What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-10-25 compared with 2023-06-29 · 439 added, 301 removed, 903 unchanged (45% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 (Unaudited)

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)

Condensed Consolidated Statements of Stockholders’ Equity (Deficiency) for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 (Unaudited) and 2022 (Unaudited and restated)

Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022 (Audited)

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 (Unaudited) and 2022 (Unaudited and restated)

Condensed Consolidated Statements of Stockholders’ Equity (Deficiency) for the Six Months Ended June 30, 2023 (Unaudited) and 2022 (Unaudited and restated)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 (Unaudited) and 2022 (Unaudited and restated)

Notes to Condensed Consolidated Financial Statements (Unaudited)

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

LEXINGTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2023 AND DECEMBER 31, 2022

Current assets

21 unchanged sentences

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

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

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 June 30, 2023 and December 31, 2022

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 June 30, 2023 and December 31, 2022

Total Mezzanine Equity

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

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

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

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

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

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

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

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

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

Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 2,134,478 and 2,131,328 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value $ 4.00 , 122 shares issued and outstanding at June 30, 2023 and December 31, 2022

Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 150,750 shares issued and outstanding at June 30, 2023 and December 31, 2022

Series F-1 Preferred Stock - 800,000 shares authorized, $0.001 par value, stated value $ 4.00 , 35,752 shares issued and outstanding at June 30, 2023 and December 31, 2022

Series I Preferred Stock - 500,000,000 shares authorized, $ 0.001 par value, 14,885,000 shares issued and outstanding at June 30, 2023 and December 31, 2022

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 June 30, 2023 and December 31, 2022

Series L Preferred Stock - 100,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at June 30, 2023 and December 31, 2022

Series R Preferred Stock - 5,000 shares authorized, $0.001 par value, stated value of $ 1,200 , 165 shares issued and outstanding at June 30, 2023 and December 31, 2022

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

943,475,613 and 789,796,735 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

( 8,497,309 )

( 8,581,265 )

Accumulated deficit

( 70,517,920 )

( 70,855,453 )

Total stockholders' equity (deficit)

( 1,469,808 )

Total liabilities, mezzanine equity and stockholders' equity

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND

Three Months Ended March 31,

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2023 AND 2022

ENDED JUNE 30,

Financial Services

10 unchanged sentences

Gain on forgiveness of debt

Penalties and fees

Interest expense and finance charge

( 1,035,811 )

( 1,539,623 )

( 3,255,987 )

Conversion cost penalty and reimbursement

Penalties and fees

Amortization of debt discounts

Total other income (expense)

Total other income (expenses)

( 1,147,509 )

NET LOSS BEFORE DISCONTINUED OPERATIONS

( 1,619,644 )

( 3,412,231 )

NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS

( 1,588,738 )

LOSS FROM DISCONTINUED OPERATIONS

NET LOSS FOR THE PERIOD

NET INCOME (LOSS) FOR THE PERIOD

$ ( 1,624,280 )

DEEMED DIVIDENDS ON PREFERRED STOCK

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ ( 352,802 )

NET INCOME (LOSS)

ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ ( 1,624,280 )

BASIC LOSS PER SHARE

BASIC INCOME (LOSS) PER SHARE

Continuing operations

Discontinued operations

WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC AND DILUTED

DILUTED INCOME (LOSS) PER SHARE

Continuing operations

Discontinued operations

BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES – CONTINUED AND DISCONTINUED OPERATIONS

DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES – CONTINUED AND DISCONTINUED OPERATIONS

14,435,802,103

17,836,079,282

The accompanying notes are an integral part of

3 unchanged sentences

EQUITY (DEFICIENCY)

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

( UNAUDITED )

D, E, F, F-1, G, H, L

Balance December 31,

2021 (Restated)

Treasury Stock

Balance December 31, 2021 (Restated)

$ ( 4,967,686 )

Dividend to preferred stock

Balance, March 31, 2022 (Restated)

Distribution of dividend

Balance, June 30, 2022 (Restated)

$ ( 4,967,686 )

1 unchanged sentence

Conversion of convertible notes payable

Dividend to preferred stock

Balance, March 31, 2023

Stockholders’

Distribution of dividend

Issuance of preferred stock series B

Balance, June 30, 2023

Additional Paid-in

Total Stockholders’

Balance December 31, 2021 (Restated)

1 unchanged sentence

$ ( 65,118,744 )

Dividend to preferred stock

Distribution of dividend

( 1,624,280 )

Balance, March 31, 2022 (Restated)

Balance, June 30, 2022 (Restated)

$ ( 3,479,126 )

6 unchanged sentences

Conversion of convertible notes payable

Dividend to preferred stock

Balance, March 31, 2023

Accrued dividend

Issuance of preferred stock series B

Balance, June 30, 2023

$ ( 8,497,308 )

4 unchanged sentences

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Three Months Ended March 31

CONDENSED CONSOLIDATED STATEMENT OF

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss for the period

Net income (loss) for the period

$ ( 1,624,280 )

5 unchanged sentences

Conversion and note issuance cost

Share issuance for service rendered

Increase (decrease) in:

9 unchanged sentences

Right of use – liabilities

Net cash used in operating activities

Net cash provided by discontinued operations - operating activities

Net cash used in operating activities - continuing operations

Net cash provided by operating activities - discontinued operations

CASH FLOWS FROM FINANCING ACTIVITIES

3 unchanged sentences

Dividend on preferred stock

Proceeds from credit line

Repayment of credit line

Proceeds from line of credit

Repayment of line of credit

Payment of notes payable related party

1 unchanged sentence

Net cash provided by financing activities

NET (DECREASE) INCREASE IN CASH

NET INCREASE IN CASH

CASH, BEGINNING OF PERIOD

4 unchanged sentences

Common stock issued upon conversion of notes payable and accrued interest

Debt discount from derivative liabilities

Proceeds from related party

The accompanying notes are an integral part of

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

11 unchanged sentences

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”), which was acquired on May 15, 2014 and sold on October 31, 2022;

· Edge View Properties,

(“Edge View”), which was acquired on July 16, 2014;

· Platinum Tax Defenders

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

· Nova Ortho and Spine, PLLC (“Nova”), which was acquired

on May 31, 2021.

Principles of Consolidation

· 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;

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

Princsiples of Consolidation

The condensed consolidated financial statements

12 unchanged sentences

Accordingly, actual results could differ from those estimates.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

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 $ 270,000 and $ 0 as of March 31, 2023 and December 31, 2022,

respectively.

As of March 31, 2023 and December 31, 2022, the Company had net accounts receivable of $ 7,446,416 and $ 6,604,780 , respectively.

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 $ 270,000

as of June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023 and December 31, 2022, the Company had net accounts

receivable of $ 9,193,529

and $ 6,604,780 , respectively.

Accounts receivables are primarily generated from subsidiaries in their normal course of business.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Property and Equipment

20 unchanged sentences

marketplace participants.

During the three months ended March 31, 2023 and 2022, the Company did no t 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.

During the six months ended June 30, 2023 and 2022, the Company did no t recognize any goodwill impairment.

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

8 unchanged sentences

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

Revenue Recognition

On January 1, 2018, the 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

17 unchanged sentences

contract liabilities or deferred revenue as there are no amounts prepaid for services.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Healthcare Income

Established billing rates are not the same

as actual amounts recovered for the Company’s healthcare subsidiary.

They generally do not reflect what the Company is

ultimately paid and therefore are not reported in the condensed 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.

Established billing rates are not the same as

actual amounts recovered for the Company’s healthcare subsidiary.

They generally do not reflect what the Company is ultimately

paid and therefore are not reported in the condensed 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

8 unchanged sentences

additional funds collected by the Company are remitted to the factor.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Service Fees – Net (PIP)

45 unchanged sentences

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.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

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.

Advertising Costs

1 unchanged sentence

costs are included as a component of cost of sales in the condensed consolidated statements of operations and changes in stockholders’

The Company recognized advertising and marketing expense of $ 38,353 and $ 127,785 for the three months ended March 31, 2023 and

The Company recognized advertising and marketing expense of $ 133,326 and $ 82,269 for the three months ended June 30, 2023 and

2022, respectively.

The Company recognized advertising and marketing expense of $ 171,679 and $ 210,054 for the six months ended June 30,

2023 and 2022, respectively.

Fair Value Measurements

10 unchanged sentences

hierarchy are described below:

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

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.

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

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

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Generally, all forms of share-based payments,

24 unchanged sentences

tax authority assuming full knowledge of the position and relevant facts.

As of March 31, 2023 and December 31, 2022, the

As of June 30, 2023 and December 31, 2022, the

Company did not have any interest and penalties associated with tax positions and did no t have any significant unrecognized uncertain

tax positions.

Loss per Share

Income (Loss) per Share

FASB ASC Subtopic 260, Earnings Per Share ,

7 unchanged sentences

warrants, and debts convertible into common stock.

The dilutive effect of potentially dilutive securities is reflected in diluted earnings

The dilutive effect of stock options and warrants are reflected in diluted earnings

per common share by application of the treasury stock method.

1 unchanged sentence

the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

The diluted effect of debt

convertibles is reflected utilizing the if converted method.

Going Concern

2 unchanged sentences

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 March 31, 2023, the Company has an accumulated working capital deficit of approximately $ 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 Company 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 June 30, 2023, the Company

has an accumulated working capital deficit of approximately $ 1.9 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.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

The ability of the Company to continue as a going

25 unchanged sentences

which extends the effective date of Topic 326 for certain companies until fiscal years beginning after December 15, 2022.

has adopted this standard effective January 1, 2023, 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.

has adopted this standard effective January 1, 2023, and it resulted in the Company recognizing an allowance for doubtful accounts of

$ 270,000 during the six months ended June 30, 2023.

Management does not believe that any other recently

1 unchanged sentence

As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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

2021 financial statements on June 30, 2022, management reconsidered the methodology previously applied in its valuation of goodwill and

redeemable preferred stocks.

16 unchanged sentences

The Company presented in prior periods operating loss as loss

from discontinued operations in the amount of $2,593 on the consolidated statement of operations for the three months ended March 31,

from discontinued operations in the amount of $1,920 on the consolidated statement of operations for the six months ended June 30, 2022.

The Company identified that NOVA’s accounts

2 unchanged sentences

The impact of this correction on the accounting estimates is reflected in $1,076,000 decrease to accounts

receivable as of March 31, 2022 and $1,076,000 increase in finance charges for the three months ended March 31, 2022.

receivable as of June 30, 2022 and $1,076,000 increase in finance charges for the six months ended June 30, 2022.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

The following table summarizes the impacts of

3 unchanged sentences

Impact of correction of error

March 31, 2022 (Unaudited)

As previously

June 30, 2022 (Unaudited)

As previously reported

Total liabilities

3 unchanged sentences

$ ( 992,395 )

Statement of operations

Impact of correction of error

Three months ended June 30, 2022 (Unaudited)

As previously reported

Cost of sales

Operating expense

Income from operations

Other income (expense), net

( 1,147,509 )

Net loss before discontinued operations

Loss from discontinued operations

Basic Loss per Share

Continued Operations

Discontinued Operations

Weighted Average Shares Outstanding - Basic Earnings Loss per Share

Continued Operations

Discontinued Operations

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Statement of operations

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Impact of correction of error

Three months ended March 31, 2022 (Unaudited)

As previously

Six months ended June 30, 2022 (Unaudited)

As previously reported

Cost of sales

18 unchanged sentences

Discontinued Operations

REVISION OF FINANCIAL STATEMENTS

During the preparation of the financial statements

for the six months ended June 30, 2023, the Company found that the results of the settlement agreement with Red Rock Travel Group (“Red

Rock”) were incorrectly reflected on the consolidated statement of stockholders’ equity(deficiency) as of December 31, 2022.

The Company determined that these errors were immaterial to the previously issued consolidated financial statements, and as such no restatement

was necessary.

The revisions discussed below were made to the December 31, 2022 balance sheet and statement of stockholders’ equity

(deficiency).

As a result of the settlement agreement with Red

Rock on July 29, 2022, the Company reduced 35,000,000 shares of common shares on the consolidated financial statements as of December

The certificate of the common stock for 35,000,000 shares which were originally issued on February 24, 2020 was returned as

part of the 2022 agreement with Red Rock and 3,500 common shares were cancelled which were equivalent to 35,000,000 shares before the

10,000:1 reverse split on May 12, 2020.

Consequently, the December 31, 2022 financial statements as originally reported were understated

by 34,996,500 common shares.

The impact of the correction is reflected in the $35,097 increase to common stock and decrease the same amount

to additional paid-in-capital on the consolidated statement of shareholders’ equity.

The adjustment had no impact on earnings per

share for any 2022 period.

On July 31, 2018, the Company issued 8,200,562

shares of series K preferred stock to the prior owners of Red Rock for the consideration of the acquisition of Red Rock.

The acquisition

was not completed, and Red Rock returned the 8,200,562 shares of series K preferred shares during the year ended December 31, 2018.

total of 8,200,562 shares of series K Preferred Share were cancelled The impact of the correction is reflected in the $8,201 decrease

to series K Preferred Stock and increase the same amount to additional paid-in-capital on the consolidated statement of shareholders’

equity (deficiency).

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

11 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, the balance for these taxes, penalties and interest is $ 5,346 and $ 6,732 ,

respectively.

PLANT AND EQUIPMENT, NET

Property and equipment as of March 31, 2023 and

Property and equipment as of June 30, 2023 and

December 31, 2022 is as follows:

Schedule of property and equipment

June 30, 2023

December 31, 2022

Medical equipment

4 unchanged sentences

Property and equipment, net

For the three months ended March 31, 2023 and

2022, depreciation expense was $ 4,635 and $ 10,814 , respectively.

As of March 31, 2023 and December 31, 2022, the

For the three and six months ended June 30,

2023, total depreciation expense was $ 3,365

and $ 8,000 ,

respectively.

For the three and six months ended June 30, 2022, total depreciation expense was $ 10,814

and $ 21,628 ,

respectively.

Depreciation expense recorded as cost of sales for the three and six months ended June 30, 2022 was $ 5,031

and $ 10,062 ,

respectively.

As of June 30, 2023 and December 31, 2022, the

Company had 27 acres of land valued at approximately $ 540,000 .

1 unchanged sentence

LINE OF CREDIT

At March 31, 2023 and December 31, 2022, the Company

At June 30, 2023 and December 31, 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 against the line of credit.

The loan accrues interest at 11.70 % at June 30, 2023 and 10.95 % at December 31, 2022.

As of June 30, 2023 and December 31, 2022, the Company

had $ 8,749 and $ 0 , respectively, of outstanding balance against the line of credit.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

RELATED PARTY TRANSACTIONS

1 unchanged sentence

the manager of Platinum Tax loaned funds to Platinum Tax to cover short term operating needs.

Amounts owed as of March 31, 2023 and December

Amounts owed as of June 30, 2023 and December

31, 2022 were $ 156,384 and $ 37,024 , respectively.

3 unchanged sentences

and do not bear interest.

The balance of these amounts are $ 4,979 as of March 31, 2023 and December 31, 2022.

The balance of these amounts are $ 4,979 as of June 30, 2023 and December 31, 2022.

The Company obtained short-term advances from

the Chairman of the Board that are non-interest bearing and due on demand.

As of March 31, 2023 and December 31, 2022, the Company owed

the Chairman $ 123,192 .

As of June 30, 2023 and December 31, 2022, the Company owed

the Chairman $ 123,192 and $ 123,192 , respectively.

See also Note 14 for compensation paid to employees

of the Company.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

NOTES AND LOANS PAYABLE

Notes payable at March 31, 2023 and December

Notes payable at June 30, 2023 and December 31,

2022, respectively, are summarized as follows:

Schedule of notes payable

June 30, 2023

December 31, 2022

Notes and loans payable

8 unchanged sentences

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

debenture was $ 10,989 at June 30, 2023 and December 31, 2022 and the accrued interest was $ 6,882 and $ 6,229 at June 30, 2023 and December

31, 2022, respectively.

5 unchanged sentences

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

March 31, 2023 was $ 149,633 and $ 0 , respectively, and principal and accrued interest at December 31, 2022 was $ 144,609 and $ 5,723 , respectively.

of accrued interest to the principal amounts for the six months ended June 30, 2023.

The principal balance and accrued interest at June

30, 2023 was $ 149,580 and $ 0 , respectively, and principal and accrued interest at December 31, 2022 was $ 144,609 and $ 5,723 , respectively.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

CONVERTIBLE NOTES PAYABLE

As of March 31, 2023 and December 31, 2022, the

As of June 30, 2023 and December 31, 2022, the

Company had convertible debt outstanding net of amortized debt discount of $ 3,868,068 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,

During the six months

ended June 30, 2023, the Company received net proceeds of $ 355,500 from convertible notes.

During the six months ended June 30, 2022,

the Company had proceeds of $ 752,260 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.

associated with the convertible debt of $ 100,347 and $ 46,798 at June 30, 2023 and December 31, 2022, respectively.

For the six months

ending June 30, 2023 and 2022, the Company recorded amortization of debt discounts of $ 48,616 and $ 156,252 , respectively.

For the three

months ending June 30, 2023 and 2022, the Company recorded amortization of debt discounts of $ 30,633 and $ 111,706 , respectively.

the six months ended June 30, 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 six months ended June 30, 2023.

The Company had no convertible

debt conversions during the six months ended June 30, 2022.

On September 22, 2022, the Company entered into

6 unchanged sentences

of $ 1,397,271 .

Convertible notes as of March 31, 2023 and December

Convertible notes as of June 30, 2023 and December

31, 2022 are summarized as follows:

Schedule of convertible notes summary

June 30, 2023

December 31, 2022

Convertible notes payable

3 unchanged sentences

Long-term portion

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

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

payable as of and for the six months ended June 30, 2023.

Schedule of convertible

notes payable

Principal Balance 12/31/22

3 unchanged sentences

Accrued Interest on Convertible Debt at 12/31/22

Interest Expense On Convertible Debt For the Period Ended 3/31/23

Interest Expense On Convertible Debt For the Period

Ended 6/30/23

Accrued Interest on Convertible Debt at 6/30/23

Unamortized Debt Discount At 6/30/23

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

On October 28, 2016, the Company issued a convertible

2 unchanged sentences

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

On September 12, 2016, the Company issued a convertible

38 unchanged sentences

at a default interest rate of 22% per annum.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

On April 26, 2021, the Company issued a convertible

2 unchanged sentences

at a default interest rate of 22% per annum.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Notes 40-1, 40-2, 40-3, 40-4, 40-5, 40-6, 40-7 and 40-8

On September 22, 2022, the Company 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

On November 4, 2022, the Company 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, the Company 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, 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).

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,

On September 22, 2022, the Company 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, the Company 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).

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.

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 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 $90,166,

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).

On June 5, 2023, the

Company executed a seventh tranche under this note in the principal amount of $ 136,667 ,

less original issue discount and fee of $ 39,167

On June 13, 2023, the Company executed a eighth tranche under this note in the principal amount of

less original issue discount and fee of $ 5,167

All of the Note 40 tranches mature in one year from the note issuance date and accrue interest at a rate of 10 %

CAPITAL STOCK

1 unchanged sentence

The Company 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 preferred stock, 5,000 shares of series R preferred stock and 5,000,000 shares of series X senior convertible

preferred stock.

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 preferred stock, 5,000 shares of series R preferred stock and 5,000,000 shares of series

X senior convertible preferred stock.

The following is a description of the rights and

4 unchanged sentences

at the option of the holder, but is not mandatorily redeemable.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Series N Senior Convertible Preferred Stock

18 unchanged sentences

applicable dividend payment date.

At March 31, 2023, cumulative dividends on Series N Preferred Stock were $ 453,654 .

At June 30, 2023, cumulative dividends on Series N Preferred Stock were $ 557,535 .

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Liquidation Rights.

33 unchanged sentences

(61) days’ prior notice to the Company.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Redemption Rights .

2 unchanged sentences

per share, plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the certificate of designation.

In addition, a ny holder may require the Company to redeem some or all of its shares of series

N senior convertible preferred stock on 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.

In addition, any holder may require the Company to redeem some or all of its shares of series N senior convertible preferred stock on

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

Series X Senior Convertible Preferred Stock

6 unchanged sentences

preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Dividend Rights.

7 unchanged sentences

be payable quarterly in arrears on each dividend payment date.

At March 31, 2023, cumulative dividends on Series X Preferred Stock were

At June 30, 2023, cumulative dividends on Series X Preferred Stock were

Liquidation Rights.

20 unchanged sentences

senior securities.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Conversion Rights .

19 unchanged sentences

Commencing on September

22, 2023, a ny 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 accrued and unpaid dividends and any other

amounts due pursuant to the terms of the certificate of designation;

provided however, that in 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

preferred stock by paying such redemption price in twelve (12) equal monthly installments with the first such payment due on the date

that is six (6) months following the date that the Company completes such public offering.

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 accrued and unpaid dividends and any other amounts due pursuant to the terms of the certificate

of designation;

provided however, that in 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 preferred stock by paying such redemption price

in twelve (12) equal monthly installments with the first such payment due on the date that is six (6) months following the date that the

Company completes such public offering.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Non-redeemable Preferred Stock

21 unchanged sentences

any dividend, liquidation or redemption rights.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Series D Preferred Stock

26 unchanged sentences

Holders of series I preferred stock do not have any dividend, liquidation or redemption rights.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Series J Preferred Stock

4 unchanged sentences

Holders of series J preferred stock do not have any dividend, liquidation or redemption rights.

Series K Preferred Stock

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 K preferred stock is convertible into 1.25 shares

of common stock.

Holders of series K preferred stock do not have any dividend, liquidation or redemption rights.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Series L Preferred Stock

12 unchanged sentences

Preferred Stock Transactions

The Company had no preferred stock transactions

during the three months ended March 31, 2023 and 2022.

During the three months ended March 31, 2023,

the Company issued 118,682,378 shares of common stock upon conversion of certain convertible notes.

The Company did not issue any shares of common

stock during the three months ended March 31, 2022.

During the six months ended June 30, 2023, the

Company executed the following transactions:

· On May 25, 2023, the Company issued 3,150

shares of series B preferred stock to Zia Choe, Interim Chief Financial Officer for $ 25,000 .

During the six months ended June 30, 2022, the

Company executed the following transactions:

· In the second quarter of 2022, 37,500 shares

of series D preferred stock were cancelled and exchanged for 37,500 shares

of series B preferred stock and 37,500

shares of series H preferred stock were cancelled and exchanged for 37,500 shares

of series B preferred stock.

During the six months ended June 30, 2023, the

Company executed the following transactions:

· The Company issued 118,682,378 shares of common

stock upon conversion of certain convertible notes.

The table below sets forth warrant activity for

the three months ended March 31, 2023 and 2022:

the six months ended June 30, 2023 and 2022:

Schedule of warrant activity

Balance at January 1, 2023

Balance at March 31, 2023

Warrants Exercisable at March 31, 2023

Balance at June 30, 2023

Warrants Exercisable at June 30, 2023

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

As a result of the settlement agreement with Red

Rock on July 29, 2022, the Company required the previous owners to relinquish warrants for 25,000 shares of common stock.

The certificate

of the 25,000 warrants were returned and cancelled during the second quarter of 2023.

There was no impact on the consolidated financial

statements as of December 31, 2022.

DISCONTINUED OPERATIONS

4 unchanged sentences

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.

The Company had no net liabilities of discontinued operations at June 30, 2023 and December 31, 2022.

The Company had $ 0

of loss from discontinued operations for the three months ended June 30, 2023 and 2022, respectively.

The Company had $ 0

of loss from discontinued operations for the six months ended June 30, 2023 and 2022, respectively.

Schedule of discontinued operations

Three Months Ended March 31,

Three Months Ended June 30,

Gain (Loss) from discontinued operations

Cost of sales

Selling, general and administrative expenses

Revenue of AHI subsidiary

Cost of sales of AHI subsidiary

Selling, general and administrative expenses of AHI subsidiary

Interest expense of Red Rock Investor Note

Loss on divestiture of AHI subsidiary

Gain no change in estimate

Loss from discontinued operations

Six Months Ended June 30,

Gain (Loss) from discontinued operations

Revenue AHI subsidiary

Cost of sales AHI subsidiary

Selling, general and administrative expenses AHI subsidiary

Interest expense of Red Rock Investor Note

Gain no change in estimate of AHI subsidiary

Loss from discontinued operations

GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS, NET

3 unchanged sentences

or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

During the three months ended March 31, 2023

During the six months ended June 30, 2023

and 2022, the Company had no goodwill impairment.

4 unchanged sentences

Accumulated impairment

Carrying value at March 31, 2023

Carrying value at June 30, 2023

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

COMMITMENTS AND CONTINGENCIES

22 unchanged sentences

not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company recorded operating lease expense of

$ 77,852 and $ 134,000 for the three months ended March 31, 2023 and 2022, respectively.

The Company recorded operating lease expense

of $ 56,378 and

for the three months ended June 30, 2023 and 2022, respectively and the Company recorded operating lease expense of $ 134,230

and $ 170,150 for

the six months ended June 30, 2023 and 2022, respectively.

The Company has operating leases with future

1 unchanged sentence

Schedule of property leases

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

The Company agreed to pay $360,000 per year and

1 unchanged sentence

50% is paid in cash and 50% is accrued.

The total outstanding accrued compensation as of 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 were

The total outstanding accrued compensation as of June 30, 2023 and December 31, 2022 were $ 2,025,500

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 June 30, 2023 and December

31, 2022 were $ 2,042,000

and $ 1,863,000 ,

respectively.

The Company agreed to pay $ 156,000 per year to

1 unchanged sentence

The total outstanding accrued

compensation as of March 31, 2023 and December 31, 2022 was $ 17,057 .

The Company entered

into a Management Agreement effective May 31, 2021 for compensation to the principals of Nova in the form of an annual base salaries

compensation as of June 30, 2023 and December 31, 2022 was $ 17,057 .

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

The Company entered into a Management Agreement

effective May 31, 2021 for compensation to the principals of Nova in the form of an annual base salaries of $ 372,000

to one of the three doctors, $ 450,000

20 unchanged sentences

business, financial condition, or operating results.

Due to operating losses, there is no provision

for current federal or state income taxes for the three months ended March 31, 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.

At March 31, 2023 and December 31, 2022, the Company

had federal and state net operating loss carry forwards of approximately $ 22,429,214 that expire in various years through the year 2039.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

SEGMENT REPORTING

The Company has four reportable operating segments

The Company has three reportable operating segments

as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures

24 unchanged sentences

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.

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,

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Schedule of segment reporting

June 30, 2023

December 31, 2022

Financial Services

Consolidated assets

Three Months Ended June 30,

Financial Services

Consolidated revenues

Cost of Sales:

Financial Services

Consolidated cost of sales

Income (Loss) from operations from subsidiaries

Financial Services

Income from operations from subsidiaries

Loss from operations from Cardiff Lexington

$ ( 355,369 )

$ ( 388,717 )

Total income from operations

Income (Loss) before taxes

Financial Services

Corporate, administration and other non-operating expenses

Consolidated income (loss) before taxes

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023 AND 2022

Three Months Ended March 31,

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended June 30,

Financial Services

3 unchanged sentences

Consolidated cost of sales

Loss from operations from subsidiaries

Income (Loss) from operations from subsidiaries

Financial Services

$ ( 101,481 )

Income from operations from subsidiaries

3 unchanged sentences

Total income from operations

Loss before taxes

Income (Loss) before taxes

Financial Services

$ ( 101,773 )

Corporate, administration and other non-operating expenses

Consolidated loss before taxes

( 1,304,315 )

( 2,398,971 )

Consolidated income (loss) before taxes

$ ( 1,624,280 )

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

to June 30, 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.

On July 19, 2023, the Company executed a ninth

tranche under Note 40 in the principal amount of $35,500, less an original issue discount and fee of $8,875 (See Note 10).

On July 24, 2023, the Company issued 5,000 shares of series E preferred

stock as compensation for the property manager of Edge View in exchange for the bonus of $5,000.

On July 24, 2023, the Company executed a tenth

tranche under Note 40 in the principal amount of $14,000, less an original issue discount and fee of $3,500 (See Note 10).

In July, the Company issued 156,000,000 shares of common stock upon

conversion of certain convertible notes’ principal and accrued interests in the amount of $30,637 and $6,200, respectively.

On August 11, 2023, the Company executed a third tranche under Note

10 in the principal amount of $25,000 (See Note 10).

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

On August 25, 2023, the Company issued a twelve-month convertible promissory

note in the principal amount of $5,000 to the Company’s CEO for the Company’s operation expenses.

The rate of interest is

10% per annum.

On September 29, 2023, the Company and its healthcare subsidiary entered

into a two-year revolving purchase and security agreement with DML HC Series, LLC to sell the healthcare subsidiary’s accounts receivables

for a revolving financing up to a maximum advance amount of $4.5 million.

The Company received the first net cash advance in the amount

of $861,071 on October 9, 2023 for the sale of accounts receivable and future claims in the amount of $1,428,571.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements