year, if changed since last report)~~

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

~~Title of Each Class~~	~~Trading Symbol~~	~~Name of Each Exchange on Which Registered~~
~~N/A~~	~~N/A~~	~~N/A~~

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

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 ☒ xNo ☐¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ xNo ☐¨

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

Large accelerated Filer ☐	Accelerated Filer ☐
Non-accelerated Filer ☒	Smaller reporting company ☒
	Emerging ~~Growth Company ☐~~	growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for ~~complying~~comply 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

~~The number~~As of ~~commons~~June 29, 2023, there were 908,479,113 shares ~~outstanding at January 5, 2023 is 824,796,735 with a par value~~ of ~~$0.001.~~common stock of the registrant issued and outstanding.

~~FORM 10-Q~~

~~CONDENSED CONSOLIDATED FINANCIAL~~

~~STATEMENTS AND SCHEDULES~~

CARDIFF LEXINGTON CORPORATION

~~For the Three and Nine Months~~Quarterly Report on Form 10-Q

Period Ended ~~September 30, 2022~~March 31, 2023

~~The following financial statements and schedules of the registrant are submitted herewith:~~TABLE OF CONTENTS

			~~Page~~PART I

	~~PART I -~~ FINANCIAL INFORMATION

Item 1.	~~Unaudited Condensed Consolidated Financial Statements:~~	3
	~~Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021~~	3
	~~Condensed Consolidated Statements of Operations or the Three and Nine Months Ended September 30, 2022 (unaudited) and 2021 (unaudited)~~	5
	~~Condensed Consolidated Statements of Shareholders’ Equity (Deficiency) for the Periods ended September 30, 2022 and 2021 (unaudited)~~	7
	~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)~~	8
	~~Notes to Condensed Consolidated~~ Financial Statements	102
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	3632
Item 33.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures ~~Evaluation of Disclosure Controls and Procedures~~	41

	PART II ~~- OTHER INFORMATION~~
			OTHER INFORMATION
Item 1.	Legal Proceedings	4243
Item 1A.	Risk Factors	4243
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4243
Item 3.	Defaults Upon Senior Securities	4243
Item 4.	Mine Safety Disclosures	4243
Item 5.	Other Information	4243
Item 6.	Exhibits	4243

PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 (Unaudited)		3
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)		4
Condensed Consolidated Statements of Stockholders’ Equity (Deficiency) for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)		5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)		6
Notes to Condensed Consolidated Financial Statements (Unaudited)		7

~~EXPLANATORY NOTE~~

~~This 10-Q Amendment is filed solely for the purpose of providing the interactive data files for inline XBRL.~~

~~PART I - FINANCIAL INFORMATION~~

~~Item 1 - Financial Statements~~

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF ~~SEPTEMBER 30, 2022~~MARCH 31, 2023 AND DECEMBER 31, ~~2021~~2022

(UNAUDITED)


	September 30, 2022		December 31, 2021		March 31, 2023			December 31, 2022
	Unaudited		Audited
ASSETS
Current assets
Cash	$	260,498	$	595,987	$	350,329		$	226,802
Accounts receivable-net		6,829,160		4,948,796		7,446,416			6,604,780
Prepaid and other current assets		5,000		5,000		5,000			5,000
Total current assets		7,094,658		5,549,783		7,801,745			6,836,582

Property and equipment, net of accumulated depreciation of $247,861 and $218,471, respectively		222,114		259,030
Property and equipment, net						50,804			55,439
Land		540,000		540,000		540,000			540,000
Goodwill		7,758,656		4,483,656		5,666,608			5,666,608
Right of use - assets						189,626			218,926
Due from related party		4,979		4,979		4,979			4,979
Other assets		30,882		38,882		30,823			30,823
Right of use assets		307,056		283,621
Total assets	$	15,958,345	$	11,159,951	$	14,284,585		$	13,353,357

LIABILITIES AND DEFICIENCY IN SHAREHOLDERS' EQUITY

LIABILITIES, MEZZANINE EQUITY AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expense	$	1,917,891	$	1,392,722	$	2,070,490		$	2,038,595
Accrued expenses - related parties		3,461,057		2,961,057		3,904,557			3,750,557
Accrued interest		222,873		449,455		461,307			350,267
Operating lease liability		164,093		176,285
Common stock to be issued		157,600		–
Right of use - liability						140,777			142,307
Due to director & officer		123,882		126,765		123,192			123,192
Due to related party		4,025		36
Notes payable, current portion		25,835		458,177
Convertible notes payable, net of debt discounts of $0 and $0, respectively		3,189,175		2,077,753
Net liabilities of discontinued operations		–		471,318
Notes payable						36,596			15,809
Notes payable - related party						90,189			37,024
Convertible notes payable, net of debt discounts of $87,147 and $46,797, respectively						3,717,936			3,515,752
Total current liabilities		9,266,431		8,113,568		10,545,044			9,973,503

Other Liabilities
Notes payable – net of current portion		140,541		142,755
Operating lease liability – net of current portion		133,585		122,264
Other liabilities
Notes payable						144,646			139,789
Operating lease liability – long term						55,408			84,871
Total liabilities	$	9,540,557	$	8,378,587		10,745,097			10,198,163

Mezzanine equity
Redeemable Series N Senior Convertible Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $4.00, 868,058 shares issued and outstanding at March 31, 2023 and December 31, 2022						3,578,656			3,125,002
Redeemable Series X Senior Convertible Preferred Stock - 5,000,000 shares authorized, $0.001 par value, stated value $4.00, 375,000 shares issued and outstanding at March 31, 2023 and December 31, 2022						1,593,205			1,500,000
Total Mezzanine Equity						5,171,861			4,625,002

Stockholders' equity (deficit)
Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $4.00, 2,131,328 shares issued and outstanding at March 31, 2023 and December 31, 2022						8,525,313			8,525,313
Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value $4.00, 122 shares issued and outstanding at March 31, 2023 and December 31, 2022						488			488
Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $4.00, 150,750 shares issued and outstanding at March 31, 2023 and December 31, 2022						603,000			603,000
Series F-1 Preferred Stock - 800,000 shares authorized, $0.001 par value, stated value $4.00, 35,752 shares issued and outstanding at March 31, 2023 and December 31, 2022						143,008			143,008
Series I Preferred Stock - 500,000,000 shares authorized, $0.001 par value, 14,885,000 shares issued and outstanding at March 31, 2023 and December 31, 2022						59,540,000			59,540,000
Series J Preferred Stock - 10,000,000 shares authorized, $0.001 par value, stated value $4.00, 1,713,584 shares issued and outstanding at March 31, 2023 and December 31, 2022						6,854,336			6,854,336
Series K Preferred Stock - 10,937,500 shares authorized, $0.001 par value, 8,200,562 shares issued and outstanding at March 31, 2023 and December 31, 2022						8,201			8,201
Series L Preferred Stock - 100,000,000 shares authorized, $0.001 par value, stated value $4.00, 319,493 shares issued and outstanding at March 31, 2023 and December 31, 2022						1,277,972			1,277,972
Series R Preferred Stock - 5,000 shares authorized, $0.001 par value, stated value of $1,200, 165 shares issued and outstanding at March 31, 2023 and December 31, 2022						198,000			198,000
Common Stock - 7,500,000,000 shares authorized, $0.001 par value; 908,479,113 and 789,796,735 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						908,378			789,696
Additional paid-in capital						(8,482,814	)		(8,554,368	)
Accumulated deficit						(71,208,254	)		(70,855,453	)
Total stockholders' equity (deficit)						(1,632,373	)		(1,469,808	)
Total liabilities, mezzanine equity and stockholders' equity					$	14,284,585		$	13,353,357

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF OPERATIONS

~~AS OF SEPTEMBER 30,~~FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 ~~AND DECEMBER 31, 2021~~

(UNAUDITED)

September 30,
2022 December 31,
2021
Unaudited Audited

Shareholders' equity
Preferred stock
Preferred Stock Series B - 3,000,000 shares authorized, par value $.001, stated value $4.00, 2,020,078 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively $ 8,080,313 $ 7,780,313
Preferred Stock Series C- 500 shares authorized, par value $.001, stated value $4.00, 122 shares issued and outstanding at September 30, 2022 and December 31, 2021 488 488
Preferred Stock Series D- 800,000 shares authorized, par value $.001, stated value $4.00, -0- shares issued and outstanding at September 30, 2022 and 37,500 shares issued and outstanding at December 31, 2021 – 150,000
Preferred Stock Series E- 1,000,000 shares authorized, par value $.001, stated value $4.00, 150,750 shares issued and outstanding at September 30, 2022 and December 31, 2021 603,000 603,000
Preferred Stock Series F- 800,000 shares authorized, par value $.001, stated value $4.00, 175,045 shares issued and outstanding at September 30, 2022 and December 31, 2021 700,180 700,180
Preferred Stock Series F-1- 800,000 shares authorized, par value $.001, stated value $4.00, 35,752 shares issued and outstanding at September 30, 2022 and December 31, 2021 143,008 143,008
Preferred Stock Series H- 4,859,379 shares authorized, par value $.001, stated value $4.00, -0- shares issued and outstanding at September 30, 2022 and 37,500 shares issued and outstanding December 31, 2021 – 150,000
Preferred Stock Series I- 500,000,000 shares authorized, par value $.001, stated value $4.00, 14,885,000 shares issued and outstanding at September 30, 2022 and December 31, 2021 59,540,000 59,540,000
Preferred Stock Series J- 10,000,000 shares authorized, par value $.001, stated value of $4.00, 1,713,584 shares issued and outstanding at September 30, 2022 and 894,834 shares issued and outstanding at December 31, 2021, respectively 6,854,336 3,579,336
Preferred Stock Series K- 10,937,500 shares authorized, par value of $.001, 8,200,562 shares issued and outstanding at September 30, 2022 and December 31, 2021 8,201 8,201
Preferred Stock Series L- 100,000,000 shares authorized, par value $.001, stated value $4.00, 319,493 shares issued and outstanding at September 30, 2022 and December 31, 2021 1,277,972 1,277,972
Preferred Stock Series N- 3,000,000 shares authorized, par value $.001, stated value of $4.00, 868,056 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 3,472,224 3,472,224
Preferred Stock Series R- 5,000 shares authorized, par value $.001, stated value of $1,200, 165 shares issued and outstanding at September 30, 2022 and December 31, 2021 198,000 198,000
Preferred Stock Series X- 5,000,000 shares authorized, par value $.001, stated value of $4.00, 375,000 and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 1,500,000 –
Common stock; 7,500,000,000 shares authorized with $0.001 par value; 197,796,735 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 199,088 167,421
Treasury stock; at cost, 212,500 shares of series D preferred stock, 81,601 of series H preferred stock and 325,244 shares of series G preferred stock at September 30, 2022 and December 31, 2021, respectively, (4,967,686 ) (4,967,686 )
Additional paid-in capital (3,873,016 ) (3,826,349 )
Accumulated deficit (67,318,320 ) (66,194,744 )
Total shareholders' equity 6,417,788 2,781,364
Total liabilities and shareholders' equity $ 15,958,345 $ 11,159,951


	Three Months Ended March 31,
	2023			2022 (Restated)
REVENUE
Financial services	$	154,399		$	464,843
Healthcare		2,706,399			2,432,307
Total revenue		2,860,798			2,897,150

COST OF SALES
Financial services		26,829			212,446
Healthcare		956,295			903,782
Total cost of sales		983,124			1,116,228

GROSS PROFIT		1,877,674			1,780,922

OPERATING EXPENSES
Depreciation expense		4,635			5,783
Selling, general and administrative		1,159,478			1,053,656
Total operating expenses		1,164,113			1,059,439

INCOME FROM OPERATIONS		713,561			721,483

OTHER INCOME (EXPENSE)
Other income		205			–
Gain on forgiveness of debt		390			–
Penalties and fees		(15,000	)		–
Interest expense and finance charge		(695,164	)		(2,220,176	)
Conversion cost penalty and reimbursement		(2,000	)		–
Amortization of debt discounts		(17,983	)		(44,546	)
Total other income (expense)		(729,552	)		(2,264,722	)

NET LOSS BEFORE DISCONTINUED OPERATIONS		(15,991	)		(1,543,239	)
LOSS FROM DISCONTINUED OPERATIONS		–			(19,215	)
NET LOSS FOR THE PERIOD	$	(15,991	)	$	(1,562,454	)
DEEMED DIVIDENDS ON PREFERRED STOCK		(336,811	)		–
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(352,802	)	$	(1,562,454	)

BASIC LOSS PER SHARE
Continuing operations	$	0.00		$	(0.01	)
Discontinued operations	$	0.00		$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC AND DILUTED		871,989,778			166,130,069

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~STOCKHOLDERS’ EQUITY (DEFICIENCY)

~~FOR THE~~ THREE MONTHS ENDED MARCH 31, 2023 AND ~~NINE MONTHS ENDED SEPTEMBER 30,~~ 2022 ~~AND 2021~~

(UNAUDITED)


	Preferred Stock Series A, I, K			Preferred Stock Series B, D, E, F, F-1, G, H, L			Preferred Stock Series C and R			Treasury Stock
	Shares		Amount	Shares		Amount	Shares		Amount	Shares			Amount
Balance December 31, 2021 (Restated)	23,085,563	$	59,548,201	3,595,952	$	14,383,808	287	$	198,488	(619,345	)	$	(4,967,686	)
Dividend to preferred stock	–		–	–		–	–		–	–			–
Net loss	–		–	–		–	–		–	–			–
Balance, March 31, 2022 (Restated)	23,085,563	$	59,548,201	3,595,952	$	14,383,808	287	$	198,488	(619,345	)	$	(4,967,686	)

Balance December 31, 2022	23,085,563	$	59,548,201	4,350,907	$	17,403,628	287	$	198,488	–		$	–
Conversion of convertible notes payable	–		–	–		–	–		–	–			–
Dividend to preferred stock	–		–	–		–	–		–	–			–
Net loss	–		–	–		–	–		–	–			–
Balance, March 31, 2023	23,085,563	$	59,548,201	4,350,907	$	17,403,628	287	$	198,488	–		$	–

THREE MONTHS ENDED
SEPTEMBER 30,

NINE MONTHS ENDED
SEPTEMBER 30,

2022
2021
2022
2021

REVENUE
Rental income $ 37,462 $ 30,944 $ 120,818 $ 97,767
Financial Services 219,872 1,034,422 1,156,729 3,432,819
Healthcare 3,103,409 2,092,427 8,154,934 2,742,001
Other – 152,000 – 152,000
Total revenue 3,360,743 3,309,793 9,432,481 6,424,587

COST OF SALES
Rental business 20,523 22,281 58,611 68,269
Financial Services 39,963 454,118 365,185 1,328,508
Healthcare 1,094,794 526,839 2,982,418 726,289
Other – 79,481 – 79,481
Total cost of sales 1,155,280 1,082,719 3,406,214 2,202,547

GROSS MARGIN 2,205,463 2,227,074 6,026,267 4,222,040

OPERATING EXPENSES
Depreciation expense 5,783 6,175 17,349 8,103
Transaction costs – – – 2,777,778
Selling, general and administrative 700,410 1,154,249 2,683,601 3,101,989
Total operating expenses 706,193 1,160,424 2,700,950 5,887,870

PROFIT (LOSS) FROM OPERATIONS 1,499,270 1,066,650 3,325,317 (1,665,830 )

OTHER INCOME (EXPENSE)
Other income (2 ) 53,703 6 82,385
Change in value of derivative liability – (172,982 ) – (1,305,596 )
Gain on forgiveness of debt 1,397,271 67,568 1,397,271 507,863
Gain on change of estimate – 66,216 – 184,243
Loss on disposal – – (4,474 ) –
Interest expense & finance charge (1,506,869 ) (936,287 ) (3,686,856 ) (1,409,481 )
Financing penalties & fees (1,923,916 ) (3,000 ) (1,923,916 ) (13,000 )
Amortization of debt discounts (92,868 ) (18,750 ) (249,120 ) (1,050,014 )
Total other income (expenses) (2,126,384 ) (943,532 ) (4,467,089 ) (3,003,600 )

NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (627,114 ) 123,118 (1,141,772 ) (4,669,430 )

LOSS FROM DISCONTINUED OPERATIONS 328,718 1,912,852 328,718 1,858,500
GAIN FROM DISPOSAL OF SUBSIDIARY 33,622 – – –
362,340 1,912,852 328,718 1,858,500

NET INCOME (LOSS) FOR THE PERIOD $ (264,774 ) $ 2,035,970 $ (813,054 ) $ (2,810,930 )

BASIC AND DILUTED INCOME (LOSS) PER SHARE
Continuing operations $ 0.00 $ 0.01 $ (0.00 ) $ (0.02 )
Discontinued operations $ (0.00 ) $ 0.01 $ (0.00 ) $ 0.002

WEIGHTED AVERAGE NUMBER OF COMMON SHARES – CONTINUED AND DISCONTINUED OPERATIONS 208,829,344 150,277,623 189,084,892 115,230,605

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

~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY)~~

~~FOR THE PERIOD ENDED SEPTEMBER 30, 2021~~

Preferred Stock Series
A, I, K Preferred Stock Series
B,D,E,F,F-1,G,H,J,L,N,X Preferred Stock, Series
C and R
Shares Amount Shares Amount Shares Amount

Balance December 31, 2020 (Restated) 203,210,563 $ 780,048,201 2,824,563 $ 11,298,252 287 $ 198,488
Conversion of convertible notes payable – – – – – –
Reclassify Derivative liabilities to Additional Paid in Capital – – – – – –
Issuance of Common Stock for preferred I shares (125,000 ) (500,000 ) – – – –
Reclassify warrant liabilities to additional paid in capital – – – – – –
Issuance of preferred stock series J – – 894,834 3,579,336 – –
Issuance of preferred stock series N – – 868,056 3,472,224 – –
Issuance of preferred stock series B – – 201,799 807,196 – –
Issuance of common stock for services – – – – – –
Distribution of dividend – – – – – –
Issuance of warrant – – – – – –
Net loss – – – – – –
Balance, September 30, 2021 (unaudited) 203,085,563 $ 779,548,201 4,789,252 $ 19,157,008 287 $ 198,488

Treasury Stock Common Stock
Additional
Paid-in
Accumulated
Shares Amount Shares Amount Capital Deficit Total

Balance December 31, 2020 (Restated) (294,101 ) $ (2,365,864 ) 5,268,797 $ 5,267 $ (732,473,423 ) $ (65,583,255 ) $ (8,872,334 )
Conversion of convertible notes payable – – 109,234,241 109,234 804,991 – 914,225
Reclassify Derivative liabilities to Additional Paid in Capital – – – – 1,396,610 – 1,396,610
Issuance of Common Stock for preferred I shares – – 50,000,000 50,000 450,000 – –
Reclassify warrant liabilities to additional paid in capital – – – – 260,443 – 260,443
Issuance of preferred stock series J – – – – – – 3,579,336
Issuance of preferred stock series N – – – – (347,222 ) – 3,125,002
Issuance of preferred stock series B – – – – – – 807,196
Issuance of common stock for services 1,275,427 1,275 14,412 – 15,687
Distribution of dividend – – – – – (99,999 ) (99,999 )
Issuance of warrant – – – – 2,777,778 – 2,777,778
Net loss – – – – – (2,810,930 ) (2,810,930 )
Balance September 30, 2021 (unaudited) (294,101 ) $ (2,365,864 ) 165,778,465 $ 165,776 $ (727,116,411 ) $ (68,494,184 ) $ (1,093,014 )

~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY)~~

~~FOR THE PERIOD ENDED SEPTEMBER 30, 2022~~

Preferred Stock Series
A, I, K Preferred Stock Series
B,D,E,F,F-1,G,H,J,L,N,X Preferred Stock, Series
C and R
Shares Amount Shares Amount Shares Amount

Balance, December 31, 2021 23,085,563 $ 59,548,201 4,464,008 $ 17,856,032 287 $ 198,488
Issuance of preferred B in exchange of
preferred D and H – – 75,000 300,000 – –
Cancellation of common stock – – – – – –
Cancellation of preferred stock series D – – (37,500 ) (150,000 ) – –
Cancellation of preferred stock series H – – (37,500 ) (150,000 ) – –
Issuance of preferred stock series X – – 375,000 1,500,000 – –
Issuance of preferred stock series J – – 818,750 3,275,000 – –
Distribution of dividend – – – – – –
Net loss – – – – – –
Balance, September 30, 2022 23,085,563 $ 59,548,201 5,657,758 $ 22,631,032 287 $ 198,488

Treasury Stock Common Stock
Additional
Paid-in
Accumulated
Shares Amount Shares Amount Capital Deficit Total

Balance, December 31, 2021 (619,345 ) $ (4,967,686 ) 166,130,069 $ 167,421 $ (3,826,349 ) $ (66,194,744 ) $ (2,781,364 )
Issuance of preferred B in exchange of preferred D and H – – – – – – 300,000
Cancellation of common stock – – (35,000,000 ) (35,000 ) – – (35,000 )
Cancellation of preferred stock series D – – – – – – (150,000 )
Cancellation of preferred stock series H – – – – – – (150,000 )
Issuance of preferred stock series X – – – – – – 1,500,000
Issuance of preferred stock series J – – – – – – 3,275,000
Issuance of common stock for settlement of red Rock Travel – – 66,666,666 66,667 (46,667 ) 20,000
Distribution of dividend – – – – – (310,522 ) (310,552 )
Net loss – – – – – (813,054 ) (813,054 )
Balance, September 30, 2022 (619,345 ) $ (4,967,686 ) 197,796,735 $ 199,088 $ (3,826,349 ) $ (67,318,320 ) $ 6,417,788


	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Deficit
Balance December 31, 2021 (Restated)	166,130,069	$	167,421	$	(3,479,126	)	$	(65,118,744	)	$	732,361
Dividend to preferred stock	–		–		–			(102,746	)		(102,746	)
Net loss	–		–		–			(1,562,454	)		(1,562,454	)
Balance, March 31, 2022 (Restated)	166,130,069	$	167,421	$	(3,479,126	)	$	(66,783,944	)	$	(932,839	)

Balance December 31, 2022	789,796,735	$	789,696	$	(8,554,368	)	$	(70,855,453	)	$	(1,469,808	)
Conversion of convertible notes payable	118,682,378		118,682		71,555			–			190,237
Dividend to preferred stock	–		–		–			(336,811	)		(336,811	)
Net loss	–		–		–			(15,991	)		(15,991	)
Balance, March 31, 2023	908,479,113	$	908,378	$	(8,482,813	)	$	(71,208,255	)	$	(1,632,373	)

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CASH FLOWS

~~FOR THE NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30,
2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss for the period $ (813,054 ) $ (2,810,930 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 32,442 24,441
Amortization of loan discount 249,120 1,050,014
Other noncash items, net 324,563 586,644
Loss on disposal 4,474 –
Change in value of derivative liability – 1,305,596
Warrant issued for transaction costs – 2,777,778
Loss on finance penalties and fees 1,923,916 –
Gain on refinance of debt (1,397,271 ) –
Reduction from forgiveness of PPP Loans – (507,863 )
(Increase) decrease in:
Accounts receivable (1,858,494 ) (114,399 )
Assets held for sale – (187,671 )
Right of use – assets (23,434 ) (278,994 )
Prepaid expenses and other current assets 8,000 (7,392 )
Intangible assets – 3,550
Other assets – 321,975
Land – 63,000
Increase (decrease) in:
Accounts payable & accrued expense 315,123 (594,276 )
Accrued officer’s compensation 500,000 244,835
Due (to) from related parties (5,016 ) (149,579 )
Accrued interest (219,082 ) (321,468 )
Right of use – liabilities (871 ) 297,418
Capital stock to be issued 545,333 –
Deferred revenue – (353,830 )

Net cash used in operating activities (414,252 ) 1,348,849

Net cash used in discontinued operations - operating activities (328,718 ) (1,858,500 )

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture & equipment – (3,407 )
Acquisition of Nova Ortho and Spine PLLC, net of cash acquired – (2,320,235 )
Net cash used in investing activities – (2,323,642 )

~~(continued)~~

CASH FLOWS FROM FINANCING ACTIVITIES
Due to director (2,883 ) –
Proceeds from convertible notes payable 729,083 400,000
Repayment of convertible notes payable (5,908 ) –
Proceeds from PPP loans – 547,050
Payment of PPP loan (2,290 ) –
Dividend on preferred stock (310,522 ) (99,999 )
Repayment of credit line – (51,927 )
Issuance of preferred stock series N – 3,000,000
Payment of notes payable – (28,164 )
Payment of notes payable related party (5,065 ) –
Proceeds of notes payable related party 5,065 –
Net cash provided by financing activities 407,480 3,766,960

NET INCREASE(DECREASE) IN CASH (335,489 ) 933,667

CASH, BEGINNING OF PERIOD 595,987 279,311

CASH, END OF PERIOD $ 260,498 $ 1,212,978

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 73,476 $ 70,674
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payment of notes payable $ – $ (28,164 )
Preferred stock issued for business acquisition $ 3,275,000 $ 3,579,336
Preferred stock issued upon conversion of notes payable and accrued interest $ – $ 563,196
Derivative liability settled upon conversion $ – $ 1,396,610
Preferred stock issued for debt refinance $ 1,500,000 $ –


	Three Months Ended March 31
	2023			2022 (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	$	(15,991	)	$	(1,562,454	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4,635			10,814
Amortization of loan discount		17,983			44,546
Gain on forgiveness of debt		(390	)		–
Other noncash items, net		–			(66,054	)
Bad debt		270,000			–
Fair value settled upon conversion		123,566			–
Conversion and note issuance cost		5,000			–
(Increase) decrease in:
Accounts receivable		(1,111,636	)		343,840
Right of use – assets		29,300			103,119
Prepaid expenses and other current assets		–			8,000
Increase (decrease) in:
Accounts payable and accrued expense		241,945			569,508
Accrued officer’s compensation		154,000			120,000
Due from related parties		–			3,988
Accrued interest		123,074			110,559
Right of use – liabilities		(30,993	)		(62,319	)
Net cash used in operating activities		(189,507	)		(376,453	)

Net cash provided by discontinued operations - operating activities		–			19,215

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable		240,000			405,730
Repayment of convertible notes payable		–			(5,908	)
Payment of SBA loan		(750	)		(756	)
Dividend on preferred stock		–			(102,746	)
Proceeds from credit line		37,000			–
Repayment of credit line		(16,381	)		–
Payment of notes payable related party		(835	)		(816	)
Proceeds from notes payable related party		54,000			4,803
Net cash provided by financing activities		313,034			300,307

NET (DECREASE) INCREASE IN CASH		123,527			(56,931	)
CASH, BEGINNING OF PERIOD		226,802			595,987
CASH, END OF PERIOD	$	350,329		$	539,056

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	1,503		$	22,709

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued upon conversion of notes payable and accrued interest	$	66,673		$	–
Debt discount from derivative liabilities	$	–		$	94,321

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

Cardiff Lexington Corporation (“Cardiff”) was originally incorporated on September 3, 1986 in Colorado as Cardiff International Inc. On November 10, 2005, Cardiff merged with Legacy Card Company, LLC ~~(“Legacy”) was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, Legacy converted from a California Limited Liability Company~~and changed its name to ~~a Nevada~~Cardiff Lexington Corporation. On ~~November 10, 2005, Legacy merged with~~August 27, 2014, Cardiff ~~Lexington Corporation (“Cardiff Lexington”,~~redomiciled and became a corporation under the ~~“Company”), a publicly held corporation.~~laws of Florida. On April 13, 2021, Cardiff ~~Lexington Corporation converted from~~redomiciled and became a ~~Florida Corporation to a Nevada Corporation.~~

Incorporation under the ~~first quarter~~laws of 2013, it was decided to restructure Cardiff Lexington 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 potential access to capital markets provided by affiliation with a publicly-traded company. Cardiff Lexington began targeting the acquisition of niche companies with high growth potential. The reason for this strategy was to protect the Company’s shareholders by acquiring businesses with little to no debt, seeking support with both financing and management that had the ability to offer a return to investors.

~~Description of Business~~Nevada.

Cardiff ~~Lexington consists~~is an acquisition holding company focused on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership to maximize the value and potential of ~~the following wholly owned subsidiaries:~~their private enterprises while also providing diversification and risk mitigation for stockholders. All of Cardiff’s operations are conducted through, and its income derived from, its various subsidiaries, which includes:

~~We Three, LLC dba Affordable Housing Initiative (“AHI”), acquired May 15, 2014~~

~~Romeo’s Alpharetta, LLC dba Romeo’s NY Pizza (“Romeo’s Pizza”), acquired September 30, 2014; Sold July 1, 2021.~~

~~Edge View Properties, Inc., (“Edge View”) acquired July 16, 2014~~

~~Repicci’s Franchise Group, LLC (“Repicci’s Group”), acquired August 10, 2016; Sold September 1, 2021.~~

~~Platinum Tax Defenders, LLC (“Platinum Tax”), acquired July 31, 2018~~

~~JM Enterprises 1, Inc. dba Key Tax Group (“Key Tax”), acquired May 8, 2019; Sold December 31, 2021~~

~~Red Rock Travel Group, LLC (“Red Rock”), acquired July 31, 2018, discontinued May 31, 2019~~

~~Nova Ortho and Spine, PLLC (“Nova”), acquired May 31, 2021~~

	·	We Three, LLC dba Affordable Housing Initiative (“AHI”), which was acquired on May 15, 2014 and sold on October 31, 2022;

	·	Edge View Properties, Inc. (“Edge View”), which was acquired on July 16, 2014;

	·	Platinum Tax Defenders (“Platinum Tax”), which was acquired on July 31, 2018; and

	·	Nova Ortho and Spine, PLLC (“Nova”), which was acquired on May 31, 2021.

~~Basis of Presentation and~~ Principles of Consolidation

The ~~accompanying September 30, 2022 interim~~ condensed consolidated financial statements ~~(“financial statements”~~include the accounts of Cardiff and its wholly owned subsidiaries AHI, Edge View, Platinum Tax and Nova (collectively, the “Company”). AHI is included in discontinued operations. All significant intercompany accounts and transactions are eliminated in consolidation. Certain prior period amounts may have been ~~prepared pursuant to~~reclassified for consistency with the ~~rules and regulations of~~current period presentation. These reclassifications would have no material effect on the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in thereported condensed consolidated financial statements included herein. These statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the periods presented are not necessarily indicative of results to be expected for the full fiscal year or any other periods.results.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles (“U.S. ~~GAAP~~GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ from those estimates.

~~COVID-19 Pandemic~~

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

The outbreak of a novel coronavirus throughout the world, including the United States, during early calendar year 2021 has caused widespread business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”). The extent of the impact of the COVID-19 Pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the United States and other markets where the Company operates. It is expected that many of the Company's customers and suppliers could be impacted by these closings and restrictions which could materially and adversely affect demand for our products, our ability to obtain or deliver inventory or services, and our ability to collect accounts receivables as customers face higher liquidity and solvency risk. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 Pandemic, and it is possible that it could cause an economic downturn, recession, or depression. Such economic disruption could have a material adverse effect on our business. Policymakers around the world have responded with fiscal and monetary policy actions to support the economy. The magnitude and overall effectiveness of these actions remains uncertain.

Accounts Receivable

Accounts receivable is reported on the balance sheet at the net amounts expected to be collected by the Company. Management closely monitors outstanding accounts receivable and charges off to expense any balances that are determined to be uncollectible, which was ~~zero~~$270,000 and $0 as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectfully.~~2022, respectively. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had net accounts receivable of ~~$6,829,160~~$7,446,416 and ~~$4,948,796,~~$6,604,780, respectively. Accounts receivables are primarily generated from ~~our~~ subsidiaries in their normal course of business.

Property and Equipment

Property and equipment are carried at cost. Expenditures for renewals and betterments that extend the useful lives of property, equipment or leasehold improvements are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is calculated using the straight-line method for financial reporting purposes based on the following estimated useful lives:

Schedule of estimated useful lives
Classification	Useful Life
Equipment, furniture, and fixtures	5 - 7 years
Medical equipment	10 years
Leasehold improvements	10 years or lease term, if shorter

Goodwill and Other Intangible Assets

Goodwill and indefinite-lived brands are not amortized but are evaluated for impairment annually or when indicators of a potential impairment are present. ~~Our~~The Company’s impairment testing of goodwill is performed separately from ~~our~~its impairment testing of indefinite-lived intangibles. The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. The Company believes such assumptions are also comparable to those that would be used by other marketplace participants. During ~~nine~~the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company did ~~not~~not recognize any goodwill impairment. The Company based this decision on impairment testing of the underlying assets, expected cash flows, decreased asset value and other factors.

Valuation of ~~long-lived assets~~Long-lived Assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated discounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Revenue Recognition

On January 1, 2018, wethe Company adopted ASC 606, Revenue from contracts with customers (“Topic 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018.

The Company applies the following five-step model to determine revenue recognition:

	·	Identification of a contract with a customer
	·	Identification of the performance obligations in the contact
	·	Determination of the transaction price
	·	Allocation of the transaction price to the separate performance allocation
	·	Recognition of revenue when performance obligations are ~~satisfied~~satisfied.

The Company only applies the five-step model when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, the Company assesses services promised within each contract and determines those that are performance obligations and assesses whether each promised service is distinct.

The Company’s financial services sector reports revenues as services are performed and its healthcare sector reports revenues at the time control of the services transfer to the customer and from providing licensed and/or certified orthopedic procedures. ~~Our~~The Company’s healthcare subsidiary does not have contract liabilities or deferred revenue as there are no amounts prepaid for services.

Healthcare Income

Established billing rates are not the same as actual amounts recovered for ~~our~~the Company’s healthcare subsidiary. They generally do not reflect what the Company is ultimately paid and therefore are not reported in ~~our~~the condensed ~~unaudited~~consolidated financial statements. The Company is typically paid amounts based on established charges per procedure with guidance from the annually updated Current Procedural Terminology (“CPT”) guidelines (a code set maintained by the American Medical Association through the CPT Editorial Panel), that designates relative value units (“RVU's”) and a suggested range of charges for each procedure which is then assigned a CPT code.

This fee is discounted to reflect the percentage paid to the Company “using a modifier” recognized by each insurance carrier for services, less deductible, co-pay, and contractual adjustments which are deducted from the calculated fee. The net revenue is recorded at the time the services are rendered.

Contract Fees (Non-PIP)

The Company has contract fees for amounts earned from its Non-Personal Injury Protection (“PIP”) related procedures, typically car accidents, and are collected on a contingency basis. These cases are sold to a factor, who bears the risk of economic benefit or loss. After selling patient cases to the factor, any additional funds collected by the Company are remitted to the factor.

129

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Service Fees – Net (PIP)

The Company generates services fees from performing various procedures on the date the services are performed. These services primarily include slip and falls as well as smaller nominal Non-PIP services. Fees are collected primarily from third party insurance providers. These revenues are based on established insurance billing rates less allowances for contractual adjustments and uncollectible amounts. These contractual adjustments vary by insurance company and self-pay patients. The Company computes these contractual adjustments and collection allowances based on its historical collection experience.

Completing the paperwork for each case and preparing it for billing takes approximately ten business days after a procedure is performed. The majority of claims are then filed electronically except for those remaining insurance carriers requiring paper filing. An initial response is usually received within four weeks from electronic filing and up to ~~Nine~~six weeks from paper filing. Responses may be a payment, a denial, or a request for additional information.

The Company’s healthcare revenues are generated from professional medical billings including facility and anesthesia services. With respect to facility and anesthesia services, the Company is the primary obligor as the facility and anesthesia services are considered part of one integrated performance obligation. Historically the Company receives 49.9% of collections from total gross billed. Accordingly, the Company recognized net healthcare service revenue as 49.9% of gross billed amounts. Historical collection rates are estimated using the most current prior ~~18-month~~12-month historical payment and collection percentages.

The Company’s healthcare subsidiary has contractual medical receivable sales and purchase agreements with third party factors which result in approximately 51% to 56% reduction from the accounts receivables amounts when a receivable is sold to the factors. The Company ~~generally receives all~~evaluated the factored adjustments considering the actual factored amounts per patient quarterly, and the reductions from accounts receivable that are factored were recorded in finance charges as other expenses on the consolidated statement of its collections within 18 months from the date of service. The Company accounts for chargebacks as they occur and records an estimate for expected chargebacks as they are received from insurance companies.

~~For the Nine months ended September 30, 2022 and 2021, respectively, the Company did not record any bad debt expense. Additionally, the Company has not recorded any estimate for expected chargebacks.~~operations.

The Company’s contracts for both its contract and service fees each contain a single performance obligation (providing orthopedic services), as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct, as a result, the entire transaction price is allocated to this single performance obligation.

Accordingly, the Company recognizes revenues (net) when the patient receives orthopedic care services. ~~Our~~The Company’s patient service contracts generally have performance obligations which are satisfied at a point in time. The performance obligation is for onsite or off-site care provided. Patient service contracts are generally fixed-price, and the transaction price is in the contract. Revenue is recognized when obligations under the terms of the contract with our patients are satisfied; generally, at the time of patient care.

Financial Services Income

The Company generates revenue from providing tax resolution services to individuals and business owners that have federal and state tax liabilities by assisting its clients to settle outstanding tax debts. Additionally, services include back taxes, offer in compromise, audit representation, amending tax returns, tax preparation, wage garnishment relief, removal of bank levies and liens, and other financial challenges. The Company recognizes revenues for these services as services are performed.

~~Rental Income~~

The Company’s rent revenue is derived from the mobile home leases. The expired leases are considered month-to-month leases. In accordance with section ASC 842, the cost of property held for leasing by major classes of property according to nature or function, and the amount of accumulated depreciation in total, is presented in the accompanying condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021. There are no contingent rentals included in income in the accompanying condensed consolidated statements of operations. With the exception of the month-to-month leases, revenue was recognized on a straight-line basis and amortized into income on a monthly basis, over the lease term.

1310

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs are included as a component of cost of sales in the condensed consolidated statements of operations and changes in ~~members’~~stockholders’ equity. The Company recognized advertising and marketing expense of ~~$93,905~~$38,353 and ~~$221,690~~$127,785 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively. The Company recognized advertising and marketing expense of $317,899 and $881,591 for the three and nine months ended September 30, 2021,~~ respectively.

~~Valuation of Derivative Instruments~~

~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-10,~~ ~~Derivatives and Hedging (“ASC 815-10”)~~, requires that embedded derivative instruments be bifurcated and assessed, along with freestanding derivative instruments such as convertible promissory notes, on their issuance date to determine whether they would be considered a derivative liability and measured at their fair value for accounting purposes. The Company evaluates all of it financial instruments, including stock purchase warrants, 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 revalued at each reporting date, with changes in the fair value reported as charges or credits to income.

For option based simple derivative financial instruments, the Company uses the Black-Scholes option pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs), and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

~~Level Input Definition~~

Level 1

Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.


	Level 2	Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date.


	Level 3	Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Distinguishing Liabilities from Equity

The Company accounts for its series N senior convertible preferred stock and series X senior convertible preferred stock subject to possible redemption in accordance with ASC 480, “Distinguishing Liabilities from Equity”. Conditionally redeemable preferred shares are classified as temporary equity within the Company’s condensed consolidated balance sheet.

Stock-Based Compensation

The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB ~~Accounting Standards Codification.~~ASC. Pursuant to paragraph 718-10-30-6 of the FASB ~~Accounting Standards Codification,~~ASC, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest.

The expense resulting from share-based payments is recorded in general and administrative expense in the condensed consolidated statements of operations.

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

~~The Company early adopted~~FASB ASU No 2018-07 ~~for~~prescribes equity instruments issued to parties other than employees.

Income Taxes

Income taxes are determined in accordance with ASC Topic 740, “Income Taxes” ~~(“ASC 740”)~~. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

~~For the periods ended September 30,~~As of March 31, 2023 and December 31, 2022, ~~and September 30, 2021,~~ the Company did not have any interest and penalties associated with tax positions and did ~~not~~not have any significant unrecognized uncertain tax positions.

Loss per Share

FASB ASC Subtopic 260, Earnings Per Share ~~(“ASC 260”)~~, provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per common share is computed by dividing income available to common ~~shareholders~~stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common ~~shareholders~~stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, warrants, and debts convertible into common ~~shares.~~stock. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s ~~Common Stock~~common stock can result in a greater dilutive effect from potentially dilutive securities.

1512

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Going Concern

The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The Company has sustained operating losses since its inception and has negative working capital and an accumulated deficit. These factors raise substantial doubts about the Company’s ability to continue as a going concern. As of ~~September 30, 2022,~~March 31, 2023, the Company has ~~sustained recurring losses and has~~ an accumulated ~~deficit of $67.8 million and a~~ working capital deficit of approximately ~~$3.1 million.~~$2.7 million. The accompanying condensed consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.

The ability of the Company to continue as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management ~~is seeking additional capital~~has prospective investors and believes the raising of capital will allow the Company to fund its cash flow shortfalls and pursue new acquisitions. There can be no assurance that the Company 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 it. Should the Company be unable to raise sufficient funds, it may be required to curtail its operating plans. In addition, ~~the Company~~increases in expenses may ~~be required to make~~require cost reductions. No assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all, in the future. Should the Company not be able to raise sufficient funds, it may cause cessation of operations.

Recent Accounting Standards

Changes to accounting principles are established by the FASB in the form of Accounting Standards Update (“ASU”) to the FASB's Codification. ~~We consider~~The Company considers the applicability and impact of all ASU's on ~~our~~its financial position, results of operations, ~~shareholders’ deficit.~~stockholders’ deficit, cash flows, or presentation thereof.

In ~~August 2021,~~June 2016, the FASB issued ASU No. ~~2021-06 (“ASU 2021-06”) “~~~~Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)~~.” ASU 2021-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion accounting models. As a result, the Company’s convertible debt instruments will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. Upon adoption of ASU 2020-06, we classified the previously identified beneficial conversion features to the associated debt. We also determined, that in accordance with ASU 2017-11, such beneficial conversion features are not considered a liability classified derivative.

~~In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.~~ 2016-13, Measurement of Credit Losses on Financial Instruments, which supersedes current guidance by requiring recognition of credit losses when it is probable that a loss has been incurred. The new standard requires the establishment of an allowance for estimated credit losses on financial assets including trade and other receivables at each reporting date. The new standard will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments -- Credit Losses (Topic 326), Derivatives and hedging (Topic 815) and Leases (Topic 842), which extends the effective date of Topic 326 for certain companies until fiscal years beginning after December 15, 2022. The ~~new~~Company has adopted this standard ~~will be~~ effective ~~for the Company in the first quarter of fiscal year beginning~~ January 1, 2023, ~~and early adoption is permitted.~~which did not have a material impact to the consolidated financial statements,which resulted in the Company recognizing an allowance for doubtful accounts of $270,000 during the three months ended March 31, 2023.

Management does not ~~expect~~believe that ~~the adoption of this standard will~~any other recently issued, but not yet effective, accounting standards could have a material effect on the ~~Company's~~accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

1613

~~Reclassifications~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Certain accounts relating to the prior year have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the net income or net assets as previously reported.

2.	~~ACQUISITIONS~~RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

~~Nova Ortho~~Subsequent to the initial issuance of the Company's 2021 financial statements on March 31, 2022, management reconsidered the methodology previously applied in its valuation of goodwill and ~~Spine, LLC~~redeemable preferred stocks.

~~On May 31, 2021 the~~The Company completed the acquisition of Nova Ortho and Spine LLC. Sellers received a cash payment in the amount of $2,500,000 and were issued 894,834 shares of Series J Preferred Stock of the Company with a par value of $0.001 and a stated value of $4.00 with an aggregate stated value equal to $3,579,334 for a total transaction of $6,079,334. The Preferred J stock rights and privileges include voting rights, a conversion ratio of 1:2:00. The Preferred J shares have a lock-up/leak-out limiting the sale of stock for 6 months after which conversions and sales are limited to 20% of their portfolio per year, pursuant to the terms of the Stock Purchase Agreement. The parties further agreed to performance based contingent supplement payment to Sellers in 2022 should one year from the closing date the Company’s trailing twelve months minimum Pre-Tax Net Income exceed $1,979,320, the “Milestone”, which in that event would cause the issuance to Sellers ofissue 818,750 additional shares of series J Preferred J Stock with an aggregate stated value equal to ~~$3,275,000.~~$3,275,000 if, as of May 31, 2022, Nova’s trailing twelve months minimum pre-tax net income exceeded $1,979,320 (the “Milestone”). The Company finalized its purchase price accounting and allocation in 2022 and recorded purchase consideration of $6,100,000 associated with the cash consideration, the fair value of the series J preferred stock and the fair value of the contingent consideration. The impact of the correction is reflected in $3,275,000 increase to goodwill and contingent consideration liability on the consolidated balance sheet.

~~On August 25,~~In December 2022, ~~under~~ the ~~terms~~Company identified an error in its classification for its series N senior convertible preferred stock for the acquisition of NOVA as presented in its audited balance sheet as of December 31, 2021. Pursuant to ASC 250, “Accounting changes and error corrections” issued by FASB and SAB 99 “Materiality” issued by SEC, the Company determined the impact of the Stock Purchase Agreement entered on May 31, 2021 between the Company and the former owners of its Nova Ortho and Spine subsidiary and an addendum to that agreement regarding the acquisition supplemental payment the parties recognized unanticipated series of events which prevented alternative financing and equity funding during the initial year that impacted the Milestone outcome, and the parties acknowledged the significant gains and accomplishments during the initial year. Based upon those accomplishments and the performanceerror was immaterial. The impact of the ~~subsidiary during its initial year~~error correction is reflected in $3,125,002 increase to the ~~Company agreed~~mezzanine equity and offsetting decrease to ~~issue~~ the ~~supplemental payment of 818,750 additional shares of~~Series N Preferred ~~Series J~~ Stock ~~with an aggregate stated value equal~~in subject to ~~$3,275,000.~~possible redemption mezzanine equity line item.

The ~~preliminary purchase price allocation~~Company and We3 managers entered into a resignation, release and buyback agreement and addendum, effective October 31, 2022. The Company presented in prior periods operating loss as loss from discontinued operations in the amount of $2,593 on the ~~net assets acquired is as follows:~~consolidated statement of operations for the three months ended March 31, 2022.

Nova Ortho and Spine, PLLC
Cash $ 177,977
Accounts receivable 4,052,213
Property and equipment 92,064
Other assets 342,493
Goodwill 5,666,608
Liabilities (977,021 )
Total $ 9,354,334

3.	~~PROPERTY AND EQUIPMENT, NET~~

~~Property and equipment~~The Company identified that NOVA’s accounts receivable as presented in its balance sheet as of ~~September 30, 2022 and~~ December 31, 2021, was understated due to an error in the collection utilized to estimate NOVA’s accounts receivable. The impact of this correction on the accounting estimates is reflected in $1,076,000 decrease to accounts receivable as ~~follows:~~of March 31, 2022 and $1,076,000 increase in finance charges for the three months ended March 31, 2022.

September 30,
2022

December 31,
2021

Residential housing $ 312,330 $ 319,856
Medical equipment 35,974 96,532
Computer Equipment 9,189 9,189
Furniture, fixture and equipment 96,532 35,974
Leasehold Improvement 15,950 15,950

Total 469,975 477,501
Less: accumulated depreciation (247,861 ) (218,471 )
Property and equipment, net $ 222,114 $ 259,030

The following table summarizes the impacts of the error corrections on the Company's financial statements for each of the periods presented below:

i. Balance sheet

Schedule of restated financial information
	Impact of correction of error
March 31, 2022 (Unaudited)	As previously reported		Adjustments			As restated

Total assets	$	11,704,750	$	3,275,000		$	14,979,750

Total liabilities		9,512,586		3,275,000			12,787,586

Mezzanine equity		–		3,125,002			3,125,002

Total shareholders' equity	$	2,192,163	$	(3,125,002	)	$	(932,839	)

1714

~~For the three and nine months ended September 30,~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022 ~~total depreciation expense was $10,814 and $32,442, respectively. Depreciation expense recorded as cost~~

(UNAUDITED)

ii. Statement of ~~sales for the three and nine months ended September 30, 2022 was $5,031 and $15,093, respectively, and depreciation expense recorded as cost of sales for the year ended December 31, 2021 was $12,448.~~operations

	Impact of correction of error
Three months ended March 31, 2022 (Unaudited)	As previously reported			Adjustments			As restated

Revenue	$	2,940,994		$	(43,844	)	$	2,897,150
Cost of sales		1,135,702			(19,474	)		1,116,228
Gross margin		1,805,292			(24,370	)		1,780,922
Operating expense		1,081,928			(22,489	)		1,059,439
Income from operations	$	723,364		$	(1,881	)	$	721,483
Other income (expense), net		(1,193,196	)		(1,071,526	)		(2,264,722	)
Net loss before discontinued operations		(469,832	)		(1,073,407	)		(1,543,239	)
Loss from discontinued operations		(16,622	)		(2,593	)		(19,215	)
Net loss	$	(486,454	)	$	(1,076,000	)	$	(1,562,454	)
Basic Loss per Share
Continued Operations		(0.01	)					(0.01	)
Discontinued Operations		0.01						–
Weighted Average Shares Outstanding - Basic Earnings Loss per Share
Continued Operations		166,130,069						128,021,527
Discontinued Operations		166,130,069						128,021,527

~~LAND~~3.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Schedule of account payable and accrued expenses
	March 31, 2023		December 31, 2022
Accounts payable	$	492,391	$	342,330
Accrued credit cards		10,325		45,722
Accrued expense – previously factored liability		954,366		776,414
Accrued income taxes, and other taxes		6,732		6,732
Accrued professional fees		479,609		573,040
Accrued advertising		69,656		69,656
Accrued payroll		57,411		14,292
Accrue expense - other		–		363
Accrued expense - dividend payable		–		210,046
Total	$	2,070,490	$	2,038,595

The Company is delinquent paying certain income and property taxes. As of March 31, 2023 and December 31, 2022, the balance for these taxes, penalties and interest is $6,732.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

PLANT AND EQUIPMENT, NET

InProperty and equipment as of March 31, 2023 and December 31, 2022 is as follows:

Schedule of Property and Equipment
	March 31, 2023			December 31, 2022
Medical equipment	$	96,532		$	96,532
Computer Equipment		9,189			9,189
Furniture, fixtures and equipment		30,841			35,974
Leasehold Improvement		15,950			15,950
Total		152,512			157,645
Less: accumulated depreciation		(101,708	)		(102,206	)
Property and equipment, net	$	50,804		$	55,439

For the ~~quarter~~three months ended ~~September 30,2021, the Company sold 3 lots for $152,000. At September 30,~~March 31, 2023 and 2022, depreciation expense was $4,635 and $10,814, respectively.

LAND

As of March 31, 2023 and December 31, 2022, the Company had 27 acres of land ofvalued at approximately $540,000. As of December 31, 2021, the Company had 30 acres of land of approximately $603,000 located in Salmon, Idaho, which was in connection with the acquisition of Edge View Properties, Inc. in July 2014. The Company issued 241,199 shares of Series E Preferred Stock as consideration for this acquisition.$540,000. The land is currently vacant and is expected to be developed into a residential community.

~~ACCOUNTS PAYABLE AND ACCRUED EXPENSES~~6.

LINE OF CREDIT

September 30,
2022

December 31,
2021

Accounts payable $ 244,146 $ 170,914
Accrued finance cost 796,546 846,754
Accrued dividends payable 210,046 –
Accrued credit cards 54,675 16,466
Accrued advertising 69,656 39,886
Accrued payroll wages 21,576 39,959
Accrued professional fees 514,151 270,827
Accrued expenses other 7,095 7,916
Total $ 1,917,891 $ 1,392,722

~~The Company is delinquent paying certain income and property taxes. As of September 30, 2022~~At March 31, 2023 and December 31, ~~2021~~2022, the Company had a revolving line of credit with a financial institution for $92,500 which was personally guaranteed by the manager of Platinum Tax. The loan accrues interest at 11.20% at March 31, 2023 and 10.95% at December 31, 2022. As of March 31, 2023 and December 31, 2022, the Company had $20,619 and $0, respectively, of outstanding balance ~~for these taxes, penalties and interest is $6,732 and $7,553, respectively~~against the line of credit.

RELATED PARTY TRANSACTIONS

On February 11, 2021, the Chairman of the Board and the CEO each converted 62,500 Preferred Series I shares into 25,000,000 restricted common shares for a total of 125,000 Preferred Series I shares into 50,000,000 restricted common shares.

From time to time, the previous owner ~~which~~who is currently the manager of Platinum Tax ~~Defenders loans~~loaned funds to ~~the Company~~Platinum Tax to cover short term operating needs. Amounts owed as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were ~~$4,025~~$90,189 and ~~$37~~$37,025, respectively.

~~The~~In connection with the acquisition of Edge View on July 16, 2014, the Company assumed amounts due to previous owners who are current managers of Edge ~~View Properties Inc. related to the acquisition on July 16, 2014.~~View. These amounts are due on demand and do not bear interest. The balance of these amounts are ~~$4,979 due from the previous owners~~$4,979 as of ~~September 30, 2022~~March 31, 2023 and December 31, 2021, respectively. On August 6, 2021, a Board Resolution was executed to terminate one of the two employees of Edge View Properties for fraud, deceit, larceny, and thievery for selling property belonging to the Company and personally taking the $162,598 in proceeds. The Company hired counsel to terminate the employee and handle all legal matters for return of monies and criminal prosecution.2022.

~~The Company agreed to pay $360,000 per year and a $200,000 of target annual incentive granted in 2021 to the Chief Executive Officer.~~ Based on his employment agreement since January1, 2022 currently 29% is paid in cash and 71% is accrued. The Company previously paid the Chief Executive Officer $360,000 per year. The total outstanding accrued compensation as of September 30, 2022 and December 31, 2021 were $1,605,000 and $1,415,000, respectively.

~~The Company agreed to pay $360,000 per year and a $200,000 of target annual incentive to the Chairman of the Board.~~ Based on his employment agreement since January 1, 2022 of which currently 29% is paid in cash and 71% is accrued. The Company previously paid the Chairman of the Board $300,000 per year. The total outstanding accrued compensation as of September 30, 2022 and December 31, 2021 were $1,590,000 and $1,400,000, respectively.

The Company agreed to pay $120,000 per year to the Chief Operating Officer based on his amended employment agreement executed on May 15, 2019. In the third quarter of 2021, the Chief Operating Officer received 61,000 shares of preferred stock series B in exchange for accrued salaries of $244,000. The total outstanding accrued compensation as of September 30, 2022 and December 31, 2021 was $249,000 and $159,000, respectively.

The Company agreed to pay $156,000 per year to the Chief Financial Officer based on his amended employment agreement executed on May 15, 2021. The total outstanding accrued compensation as of September 30, 2022 and December 31, 2021 was $17,057.

The Company entered into a Management Agreement effective May 31, 2021 for compensation to the Principals of the Company’s Nova Ortho and Spine subsidiary in the form of an annual base salaries of $372,000 to one of the 3 doctors, $450,000 to the second, and $372,000 to the third doctor.

Collectively, as a group, Principals will receive an annual cash bonus and stock equity set forth below (the “Annual Bonus”). The Annual Bonus will be conditioned upon the Company achieving 100% of the annual objectives of financial performance goals as set forth below.

Year Minimum Annual Nova EBITDA Cash Annual Bonus Series J Preferred Stock
2021 $2.0M $120,000 120,000 Shares
2022 $2.4M $150,000 135,000 Shares
2023 $3.7M $210,000 150,000 Shares
2024 $5.5M $300,000 180,000 Shares
2025 $8.0M $420,000 210,000 Shares

The Company obtained short-term advances from the Chairman of the Board that are non-interest bearing and due on demand. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company owed the Chairman ~~$123,882 and $126,765, respectively.~~$123,192.

7.	~~NOTES AND LOANS PAYABLE~~

See also Note 14 for compensation paid to employees of the Company.

~~Notes payable at September 30, 2022 and December 31, 2021 are summarized as follows:~~

September 30,
2022

December 31,
2021

Notes and Loans Payable $ 166,376 $ 600,932
Less current portion (25,835 ) (458,177 )
Long-term portion $ 140,541 $ 142,755

1916

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

NOTES AND LOANS PAYABLE

Notes payable at March 31, 2023 and December 31, 2022, respectively, are summarized as follows:

Schedule of notes payable
	March 31, 2023			December 31, 2022
Notes and loans payable	$	181,242		$	155,598
Less current portion		(36,596	)		(15,809	)
Long-term portion	$	144,646		$	139,789

Long-term debt matures as follows:

Schedule of Maturities of Long-term Debt
	Amount		Amount
2023	$	25,835
2024		4,846	$	36,596
2025		4,846		4,988
2026		4,846		4,988
2027		4,846		4,988
2028				4,988
Thereafter		121,157		124,694
Total	$	166,376	$	181,242

~~Notes and Loans Payable – Related Party~~

From time to time, the previous owner which is currently the manager of Platinum Tax Defenders loans funds to the Company to cover short term operating needs. Amounts owed as of September 30, 2022 and December 31, 2021 were $4,025 and $36, respectively. The amounts due from the previous owners of Edge View is $4,979 as of September 30, 2022 and December 31, 2021.

Loans and Notes Payable – Unrelated ~~Parties~~Party

On March 12, 2009, the Company ~~entered into~~issued a ~~preferred~~ debenture ~~agreement for~~in the principal amount of $20,000. The ~~note bore~~debenture bears interest at 12% per ~~year~~annum and matured on September 12, 2009. The balance of the debenture was $10,989 at March 31, 2023 and December 31, 2022 and the accrued interest was $6,554 and $6,229 at March 31, 2023 and December 31, 2022, respectively. The Company assigned all of its receivables from consumer activations of the rewards program as collateral on this debenture. No warrants had been exercised before the expiration. The balance of the note was $10,989 at September 30, 2022 and December 31, 2021. The accrued interest of the note was $5,986 and $4,910 at September 30, 2022 and December 31, 2021, respectively.

On September 9, 2019, the Company obtained a promissory note for $410,000 at 10% interest and matured on September 9, 2021. On November 10, 2021, the Company entered into addendum No. 1 on the note extending the maturity date until December 31, 2021. On May 4, 2021, the Company entered into addendum No. 2, whereby the maturity date was amended to November 3, 2021, accrued interest of $22,266 was added to the principal balance of $410,000 resulting in a new principal balance of $432,266 at May 4, 2021 and interest accruing at the rate of 24%. On September 22, 2022, this note was refinanced into a consolidated senior secured convertible promissory note. See footnote 8, for further discussion.

Small Business Administration (“SBA”) Loans

On ~~September~~June 2, ~~2021, The~~2020, the Company obtained an SBA loan in the principal amount of ~~$150,000 at~~$150,000 with an interest rate of ~~3.75% with~~3.75% and a maturity date of ~~September~~June 2, ~~2050.~~2050. The Company reclassified $5,723 of accrued interest to the principal amounts for the three months ended March 31, 2023. The principal balance and accrued interest at ~~September 30, 2022~~March 31, 2023 was ~~$145,387~~$149,633 and ~~$5,723,~~$0, respectively, and ~~the~~ principal ~~balance~~ and accrued interest at December 31, ~~2021~~2022 was ~~$147,677~~$144,609 and ~~$5,723,~~$5,723, respectively.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

CONVERTIBLE NOTES PAYABLE

As of March 31, 2023 and December 31, 2022, the Company had convertible debt outstanding net of amortized debt discount of $3,717,936 and $3,515,752, respectively. During the three months ended March 31, 2023, the Company received net proceeds of $240,000 from convertible notes. During the three months ended March 31, 2022, the Company had proceeds of $550,967 from convertible notes and repaid $5,908 to convertible noteholders. There are debt discounts associated with the convertible debt of $89,147 and $46,798 at March 31, 2023 and December 31, 2022, respectively. For the three months ended March 31, 2023 and 2022, the Company recorded amortization of debt discounts of $17,983 and $44,546, respectively. During the three months ended March 31, 2023, the Company converted $58,800 of convertible debt, $5,873 in accrued interest and $2,000 in penalties and fees into 118,682,378 shares of the Company’s common stock. The Company recognized $123,566 of interest expense and additional paid-in capital to adjust fair value for the debt settlement during the three months ended March 31, 2023.

On September 22, 2022, the Company entered into a security exchange and purchase agreement with its largest lender to consolidate all promissory notes held by ~~them~~it and related accrued interest in exchange for (1) one consolidated senior secured convertible promissory note ~~(“New Promissory Note”)~~ in the amount of ~~$2,600,000~~$2,600,000 and (2) 375,000 shares of series X senior convertible preferred stock totaling ~~$1,500,000~~$1,500,000 with a par value of $0.001, stated value of ~~$4.00,~~$4.00, convertible into common shares at a 1:1 conversion rate, non-dilutive and non-voting shares. Prior to conversion, all promissory notes with this lender totaled to ~~$4,791,099~~$4,791,099 consisting of principal of ~~$3,840,448~~$3,840,448 and accrued interest of ~~$950,651~~$950,651 resulting in a gain on debt consolidation of ~~$1,217,744.~~$1,397,271.

Convertible notes as of March 31, 2023 and December 31, 2022 are summarized as follows:

Schedule of convertible notes summary
	March 31, 2023			December 31, 2022
Convertible notes payable	$	3,807,083		$	3,562,550
Discounts on convertible notes payable		(89,147	)		(46,798	)
Total convertible debt less debt discount		3,717,936			3,515,752
Current portion		3,717,936			3,515,752
Long-term portion	$	–		$	–

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

The following is a schedule of convertible notes payable as of and for the three months ended March 31, 2023.

Schedule of convertible notes details
Note #	Issuance	Maturity	Principal Balance 12/31/22		New Loan		Principal Conversions			Shares Issued Upon Conversion		Principal Balance 3/31/23		Accrued Interest on Convertible Debt at 12/31/22		Interest Expense On Convertible Debt For the Period Ended 3/31/23		Accrued Interest on Convertible Debt at 3/31/23		Unamortized Debt Discount At 3/31/23
7-1	10/28/2016	10/28/2017		10,000	$	–	$	(10,000	)		23,405,455	$	–	$	2,263	$	–	$	–	$	–
9	9/12/2016	9/12/2017		50,080		–		–			–		50,080		14,157		2,470		16,627		–
10	1/24/2017	1/24/2018		55,000		–		–			–		55,000		69,876		2,712		72,588		–
10-1	2/10/2023	2/10/2024		–		50,000		–			–		50,000		–		1,007		1,007		–
10-2	3/30/2023	3/30/2024		–		25,000		–			–		25,000		–		10		10		–
29-2	11/8/2019	11/8/2020		36,604		–		–			–		36,604		20,160		2,166		22,326		–
31	8/28/2019	8/28/2020		–		–		–			–		–		8,385		–		8,385		–
37-1	9/3/2020	6/30/2021		113,667		–		–			–		113,667		28,756		5,045		38,801		–
37-2	11/2/2020	8/31/2021		113,167		–		–			–		113,167		27,510		5,023		37,533		–
37-3	12/29/2020	9/30/2021		113,166		–		–			–		113,166		26,474		5,023		36,497		–
38	2/9/2021	2/9/2022		96,000		–		(48,800	)		85,276,923		47,200		27,939		3,321		31,260		–
39	4/26/2021	4/26/2022		168,866		–		–			–		168,866		39,684		9,160		48,844		–
40-1	9/22/2022	9/22/23		2,600,000		–		–			10,000,000		2,600,000		71,233		64,110		131,343		–
40-2	11/4/2022	11/4/2023		68,666		–		–			–		68,666		1,072		1,693		2,765		10,253
40-3	11/28/2022	11/28/2023		68,667		–		–			–		68,667		620		1,693		2,313		11,382
40-4	12/21/2022	12/21/2023		68,667		–		–			–		68,667		187		1,693		1,880		12,464
40-5	1/24/2023	1/24/2024		–		90,166		–			–		90,166		–		1,630		1,630		19,387
40-6	3/21/2023	3/21/2024		–		138,167		–			–		138,167		–		379		379		35,661
			$	3,562,550	$	303,333	$	(58,800	)		118,682,378	$	3,807,083	$	338,316	$	107,135	$	454,188	$	89,147

Note 7-1

On October 28, 2016, the Company issued a convertible promissory note in the principal amount of $50,000, which matured on October 28, 2017. Note 7-1 is currently in default and accrues interest at a default interest rate of 20% per annum.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Note 9

On September 12, 2016, the Company issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on September 12, 2017. Note 9 is currently in default and accrues interest at a default interest rate of 20% per annum.

Notes 10, 10-1 and 10-2

On January 24, 2017, the Company issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018. Note 10 is currently in default and accrues interest at a default interest rate of 20% per annum. On February 10, 2023, the Company executed a second tranche under this note in the principal amount of $50,000 (Note 10-1). On March 30, 2023, the Company executed a third tranche under this note in the principal amount of $25,000 (Note 10-2). Notes 10-1 and 10-2 accrue interest at a rate of 15% per annum.

Notes 29, 29-1 and 29-2

On May 10, 2019, the Company issued a convertible promissory note in the principal amount of $150,000. On November 8, 2019, this note (Note 29) was purchased by and assigned to an unrelated party. The amount assigned was the existing principal amount of $150,000 and accrued interest of $5,918 which was issued as Note 29-1, plus a new convertible promissory note in the principal amount of $62,367 which was issued as Note 29-2. Note 29-2 is currently in default and accrues interest at a default interest rate of 24% per annum.

Note 31

On August 28, 2019, the Company issued a convertible promissory note in the principal amount of $120,000, which matured on August 28, 2020. Note 31 is currently in default and accrues interest at a default interest rate of 24% per annum.

Notes 37-1, 37-2 and 37-3

On September 3, 2020, the Company issued a convertible promissory note in the principal amount of $200,000, with an original issue discount of $50,000, which could be drawn in several tranches. On September 3, 2020, the Company executed the first tranche in the principal amount of $67,000, less an original issue discount of $17,000, which matured on June 30, 2021 (Note 37-1). On November 2, 2020, the Company executed the second tranche in the principal amount of $66,500, less an original issue discount of $16,500, which matured on August 31, 2021 (Note 37-2). On December 29, 2020, the Company executed the third tranche in the principal amount of $66,500, less an original issue discount of $16,500, which matured on September 30, 2021 (Note 37-3). Notes 37-1, 37-2 and 27-3 are currently in default and accrue interest at a default interest rate of 18% per annum.

Note 38

On February 9, 2021, the Company issued a convertible promissory note in the principal amount $103,500, which matured on February 9, 2022. Note 38 is currently in default and accrues interest at a default interest rate of 22% per annum.

~~As of September 30,~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022 ~~and December 31,~~

(UNAUDITED)

Note 39

On April 26, 2021, the Company ~~had~~issued a convertible ~~debt outstanding~~promissory note in the principal amount $153,500, which matured on May 10, 2022. Note 39 is currently in default and accrues interest at a default interest rate of ~~$3,189,175~~22% per annum.

Notes 40-1, 40-2, 40-3, 40-4, 40-5 and ~~$2,077,753, respectively, net of debt discounts. During the nine months ending~~40-6

On September ~~30,~~22, 2022, the Company ~~had proceeds~~issued a convertible promissory note in the principal amount of ~~$990,072 from convertible~~$2,600,000 in exchange for total of $4,791,099 of defaulted promissory notes ~~and repaid $5,908 to convertible noteholders. There are debt discounts associated with the convertible debt of $0 and $0 as of September 30,~~balances (Note 40-1). On November 4, 2022, ~~and December 31, 2021, respectively. For the nine months ending September 30, 2022 and 2021,~~ the Company ~~recorded amortization~~executed a second tranche under this note in the principal amount of ~~debt discounts~~$68,667, less an original issue discount and fee of ~~$249,120~~$18,667 (Note 40-2). On November 28, 2022, the Company executed the third tranche under this note in the principal amount of $68,667, less an original issue discount and ~~$1,050,014, respectively.~~fee of $18,667 (Note 40-3). On November 28, 2022, the Company executed a fourth tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-4). On January 24, 2023, the Company executed a fifth tranche under this note in the principal amount of $88,6676, less an original issue discount and fee of $25,166 (Note 40-5). On March 21, 2023, the Company executed a sixth tranche under this note in the principal amount of $136,666, less an original issue discount and fee of $39,166 (Note 40-6). All of the Note 40 tranches mature in one year from the note issuance date and accrue interest at a rate of 10% per annum.

10.

CAPITAL STOCK

Preferred Stock

The Company ~~had no~~has designated multiple series of preferred stock, including 4 shares of series A preferred stock, 3,000,000 shares of series B preferred stock, 500 shares of series C preferred stock, 800,000 shares of series D preferred stock, 1,000,000 shares of series E preferred stock, 800,000 shares of series F preferred stock, 800,000 shares of series F-1 preferred stock, 500,000,000 shares of series I preferred stock, 10,000,000 shares of series J preferred stock, 10,937,500 shares of series K preferred stock, 100,000,000 shares of series L preferred stock, 3,000,000 shares of series N senior convertible ~~debt conversions during the nine months ended September 30, 2022.~~preferred stock, 5,000 shares of series R preferred stock and 5,000,000 shares of series X senior convertible preferred stock.

~~Convertible notes at September 30, 2022~~The following is a description of the rights and ~~December 31, 2021 are summarized as follows:~~preferences of each series of preferred stock.

September 30,
2022

December 31,
2021

Convertible notes payable $ 3,189,175 $ 2,077,753
Discounts on convertible notes payable – –
Total convertible debt less debt discount 3,189,175 2,077,753
Current portion 3,189,175 2,077,753
Long-term portion $ – $ –

Redeemable Preferred Stock

The Company recognized the series N senior convertible preferred stock and series X senior convertible preferred stock as mezzanine equity since the redeemable preferred stock may be redeemed at the option of the holder, but is not mandatorily redeemable.

~~The following is a schedule of convertible notes payable from December~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021 to September 30, 2022.~~2023 AND 2022

(UNAUDITED)

Note # Issuance Maturity Principal Balance 12/31/21 New Loan Debt Consolidation Cash Paydown Principal Balance 9/30/22 Accrued Interest on Convertible Debt at 12/31/21 Interest Expense On Convertible Debt For the Period Ended 9/30/22 Accrued Interest on Convertible Debt at 9/30/22 Unamortized Debt Discount At 9/30/22
7-1 10/28/2016 10/28/2017 10,000 $ – $ – $ – $ 10,000 $ 10,899 $ 1,495 $ 12,394 $ –
9 9/12/2016 9/12/2017 50,080 – – – 50,080 4,141 7,491 11,632 –
10 1/24/2017 1/24/2018 12,646 – – – 12,646 14,831 1,892 16,723 –
11-2 3/16/2017 3/16/2018 17,345 – – – 17,345 9,843 2,595 12,438 –
13-2 7/24/2018 1/24/2019 43,961 – (43,961 ) – – 34,113 8,075 – –
22 7/10/2018 1/10/2021 772,118 – (766,210 ) (5,908 ) – – 53,908 – –
22-1 2/20/2019 1/10/2021 61,704 – (61,704 ) – – 28,523 11,076 – –
22-3 4/10/2019 1/10/2021 56,095 – (56,095 ) – – 25,303 10,069 – –
26 8/10/2017 1/27/2018 20,000 – – – 20,000 10,525 2,244 12,769 –
29-1 11/8/2019 11/8/2021 – – – – – 2,283 – 2,283 –
29-2 11/8/2019 11/8/2021 36,604 – – – 36,604 11,374 6,571 17,945 –
31 8/28/2019 8/28/2021 – – – – – 8,385 – 8,385 –
32 5/22/2019 5/22/2021 25,000 – – – 25,000 12,277 3,740 16,017 –
34 5/18/2021 5/18/2021 – – – – – 219 – 219 –
35 8/24/2021 8/24/2021 – – – – – 74 – 74 –
36-1 9/3/2021 1/3/2021 122,400 – (122,400 ) – – 25,906 16,479 – –
36-2 11/3/2021 3/3/2021 122,400 – (122,400 ) – – 23,906 16,479 – –
36-3 12/29/2021 4/29/2021 122,400 – (122,400 ) – – 22,070 16,479 – –
36-4 5/5/2021 9/5/2021 187,500 – (187,500 ) – – 22,131 25,243 – –
36-5 1/11/2022 5/11/2022 – 202,300 (202,300 ) – – – 26,138 – –
36-6 3/9/2022 7/9/2022 – 146,667 (146,667 ) – – – 14,827 – –
36-7 3/22/2022 7/22/2022 – 202,000 (202,000 ) – – – 19,126 – –
36-8 4/25/2022 8/25/2022 – 201,293 (201,293 ) – – – 15,684 – –
36-9 7/25/2022 11/25/2022 – 68,692 (68,692 ) – – – 2,270 – –
36-10 8/4/2022 12/4/2022 – 74,120 (74,120 ) – – – 2,083 – –
36-11 9/12/2022 1/12/2023 – 95,000 (95,000 ) – – – 843 – –
37-1 9/3/2021 6/30/2021 67,000 – – – 67,000 8,878 5,011 13,889 –
37-2 11/2/2021 8/31/2021 66,500 – – – 66,500 7,722 4,974 12,696 –
37-3 12/29/2021 9/30/2021 66,500 – – – 66,500 6,686 4,974 11,660 –
38 2/9/2021 2/9/2022 64,000 – – – 64,000 4,614 2,872 7,486 –
39 5/10/2021 5/10/2022 153,500 – – – 153,500 5,915 6,889 12,803 –
40 9/22/2022 9/22/23 – 2,600,000 – – 2,600,000 – 40,603 40,603 –

$ 2,077,753 $ 3,590,072 $ (2,472,742 ) $ (5,908 ) $ 3,189,175 $ 300,618 $ 330,130 $ 210,016 $ –

9.	~~CAPITAL STOCK~~

Series N Senior Convertible Preferred Stock

~~On September 12, 2022,~~Ranking. The series N senior convertible preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common stock and each other class or series that is not expressly made senior to or on parity with the series N senior convertible preferred stock; (ii) on parity with each class or series that is not expressly subordinated or made senior to the series N senior convertible preferred stock; and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company ~~issued 375,000~~and each class or series that is expressly made senior to the series N senior convertible preferred stock.

Dividend Rights. Holders of series ~~X shares~~N senior convertible preferred stock are entitled to dividends at a ~~par~~rate per annum of 12.0% of the stated value ($4.00 per share); provided that upon an event of ~~$.001~~default (as defined in the certificate of designation for the series N senior convertible preferred stock), such rate shall increase by 8% per annum. Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common stock at the Company’s discretion. Dividends payable in common stock shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common stock on the Company’s principal trading market (the “VWAP”) during the five (5) trading days immediately prior to the applicable dividend payment date. At March 31, 2023, cumulative dividends on Series N Preferred Stock were $453,654.

Liquidation Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined in the certificate of designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of junior securities (as defined in the certificate of designation), including the common stock, each holder of outstanding series N senior convertible preferred stock shall be entitled to receive an amount of cash equal to 115% of the stated value of $4.00 ~~totaling $1,500,000. See footnote 8,~~per share, plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such holders.

Voting Rights. Holders of series N senior convertible ~~notes payable~~preferred stock do not have any voting rights; provided that, so long as any shares of series N senior convertible preferred stock are outstanding, the affirmative vote of holders of a majority of the series N senior convertible preferred stock, which majority must include SILAC Insurance Company so long as it holds any shares of series N senior convertible preferred stock, voting as a separate class, shall be necessary for ~~further discussion.~~approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate of designation or prior to the Company’s (or Nova’s) creation or issuance of any parity securities or new indebtedness (as defined in the certificate of designation); provided that the foregoing shall not apply to any financing transaction the use of proceeds of which will be used to redeem the series N senior convertible preferred stock and the warrants issued in connection therewith. In addition, the affirmative vote of holders of 66% of the series N senior convertible preferred stock, voting as a separate class, is required prior to the Company’s (or Nova’s) creation or issuance of any senior securities.

Conversion Rights. Each shares of series N senior convertible preferred stock, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price of $0.012 per share (subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all assets, mergers, consolidations or similar transactions); provided that in no event shall the holder of any series N senior convertible preferred stock be entitled to convert any number of shares that upon conversion the sum of (i) the number of shares of common stock beneficially owned by the holder and its affiliates and (ii) the number of shares of common stock issuable upon the conversion of the series N senior convertible preferred stock with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding common stock. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.

~~In the second quarter of~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022 ~~37,500 preferred series D shares were cancelled and exchanged for 37,500 B shares and 37,500 preferred series H shares were cancelled and exchanged for 37,500 B shares.~~

(UNAUDITED)

~~Additionally, as part~~

Redemption Rights. The Company may redeem the series N senior convertible preferred stock at any time by paying in cash therefore a sum equal to 115% of the ~~Nova acquisition, on September 7, 2022, the Company issued 818,750 preferred series J shares at a par value of $.001 and~~ stated value of $4.00 ~~totaling $3,275,000 as discussed in note 2.~~

~~As part~~per share, plus the amount of ~~the Nova Ortho acquisition, the Company issued 894,834 shares of preferred stock series J with par value $.001~~accrued and ~~a stated value of $4.00, for $3,579,334.~~

~~Also, as part of the Nova Ortho acquisition, the Company issued 868,056 shares of preferred stock series N with par value $.001~~unpaid dividends and ~~a stated value of $4.00, for $3,000,000 including a discount of $472,224 which was recorded as a reduction to APIC.~~

The Company and Key Tax managers have entered into a Buyback Agreement (“Agreement”) which is effective December 31, 2021. Pursuant to the Agreement, Key Tax managers resigned employment from the Company effective December 31, 2021 and has purchased back the subsidiary in exchange for returning 325,244 Preferred Shares Series G stock (“Preferred G”) which is 100% of Preferred G shares. The Key Tax managers will retain zero shares of Preferred G shares subjectany other amounts due pursuant to the terms of the ~~Agreement. There was~~certificate of designation. In addition, a ~~loss~~ny holder may require the Company to redeem some or all of its shares of series N senior convertible preferred stock on ~~disposal~~the same terms after a period of twelve months from the date of issuance; provided, however, that such redemption right shall only be exercisable if the Company raises at least $5,000,000 or the common stock is trading on the Nasdaq Stock Market or the New York Stock Exchange.

Series X Senior Convertible Preferred Stock

Ranking. The series X senior convertible preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common stock and each other class or series that is not expressly made senior to or on parity with the series X senior convertible preferred stock; (ii) on parity with each class or series that is not expressly subordinated or made senior to the series X senior convertible preferred stock; and (iii) junior to the series N senior convertible preferred stock, all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and each class or series that is expressly made senior to the series X senior convertible preferred stock.

Dividend Rights. Holders of series X senior convertible preferred stock are entitled to dividends at a rate per annum of 10.0% of the stated value ($4.00 per share); provided that upon an event of default (as defined in the certificate of designation for the series X senior convertible preferred stock), such rate shall increase by 5% per annum. Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each dividend payment date. At March 31, 2023, cumulative dividends on Series X Preferred Stock were $93,205.

Liquidation Rights. Subject to the rights of creditors and the holders of any senior securities, including the series N senior convertible preferred stock, or parity securities (in each case, as defined in the certificate of designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of junior securities (as defined in the certificate of designation), including the common stock, each holder of outstanding series N senior convertible preferred stock shall be entitled to receive an amount of cash equal to 100% of the stated value of $4.00 per share, plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such holders.

Voting Rights. Holders of series X senior convertible preferred stock do not have any voting rights; provided that, so long as any shares of series X senior convertible preferred stock are outstanding, the affirmative vote of holders of a majority of the series X senior convertible preferred stock, which majority must include Leonite Capital LLC so long as it holds any shares of series X senior convertible preferred stock, voting as a separate class, shall be necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate of designation or prior to the creation or issuance of any parity securities or new indebtedness (as defined in the certificate of designation); provided that the foregoing shall not apply to any financing transaction the use of proceeds of which will be used to redeem the series X senior convertible preferred stock and the warrants issued in connection therewith. In addition, the affirmative vote of holders of 66% of the series X senior convertible preferred stock, voting as a separate class, is required prior to the creation or issuance of any senior securities.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Conversion Rights. Each shares of series X senior convertible preferred stock, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price equal to the lower of (i) the lowest VWAP during the five (5) trading days immediately prior to the applicable conversion date and (ii) the price per share paid in any subsequent financing (the “Fixed Price”). The Fixed Price is subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all assets, mergers, consolidations or similar transactions, as well as a price based antidilution adjustment, pursuant to which, subject to certain exceptions, if the Company issues common stock at a price lower than the Fixed Price, the Fixed Price shall decrease to such lower price. Notwithstanding the foregoing, in no event shall the holder of any series X senior convertible preferred stock be entitled to convert any number of shares that upon conversion the sum of (i) the number of shares of common stock beneficially owned by the holder and its affiliates and (ii) the number of shares of common stock issuable upon the conversion of the series X senior convertible preferred stock with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding common stock. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.

Redemption Rights. Commencing on September 22, 2023, any holder may require the Company to redeem its shares by the payment in cash therefore of a sum equal to 100% of the stated value of $4.00 per share, plus the amount of ~~$1,201,169 which represented net assets~~accrued and ~~liabilities at~~unpaid dividends and any other amounts due pursuant to the ~~time of sale back.~~

~~Effective December 28, 2021, the Chairman~~terms of the ~~Board and Chief Executive Officer each forfeit and surrendered for no consideration 90,000,000 Preferred I shares each, totaling 180,000,000.~~

~~Effective March 29, 2021, $265,000~~certificate of designation; provided however, that in ~~principle from~~the event that the Company completes a public offering prior to the redemption date, then any holder may only cause the Company to redeem any outstanding series X senior convertible ~~debt and conventional debt and $298,195 in accrued interest was converted into 140,799 shares of~~ preferred stock ~~series B~~by paying such redemption price in twelve (12) equal monthly installments with ~~a $4.00 stated value per share. This has been reflected in~~ the ~~statement of deficiency in shareholders’ equity.~~

~~The Chief Operating Officer received 61,000 shares of preferred stock series B in exchange for accrued salaries of $244,000.~~

On February 11, 2021 the Chairman of the Board and the CEO and each converted 62,500 Preferred Series I shares into 25,000,000 restricted common shares for a total of 125,000 Preferred Series I shares into 50,000,000 restricted common shares.

During January 2021, we facilitated a reverse split of several classes our Preferred Stock which has been given retrospective treatment in these financial statements. In addition to the reverse stock split, management established new rights & privileges for certain classes of preferred stock. The reverse split ratio ranges from 1.6:1 to 307.7:1 resulting in a reclassification of $11,837,482 from preferred stock to additional paid in capital. The rights and privileges were changed with unanimous consent of all parties. All holders agreed to replace existing rights and privileges with new uniform conditions and a simplified uniform preferred $4.00 per share stated value.

~~Holders of Series B, D, D1, E, E1, F, F1, G, G1, H, H1, I, J, J1, L, L1, M, and P Preferred Stock shall have conversion rights that are affected by the closing common share market price~~first such payment due on the date that is six (6) months following the date that the Company completes such public offering.

Non-redeemable Preferred Stock

Series A Preferred Stock

Each share of ~~conversion as reported on such national exchange where the Company’s common~~series A preferred stock is ~~traded:~~

~~i. If~~entitled to a number of votes and converts to a number of shares equal to the ~~closing market price~~sum of all shares of common stock and series B preferred stock issued and outstanding, divided by the number shares of series A preferred stock held. Holders of series A preferred stock do not have any dividend, liquidation or redemption rights.

Series B Preferred Stock

Each share of series B preferred stock is ~~less than $4 per share~~entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share ~~the Preferred Stock shall convert~~of series B preferred stock is convertible into ~~an amount~~two (2) shares of common stock ~~equal to: two (2) times the Stated Value, as defined herein, divided by the closing market price as reported on such national exchange where the Company’s common~~(subject to adjustment for forward stock splits but not reverse stock splits). Holders of series B preferred stock do not have any dividend, liquidation or redemption rights.

Series C Preferred Stock

Each share of series C preferred stock is ~~traded~~entitled to one (1) vote on ~~the date~~all matters submitted to a vote of ~~conversion.~~ ~~For Example. If the closing price~~stockholders. Each share of ~~the common stock as reported on such national exchange where the Company’s common~~series C preferred stock is ~~traded is $1.00 and the Stated Value is $4.00, one (1) preferred share would convert~~convertible into ~~eight (8)~~100,000 shares of common ~~stock.~~stock (subject to adjustment for forward stock splits but not reverse stock splits). If the Company lists on an exchange, it has the right to repurchase these shares at a purchase price of $50,000 per share. Holders of series C preferred stock do not have any dividend, liquidation or redemption rights.

2324

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

(UNAUDITED)

Series D Preferred Stock

~~ii. If the closing market price~~

Each share of ~~common~~series D preferred stock is ~~equal~~entitled to ~~or greater than $4 per share~~ one (1) vote on all matters submitted to a vote of stockholders. Each share ~~the Preferred Stock shall convert~~of series D preferred stock is convertible into two (2) shares of common stock. ~~For Example. If the closing price~~Holders of ~~the common~~series D preferred stock ~~as reported on such national exchange where the Company’s common~~do not have any dividend, liquidation or redemption rights.

Series E Preferred Stock

Each share of series E preferred stock is ~~traded is $5.00~~entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of series E preferred ~~share would convert~~stock is convertible into two (2) shares of common stock. Holders of series E preferred stock do not have any dividend, liquidation or redemption rights.

Series F Preferred Stock

Each share of series F preferred stock is entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of series F preferred stock is convertible into two (2) shares of common stock. Holders of ~~Series C Preferred Stock shall~~series F preferred stock do not have Conversion Rights such that upon Conversion each one (1) share of Series C Preferred Stock shall convert into one hundred thousand (100,000) shares of the Common Stock. In the event that the Company should up list to a national exchange as defined by the U.S. Securities and Exchange Commission, each share of Series C Preferred Stock shall automatically be redeemed by the Company in exchange for a total of Fifty Thousand Dollars ($50,000.00) worth of the Common Stock, valued at the time of redemption.any dividend, liquidation or redemption rights.

Series F-1 Preferred Stock

Each share of series F-1 preferred stock is convertible into two (2) shares of common stock. Holders of ~~the~~ series F-1 preferred stock do not have any voting, dividend, liquidation or redemption rights.

Series I Preferred Stock

Each share of series I preferred stock is entitled to five (5) votes on all matters submitted to a vote of stockholders. Each share of series I preferred stock is convertible into two (2) shares of common stock. Holders of series I preferred stock do not have any dividend, liquidation or redemption rights.

Series J Preferred Stock

Each share of series J preferred stock is entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of series J preferred stock is convertible into two (2) shares of common stock. Holders of series J preferred stock do not have any dividend, liquidation or redemption rights.

Series K ~~and K1~~ Preferred Stock ~~shall have Conversion Rights such that upon Conversion each~~

Each share of series K preferred stock is entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of ~~Series~~series K ~~and K1 Preferred Stock shall convert~~preferred stock is convertible into 1.25 shares of ~~the Common Stock.~~

common stock. Holders of Series R Preferred Stock shall have conversion rights to common stock equal to $0.30; provided, however if the price of the Common Stock closes below $0.30 for the five (5) consecutive Trading Days immediately prior to the Conversion Date, then the Conversion Price shall be adjusted to $0.20, and if the price of the Common Stock closes below $0.20 for the five (5) consecutive Trading Days immediately prior to the Conversion Date, then the Conversion Price shall be adjusted to $0.10.

~~Common Stock~~

During the nine months ended September 30, 2022, 84,028,411 shares of common stock were issued upon conversion of certain convertible notes payable and 1,275,427 shares of common stock were issued for services.

In the third quarter of 2022, the Company issued 66,666,666 shares of common stock to Red Rock Travel Group and will issue 525,333,334 shares of common stock to be issued which is recorded as common stock to be issued in current liabilities at $157,600 as discussed in note 11.

~~10.~~

~~WARRANTS~~

~~The following tables summarize all warrant outstanding as of September 30, 2022, and the related changes during this period.~~

Number of
Warrants Weighted
Average
Exercise
Price
Stock Warrants
Balance at December 31, 2021 244,420,943 $ 0.020
Granted – –
Exercised – –
Expired (8,939,477 ) (0.146 )
Balance at September 30, 2022 235,481,466 0.015
Warrants Exercisable at September 30, 2022 235,481,466 $ 0.015
24
~~11.~~ ~~DISCONTINUED OPERATIONS~~
Management has decided to divest from the food services sector due primarily to a shift in strategy to focus time and resources on opportunities in the financial services sector to build upon its tax subsidiaries with related debt, credit, billing, real estate and healthcare. The Company’s restaurant franchise operations have been hard hit by the economic pressure of the COVID-19 pandemic and the subsequent directives and responses to this crisis taken by federal, state, and local governments. In light of current circumstances arising from the COVID-19 pandemic, the Company, as a public reporting company, must evaluate what the Company should and are obligated to do in order to protect shareholders from the negative effects of this pandemic.
As a result, management entered into agreements with the existing managers who were the original owners of Romeo’s NY Pizza (“Romeo’s”) and Repicci’s Franchise Group (“Repicci’s”) to buyback the subsidiaries previously purchased by Cardiff Lexington Corporation
The Company and the Repicci’s manager have entered into a Resignation, Release & Buyback Agreement and a Resignation, Release & Buyback Agreement Addendum (“Repicci’s Agreements”) which was effective September 1, 2021. Pursuant to the Repicci’s Agreement, the Repicci’s manager resigned employment from the Company effective September 1, 2021 and has purchased the Repicci’s subsidiary in exchange for returning 81,601 Preferred Shares Series H stock (“Preferred H”) which is held by the Company as treasury stock. The Repicci’s manager retained 37,500 shares of Preferred H shares subject to the terms of the Repicci’s Agreements. There was a gain on disposal in the amount of $216,013 in September 2021 which represented net assets and liabilities at the time of sale back.
The Company and the Romeo’s manager have entered into a Resignation, Release & Buyback Agreement and a Resignation, Release & Buyback Agreement Addendum (“Romeo Agreements”) which is effective July 1, 2021. Pursuant to the Romeo Agreement, Romeo’s manager resigned employment from the Company effective July 1, 2021 and has purchased back the Romeo’s subsidiary in exchange for returning 212,500 Preferred Shares Series D stock (“Preferred D”). The Romeo’s manager will retain 37,500 shares of Preferred D shares subject to the terms of the Romeo Agreements. There was a loss on disposal in the amount of $21,140 in July 2021 which represented net assets and liabilities at the time of sale back.
Cardiff Lexington filed a lawsuit against investors in Red Rock Travel seeking a judgement declaring that convertible secured notes issued to them by Red Rock Travel Group purportedly convertible into Cardiff’s common stock, to be null and void, and defendants subsequently filed a counterclaim. On July 29, 2022 the parties entered into a mediated settlement agreement whereby defendants agreed to dismiss all claims against Cardiff Lexington related to Red Rock Travel notes and accrued interest in the amount of $510,418 and further agreed to cancel and return common stock and warrants issued to claimants in a related 2020 settlement. Cardiff agreed to issue Defendants 592 million restricted common shares at $.0003 per share ($180,000). As a result of the settlement agreement, the convertible notes and accrued interest has been written-off by the Company in the third quarter of 2022 resulting in a gain of $510,417 which is recorded in discontinued operation. As of September 30, 2022, 66,666,666 shares were issued and recorded in common stock for $66,667, additional paid in capital for $46,667 and $157,600 was recorded in liabilities as shares to be issued.
Prior to the Mediated Settlement, the Company continued to carry Red Rock liabilities on its balance sheet including accounts payables and accrued expenses of $1,872,086, convertible notes payable of $240,000, accrued interest of $214,318 and a derivative liability of $378,877 as of September 30, 2021. The party responsible for the convertible notes and related accrued interest is in dispute and is currently in litigation. The derivative liability is a function of the convertible notes and accrued interest. And the accounts payable and accrued expenses of $1,872,086 is deemed to be the responsibility of the current owners of Red Rock and was written-off by the Company in the third quarter of 2021 resulting in a gain of $328,718 which is recorded in discontinued operation.
On May 1, 2018, the Company entered into a stock for stock purchase agreement with the sellers of Red Rock Travel, LLC and a related management agreement to manage Red Rock Travel, LLC (“Red Rock”). The terms and conditions of those agreements were subsequently violated causing the transaction to be reversed and dissolved on May 31, 2019. Red Rock reverted to its previous ownership, the Company canceled the preferred series K ~~shares related to the aborted acquisition and the Company filed notice with the State of Florida of the dissolution.~~
preferred stock do not have any dividend, liquidation or redemption rights.

25

~~On April 26, 2021,~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
(UNAUDITED)
Series L Preferred Stock
Each share of series L preferred stock is entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of series L preferred stock is convertible into two (2) shares of common stock. Holders of series L preferred stock do not have any dividend, liquidation or redemption rights.
Series R Preferred Stock
Each share of series R preferred stock is entitled to one (1) vote on all matters submitted to a vote of stockholders. Each share of series B preferred stock is convertible into one (1) shares of common stock (subject to adjustment for forward stock splits but not reverse stock splits). Holders of series R preferred stock do not have any dividend, liquidation or redemption rights.
Preferred Stock Transactions
The Company had no preferred stock transactions during the three months ended March 31, 2023 and 2022.
Common Stock
During the three months ended March 31, 2023, the Company ~~filed a lawsuit against Investors~~issued 118,682,378 shares of ~~Red Rock seeking a judgment declaring that convertible secured notes totaling $240,000 issued by Red Rock and purportedly convertible into the Company’s~~ common stock ~~be deemed null and void. The Company continues to maintain the liability~~upon conversion of these Red Rock Investor notes on its balance sheet under discontinued operations together with corresponding accrued interest and related derivative liability. Subsequently, in the first quarter of 2022, the company settled a $40,000 note with one Red Rock Investor. Litigation and settlement discussions continue on the remaining $200,000 of Red Rock Investorcertain convertible notes.

September 30,
2022

December 31,
2021

Net liabilities of discontinued operations
Accrued interest $ – $ 231,318
Convertible debt – 240,000
Net liabilities of discontinued operations $ – $ 471,318
The Company did not issue any shares of common stock during the three months ended March 31, 2022.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Loss from discontinued operations
Interest expense $ 5,478 $ 17,000 $ 39,100 $ 51,378
Gain from reversal of Red Rock liabilities – (1,872,086 ) – (1,872,086 )
Gain on settlement of debt (510,418 ) – (510,418 ) –
Change in derivative liability – (57,766 ) – (37,792 )
Loss from discontinued operations $ (504,940 ) $ (1,912,852 ) $ (471,318 ) $ (1,858,500 )

~~12.~~ 11. WARRANTS
The table below sets forth warrant activity for the three months ended March 31, 2023 and 2022:
Schedule of warrant activity
Number of
Warrants Weighted
Average
Exercise
Price
Balance at January 1, 2023 235,557,856 $ 0.015
Granted – –
Exercised – –
Expired – –
Balance at March 31, 2023 235,557,856 0.015
Warrants Exercisable at March 31, 2023 235,557,856 $ 0.015
26
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
(UNAUDITED)
12. DISCONTINUED OPERATIONS
The Company and the managers of AHI entered into a resignation, release and buyback agreement and addendum, effective October 31, 2022, pursuant to which the managers purchased AHI in exchange for returning 175,045 shares of series F preferred stock. There was a loss on disposal in the amount of $217,769 on October 31, 2022, which represented net assets and liabilities at the time of sale back.
The Company had no net liabilities of discontinued operations at March 31, 2023 and December 31, 2022. The Company had $0 and $19,215 of loss from discontinued operations for the three months ended March 31, 2023 and 2022, respectively.
Schedule of discontinued operations
Three Months Ended March 31,
2023 2022

Gain (Loss) from discontinued operations
Revenue $ – $ 43,844
Cost of sales – (19,474 )
Selling, general and administrative expenses – (1,881 )
Interest expense of Red Rock Investor Note – (16,622 )
Loss on divestiture of AHI subsidiary – (2,593 )
Gain no change in estimate – (4,474 )
Loss from discontinued operations $ – $ (19,215 )
13. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET

The following table shows ~~our~~the Company’s goodwill balances by reportable segment. ~~We review~~The Company reviews goodwill for impairment on a reporting unit basis ~~quarterly~~annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. ~~Since~~During the ~~date of our last quarterly assessment, we have not identified any changes in circumstances that would indicate~~three months ended March 31, 2023 and 2022, the ~~carrying value of~~Company had no goodwill ~~is not recoverable.~~
~~Allocation of Goodwill to Reporting Segments~~impairment.

The following table shows ~~our~~ goodwill balances by reportable segment:

Affordable
Housing Rentals

Financial
Services
Healthcare Total

Gross carrying value at December 31, 2021 $ – $ 2,092,048 $ 2,391,608 $ 4,483,656
Accumulated impairment – – – –
Carrying value at December 31, 2021 – 2,092,048 2,391,608 4,483,656
Milestone reached – –
3,275,000

3,275,000

Accumulated impairment – – – –
Carrying value at September 30, 2022 $ – $ 2,092,048 $ 5,666,608 $ 7,758,656
Schedule of goodwill balances
Healthcare Total
Carrying value at December 31, 2022 $ 5,666,608 $ 5,666,608
Accumulated impairment – –
Carrying value at March 31, 2023 $ 5,666,608 $ 5,666,608

2627

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
(UNAUDITED)
~~13.~~ 14. COMMITMENTS AND CONTINGENCIES

Leases

ASC 842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases, A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transaction, lessees and lessors are required to recognize and measure leases at either the effective date (the “effective date method”) or the beginning of the earliest period presented (the “comparative method”) using a modified retrospective approach. Under the effective date method, the Company’s comparative period reporting is unchanged. In contrast, under the comparative method, the Company’s date of initial application is the beginning of the earliest comparative period presented, and the Topic 842 transition guidance is then applied to all comparative periods presented. Further, under either transition method, the standard includes certain practical expedients intended to ease the burden of adoption. The Company adopted ASC 842, January 1, ~~2021,~~2020, using the effective date method and elected certain practical expedients allowing the Company not to reassess:

· whether expired or existing contracts contain leases under the new definition of a lease;
·
· lease classification for expired or existing leases; and
·
· whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company recorded operating lease expense of ~~$60,878~~$77,852 and ~~$91,726~~$134,000 for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and the Company recorded operating lease expense of $231,028 and $108,979 for the nine months ended September 30, 2022 and 2021,~~ respectively.

The Company has ~~property~~operating leases with future commitments as follows:
Amount
2022 $ 175,183
2023 109,345
2024 22,215
2025 5,554
Total $ 312,297
~~Employees~~
We have an employment agreement effective July 15, 2021 to December 31, 2025 with the Chairman of the Board, Mr. Thompson. with automatic extension for additional successive one (1) year renewals terms unless terminated as defined in the agreement. We provide for compensation of $30,000 per month along with additional incentives.
We have an employment agreement effective July 15, 2021 to December 31, 2025 with the Chief Executive Officer, Mr. Cunningham with automatic extension for additional successive one (1) year renewals terms unless terminated as defined the agreement. We provide for compensation of $30,000 per month.
Schedule of property leases
March 31, Amount
2024 $ 140,777
2025 55,408
Total $ 196,185

2728

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
(UNAUDITED)
Employees
The Company agreed to pay ~~$120,000~~$360,000 per year and $200,000 of targeted annual incentives to the Chief ~~Operating~~Executive Officer based on his ~~amended~~ employment agreement ~~executed on May 15, 2019. In the third quarter~~since July 1, 2020, of ~~2021, the Chief Operating Officer received 61,000 shares of preferred stock series B~~which currently 50% is paid in ~~exchange for accrued salaries of $244,000.~~cash and 50% is accrued. The total outstanding accrued compensation as of ~~September 30,~~March 31, 2023 and December 31, 2022 were $1,935,500 and $1,870,500, respectively.
The Company agreed to pay $360,000 per year and $200,000 of targeted annual incentives to the Chairman of the Board based on his employment agreement since July 1, 2020, of which currently 50% is paid in cash and 50% is accrued. The total outstanding accrued compensation as of December 31, 2022 and December 31, 2021 ~~was $129,000~~were $1,952,000 and ~~$120,000,~~$1,863,000, respectively.

~~In April 2021, the Company’s previous Chief Financial Officer was terminated and replaced.~~ The Company agreed to pay $156,000 per year to the ~~new~~previous Chief Financial Officer ~~$156,000 per year along with a bonus of preferred shares~~ based on his amended employment agreement executed on May 15, 2021. The total outstanding accrued compensation as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was ~~$17,057.~~$17,057.

The Company entered into a Management Agreement effective May 31, 2021 for compensation to the ~~Principals~~principals of ~~the Company’s~~ Nova ~~Ortho and Spine (“Nova”) subsidiary~~ in the form of an annual base salaries of ~~$372,000~~ $372,000 to one of the 3three doctors, ~~$450,000~~ $450,000 to the second, and ~~$372,000~~ $372,000 to the third doctor.
Collectively, as a group, ~~Principals of Nova~~such principals will receive an annual cash bonus and stock equity set forth ~~in footnote 8 (the “Annual Bonus”). The Annual Bonus~~below, which will be conditioned upon the Company achieving 100% of the annual objectives of financial performance goals as set forth ~~in footnote 8.~~below.
Schedule of annual objectives of financial performance
Year Minimum Annual Nova EBITDA Cash Annual Bonus Series J Preferred Stock
2022 $2.0M $120,000 120,000 Shares
2022 $2.4M $150,000 135,000 Shares
2023 $3.7M $210,000 150,000 Shares
2024 $5.5M $300,000 180,000 Shares
2025 $8.0M $420,000 210,000 Shares

Additionally, the previous owners of Nova were issued an additional 818,750 shares of preferred series J representing the supplemental payment for the acquisition of Nova as described in the agreement.
We have an employment agreement with a subsidiary manager, effective July 1, 2018 with a term of 5 years, whereby we provide for compensation of $20,000 per month along with a bonus incentive if financial performance measures are met.
We acquired Redrock Travel on May 1, 2018. After numerous violations of the Management Agreement it was determined by our board of directors to terminate the acquisition agreement and to file for the cancelation of the Redrock Stock Class with the State of Florida. A declaration has been served notifying Red Rock and its investors the Board nor officer of the Company approved any transactions entered into with Red Rock. The case with Red Rock was settled in the third quarter 2022.
On August 6, 2021, a Board Resolution was executed to terminate one of the two employees of Edge View Properties for fraud, deceit, larceny, and thievery for selling property belonging to the Company and personally taking the $162,598 in proceeds. The Company hired counsel to terminate the employee and handle all legal matters for return of monies and criminal prosecution.

~~14.~~ ~~INCOME TAXES~~15. LEGAL PROCEEDINGS

~~At September 30, 2022~~From time to time, the Company ~~had federal~~may become involved in various lawsuits and ~~state net~~legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. Management is not currently aware of any such legal proceedings or claims that it believes will have a material adverse effect on the Company’s business, financial condition, or operating ~~loss carry forwards of approximately $18,000,000 that expire over various years through the year 2038.~~results.
16. INCOME TAXES

Due to operating losses, there is no provision for current federal or state income taxes for the ~~year~~three months ended ~~December~~March 31, ~~2021.~~2023 and 2022.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

~~15.~~ ~~SUBSEQUENT EVENTS~~
~~On October 10, 2022.~~At March 31, 2023 and December 31, 2022, the ~~Company’s Chief Operating Officer was issued 18,750 preferred series B shares.~~Company had federal and state net operating loss carry forwards of approximately $22,429,214 that expire in various years through the year 2039.

2829

~~On October~~CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022 the Company strategically concentrating on the healthcare sector executed a Buyback Agreement finalizing the sale of We Three (d.b.a – Affordable Housing Initiative -AHI) a Tennessee registered business, back to the original owners of all of its shares for the return to the Company of 175,045 Preferred F Shares and the Company issuing the buyers 67,500 Restricted Preferred B Shares.
(UNAUDITED)

On November 23, 2022, the Board of Directors of the Company voted to amend and restate the Bylaws of the Company, effective immediately. The primary and substantive changes were as follows: · The articles have been amended to remove twelve (12) classes of preferred stock.

~~16.~~ 17. SEGMENT REPORTING

The Company has four reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures about Segments of an Enterprise and Related Information:

(1) ~~Affordable Housing (We Three)~~Tax Resolution Services (Platinum Tax)
~~(2)~~ ~~Financial Resolutions Services (Platinum Tax Defenders)~~
~~(3)~~(2) ~~Healthcare (Nova Ortho and Spine)~~Real Estate (Edge View)
~~(4)~~ ~~Real Estate (Edge View Properties Inc)~~
(3) Healthcare (Nova)

These segments are a result of differences in the nature of the products and services sold. Corporate administration costs, which include, but are not limited to, ~~bookkeeping~~general accounting, human resources, legal and ~~general accounting.~~credit and collections, are partially allocated to the three operating segments. Other revenue consists of nonrecurring items.

The Affordable Housing segment leases and sells mobile homes as an option for a homeowner wishing to avoid large down payments, expensive maintenance costs, large monthly mortgage payments and high property taxes and insurance which is a common trait of ~~brick and mortar~~brick-and-mortar homes. Additionally, if bad credit is an issue preventing potential ~~home owners~~homeowners from purchasing a traditional house, the Company will provide a "lease to own" option so people secure their family home.

~~Platinum~~The Tax Resolution Services segment provides tax resolution services to individuals and companies that have federal and state tax liabilities. The ~~company~~Company collects fees based on efforts to negotiate and assist in the settlement of outstanding tax debts.

~~Nova Ortho~~The Real Estate segment consists of Edge View, a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and ~~Spine~~twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a ~~group of doctors that~~common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond.
The Healthcare segment provides a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves.
Management uses numerous tools and methods to evaluate and measure of it’s subsidiaries success. To help succeed, management retains the prior owners of the subsidiaries and allow them to do what they do best is run the business. Additionally, management monitors key metrics primarily revenues and net income from operations.
Schedule of segment reporting

As of
September 30,
2022

As of
December 31,
2021

March 31,
2023

December 31,
2022

Assets:
Affordable Housing Rentals $ 213,511 $ 213,876
Financial Services 2,115,474 2,212,379 $ 8,673 $ 8,577
Healthcare 12,971,911 8,092,820 13,595,507 12,692,531
Real Estate 594,150 611,900 592,461 592,557
Other 63,299 28,940
Others 87,944 59,692
Consolidated assets $ 15,958,345 $ 11,159,915 $ 14,284,585 $ 13,353,357

29

For the Three
Months Ended
September 30, 2022

For the Three
Months Ended
September 30, 2021

Revenues:
Affordable Housing Rentals $ 37,462 $ 30,944
Financial Services 219,872 1,034,422
Healthcare 3,103,409 2,092,427
Real Estate – 152,000
Total revenues $ 3,360,743 $ 3,309,793

Cost of Sales:
Affordable Housing Rentals $ 20,523 $ 22,281
Financial Services 39,963 454,118
Healthcare 1,094,794 526,839
Real Estate – 79,481
Total cost of sales $ 1,155,280 $ 1,082,719

Income (Loss) from Operations From Subsidiaries:
Affordable Housing Rentals $ 1,556 $ (2,276 )
Financial Services 3,839 (63,715 )
Healthcare 1,825,593 1,382,155
Real Estate (11,906 ) 68,934
Total income from operations from subsidiaries $ 1,819,082 $ 1,385,098

Loss From Operations from Cardiff Lexington $ (319,812 ) $ (318,448 )
Total income from operations $ 1,499,270 $ 1,066,650

For the Nine
Months Ended
September 30, 2022

For the Nine
Months Ended
September 30, 2021

Revenues:
Affordable Housing Rentals $ 120,818 $ 97,767
Financial Services 1,156,729 3,432,819
Healthcare 8,154,934 2,742,001
Real Estate – 152,000
Total revenues $ 9,432,481 $ 6,424,587

Cost of Sales:
Affordable Housing Rentals $ 58,611 $ 68,269
Financial Services 365,185 1,328,508
Healthcare 2,982,418 726,289
Real Estate – 79,481
Total cost of sales $ 3,406,214 $ 2,202,547

Income (Loss) from Operations From Subsidiaries:
Affordable Housing Rentals $ 4,109 $ (13,984 )
Financial Services (86,281 ) 324,761
Healthcare 4,609,996 1,786,434
Real Estate (14,419 ) 68,934
Total income from operations from subsidiaries $ 4,513,405 $ 2,166,145

Loss From Operations from Cardiff Lexington $ (1,188,088 ) $ (3,831,975 )
Total income (loss) from operations $ 3,325,317 $ (1,665,830 )
30

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023 AND 2022
(UNAUDITED)
Three Months Ended March 31,
2023 2022
Revenues:
Financial Services $ 154,399 $ 464,843
Healthcare 2,706,399 2,432,307
Consolidated revenues $ 2,860,798 $ 2,897,150

Cost of Sales:
Financial Services $ 26,829 $ 212,446
Healthcare 956,295 903,782
Consolidated cost of sales $ 983,124 $ 1,116,228

Loss from operations from subsidiaries
Financial Services $ (43,987 ) $ (101,481 )
Healthcare 1,278,239 1,303,348
Real Estate (97 ) (825 )
Income from operations from subsidiaries $ 1,234,155 $ 1,201,042

Loss from operations from Cardiff Lexington $ (520,594 ) $ (479,559 )
Total income from operations $ 713,562 $ 721,483

Loss before taxes
Financial Services $ (45,490 ) $ (101,773 )
Healthcare 817,098 (797,140 )
Real Estate (97 ) (825 )
Corporate, administration and other non-operating expenses (787,502 ) (662,716 )
Consolidated loss before taxes $ (15,991 ) $ (1,562,454 )
18. SUBSEQUENT EVENTS
The Company has evaluated its operations subsequent to March 31, 2023 to the date these condensed consolidated financial statements were issued and determined there was subsequent events or transactions the required recognition or disclosure in these consolidated financial statements.
On May 25, 2023, the Company issued 3,150 shares of Series B Preferred Stock to Zia Choe, Interim Chief Financial Officer. These shares were fully vested upon grant.
On June 5, 2023, the Company executed a seventh tranche under Convertible Note 40 in the principal amount of $136,667, less original issue discount and fee of $39,167.
On June 22, 2023, 8,200,562 shares of series K preferred stock were cancelled in connection with terminated acquisition of Red Rock.
31
~~Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis of ~~our~~ financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with ~~our consolidated~~such financial statements ~~including~~and notes thereto set forth elsewhere herein.
Use of Terms

Except as otherwise indicated by the ~~related notes,~~context and for the ~~other financial information included~~purposes of this report only, references in this ~~report. For ease of reference, “the Company”, ‘Cardiff”,~~report to “we,” ~~“us” or~~“us,” “our” ~~refers~~and “our company” are to Cardiff Lexington Corporation, ~~unless otherwise stated.~~a Nevada corporation, and its consolidated subsidiaries.

~~Cautionary Statement Concerning~~Special Note Regarding Forward-Looking ~~Information~~Statements

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management, markets for stock of Cardiff Lexington Corporation and other matters. Statements in this report that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act of 1934 and Section 27A of the Securities Act of ~~1933. Such forward-looking statements, including, without limitation, those relating to~~1933, as amended, or the ~~future business prospects, revenue~~Securities Act, and ~~income of Cardiff Lexington Corporation, wherever they occur, are necessarily estimates reflecting the best judgment~~Section 21E of the ~~senior management~~Securities Exchange Act of ~~Cardiff Lexington Corporation~~1934, as amended, or the Exchange Act, that are based on ~~the date~~our management’s beliefs and assumptions and on ~~which they were made,~~information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or ~~if no date is stated, as of the date of this report. These forward-looking statements are subject~~ to our future financial performance and involve known and unknown risks, uncertainties and ~~assumptions, including those described in the “Risk Factors” in Item 1A of Part I of our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”),~~other factors that may ~~affect the operations, performance, development and results of~~cause our ~~business. Because the factors discussed in this report could cause~~ actual results, levels of activity, performance or ~~outcomes~~achievements to ~~differ~~be materially different from ~~those~~any future results, levels of activity, performance or achievements expressed ~~in any forward-looking statements made~~or implied by ~~us or on our behalf, you should not place undue reliance on any such~~these forward-looking statements. ~~New factors emerge from time~~Forward-looking statements include, but are not limited to, time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company assumes no obligation and does not intend to update these forward-looking statements ~~except as required by law.~~about:

~~Overview~~

Cardiff Lexington Corporation is a holding company with no stand-alone operations and no material assets other than its ownership interest in its subsidiaries. All of the Company's operations are conducted through, and its income derived from, its various subsidiaries, which are organized and operated according to the laws of their jurisdiction of incorporation, and consolidated by the Company.

~~To date, Cardiff consists of the following wholly owned subsidiaries:~~

~~We Three, LLC, d/b/a Affordable Housing Initiative (“AHI”),~~ which we acquired on May 15, 2014, is an affordable home acquirer located in Maryville, Tennessee, which acquirers’ mobile homes and mobile home parks and either sells them or rents the homes to individual families. The acquisition of mobile homes or mobile home parks allows AHI to provide an alternative to traditional housing, which is a popular option for a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage payments and high property taxes. The typical arrangement with potential buyers is a lease-to-own arrangement on an individual home. The fundamentals of that arrangement obligate the tenant(s) to the terms of the lease with AHI retaining ownership. In addition, the tenant(s) pay non-refundable option monies prior to the start of the lease. This option consideration enables them to purchase the home at the end of the lease if they choose. A typical lease is 7 years. We have found that most tenants move out before the end of that period and thus never satisfy the terms that would enable them to purchase the home.

~~Edge View Properties, Inc. (“Edge View”),~~ which we acquired on July 16, 2014, is a real estate company that owns 30 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 the 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). Edge View’s plan is to enter into a joint venture agreement with a developer for construction of single-family homes on the property. The Company has yet to enter into a joint venture agreement for the development of single-family homes.

	·	our ability to successfully identify and acquire additional businesses;
	·	our ability to effectively integrate and operate the businesses that we acquire;
	·	our expectations around the performance of our current businesses;
	·	our ability to maintain our business model and improve our capital efficiency;
	·	our ability to effectively manage the growth of our business;
	·	our lack of operating history and ability to attain profitability;
	·	the competitive environment in which our businesses operate;
	·	trends in the industries in which our businesses operate;
	·	the regulatory environment in which our businesses operate under;
	·	changes in general economic or business conditions or economic or demographic trends in the United States, including changes in interest rates and inflation;
	·	our ability to service and comply with the terms of indebtedness;
	·	our ability to retain or replace qualified employees of our businesses;
	·	labor disputes, strikes or other employee disputes or grievances;
	·	casualties, condemnation or catastrophic failures with respect to any of our business’ facilities;
	·	costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
	·	extraordinary or force majeure events affecting the business or operations of our businesses.

3132

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Overview

We are an acquisition holding company focused on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership to maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for our stockholders. Specifically, we have and will continue to look at a diverse variety of acquisitions in the healthcare sector in terms of growth stages and capital structures and we intend to focus our portfolio of subsidiaries approximately as follows: 80% will be targeted to established profitable niche small to mid-sized healthcare companies and 20% will be targeted to second stage startups in healthcare and related financial services (emerging businesses with a strong organic growth plan that is materially cash generative).

All of our operations are conducted through, and our income derived from, our various subsidiaries. We operate the following businesses through our wholly owned subsidiaries.

	·	*Healthcare Business*. Nova Ortho and Spine, PLLC, or Nova, which we acquired May 31, 2021, operates a group of regional primary specialty and ancillary care facilities throughout Florida that provide traumatic injury victims with primary care evaluations, interventional pain management, and specialty consultation services. We focus on plaintiff related care are and a highly efficient provider of emergency medical condition, or EMC, assessments. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. From sports injuries, to sprains, strains, and fractures, our doctors are dedicated to helping patients return to active lifestyles.

	·	*Financial Services (Tax Resolution) Business*. Platinum Tax Defenders, or Platinum Tax, which we acquired on July 31, 2018, is a full-service tax resolution firm located in Los Angeles, California. Since 2011, we have been assisting all types of taxpayers resolve any and all issues with the IRS and applicable state tax agencies. We provide fee-based tax resolution services to individuals and companies that have federal and state tax liabilities by assisting clients to settle outstanding tax debts.

	·	*Real Estate Business*. Edge View Properties, Inc., or Edge View, which we acquired on July 16, 2014, is a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond. Salmon is known as Idaho’s premier whitewater destination as well as one of the easier accesses to the Frank Church Wilderness Area - the largest wilderness in the lower 48 states. Salmon’s airport has service to Boise, Idaho and serves as a hub to access whitewater rafting start points and wilderness landing strips. Management has invested years working to develop a new and exciting housing development in Salmon, Idaho and plans to enter into a joint venture agreement with a developer for this planned concept development.

We previously owned We Three, LLC ~~(“Platinum Tax”),~~dba Affordable Housing Initiative, or AHI, which wewas acquired on ~~July~~May 15, 2014 and sold on October 31, ~~2018, is~~2022. AHI leased and sold mobile homes and also provided a ~~full-service tax resolution firm located~~“lease to own” option.

Segments

During the three months March 31, 2023 and 2022, we had four reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures about Segments of an Enterprise and Related Information:

	(1)	Financial Services (Platinum Tax)

	(2)	Healthcare (Nova)

	(3)	Real Estate (Edge View)

These segments are a result of differences in ~~Los Angeles, CA. Since 2011, Platinum Tax has been assisting all types~~the nature of ~~taxpayers resolve any~~the products and ~~all issues with IRS~~services sold. Corporate administration costs, which include, but are not limited to, general accounting, human resources, legal and ~~applicable state tax agencies. Platinum Tax~~credit and collections, are partially allocated to the three operating segments. Other revenue consists of nonrecurring items.

The financial services segment provides ~~fee-based~~ tax resolution services to individuals and companies that have federal and state tax ~~liabilities by assisting its clients~~liabilities. It collects fees based on efforts to ~~settle~~negotiate and assist in the settlement of outstanding tax debts. Specifically, the Platinum Tax teams tax relief services include but are not limited to, back taxes, offer in compromise, audit representation, amending tax returns, tax preparation, tax resolution, wage garnishment relief, removal of bank levies and liens, bookkeeping, and other financial challenges. Platinum Tax has a team of 28 which includes tax attorneys, accountants, and enrolled agents that have an aggregate of more than 90 years of experience in the financial services industry and have resolved tax issues for thousands of clients.

~~Nova Ortho and Spine, PLLC (“Nova Ortho”)~~ ~~which we acquired on May 31, 2021 is a company in which doctors~~The healthcare segment provides a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. ~~From sports injuries,~~

The Real Estate segment consists of Edge View, a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to ~~sprains, strains,~~meet current housing needs, and fractures, our doctors are dedicated to helping you return to your active lifestyle. Orthopedic and pain procedure services include hip and knee replacement, shoulder reconstruction, fracture care and hand surgery,twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as ~~spinal surgery~~a common area for landowners to view wildlife, provide access to the Salmon River and fishing in ~~the State of Florida.~~a two (2) acre pond.

~~Impact of COVID-19 Pandemic~~

The outbreak of a novel coronavirus throughout the world, including the United States, since early calendar year 2020 through current, has caused widespread business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”). We are subject to risks and uncertainties as a result of the COVID-19 Pandemic. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion on results of operations for the year ended December 31, 2021. The extent of the impact of the COVID-19 Pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the United States and other markets where the Company operates. It is expected that the Company's customers and suppliers may well continue to be impacted which could materially and adversely affect the Company. Our ability to obtain or deliver inventory or services, and our ability to collect accounts receivables as customers may be affected

The financial services segments of the economy was adversely affected by the COVID-19 Pandemic. Due to the IRS prolonging individual tax filings, this affected our tax resolution businesses and management decided to divest JM Enterprise 1, Inc. (Key Tax Group). The Company’s tax resolution business operations have been hard hit by the economic pressure of the COVID-19 pandemic and the subsequent directives and responses to this crisis taken by the IRS, federal, state, and local governments. Management will continue to monitor its businesses and focus our growth primarily in the health industry.

As of
September 30,
2022

As of
December 31,
2021

Assets:
Affordable Housing Rentals $ 213,511 $ 213,876
Financial Services 2,115,474 2,212,379
Healthcare 12,971,911 8,092,820
Real Estate 594,150 611,900
Other 63,299 28,940
Consolidated assets $ 15,958,345 $ 11,159,915

For the Three
Months Ended
September 30, 2022

For the Three
Months Ended
September 30, 2021

Revenues:
Affordable Housing Rentals $ 37,462 $ 30,944
Financial Services 219,872 1,034,422
Healthcare 3,103,409 2,092,427
Real Estate – 152,000
Total revenues $ 3,360,743 $ 3,309,793

Cost of Sales:
Affordable Housing Rentals $ 20,523 $ 22,281
Financial Services 39,963 454,118
Healthcare 1,094,794 526,839
Real Estate – 79,481
Total cost of sales $ 1,155,280 $ 1,082,719

Income (Loss) from Operations From Subsidiaries:
Affordable Housing Rentals $ 1,556 $ (2,276 )
Financial Services 3,839 (63,715 )
Healthcare 1,825,593 1,382,155
Real Estate (11,906 ) 68,934
Total income from operations from subsidiaries $ 1,819,082 $ 1,385,098

Loss From Operations from Cardiff Lexington $ (319,812 ) $ (318,448 )
Total income from operations $ 1,499,270 $ 1,066,650

For the Nine
Months Ended
September 30, 2022

For the Nine
Months Ended
September 30, 2021

Revenues:
Affordable Housing Rentals $ 120,818 $ 97,767
Financial Services 1,156,729 3,432,819
Healthcare 8,154,934 2,742,001
Real Estate – 152,000
Total revenues $ 9,432,481 $ 6,424,587

Cost of Sales:
Affordable Housing Rentals $ 58,611 $ 68,269
Financial Services 375,185 1,328,508
Healthcare 2,982,418 726,289
Real Estate – 79,481
Total cost of sales $ 3,406,214 $ 2,202,547

Income (Loss) from Operations From Subsidiaries:
Affordable Housing Rentals $ 4,109 $ (13,984 )
Financial Services (86,281 ) 324,761
Healthcare 4,609,996 1,786,434
Real Estate (14,419 ) 68,934
Total income from operations from subsidiaries $ 4,513,405 $ 2,166,145

Loss From Operations from Cardiff Lexington $ (1,188,088 ) $ (3,831,975 )
Total income (loss) from operations $ 3,325,317 $ (1,665,830 )

~~Results of~~Discontinued Operations

~~Three Months Ended September 30,~~We and the managers of AHI entered into a resignation, release and buyback agreement and addendum, effective October 31, 2022, pursuant to which the managers purchased AHI in exchange for returning 175,045 shares of series F preferred stock. There was a loss on disposal in the amount of $217,769 on October 31, 2022, which represented net assets and ~~2021~~liabilities at the time of sale back.

~~Revenues were $3,360,743~~We had no net liabilities of discontinued operations at March 31, 2023 and ~~$3,309,793~~December 31, 2022. We had $0 and $19,215 of loss from discontinued operations for the three months ended ~~September 30,~~March 31, 2023 and 2022, and 2021 an increase of $50,950 or 1.5%, respectively. The increase was primarily due to the acquisition of Nova Ortho on May 31, 2021 which generated revenue of $3,103,409 for the three months ended September 30, 2022, offset by the decrease in revenue from the sale of Key Tax and the reduction in revenues for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

Cost of sales were $1,155,280 and $1,082,719 for the three months ended September 30, 2022 and 2021 an increase of $72,561 or 6.7%, respectively. The increase was primarily due to the acquisition of Nova Ortho on May 31, 2021 which incurred cost of sales of $1,094,794 for the three months ended September 30, 2022 offset by the decrease in cost of sales from the sale of Key Tax and the reduction in cost of sales for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

~~Gross margins were $2,205,463 and $2,227,074 for the three months ended September 30, 2022 and 2021 a decrease of $21,611 or 1.0%, respectively.~~

Operating expenses were $706,193 and $3,938,202 for the three months ended September 30, 2022 and 2021 a decrease of $3,232,009 or 82.1%, respectively. The decrease was primarily due to the transaction costs relating to the acquisition of Nova Ortho on May 31, 2021, the sale of Key Tax and the reduction in business for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

~~Net loss was $264,774 and $754,808 for the three months ended September 30, 2022 and 2021 a decrease of $490,034 or 64.9%, respectively.~~

~~Nine Months Ended September 30, 2022 and 2021~~

Revenues were $9,432,481 and $6,424,587 for the Nine months ended September 30, 2022 and 2021 an increase of $3,007,894 or 46.8%, respectively. The increase was primarily due to the acquisition of Nova Ortho May 31, 2021 which generated revenue of $8,154,934 for the Nine months ended September 30, 2022, offset by the decrease in revenue from the sale of Key Tax and the reduction in revenues for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

Cost of sales were $3,406,214 and $2,202,547 for the Nine months ended September 30, 2022 and 2021 an increase of $1,203,667 or 54.6%, respectively. The increase was primarily due to the acquisition of Nova Ortho May 31, 2021 which incurred cost of sales of $2,982,418 for the Nine months ended September 30, 2022 offset by the decrease in cost of sales from the sale of Key Tax and the reduction in cost of sales for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

~~Gross margins were $6,026,267 and $4,222,040 for the Nine months ended September 30, 2022 and 2021 an increase of $1,804,227 or 42.7%, respectively.~~

Operating expenses were $2,700,950 and $5,887,870 for the Nine months ended September 30, 2022 and 2021 a decrease of $3,186,920 or 54.1%, respectively. The decrease was primarily due to the transaction costs relating to the acquisition of Nova Ortho May 31, 2021, the sale of Key Tax and the reduction in business for Platinum Tax Defenders due to a reduction in business due to the IRS prolonging individual tax filings which affected both tax resolution businesses.

~~Net loss was $813,054 and $2,810,930 for the Nine months ended September 30, 2022 and 2021 a decrease of $1,997,876 or 71.1%,~~ respectively.

~~The outbreak~~Results of the coronavirus throughout the world, including the United States, during early calendar year 2020 has caused widespread business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”). Due to the IRS prolonging individual tax filings, this affected our tax resolution businesses in 2021 and management decided to divest JM Enterprise 1, Inc. (Key Tax Group). The Company’s tax resolution business operations have been hard hit by the economic pressure of the COVID-19 pandemic and the subsequent directives and responses to this crisis taken by the IRS, federal, state, and local governments. Considering these circumstances arising from the COVID-19 pandemic, the Company, as a public reporting company, must evaluate what the Company should and are obligated to do in order to protect shareholders.Operations

Comparison of Three Months Ended March 31, 2023 and 2022

The ~~outbreak~~following table sets forth key components of a novel coronavirus throughout the world, including the United States, since early calendar year 2020 through current, has caused widespread business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”). We are subject to risks and uncertainties as a result of the COVID-19 Pandemic. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion onour results of operations ~~for~~during the ~~year~~three months ended ~~December~~March 31, ~~2021. The extent~~2023 and 2022, both in dollars and as a percentage of the impact of the COVID-19 Pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the United States and other markets where the Company operates. It is expected that the Company's customers and suppliers may well continue to be impacted which could materially and adversely affect the Company. Our ability to obtain or deliver inventory or services, and our ~~ability to collect accounts receivables as customers may be affected~~revenue.

The financial services segments of the economy was adversely affected by the COVID-19 Pandemic. Management will continue to monitor its businesses and focus our growth primarily in the health industry.

~~The Company raised $729,083 in convertible notes during the Nine months ended September 30, 2022.~~

~~Inflation~~

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

~~Liquidity and Capital Resources~~

Since inception, the principal sources of cash have been funds raised from (i) debenture convertible notes and conventional notes payable, (ii) the sale of common stock and pre ferred stock, and (iii) advances from shareholders. At September 30, 2022, we had $260,498 in cash, a working capital deficit of $2,539,506 and total assets of $15,958,345 and total liabilities of $9,908,290.

Net cash used in operating activities was $414,252 for the nine months ended September 30, 2022. The cash used in operating activities was primarily due to the net loss of $850,454, an increase in accounts receivable of $1,858,494, offset by an increase in accounts payable and accrued expenses of $315,123. The negative cash flows for the nine months ended September 30, 2021 was due primarily to the loss of 2,810,930, an increase in accounts receivable of $114,399, an increase in accounts payable and accrued expenses of $594,276 and an increase in accrued interest of 321,468.

Net cash used in investing activities was $-0- for the nine months ended September 30, 2022. The cash used in investing activities of $2,323,642 for the nine months ended September 30, 2021 was for the acquisition of Nova Ortho and Spine.

Net cash provided by financing activities was $407,480 and $3,766,960 for the nine months ended September 30, 2022 and 2021, respectively. The positive cash flows for the nine months ended September 30, 2022 were primarily due to proceeds from convertible notes of $729,083, offset by the payment of dividends of $310,522. The positive cash flows for the Nine months ended September 30, 2021 were primarily due to proceeds from the issuance of preferred stock of $3,000,000 for the purchase of Nova Ortho and proceeds from SBA / PPP loans of $347,050.

	March 31, 2023						March 31, 2022
	Amount			% of Revenue			Amount			% of Revenue
Revenue
Financial services	$	154,399			5.40%		$	464,843			16.04%
Healthcare		2,706,399			94.60%			2,432,307			83.96%
Total revenue		2,860,798			100.00%			2,897,150			100.00%
Cost of sales
Financial services		26,829			0.94%			212,446			7.33%
Healthcare		956,295			33.43%			903,782			31.20%
Total cost of sales		983,124			34.37%			1,116,228			38.53%
Gross profit		1,877,674			65.63%			1,780,922			61.47%
Operating expenses
Depreciation expense		4,635			0.16%			5,783			0.20%
Selling, general and administrative		1,159,478			40.53%			1,053,656			36.37%
Total operating expenses		1,164,113			40.69%			1,059,439			36.57%
Income from operations		713,561			24.94%			721,483			24.90%
Other income (expense)
Other income		205			0.01%			–			–
Gain on forgiveness of debt		390			0.01			–			–
Penalties and fees		(15,000	)		(0.52	)%		–			–
Interest expense and finance charge		(695,164	)		(24.30	)%		(2,220,176	)		(76.63	)%
Conversion cost penalty and reimbursement		(2,000	)		(0.07	)%		–			–
Amortization of debt discounts		(17,983	)		(0.63	)%		(44,546	)		(1.54	)%
Total other income (expense)		(729,552	)		(25.50	)%		(2,264,722	)		(78.17	)%
Net loss before discontinued operations		(15,991	)		(0.56	)%		(1,543,239	)		(53.27	)%
Loss from discontinued operations		–			–			(19,215	)		(0.66	)%
Net loss	$	(15,991	)		(0.56	)%	$	(1,562,454	)		(53.93	)%
Deemed dividends on preferred stock		(336,811	)		(11.77	)%		–			–
Net loss attributable to common shareholders	$	(352,802	)		(12.33	)%		–			–

Revenue. Our total revenue decreased by $36,352, or 1.25%, to $2,860,798 for the three months ended March 31, 2023 from $2,897,150 for the three months ended March 31, 2022. Such decrease was primarily due to decreases in revenue from the financial services, offset by an increase in revenue from the healthcare segment.

The financial services segment generates revenue through the provision of tax resolution services to individuals and business owners. Revenue from the financial services segment decreased by $310,444, or 66.78%, to $154,399 for the three months ended March 31, 2023 from $464,843 for the three months ended March 31, 2022. Such decrease was primarily due to the loss of leads from the discontinued service with Optima Tax Relief, which affected the significant revenue reduction in the tax resolution business.

The healthcare segment generates revenue through a full range of diagnostic and surgical services. Revenue from the healthcare services segment increased by $274,092, or 11.27%, to $2,706,399 for the three months ended March 31, 2023 from $2,432,307 for the three months ended March 31, 2022. Such increase was primarily due to increased Personal Injury Protection (PIP) services.

Cost of sales. Our total cost of sales decreased by $133,104, or 11.92%, to $983,124 for the three months ended March 31, 2023 from $1,116,228 for the three months ended March 31, 2022. Such decrease was primarily due a decrease from the financial service segment, offset by an increase from the healthcare segment. As a percentage of revenue, our total cost of sales was 34.37% and 38.53% for the three months ended March 31, 2023 and 2022, respectively.

Cost of sales for the financial services segment consists of advertising, contract labor and merchant fees. Cost of sales for the financial services segment decreased by $185,617, or 87.37%, to $26,829 for the three months ended March 31, 2023 from $212,446 for the three months ended March 31, 2022. As a percentage of financial services revenue, cost of sales was 17.38% and 45.70% for the three months ended March 31, 2023 and 2022, respectively. Such decrease was generally in line with the decrease in revenue from this segment.

Cost of sales for the healthcare segment consists of surgical center fees, physician and professional fees, salaries and wages and medical supplies. Cost of sales from the healthcare services segment increased by $52,513, or 5.81%, to $956,295 for the three months ended March 31, 2023 from $903,782 for the three months ended March 31, 2022. As a percentage of healthcare revenue, cost of sales was 35.33% and 37.16% for the three months ended March 31, 2023 and 2022, respectively. This slight increase was primarily due to increased labor costs.

Gross profit. As a result of the foregoing, our total gross profit increased by $96,752, or 5.43%, to $1,877,674 for the three months ended March 31, 2023 from $1,780,922 for three months ended March 31, 2022. Our total gross margin (percent of revenue) was 65.63% and 61.47% for three months ended March 31, 2023 and 2022, respectively.

Gross profit for the financial services segment decreased by $124,827, or 49.46%, to $127,570 for the three months ended March 31, 2023 from $252,397 for the three months ended March 31, 2022. Gross margin (percent of revenue) for the financial services segment was 82.62% and 54.30% for the three months ended March 31, 2023 and 2022, respectively.

Gross profit for the healthcare services segment increased by $221,579, or 14.5%, to $1,750,104 for the three months ended March 31, 2023 from $1,528,525 for the three months ended March 31, 2022. Gross margin (percent of revenue) for the healthcare segment was 64.67% and 62.84% for the for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense. Our depreciation expense was $4,635, or 0.16% of revenue, for the three months ended March 31, 2023, as compared to $5,783, or 0.20% of revenue, for the three months ended March 31, 2022.

Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries and bonuses plus related payroll taxes, advertising expenses, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses increased by $105,822, or 10.04%, to $1,159,478 for the three months ended March 31, 2023 from $1,053,656 for the three months ended March 31, 2022. As a percentage of revenue, our selling, general and administrative expenses were 40.69% and 36.37% for the three months ended March 31, 2023 and 2022, respectively. Such increase was primarily due to the bad debt expense for allowances for doubtful accounts relating to our healthcare services business.

Total other income (expense). We had $729,552 in total other expense, net, for the three months ended March 31, 2023, as compared to other expense, net, of $2,264,722 for the three months ended March 31, 2022. Other expense, net, for the three months ended March 31, 2023 consisted of interest expense and finance charges of $695,164, amortization of debt discounts of $17,983, financing penalties and fees of $15,000 and conversion cost penalty and reimbursement related to convertible note of $2,000, offset by other income of $595. Other expense, net, for the three months ended March 31, 2022 consisted of interest expense and finance charges of $2,220,176 and amortization of debt discounts of $44,546.

Discontinued operations. For the three months ended March 31, 2023 and 2022, we recorded a loss from discontinued operations of $0 and $19,215, respectively.

Net loss. As a result of the cumulative effect of the factors described above, our net loss was $15,991 for the three months ended March 31, 2023, as compared to net loss of $1,562,454 for the three months ended March 31, 2022, an increase of $1,546,463, or 98.98%.

Liquidity and Capital Resources

As of March 31, 2023, we had $350,329 in cash. To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders and third-party and related party debt.

We believe, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year from the financial statement issuance date. However, additional funds from new financing and/or future equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses. The funds required to sustain operations ranges between $600,000 to $1 million and additional funds execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. Given these factors, we believe that the amount of outside additional capital necessary to execute our business plan on the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or our equity or equity in one of our subsidiaries) ranges between $5 million to $7 million. If, and to the extent, that sellers are unwilling to accept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan could be as much as $10 million.

We intend to raise capital for additional acquisitions primarily through equity and debt financings. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. There ~~can be~~is no ~~assurance~~guarantee that we will be able to ~~obtain sufficient~~acquire additional businesses under the terms outlined above.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023			2022
Net cash used in operating activities from continuing operations	$	(189,507	)	$	(376,453	)
Net cash from discontinued operations		–			19,215
Net cash provided by financing activities		313,034			300,307
Net change in cash		123,527			(56,931	)
Cash and cash equivalents at beginning of period		226,802			595,987
Cash and cash equivalents at end of period	$	350,329		$	539,056

Our net cash used in operating activities from continuing operations was $189,507 for the three months ended March 31, 2023, as compared to $376,453 for the three months ended March 31, 2022. For the three months ended March 31, 2023, our net loss of $15,991, an increase in bad debt expense of $270,000, fair value settled upon conversion of $123,566, accounts payable and accrued expenses of $241,945, an increase in accrued officer’s compensation of $154,000 and an increase in accrued interest of $123,074, offset by an in accounts receivable of $1,111,636, were the primary drivers for the cash used in operations. For the three months ended March 31, 2022, our net loss of $1,562,454 and a increase in accounts receivable of $343,840, offset by increased accounts payable and accrued expense of $569,508 and an increase in accrued officers’ compensation of $120,000, were the primary drivers for the cash used in operations.

We had no investing activities for the three months ended March 31, 2023 and 2022.

Our net cash provided by financing activities was $313,034 for the three months ended March 31, 2023, as compared to $300,307 for the three months ended March 31, 2023. Net cash provided by operating activities for the three months ended March 31, 2023 consisted of proceeds from convertible notes payable of $240,000, proceeds from related party notes payable of $54,000 and proceeds from line of credit of $37,000, offset by repayments of line of credit of $16,381, payment of related party notes payable of $835 and payment of the SBA loan described below of $750. Net cash provided by financing activities for the three months ended March 31, 2022 consisted of proceeds from convertible notes payable of $405,730 and proceeds from related party notes payable of $4,803, offset by preferred stock dividends of $102,746, repayment of convertible notes payable of $5,908, payment of related party notes payable of $816 and payment of the SBA loan described below of $756.

Convertible Notes

As of March 31, 2023, we had convertible debt outstanding net of amortized debt discount of $3,717,936. During the three months ended March 31, 2023, we received net proceeds of $240,000 from convertible notes and converted $58,800 of convertible debt, $5,873 in accrued interest and $1,390 in penalties and fees into 118,682,378 shares of common stock. The Company recognized $123,566 of interest expense and additional paid-in capital ~~from~~to adjust fair value for the debt ~~or equity transactions or from operations~~settlement during the three months ended March 31, 2023. For the three months ended March 31, 2023 and 2022, we recorded amortization of debt discounts of $17,983 and $44,546, respectively.

The following is a schedule of convertible notes payable outstanding as of March 31, 2023:

Note #	Issuance Date	Maturity Date	Principal Balance		Accrued Interest		Unamortized Debt Discount
9	09/12/2016	09/12/2017		50,080		16,627		–
10	01/24/2017	1/24/2018		55,000		72,588		–
10-1	02/10/2023	02/10/2024		50,000		1,007		–
10-2	03/30/2023	03/30/2024		25,000		10
29-2	11/08/2019	11/08/2020		36,604		22,326		–
31	08/28/2019	08/28/2020		–		8,385		–
37-1	09/03/2020	06/30/2021		113,666		38,801		–
37-2	11/02/2020	08/31/2021		113,167		37,533		–
37-3	12/29/2020	09/30/2021		113,167		36,497		–
38	02/09/2021	02/09/2022		47,200		31,260		–
39	04/26/2021	04/26/2022		168,866		48,844		–
40-1	09/22/2022	09/22/2023		2,600,000		131,342		–
40-2	11/04/2022	11/04/2023		68,666		2,765		10,253
40-3	11/28/2022	11/28/2023		68,667		2,313		11,382
40-4	12/21/2022	12/21/2023		68,667		1,880		12,464
40-5	01/24/2023	01/24/2024		90,166		1,630		19,387
40-6	03/21/2023	03/21/2024		138,167		379		35,661
			$	3,807,083	$	454,578	$	89,147

Note 9. On September 12, 2016, we issued a convertible promissory note in the ~~necessary time frame or~~principal amount of $80,000 for services rendered, which matured on ~~terms acceptable to us. Should~~September 12, 2017. Note 9 is currently in default and accrues interest at a default interest rate of 20% per annum.

Notes 10, 10-1 and 10-2. On January 24, 2017, 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 services provided. In addition, increases in expenses may adversely impact our cash position and may require cost reductions. No assurance can be given that we will be able to operate profitably onissued a ~~consistent basis, or at all,~~convertible promissory note in the ~~future.~~principal amount of $80,000 for services rendered, which matured on January 24, 2018. Note 10 is currently in default and accrues interest at a default interest rate of 20% per annum. On February 10, 2023, we executed a second tranche under this note in the principal amount of $50,000 (Note 10-1). On March 30, 2023, we executed a third tranche under this note in the principal amount of $25,000 (Note 10-2). Notes 10-1 and 10-2 accrue interest at a rate of 15% per annum.

Note 29-2. On May 10, 2019, we issued a convertible promissory note in the principal amount of $150,000. On November 8, 2019, this note (Note 29) was purchased by and assigned to an unrelated party. The amount assigned was the existing principal amount of $150,000 and accrued interest of $5,917.81, which was issued as Note 29-1, plus a new convertible promissory note in the principal amount of $62,367.12, which was issued as Note 29-2. Note 29-2 is currently in default and accrues interest at a default interest rate of 24% per annum.

Note 31. On August 28, 2019, we issued a convertible promissory note in the principal amount of $120,000, which matured on August 28, 2020. Note 31 is currently in default and accrues interest at a default interest rate of 24% per annum.

Notes 37-1, 37-2 and 37-3. On September 3, 2020, we issued a convertible promissory note in the principal amount of $200,000, with an original issue discount of $50,000, which could be drawn in several tranches. On September 3, 2020, we executed the first tranche in the principal amount of $67,000, less an original issue discount of $17,000, which matured on June 30, 2021 (Note 37-1). On November 2, 2020, we executed the second tranche in the principal amount of $66,500, less an original issue discount of $16,500, which matured on August 31, 2021 (Note 37-2). On December 29, 2020, we executed the third tranche in the principal amount of $66,500, less an original issue discount of $16,500, which matured on September 30, 2021 (Note 37-3). Notes 37-1, 37-2 and 27-3 are currently in default and accrue interest at a default interest rate of 18% per annum.

Note 38. On February 9, 2021, we issued a convertible promissory note in the principal amount $103,500, which matured on February 9, 2022. Note 38 is currently in default and accrues interest at a default interest rate of 22% per annum.

Note 39. On April 26, 2021, we issued a convertible promissory note in the principal amount $153,500, which matured on May 10, 2022. Note 39 is currently in default and accrues interest at a default interest rate of 22% per annum.

Notes 40-1, 40-2, 40-3, 40-4, 40-5 and 40-6. On September 22, 2022, we issued a convertible promissory note in the principal amount of $2,600,000 in exchange for total of $4,791,099 of defaulted promissory notes balances (Note 40-1). On November 4, 2022, we executed a second tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-2). On November 28, 2022, we executed the third tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-3). On November 28, 2022, we executed a fourth tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-4). On January 24, 2023, we executed a fifth tranche under this note in the principal amount of $88,667, less an original issue discount and fee of $25,166 (Note 40-5). On March 21, 2023, we executed a sixth tranche under this note in the principal amount of $136,666, less an original issue discount and fee of $39,166 (Note 40-6). All of the Note 40 tranches mature in one year from the note issuance date and accrue interest at a rate of 10% per annum.

Line of Credit

In ~~order~~February 2018, we entered into a revolving line of credit with a financial institution for $92,500 which was personally guaranteed by the manager of Platinum Tax. The loan accrues interest at 11.20% as of March 31, 2023. As of March 31, 2023, the outstanding balance was $20,619.

Small Business Administration Loan

On June 2, 2020, we obtained a loan from the U.S. Small Business Administration, or SBA, in the principal amount of $150,000 with an interest rate of 3.75% and a maturity date of June 2, 2050. We reclassified $5,723 of accrued interest to ~~continue our operations~~the principal amount for the three months ended March 31, 2023. The principal balance and ~~implementation~~accrued interest at March 31, 2023 was $149,633 and $0, respectively.

Debenture

On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bears interest at 12% per annum and matured on September 12, 2009. The balance of the debenture was $10,989 at March 31, 2023 and the accrued interest was $6,554. We assigned all of our ~~business plan,~~receivables from consumer activations of our rewards program as collateral on this debenture.

Related Party Loans

From time to time, the previous owner and current manager of Platinum Tax loaned funds to Platinum Tax to cover short term operating needs. The amount owed as of March 31, 2023 was $90,189.

In connection with the acquisition of Edge View on July 16, 2014, we ~~need additional financing.~~ assumed amounts due to previous owners who are current managers of Edge View. These amounts are due on demand and do not bear interest. The balance of these amounts are $4,979 as of March 31, 2023.

We have obtained short-term advances from the Chairman of the Board that are ~~currently attempting~~non-interest bearing and due on demand. As of March 31, 2023, we owed the Chairman $123,192.

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements requires our management to ~~obtain additional working capital~~make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in ~~an equity transaction.~~management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission, or the SEC, on June 6, 2023.

Off Balance Sheet Arrangements

As of ~~September 30, 2022,~~March 31, 2023, we had no off-balance sheet arrangements.

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not ~~applicable~~applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

~~Item 4. Controls and Procedures~~

Evaluation of Disclosure Controls and Procedures

~~(a)~~

~~Evaluation of Disclosure Controls and Procedures~~

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in ~~our~~the reports ~~filed~~we file or submit under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the Exchange Act),~~ is recorded, processed, summarized and reported within the ~~required~~ time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our ~~Chairman, Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer,~~chief financial officer, as appropriate, to allow ~~for~~ timely decisions regarding required disclosure. ~~Under~~

As required by Rule 13a-15(e) of the ~~supervision and~~Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our ~~management, including~~chief executive officer and chief financial officer, of the ~~Chief Executive Officer~~effectiveness of the design and ~~Chief Financial Officer, we have evaluated the effectiveness~~operation of our disclosure controls and procedures, as ~~required by Exchange Act Rule 13a-15(b)~~of March 31, 2023. Based upon, and as of the ~~end~~date of this evaluation, our chief executive officer and chief financial officer determined that, because of the ~~period covered by this report. Based~~material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on ~~that evaluation,~~Form 10-K for the ~~Chief Executive Officer has concluded that these disclosure controls and procedures~~fiscal year ended December 31, 2022, which we are ~~ineffective. There have been no changes to~~still in the process of remediating as of March 31, 2023, our disclosure controls and procedures ~~during~~were not effective. Specifically, we did not design and maintain effective controls related to separation of duties as it relates to the ~~Nine months~~preparation and review of financial statements and monitoring, documenting over internal control procedures and environment. Investors are directed to Item 9A of our Annual Report on Form 10-K for the fiscal year ended ~~September 30, 2022.~~December 31, 2022 for the description of these weaknesses.

~~There has been no change~~Remediation of Material Weaknesses in Internal Control Over Financial Reporting

We have evaluated the material weakness described above and our management and board of directors are committed to the design and successful implementation of internal control over financial reporting as promptly as possible. We currently plan to evaluate our updated internal controls design and determine whether the controls have operated effectively during the year ended of 2023 in order to fully remediate the aforementioned material weakness in our internal control over financial reporting.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, our management has identified the steps necessary to address the material weaknesses, and in the first quarter of 2023, we continued to implement the following remedial procedures:

	·	We plan to make necessary changes by providing training to our financial team and our other relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements.

	·	We plan to implement proper documentation procedures for key functional areas, control objectives and our workflows.

	·	We plan to reinforce effective compensating controls can improve the design of the current process with limited human resources.

	·	We plan to develop a more comprehensive review process over our accounting policies and procedures to ensure that all required disclosures are included in our consolidated financial statements.

	·	We plan to perform a review of key business process controls related to high-risk financial statement accounts, such as revenue, accounts receivables, convertible notes, and significant transactions, which resulted in addition of newly developed documented control activities, in order to mitigate material weakness and strengthen the overall control environments.

We intend to complete the remediation of the material weaknesses discussed above as soon as practicable, but we can give no assurance that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.

Changes in Internal Control Over Financial Reporting

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over financial reporting during the ~~Nine months ended September 30, 2022~~first quarter of 2023 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. Since the most recent evaluation date, there have been no significant changes in our internal control structure, policies, and procedures or in other areas that could significantly affect our internal control over financial reporting.

~~(b)~~

~~Changes in Internal Controls~~

There were no significant changes in the Company's internal controls over financial reporting or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

3642

PART II –

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

~~Item 1. Legal Proceedings~~

~~There have been no events under any bankruptcy act, any criminal~~From time to time, we may become involved in various lawsuits and legal proceedings, ~~nor any judgments~~which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or ~~injunctions material~~other matters, may arise from time to ~~the evaluation of the ability and integrity~~time that may harm our business. We are currently not aware of any ~~director~~such legal proceedings or ~~executive officer during the last five years.~~

~~Cardiff and its subsidiaries are parties in a few legal actions~~claims that ~~routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through tax resolution contracts or rental property defaults. We do not~~we believe ~~that such normal and routine litigation~~ will have a material adverse effect on our business, financial condition or results of operations. Cardiff parent is also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.operating results.

ITEM 1A.

RISK FACTORS.

~~Item 1A. Risk Factors~~Not applicable.

~~There have been no material changes in our risk factors from those disclosed in the Form 10-K.~~

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~We have not sold any equity securities during the three months ended March 31, 2023 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.

~~None.~~We did not repurchase any of our common shares during the three months ended March 31, 2023.

~~Item 3. Defaults upon Senior Securities~~

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

~~Item 4. Mine Safety Disclosures~~Not applicable.

~~None.~~

~~Item 5. Other Information~~

ITEM 5.

OTHER INFORMATION.

None.

~~Item 6. Exhibits~~

ITEM 6.

EXHIBITS.

~~31.1~~Exhibit No.		Description of Exhibit
3.1		~~Certification~~Articles of Incorporation Cardiff Lexington Corporation, as amended (incorporated by reference to Exhibit 3.1 to the ~~Chief~~Annual Report on Form 10-K filed on June 6, 2023)
3.2		Certificate of Designation of Series N Senior Convertible Preferred Stock (incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K filed on June 6, 2023)
3.3		Amended and Restated Bylaws of Cardiff Lexington Corporation (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed on June 6, 2023)
4.1		Common Stock Purchase Warrant issued by Cardiff Lexington Corporation to SILAC Insurance Company on May 21, 2021 (incorporated by reference to Exhibit 4.2 to the Annual Report on Form 10-K filed on June 6, 2023)
31.1*		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
~~31.2~~31.2*		~~Certification by the Chief~~Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
~~32.1~~32.1**		~~Certification by the Chief~~Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
~~32.2~~32.2**		~~Certification by the Chief~~Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
101.INS*
101.INS*	Inline XBRL Instance Document ~~(the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)~~
~~101.SCH~~101.SCH		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~104~~104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in ~~IXBRL, and included in exhibit~~Exhibit 101).

______________

~~____________~~*Filed herewith

*~~to be filed by amendment~~* Furnished herewith

3743

SIGNATURES

~~In accordance with~~Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Company~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Dated: January 6,~~Date: June 29, 2023	CARDIFF LEXINGTON CORPORATION

	~~By:~~	/s/ Alex Cunningham
		Name: Alex Cunningham ~~Chief Executive Officer~~
	Title: Chief Executive Officer
	(Principal Executive Officer)

		/s/ Zia Choe
	~~By:~~Name: Zia Choe
	~~/s/ Daniel Thompson~~Title: Interim Chief Financial Officer
	(Principal Financial and Accounting Officer)
		~~Daniel Thompson~~
		~~Chairman~~

3844

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2022			2021			2022			2021

REVENUE
Rental income	$	37,462		$	30,944		$	120,818		$	97,767
Financial Services		219,872			1,034,422			1,156,729			3,432,819
Healthcare		3,103,409			2,092,427			8,154,934			2,742,001
Other		–			152,000			–			152,000
Total revenue		3,360,743			3,309,793			9,432,481			6,424,587

COST OF SALES
Rental business		20,523			22,281			58,611			68,269
Financial Services		39,963			454,118			365,185			1,328,508
Healthcare		1,094,794			526,839			2,982,418			726,289
Other		–			79,481			–			79,481
Total cost of sales		1,155,280			1,082,719			3,406,214			2,202,547

GROSS MARGIN		2,205,463			2,227,074			6,026,267			4,222,040

OPERATING EXPENSES
Depreciation expense		5,783			6,175			17,349			8,103
Transaction costs		–			–			–			2,777,778
Selling, general and administrative		700,410			1,154,249			2,683,601			3,101,989
Total operating expenses		706,193			1,160,424			2,700,950			5,887,870

PROFIT (LOSS) FROM OPERATIONS		1,499,270			1,066,650			3,325,317			(1,665,830	)

OTHER INCOME (EXPENSE)
Other income		(2	)		53,703			6			82,385
Change in value of derivative liability		–			(172,982	)		–			(1,305,596	)
Gain on forgiveness of debt		1,397,271			67,568			1,397,271			507,863
Gain on change of estimate		–			66,216			–			184,243
Loss on disposal		–			–			(4,474	)		–
Interest expense & finance charge		(1,506,869	)		(936,287	)		(3,686,856	)		(1,409,481	)
Financing penalties & fees		(1,923,916	)		(3,000	)		(1,923,916	)		(13,000	)
Amortization of debt discounts		(92,868	)		(18,750	)		(249,120	)		(1,050,014	)
Total other income (expenses)		(2,126,384	)		(943,532	)		(4,467,089	)		(3,003,600	)

NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS		(627,114	)		123,118			(1,141,772	)		(4,669,430	)

LOSS FROM DISCONTINUED OPERATIONS		328,718			1,912,852			328,718			1,858,500
GAIN FROM DISPOSAL OF SUBSIDIARY		33,622			–			–			–
		362,340			1,912,852			328,718			1,858,500

NET INCOME (LOSS) FOR THE PERIOD	$	(264,774	)	$	2,035,970		$	(813,054	)	$	(2,810,930	)

BASIC AND DILUTED INCOME (LOSS) PER SHARE
Continuing operations	$	0.00		$	0.01		$	(0.00	)	$	(0.02	)
Discontinued operations	$	(0.00	)	$	0.01		$	(0.00	)	$	0.002

WEIGHTED AVERAGE NUMBER OF COMMON SHARES – CONTINUED AND DISCONTINUED OPERATIONS		208,829,344			150,277,623			189,084,892			115,230,605

	Treasury Stock						Common Stock				Additional Paid-in			Accumulated
	Shares			Amount			Shares		Amount		Capital			Deficit			Total

Balance December 31, 2020 (Restated)		(294,101	)	$	(2,365,864	)		5,268,797	$	5,267	$	(732,473,423	)	$	(65,583,255	)	$	(8,872,334	)
Conversion of convertible notes payable		–			–			109,234,241		109,234		804,991			–			914,225
Reclassify Derivative liabilities to Additional Paid in Capital		–			–			–		–		1,396,610			–			1,396,610
Issuance of Common Stock for preferred I shares		–			–			50,000,000		50,000		450,000			–			–
Reclassify warrant liabilities to additional paid in capital		–			–			–		–		260,443			–			260,443
Issuance of preferred stock series J		–			–			–		–		–			–			3,579,336
Issuance of preferred stock series N		–			–			–		–		(347,222	)		–			3,125,002
Issuance of preferred stock series B		–			–			–		–		–			–			807,196
Issuance of common stock for services								1,275,427		1,275		14,412			–			15,687
Distribution of dividend		–			–			–		–		–			(99,999	)		(99,999	)
Issuance of warrant		–			–			–		–		2,777,778			–			2,777,778
Net loss		–			–			–		–		–			(2,810,930	)		(2,810,930	)
Balance September 30, 2021 (unaudited)		(294,101	)	$	(2,365,864	)		165,778,465	$	165,776	$	(727,116,411	)	$	(68,494,184	)	$	(1,093,014	)

	NINE MONTHS ENDED SEPTEMBER 30,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss for the period	$	(813,054	)	$	(2,810,930	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		32,442			24,441
Amortization of loan discount		249,120			1,050,014
Other noncash items, net		324,563			586,644
Loss on disposal		4,474			–
Change in value of derivative liability		–			1,305,596
Warrant issued for transaction costs		–			2,777,778
Loss on finance penalties and fees		1,923,916			–
Gain on refinance of debt		(1,397,271	)		–
Reduction from forgiveness of PPP Loans		–			(507,863	)
(Increase) decrease in:
Accounts receivable		(1,858,494	)		(114,399	)
Assets held for sale		–			(187,671	)
Right of use – assets		(23,434	)		(278,994	)
Prepaid expenses and other current assets		8,000			(7,392	)
Intangible assets		–			3,550
Other assets		–			321,975
Land		–			63,000
Increase (decrease) in:
Accounts payable & accrued expense		315,123			(594,276	)
Accrued officer’s compensation		500,000			244,835
Due (to) from related parties		(5,016	)		(149,579	)
Accrued interest		(219,082	)		(321,468	)
Right of use – liabilities		(871	)		297,418
Capital stock to be issued		545,333			–
Deferred revenue		–			(353,830	)

Net cash used in operating activities		(414,252	)		1,348,849

Net cash used in discontinued operations - operating activities		(328,718	)		(1,858,500	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture & equipment		–			(3,407	)
Acquisition of Nova Ortho and Spine PLLC, net of cash acquired		–			(2,320,235	)
Net cash used in investing activities		–			(2,323,642	)

CASH FLOWS FROM FINANCING ACTIVITIES
Due to director		(2,883	)		–
Proceeds from convertible notes payable		729,083			400,000
Repayment of convertible notes payable		(5,908	)		–
Proceeds from PPP loans		–			547,050
Payment of PPP loan		(2,290	)		–
Dividend on preferred stock		(310,522	)		(99,999	)
Repayment of credit line		–			(51,927	)
Issuance of preferred stock series N		–			3,000,000
Payment of notes payable		–			(28,164	)
Payment of notes payable related party		(5,065	)		–
Proceeds of notes payable related party		5,065			–
Net cash provided by financing activities		407,480			3,766,960

NET INCREASE(DECREASE) IN CASH		(335,489	)		933,667

CASH, BEGINNING OF PERIOD		595,987			279,311

CASH, END OF PERIOD	$	260,498		$	1,212,978

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	73,476		$	70,674
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payment of notes payable	$	–		$	(28,164	)
Preferred stock issued for business acquisition	$	3,275,000		$	3,579,336
Preferred stock issued upon conversion of notes payable and accrued interest	$	–		$	563,196
Derivative liability settled upon conversion	$	–		$	1,396,610
Preferred stock issued for debt refinance	$	1,500,000		$	–

	Nova Ortho and Spine, PLLC
Cash	$	177,977
Accounts receivable		4,052,213
Property and equipment		92,064
Other assets		342,493
Goodwill		5,666,608
Liabilities		(977,021	)
Total	$	9,354,334

	September 30, 2022			December 31, 2021
Residential housing	$	312,330		$	319,856
Medical equipment		35,974			96,532
Computer Equipment		9,189			9,189
Furniture, fixture and equipment		96,532			35,974
Leasehold Improvement		15,950			15,950

Total		469,975			477,501
Less: accumulated depreciation		(247,861	)		(218,471	)
Property and equipment, net	$	222,114		$	259,030

Year	Minimum Annual Nova EBITDA	Cash Annual Bonus	Series J Preferred Stock
2021	$2.0M	$120,000	120,000 Shares
2022	$2.4M	$150,000	135,000 Shares
2023	$3.7M	$210,000	150,000 Shares
2024	$5.5M	$300,000	180,000 Shares
2025	$8.0M	$420,000	210,000 Shares

Note #	Issuance	Maturity	Principal Balance 12/31/21		New Loan		Debt Consolidation			Cash Paydown			Principal Balance 9/30/22		Accrued Interest on Convertible Debt at 12/31/21		Interest Expense On Convertible Debt For the Period Ended 9/30/22		Accrued Interest on Convertible Debt at 9/30/22		Unamortized Debt Discount At 9/30/22
7-1	10/28/2016	10/28/2017		10,000	$	–	$	–		$	–		$	10,000	$	10,899	$	1,495	$	12,394	$	–
9	9/12/2016	9/12/2017		50,080		–		–			–			50,080		4,141		7,491		11,632		–
10	1/24/2017	1/24/2018		12,646		–		–			–			12,646		14,831		1,892		16,723		–
11-2	3/16/2017	3/16/2018		17,345		–		–			–			17,345		9,843		2,595		12,438		–
13-2	7/24/2018	1/24/2019		43,961		–		(43,961	)		–			–		34,113		8,075		–		–
22	7/10/2018	1/10/2021		772,118		–		(766,210	)		(5,908	)		–		–		53,908		–		–
22-1	2/20/2019	1/10/2021		61,704		–		(61,704	)		–			–		28,523		11,076		–		–
22-3	4/10/2019	1/10/2021		56,095		–		(56,095	)		–			–		25,303		10,069		–		–
26	8/10/2017	1/27/2018		20,000		–		–			–			20,000		10,525		2,244		12,769		–
29-1	11/8/2019	11/8/2021		–		–		–			–			–		2,283		–		2,283		–
29-2	11/8/2019	11/8/2021		36,604		–		–			–			36,604		11,374		6,571		17,945		–
31	8/28/2019	8/28/2021		–		–		–			–			–		8,385		–		8,385		–
32	5/22/2019	5/22/2021		25,000		–		–			–			25,000		12,277		3,740		16,017		–
34	5/18/2021	5/18/2021		–		–		–			–			–		219		–		219		–
35	8/24/2021	8/24/2021		–		–		–			–			–		74		–		74		–
36-1	9/3/2021	1/3/2021		122,400		–		(122,400	)		–			–		25,906		16,479		–		–
36-2	11/3/2021	3/3/2021		122,400		–		(122,400	)		–			–		23,906		16,479		–		–
36-3	12/29/2021	4/29/2021		122,400		–		(122,400	)		–			–		22,070		16,479		–		–
36-4	5/5/2021	9/5/2021		187,500		–		(187,500	)		–			–		22,131		25,243		–		–
36-5	1/11/2022	5/11/2022		–		202,300		(202,300	)		–			–		–		26,138		–		–
36-6	3/9/2022	7/9/2022		–		146,667		(146,667	)		–			–		–		14,827		–		–
36-7	3/22/2022	7/22/2022		–		202,000		(202,000	)		–			–		–		19,126		–		–
36-8	4/25/2022	8/25/2022		–		201,293		(201,293	)		–			–		–		15,684		–		–
36-9	7/25/2022	11/25/2022		–		68,692		(68,692	)		–			–		–		2,270		–		–
36-10	8/4/2022	12/4/2022		–		74,120		(74,120	)		–			–		–		2,083		–		–
36-11	9/12/2022	1/12/2023		–		95,000		(95,000	)		–			–		–		843		–		–
37-1	9/3/2021	6/30/2021		67,000		–		–			–			67,000		8,878		5,011		13,889		–
37-2	11/2/2021	8/31/2021		66,500		–		–			–			66,500		7,722		4,974		12,696		–
37-3	12/29/2021	9/30/2021		66,500		–		–			–			66,500		6,686		4,974		11,660		–
38	2/9/2021	2/9/2022		64,000		–		–			–			64,000		4,614		2,872		7,486		–
39	5/10/2021	5/10/2022		153,500		–		–			–			153,500		5,915		6,889		12,803		–
40	9/22/2022	9/22/23		–		2,600,000		–			–			2,600,000		–		40,603		40,603		–

			$	2,077,753	$	3,590,072	$	(2,472,742	)	$	(5,908	)	$	3,189,175	$	300,618	$	330,130	$	210,016	$	–

	Number of Warrants			Weighted Average Exercise Price
Stock Warrants
Balance at December 31, 2021		244,420,943		$	0.020
Granted		–			–
Exercised		–			–
Expired		(8,939,477	)		(0.146	)
Balance at September 30, 2022		235,481,466			0.015
Warrants Exercisable at September 30, 2022		235,481,466		$	0.015

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Loss from discontinued operations
Interest expense	$	5,478		$	17,000		$	39,100		$	51,378
Gain from reversal of Red Rock liabilities		–			(1,872,086	)		–			(1,872,086	)
Gain on settlement of debt		(510,418	)		–			(510,418	)		–
Change in derivative liability		–			(57,766	)		–			(37,792	)
Loss from discontinued operations	$	(504,940	)	$	(1,912,852	)	$	(471,318	)	$	(1,858,500	)

Schedule of warrant activity
	Number of Warrants		Weighted Average Exercise Price
Balance at January 1, 2023		235,557,856	$	0.015
Granted		–		–
Exercised		–		–
Expired		–		–
Balance at March 31, 2023		235,557,856		0.015
Warrants Exercisable at March 31, 2023		235,557,856	$	0.015

Schedule of discontinued operations
	Three Months Ended March 31,
	2023		2022

Gain (Loss) from discontinued operations
Revenue	$	–	$	43,844
Cost of sales		–		(19,474	)
Selling, general and administrative expenses		–		(1,881	)
Interest expense of Red Rock Investor Note		–		(16,622	)
Loss on divestiture of AHI subsidiary		–		(2,593	)
Gain no change in estimate		–		(4,474	)
Loss from discontinued operations	$	–	$	(19,215	)

	Affordable Housing Rentals		Financial Services		Healthcare		Total

Gross carrying value at December 31, 2021	$	–	$	2,092,048	$	2,391,608	$	4,483,656
Accumulated impairment		–		–		–		–
Carrying value at December 31, 2021		–		2,092,048		2,391,608		4,483,656
Milestone reached		–		–		3,275,000		3,275,000
Accumulated impairment		–		–		–		–
Carrying value at September 30, 2022	$	–	$	2,092,048	$	5,666,608	$	7,758,656

Schedule of goodwill balances
	Healthcare		Total
Carrying value at December 31, 2022	$	5,666,608	$	5,666,608
Accumulated impairment		–		–
Carrying value at March 31, 2023	$	5,666,608	$	5,666,608

	·
	·	lease classification for expired or existing leases; and

	·
	·	whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

	Amount
2022	$	175,183
2023		109,345
2024		22,215
2025		5,554
Total	$	312,297

Schedule of property leases
March 31,	Amount
2024	$	140,777
2025		55,408
Total	$	196,185

Schedule of annual objectives of financial performance
Year	Minimum Annual Nova EBITDA	Cash Annual Bonus	Series J Preferred Stock
2022	$2.0M	$120,000	120,000 Shares
2022	$2.4M	$150,000	135,000 Shares
2023	$3.7M	$210,000	150,000 Shares
2024	$5.5M	$300,000	180,000 Shares
2025	$8.0M	$420,000	210,000 Shares

	(1)	~~Affordable Housing (We Three)~~Tax Resolution Services (Platinum Tax)
	~~(2)~~	~~Financial Resolutions Services (Platinum Tax Defenders)~~
	~~(3)~~(2)	~~Healthcare (Nova Ortho and Spine)~~Real Estate (Edge View)
	~~(4)~~	~~Real Estate (Edge View Properties Inc)~~
	(3)	Healthcare (Nova)

Schedule of segment reporting
	As of September 30, 2022		As of December 31, 2021		March 31, 2023		December 31, 2022
Assets:
Affordable Housing Rentals	$	213,511	$	213,876
Financial Services		2,115,474		2,212,379	$	8,673	$	8,577
Healthcare		12,971,911		8,092,820		13,595,507		12,692,531
Real Estate		594,150		611,900		592,461		592,557
Other		63,299		28,940
Others						87,944		59,692
Consolidated assets	$	15,958,345	$	11,159,915	$	14,284,585	$	13,353,357

	For the Three Months Ended September 30, 2022			For the Three Months Ended September 30, 2021
Revenues:
Affordable Housing Rentals	$	37,462		$	30,944
Financial Services		219,872			1,034,422
Healthcare		3,103,409			2,092,427
Real Estate		–			152,000
Total revenues	$	3,360,743		$	3,309,793

Cost of Sales:
Affordable Housing Rentals	$	20,523		$	22,281
Financial Services		39,963			454,118
Healthcare		1,094,794			526,839
Real Estate		–			79,481
Total cost of sales	$	1,155,280		$	1,082,719

Income (Loss) from Operations From Subsidiaries:
Affordable Housing Rentals	$	1,556		$	(2,276	)
Financial Services		3,839			(63,715	)
Healthcare		1,825,593			1,382,155
Real Estate		(11,906	)		68,934
Total income from operations from subsidiaries	$	1,819,082		$	1,385,098

Loss From Operations from Cardiff Lexington	$	(319,812	)	$	(318,448	)
Total income from operations	$	1,499,270		$	1,066,650