What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-10-25 · 794 added, 440 removed, 902 unchanged (58% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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)

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

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

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

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

LEXINGTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2023 AND DECEMBER 31, 2022

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

September 30,

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 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

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 September 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 September 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 , 2,134,478 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

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 September 30, 2023 and December 31, 2022, respectively

Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value $ 4.00 , 123 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 155,750 and 150,750 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $ 4.00 , 35,752 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series I Preferred Stock - 15,000,000 shares authorized, $ 0.001 par value, 14,885,000 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series J Preferred Stock - 2,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 1,713,584 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at September 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 September 30, 2023 and December 31, 2022

Common Stock - 7,500,000,000 shares authorized, $ 0.001 par value;

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

1,099,475,613 and 824,793,235 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2023 AND 2022

ENDED JUNE 30,

ENDED SEPTEMBER 30,

Financial Services

14 unchanged sentences

( 6,686,772 )

Conversion cost penalty and reimbursement

Conversion cost

Penalties and fees

Amortization of debt discounts

Total other income (expenses)

Total other expenses, net

( 2,126,384 )

3 unchanged sentences

( 2,217,407 )

LOSS FROM DISCONTINUED OPERATIONS

GAIN FROM DISCONTINUED OPERATIONS

NET INCOME (LOSS) FOR THE PERIOD

$ ( 264,774 )

$ ( 1,889,054 )

DEEMED DIVIDENDS ON PREFERRED STOCK

NET INCOME (LOSS)

ATTRIBUTABLE TO COMMON SHAREHOLDERS

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ ( 264,774 )

$ ( 1,889,054 )

BASIC INCOME (LOSS) PER SHARE

5 unchanged sentences

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

1,008,580,008

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

6 unchanged sentences

EQUITY (DEFICIENCY)

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

( UNAUDITED )

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

Preferred Stock Series

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

Preferred Stock

Series C and R

Treasury Stock

1 unchanged sentence

$ ( 4,967,686 )

Issuance of series B preferred stock in exchange of series D preferred stock and series H preferred stock

Cancellation of common stock

Cancellation of series D preferred stock

Cancellation of series H preferred stock

Issuance of series J preferred stock

Issuance of common stock for settlement of Red Rock Travel

Distribution of dividend

Balance, June 30, 2022 (Restated)

Balance, September 30, 2022 (Restated)

$ ( 4,967,686 )

2 unchanged sentences

Distribution of dividend

Issuance of preferred stock series B

Balance, June 30, 2023

Issuance of series B preferred stock

Issuance of series E preferred stock

Balance, September 30, 2023

Additional Paid-in

3 unchanged sentences

$ ( 65,118,744 )

Distribution of dividend

Issuance of series B preferred stock in exchange of series D preferred stock and series H preferred stock

Cancellation of common stock

( 35,000,000 )

Cancellation of series D preferred stock

Cancellation of series H preferred stock

Issuance of series J preferred stock

Issuance of common stock for settlement of Red Rock Travel

Distribution of dividend

( 1,889,054 )

Balance, June 30, 2022 (Restated)

( 1,889,054 )

Balance, September 30, 2022 (Restated)

$ ( 3,525,793 )

6 unchanged sentences

Accrued dividend

Issuance of preferred stock series B

Balance, June 30, 2023

Issuance of series B preferred stock

Issuance of series E preferred stock

Balance, September 30, 2023

1,099,475,613

4 unchanged sentences

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Gain on forgiveness of debt

Gain on refinance of debt

( 1,397,271 )

Loss on finance penalties and fees

Other noncash items, net

12 unchanged sentences

Accrued interest

Capital stock to be issued

Right of use – liabilities

Net cash used in operating activities - continuing operations

Net cash provided by operating activities - discontinued operations

Net cash used in operating activities - discontinued operations

CASH FLOWS FROM FINANCING ACTIVITIES

8 unchanged sentences

Net cash provided by financing activities

NET INCREASE IN CASH

NET (DECREASE) IN CASH

CASH, BEGINNING OF PERIOD

4 unchanged sentences

Common stock issued upon conversion of notes payable and accrued interest

Proceeds from related party

Preferred stock issued for business acquisition

Preferred stock issued for debt refinance

The accompanying notes are an integral part of

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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;

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;

(“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

Principles of Consolidation

The condensed consolidated financial statements

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Accordingly, actual results could differ from those estimates.

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

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.

Receivable and Credit Losses

The Company adopted ASU 2016-13, Financial Instruments

– Credit Losses.

In accordance with this standard, the Company recognizes an allowance for credit losses for its trade receivables

to present the net amount expected to be collected as of the balance sheet date.

This allowance is based on the credit losses expected

to arise over the life of the asset and are based on Current Expected Credit Losses (CECL).

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 September 30, 2023 and December 31,

2022, respectively.

As of September 30, 2023 and December 31, 2022, the Company had net accounts receivable of $ 11,844,738 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

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marketplace participants.

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.

During the nine months ended September 30, 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.

Valuation of Long-lived Assets

12 unchanged sentences

Identification of a contract with a customer

· Identification of the performance obligations

in the contact

Identification of the performance obligations in the contact

Determination of the transaction price

· Allocation of the transaction price to the separate

performance allocation

Allocation of the transaction price to the separate performance allocation

Recognition of revenue when performance obligations are satisfied.

9 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

64 unchanged sentences

generally, at the time of patient care.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Financial Services Income

9 unchanged sentences

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 $ 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,

The Company recognized advertising and marketing expenses of $ 71,636 and $ 93,905 for the three months ended September 30, 2023

and 2022, respectively.

The Company recognized advertising and marketing expenses of $ 243,315 and $ 317,899 for the nine months ended September

30, 2023 and 2022, respectively.

Fair Value Measurements

10 unchanged sentences

hierarchy are described below:

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.

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

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.

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

14 unchanged sentences

that performance will occur.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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

As of September 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.

19 unchanged sentences

assets and liabilities and commitments in the normal course of business.

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

1 unchanged sentence

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

16 unchanged sentences

In June 2016, the FASB issued ASU No.

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

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.

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.

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 Company 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 nine months ended September 30, 2023.

Management does not believe that any other recently

3 unchanged sentences

Subsequent to the initial issuance of the Company's

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

redeemable preferred stocks.

balance sheet as of December 31, 2021, management reconsidered the methodology previously applied in its valuation of goodwill and redeemable

preferred stock.

The Company agreed to issue 818,750 additional

4 unchanged sentences

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.

In December 2022, the 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

The impact of the correction is reflected in a $3,275,000

increase to goodwill and contingent consideration liability on the consolidated balance sheet.

In December 2022, the 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 error was immaterial.

The impact of the error correction is reflected in $3,125,002

increase to the mezzanine equity and offsetting decrease to the Series N Preferred Stock in subject to possible redemption mezzanine equity

The 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 $1,920 on the consolidated statement of operations for the six months ended June 30, 2022.

The impact of the error correction is reflected in a $3,125,002

increase to the mezzanine equity and offsetting decrease to the series N senior convertible preferred stock subject to possible redemption

mezzanine equity line item.

The Company and the managers of AHI 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 $365 on the consolidated statement of operations for the nine months ended

September 30, 2022.

The Company identified that Nova’s accounts

1 unchanged sentence

Nova’s accounts receivable.

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

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

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

The following table summarizes the impacts of

3 unchanged sentences

Impact of correction of error

June 30, 2022 (Unaudited)

September 30, 2022 (Unaudited)

As previously reported

1 unchanged sentence

Mezzanine equity

Total shareholders' equity

$ ( 3,125,002 )

Total stockholders' equity

$ ( 3,125,002 )

1 unchanged sentence

Impact of correction of error

Three months ended June 30, 2022 (Unaudited)

Three months ended September 30, 2022 (Unaudited)

As previously reported

7 unchanged sentences

Loss from discontinued operations

$ ( 264,774 )

Basic Loss per Share

4 unchanged sentences

Discontinued Operations

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Impact of correction of error

Six months ended June 30, 2022 (Unaudited)

Nine months ended September 30, 2022 (Unaudited)

As previously reported

$ ( 120,818 )

Cost of sales

8 unchanged sentences

( 1,075,635 )

( 2,217,407 )

Loss from discontinued operations

10 unchanged sentences

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).

for the nine months ended September 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

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

6 unchanged sentences

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.

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

The adjustment had no impact on earnings per

3 unchanged sentences

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

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

of 8,200,562 shares of series K preferred stock 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 stockholders’ equity

(deficiency).

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Schedule of account payable and accrued expenses

Schedule of accounts payable and accrued expenses

September 30,

Accounts payable

9 unchanged sentences

and property taxes.

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

As of September 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 June 30, 2023 and

December 31, 2022 is as follows:

Property and equipment as of September 30, 2023

and December 31, 2022 is as follows:

Schedule of property and equipment

June 30, 2023

December 31, 2022

September 30,

Medical equipment

4 unchanged sentences

Property and equipment, net

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 .

The land is currently vacant and is expected to be developed into a residential

LINE OF CREDIT

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 11.70 % 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

For the three and nine months ended September

30, 2023, total depreciation expense was $ 3,365 and $ 11,365 , respectively.

For the three and nine months ended September 30, 2022, total

depreciation expense was $ 10,814 and $ 32,442 , respectively.

Depreciation expense recorded as cost of sales for the three and nine months

ended September 30, 2022 was $ 5,031 and $ 15,093 , respectively.

As of September 30, 2023 and December 31, 2022,

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

The land is currently vacant and is expected to be developed into a

residential community.

LINES OF CREDIT

At September 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

The loan accrues interest at 11.95 % at September 30, 2023 and 10.95 % at December 31, 2022.

As of September 30, 2023 and December

31, 2022, the Company had $ 8,622 and $ 0 , respectively, of outstanding balance against the line of credit.

On September 29, 2023, the Company and Nova entered

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

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

As of September 30, 2023, the Company had no outstanding balance against the

revolving receivable line of credit.

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 June 30, 2023 and December

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

Amounts owed as of September 30, 2023 and

December 31, 2022 were $ 159,662 and $ 37,024 , respectively.

In connection with the acquisition of Edge View

2 unchanged sentences

and do not bear interest.

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

The balance of these amounts are $ 4,979 as of September 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 June 30, 2023 and December 31, 2022, the Company owed

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

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

owed the Chairman $ 123,442 and $ 123,192 , respectively.

See also Note 15 for compensation paid to employees

1 unchanged sentence

NOTES AND LOANS PAYABLE

Notes payable at June 30, 2023 and December 31,

Notes payable at September 30, 2023 and December

31, 2022, respectively, are summarized as follows:

Schedule of notes payable

June 30, 2023

December 31, 2022

September 30,

Notes and loans payable

8 unchanged sentences

The balance of the

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.

The Company assigned all of its receivables from consumer activations of the rewards program as collateral on

this debenture.

debenture was $ 10,989 at September 30, 2023 and December 31, 2022 and the accrued interest was $ 7,215 and $ 6,229 at September 30, 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.

Small Business Administration (“SBA”)

2 unchanged sentences

The Company reclassified $ 5,723

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

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

of accrued interest to the principal amounts for the nine months ended September 30, 2023.

The principal balance and accrued interest

at September 30, 2023 was $ 149,655 and $ 0 , respectively, and principal and accrued interest at December 31, 2022 was $ 144,609 and $ 5,723 ,

respectively.

CONVERTIBLE NOTES PAYABLE

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 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 $ 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.

As of September 30, 2023 and December 31,

2022, the Company had convertible debt outstanding net of amortized debt discount of $ 3,952,581

and $ 3,515,752 ,

respectively.

During the nine months ended September 30, 2023, the Company received net proceeds of $ 421,375

from convertible notes.

During the nine months ended September 30, 2022, the Company had net proceeds of $ 729,083

from convertible notes and repaid $ 5,908

to convertible noteholders.

There are debt discounts associated with the convertible debt of $ 66,674

at September 30, 2023 and December 31, 2022, respectively.

For the three months ending September 30, 2023 and 2022, the Company

recorded amortization of debt discounts of $ 46,048

and $ 92,868 ,

respectively.

For the nine months ending September 30, 2023 and 2022, the Company recorded amortization of debt discounts of $ 94,664

and $ 249,120 ,

respectively.

During the nine months ended September 30, 2023, the Company converted $ 87,460

of convertible debt, $ 12,073

in accrued interest and $ 3,000

in conversion cost into 274,682,378

shares of the Company’s common stock.

The Company recognized $141,406

of interest expense and additional paid-in capital to adjust fair value for the debt settlement during the nine months ended

September 30, 2023.

The Company had no

convertible debt conversions during the nine months ended September 30, 2022.

On September 22, 2022, the Company entered into

6 unchanged sentences

of $ 1,397,271 .

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 as of September 30, 2023 and

December 31, 2022 are summarized as follows:

Schedule of convertible notes

September 30,

Convertible notes payable

4 unchanged sentences

The following is a schedule of convertible notes

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

Schedule of convertible

notes payable

payable as of and for the nine months ended September 30, 2023.

Schedule of convertible notes

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 6/30/23

Interest Expense On Convertible Debt For the Period Ended 9/30/23

Accrued Interest on Convertible Debt at 9/30/23

Unamortized Debt Discount At 9/30/23

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

7 unchanged sentences

Notes 10, 10-1, 10-2 and 10-3

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).

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).

On August 11, 2023, the Company executed a fourth tranche under this note in the principal amount of $25,000 (Note

Notes 10-1, 10-2 and 10-3 accrue interest at a rate of 15% per annum.

29 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 40-1).

On November 4, 2022, the Company executed a second tranche under this note in the principal amount of $68,667,

40-2, 40-3, 40-4, 40-5, 40-6, 40-7, 40-8, 40-9 and 40-10

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 $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 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,

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 (Note 40-7).

On June 13, 2023, the Company executed

an eighth tranche under this note in the principal amount of $ 21,167 , less original issue discount and fee of $ 5,167 (Note 40-8).

19, 2023, the Company executed a ninth tranche under this note in the principal amount of $ 35,500 , less an original issue discount and

fee of $ 8,875 (Note 40-9).

On July 24, 2023, the Company executed a tenth tranche under this note in the principal amount of $ 14,000 ,

less an original issue discount and fee of $ 3,500 (Note 40-10).

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 %

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 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 operating expenses.

The rate of interest is

10% per annum.

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 2 shares of series A preferred stock, 3,000,000 shares of series B preferred stock, 500 shares of series C

preferred stock, 1,000,000 shares of series E preferred stock, 50,000 shares of series F-1 preferred stock, 15,000,000 shares of series

I preferred stock, 2,000,000 shares of series J preferred stock, 400,000 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

The following is a description of the rights and

24 unchanged sentences

applicable dividend payment date.

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

At September 30, 2023, cumulative dividends on Series N Preferred Stock were $ 662,557 .

Liquidation Rights.

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

At September 30, 2023, cumulative dividends on Series X Preferred Stock

were $ 152,875 .

Liquidation Rights.

48 unchanged sentences

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

Series A Preferred Stock

Each share of series A preferred stock is entitled

to a number of votes and converts to a number of shares equal to the 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.

The series A preferred stock ranks,

with respect to 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 A preferred stock;

(ii) on parity with each class or series that is not expressly

subordinated or made senior to the series A preferred stock;

and (iii) junior to the series B preferred stock, series C preferred stock,

series E preferred stock, series F-1 preferred stock, series I preferred stock, series J preferred stock, series L preferred stock, series

N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and each other series of preferred

stock and each class or series that is expressly made senior to the series A preferred stock, as well as to all indebtedness and other

liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The series A preferred

stock is not entitled to participate in any distributions or payments to the holders of common stock or any other class of stock and shall

have no economic interest in the Company.

Liquidation Rights .

In the event of any

liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, a merger or consolidation of our company wherein

the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company, the holders of each share

of series A preferred stock shall be entitled to receive from any distribution of any of the assets or surplus funds of the Company, before

and in preference of any holder of shares of common stock, an amount equal to the stated value of $250.

Once the holders receive the foregoing

from any such liquidation, dissolution or winding up, the holders shall not participate with the common stock or any other class of stock.

Voting Rights .

Each share of series A preferred

stock shall have a number of votes at any time equal to (i) 25% of the number of votes then held or entitled to be made by all other equity

securities of the Company, including, without limitation, the common stock, plus (ii) one (1).

The series A preferred stock shall vote

on any matter submitted to the holders of the common stock, or any other class of voting securities, for a vote, and shall vote together

with the common stock, or any class of voting securities, as applicable, on such matter for as long as the shares of series A preferred

stock are issued and outstanding.

Notwithstanding the foregoing, the series A preferred stock shall not have the right to vote on any

matter as to which solely another series of preferred stock is entitled to vote pursuant to the Company’s amended and restated articles

of incorporation or a certificate of designation of such other series of preferred stock.

Upon transfer of any share of

series A preferred stock, except for a transfer by the holder to an affiliate, whether such transfer is voluntary or involuntary, such

share of series A preferred stock shall automatically, and without any action being required by the Company or the holder, be converted

into one (1) share of common stock.

Other Rights .

Holders of series A preferred

stock do not have any conversion (except as set forth above) or redemption rights.

Series B Preferred Stock

Each share of series B 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 two (2)

shares of common stock (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.

The series B preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series B preferred stock;

(ii) on parity with the series C

preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series B preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each

other series of preferred stock and each class or series that is expressly made senior to the series B preferred stock, as well as to

all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

B preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series B preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series B preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series B preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

B preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series B preferred stock shall be entitled to cast one (1) vote per

share of series B preferred stock held.

Except as provided by law, the holders of series B preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series B preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series B preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series B preferred stock or alter or amend the certificate of designation for the series

B preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series B preferred stock.

Conversion Rights .

Each share of series

B preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the earlier

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock)

in a public offering pursuant to an effective registration statement or offering statement under the Securities Act resulting in at least

$3,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are listed on a national

stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c)

the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding

shares of series B preferred stock, voting together as a single class, each share of series B preferred stock shall be automatically converted

into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and

similar events.

Redemption Rights .

Holders of series B

preferred stock do not have any redemption rights.

Series C Preferred Stock

Each share of series C preferred stock is entitled

to one (1) vote on all matters submitted to a vote of stockholders.

Each share of series C preferred stock is convertible into 100,000

shares of common 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.

Series D Preferred Stock

Each share of series D preferred stock is entitled

to one (1) vote on all matters submitted to a vote of stockholders.

Each share of series D preferred stock is convertible into two (2)

shares of common stock.

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

The series C preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series C preferred stock;

(ii) on parity with the series B

preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series C preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each

other series of preferred stock and each class or series that is expressly made senior to the series C preferred stock, as well as to

all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

C preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series C preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series C preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series C preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

C preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series C preferred stock shall be entitled to cast one (1) vote per

share of series C preferred stock held.

Except as provided by law, the holders of series C preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series C preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series C preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series C preferred stock or alter or amend the certificate of designation for the series

C preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series C preferred stock.

Conversion Rights .

Each share of series

C preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $0.00004.

In addition, on the date

on which the shares of common stock are listed on a national stock exchange, including without limitation the New York Stock Exchange,

NYSE American or the Nasdaq Stock Market (any tier) (a “Listing Event”), all outstanding shares of series C preferred stock

shall be automatically converted into such number of shares of common stock as is determined by dividing $50,000 by the highest traded

or closing price on such date, which such shares of common stock shall be issued pro rata among the holders of the outstanding series

C preferred stock.

Finally, upon the earlier to occur of:

(a) the closing of the sale of shares of common stock to the public at a price

of at least $3.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar

recapitalization with respect to the common stock) in a public offering pursuant to an effective registration statement or offering statement

under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company or (b) the date and time, or the occurrence

of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series C preferred

stock, voting together as a single class, each share of series C preferred stock shall be automatically converted into such number of

shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $0.00004.

Such conversion

price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and similar events.

Redemption Rights .

If there is a Listing

Event, the Company shall have the right (but not the obligation) to redeem shares of series C preferred stock at a price per share of

Series E Preferred Stock

Each share of series E preferred stock is entitled

to one (1) vote on all matters submitted to a vote of stockholders.

Each share of series E preferred 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 F preferred stock do not have any dividend, liquidation or redemption rights.

The series E preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series E preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series E preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each

other series of preferred stock and each class or series that is expressly made senior to the series E preferred stock, as well as to

all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

E preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series E preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series E preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series E preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

E preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series E preferred stock shall be entitled to cast one (1) vote per

share of series E preferred stock held.

Except as provided by law, the holders of series E preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series E preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series E preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series E preferred stock or alter or amend the certificate of designation for the series

E preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series E preferred stock.

Conversion Rights .

Each share of series

E preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the earlier

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock)

in a public offering pursuant to an effective registration statement or offering statement under the Securities Act resulting in at least

$3,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are listed on a national

stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c)

the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding

shares of series E preferred stock, voting together as a single class, each share of series E preferred stock shall be automatically converted

into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and

similar events.

Redemption Rights .

If the Company’s

common stock is listed on a national stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq

Stock Market (any tier), the Company shall have the right (but not the obligation) to redeem shares of series E preferred stock at a price

per share of $50,000.

Series F-1 Preferred Stock

Each share of series F-1 preferred stock is convertible

into two (2) shares of common stock.

Holders of series F-1 preferred stock do not have any voting, dividend, liquidation or redemption

The series F-1 preferred stock

ranks, with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each

other class or series that is not expressly made senior to or on parity with the series F-1 preferred stock;

(ii) on parity with the series

B preferred stock, series C preferred stock, series E preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series F-1 preferred stock;

and (iii) junior to the series I

preferred stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and

to each other series of preferred stock and each class or series that is expressly made senior to the series F-1 preferred stock, as well

as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

F-1 preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series F-1 preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series F-1 preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series F-1 preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

F-1 preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

Except as provided by law,

the holders of series F-1 preferred stock shall have no voting rights.

However, as long as any shares of series F-1 preferred stock are

outstanding, the Company shall not, without the affirmative vote of the holders of a majority of outstanding series F-1 preferred stock,

(a) alter or change adversely the powers, preferences or rights given to the series F-1 preferred stock or alter or amend the certificate

of designation for the series F-1 preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or

other charter documents in any manner that adversely affects any rights of the holders of series F-1 preferred stock.

Conversion Rights .

Each share of series

F-1 preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares

of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the

earlier to occur of:

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject

to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect

to the common stock) in a public offering pursuant to an effective registration statement or offering statement under the Securities Act

resulting in at least $3,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are

listed on a national stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market

(any tier), or (c) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67%

of the then outstanding shares of series F-1 preferred stock, voting together as a single class, each share of series F-1 preferred stock

shall be automatically converted into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share)

by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits,

stock reclassifications and similar events.

Redemption Rights .

Holders of series F-1

preferred stock do not have any 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.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

The series I preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock, series B preferred

stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock

and to each other class or series that is not expressly made senior to or on parity with the series I preferred stock;

(ii) on parity

with each class or series that is not expressly subordinated or made senior to the series I preferred stock;

and (iii) junior to the series

N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each other series of

preferred stock and each class or series that is expressly made senior to the series I preferred stock, as well as to all indebtedness

and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

I preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series I preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series I preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series I preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

I preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series I preferred stock shall be entitled to cast five (5) votes per

share of series I preferred stock held.

Except as provided by law, the holders of series I preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series I preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series I preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series I preferred stock or alter or amend the certificate of designation for the series

I preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series I preferred stock.

Conversion Rights .

Each share of series

I preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the earlier

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock)

in a public offering pursuant to an effective registration statement or offering statement under the Securities Act resulting in at least

$10,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are listed on a national

stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c)

the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding

shares of series I preferred stock, voting together as a single class, each share of series I preferred stock shall be automatically converted

into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and

similar events.

Redemption Rights .

Holders of series I

preferred stock do not have any 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.

The series J preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series J preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series J preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each

other series of preferred stock and each class or series that is expressly made senior to the series J preferred stock, as well as to

all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

J preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series J preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series J preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series J preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

J preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series J preferred stock shall be entitled to cast one (1) vote per

share of series J preferred stock held.

Except as provided by law, the holders of series J preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series J preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series J preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series J preferred stock or alter or amend the certificate of designation for the series

J preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series J preferred stock.

Conversion Rights .

Each share of series

J preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the earlier

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock)

in a public offering pursuant to an effective registration statement or offering statement under the Securities Act resulting in at least

$3,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are listed on a national

stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c)

the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding

shares of series J preferred stock, voting together as a single class, each share of series J preferred stock shall be automatically converted

into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and

similar events.

Redemption Rights .

Holders of series J

preferred stock do not have any redemption rights.

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.

The series L preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series L preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock and each other

class or series that is not expressly subordinated or made senior to the series L preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R preferred stock, series X senior convertible preferred stock and to each

other series of preferred stock and each class or series that is expressly made senior to the series L preferred stock, as well as to

all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

L preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series L preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series L preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series L preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

L preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series L preferred stock shall be entitled to cast one (1) vote per

share of series L preferred stock held.

Except as provided by law, the holders of series L preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series L preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series L preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series J preferred stock or alter or amend the certificate of designation for the series

L preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series L preferred stock.

Conversion Rights .

Each share of series

L preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

In addition, upon the earlier

(a) the closing of the sale of shares of common stock to the public at a price of at least $3.00 per share (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock)

in a public offering pursuant to an effective registration statement or offering statement under the Securities Act resulting in at least

$3,000,000 of gross proceeds to the Company, (b) the date on which the shares of common stock of the Company are listed on a national

stock exchange, including without limitation the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c)

the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding

shares of series L preferred stock, voting together as a single class, each share of series L preferred stock shall be automatically converted

into such number of shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $2.00.

Such conversion price is subject to standard adjustments in the event of any stock dividends, stock splits, stock reclassifications and

similar events.

Redemption Rights .

Holders of series L

preferred stock do not have any 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.

The series R preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock, series B preferred

stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series I preferred stock, series J preferred stock,

series L preferred stock and to each other class or series that is not expressly made senior to or on parity with the series R preferred

(ii) on parity with each class or series that is not expressly subordinated or made senior to the series R preferred stock;

(iii) junior to the series N senior convertible preferred stock, series X senior convertible preferred stock and to each other series

of preferred stock and each class or series that is expressly made senior to the series R preferred stock, as well as to all indebtedness

and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

R preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series R preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series R preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series R preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

R preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series R preferred stock shall be entitled to cast one (1) vote per

share of series R preferred stock held.

Except as provided by law, the holders of series R preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series R preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series R preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series R preferred stock or alter or amend the certificate of designation for the series

R preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series R preferred stock.

Conversion Rights .

Each share of series

R preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value of $1,200 by a conversion price of $1,200 (subject to standard adjustments

in the event of any stock dividends, stock splits, stock reclassifications and similar events).

Redemption Rights .

Holders of series R

preferred stock do not have any redemption rights.

Preferred Stock Transactions

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

During the nine months ended September 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 .

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 a bonus of $ 5,000 .

During the nine months ended September 30, 2022,

the Company executed the following transactions:

In the second quarter of

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.

On September 7, 2022, the

Company issued 818,750

shares of series J preferred stock for $ 3,275,000

as part of the Nova acquisition.

On September 12, 2022, the

Company issued 375,000

shares of series X senior convertible preferred stock for $ 1,500,000 .

See footnote 10, convertible notes payable for further discussion.

The Company classified the series X preferred stock and amount of

as mezzanine equity.

During the nine months ended September 30, 2023,

the Company executed the following transactions:

The Company issued 274,682,378 shares of common stock upon the conversion of certain convertible notes.

During the nine months ended September 30, 2022,

the Company executed the following transactions:

As part of the Red Rock settlement, the Company issued 666,666,666 shares of common stock.

The settlement also required the previous owners to relinquish 35,000,000 shares of common stock resulting in a gain to the Company of $ 35,000

The table below sets forth warrant activity for

the six months ended June 30, 2023 and 2022:

the nine months ended September 30, 2023:

Schedule of warrant activity

Balance at January 1, 2023

Balance at June 30, 2023

Warrants Exercisable at June 30, 2023

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Balance at September 30, 2023

Warrants Exercisable at September 30, 2023

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.

were returned and cancelled during the second quarter of 2023.

There was no impact on the consolidated financial statements as of December

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 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.

The Company had no net liabilities of discontinued

operations at September 30, 2023 and December 31, 2022.

The Company had $ 0 and $ 363,895 of gain from discontinued operations for the three

months ended September 30, 2023 and 2022, respectively.

The Company had $ 0 and $ 328,353 of gain from discontinued operations for the nine

months ended September 30, and 2022, respectively.

Schedule of discontinued operations

Three Months Ended June 30,

Three Months Ended September 30,

Gain (Loss) from discontinued operations

3 unchanged sentences

Interest expense of Red Rock Investor Note

Loss from discontinued operations

Six Months Ended June 30,

Gain from disposal of Red Rock subsidiary

Gain on settlement of debt on Red Rock

Gain from discontinued operations

Nine Months Ended September 30,

Gain (Loss) from discontinued operations

4 unchanged sentences

Gain no change in estimate of AHI subsidiary

Loss from discontinued operations

Gain on settlement of debt on Red Rock

Gain 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 six months ended June 30, 2023

During the nine months ended September 30,

2023 and 2022, the Company had no goodwill impairment.

4 unchanged sentences

Accumulated impairment

Carrying value at June 30, 2023

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Carrying value at September 30, 2023

COMMITMENTS AND CONTINGENCIES

15 unchanged sentences

not to reassess:

· whether expired or existing contracts contain

leases under the new definition of a lease;

· lease classification for expired or existing

· whether previously capitalized initial direct

costs would qualify for capitalization under Topic 842.

whether expired or existing contracts contain leases under the new definition of a lease;

lease classification for expired or existing leases;

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

The Company also made the accounting policy decision

1 unchanged sentence

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

commitments as follows:

Schedule of property leases

for the three months ended September 30, 2023 and 2022, respectively, and the Company recorded operating lease expense of $ 210,696

and $ 231,028

for the nine months ended September 30, 2023 and 2022, respectively.

The Company has operating leases with future commitments

Schedule of operating leases

September 30,

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 June 30, 2023 and December 31, 2022 were $ 2,025,500

The total outstanding accrued compensation as of September 30, 2023 and December 31, 2022 were

$ 2,115,500 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 $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 September 30, 2023 and December 31, 2022 were

$ 2,132,000 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 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

compensation as of September 30, 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 of $ 372,000

to one of the three doctors, $ 450,000

to the second, and $ 372,000

to the third doctor.

Collectively, as a group, such principals will receive an annual cash bonus and stock equity set forth below,

which will be conditioned upon the Company achieving 100% of the annual objectives of financial performance goals as set forth below.

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 to the second, and $ 372,000 to the third doctor.

Collectively, as a group, such principals will receive an annual cash

bonus and stock equity set forth below, which will be conditioned upon the Company achieving 100% of the annual objectives of financial

performance goals as set forth below.

Schedule of annual objectives of financial performance

43 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,

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

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.

Schedule of segment reporting

June 30, 2023

December 31, 2022

September 30,

Financial Services

Consolidated assets

Three Months Ended June 30,

Three Months Ended September 30,

Financial Services

14 unchanged sentences

Consolidated income (loss) before taxes

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended June 30,

$ ( 264,774 )

Nine Months Ended September 30,

Financial Services

19 unchanged sentences

The Company has evaluated its operations subsequent

to June 30, 2023 to the date these condensed consolidated financial statements were issued and determined there was subsequent events

to September 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 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.

The Company received the first net cash advance in the amount of $861,071

on October 9, 2023 from DML HC Series, LLC for the sale of accounts receivable and future claims in the amount of $1,428,571.

On October 20, 2023, the Company issued 5,000

shares of series B preferred stock as compensation for the manager of Platinum Tax as bonus compensation.

On November 7, 2023, Platinum Tax was dissolved

due to the significant decline in revenues and recurring operating losses.

On various dates in October and November 2023,

the Company issued 227,000,000 shares of common stock upon the conversion of accrued interest and conversion cost of $17,400 and $1,000,

respectively.

(See Note 10, 37-2, and 40-1)

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