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Item 1. Financial Statements

2024-08-14 compared with 2024-05-10 · 770 added, 516 removed, 1263 unchanged (50% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance

Sheets as of March 31, 2024 and December 31, 2023 (Unaudited and restated)

Condensed Consolidated Statements of

Operations for the Three Months Ended March 31, 2024 and 2023 (Unaudited and restated)

Condensed Consolidated Statements of

Stockholders’ Equity (Deficiency) for the Three Months Ended March 31, 2024 and 2023 (Unaudited and restated)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited and restated)

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited and restated)

Condensed Consolidated Statements of Stockholders’ Equity (Deficiency) for the Six Months Ended June 30, 2024 and 2023 (Unaudited and restated)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)

Notes to Condensed Consolidated

Financial Statements (Unaudited and restated)

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

March 31, 2024

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

December 31, 2023

June 30, 2024

Current assets

12 unchanged sentences

Due to director and officer

Notes payable

Notes payable – current portion

Line of credit

Convertible notes payable, net of debt discounts of $ 0 and $ 24,820 , respectively

5 unchanged sentences

Mezzanine equity

Redeemable Series N Senior Convertible Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 868,056 shares issued and outstanding at March 31, 2024 and December 31, 2023

Redeemable Series R Senior Convertible Preferred Stock - 5,000 shares authorized, $0.001 par value, stated value of $ 1,200 , 165 shares issued and outstanding at March 31, 2024 and December 31, 2023

Redeemable Series N Senior Convertible Preferred Stock - 3,000,000

shares authorized, $0.001 par value, stated value $ 4.00 , 868,056

shares issued and outstanding at June 30, 2024 and December 31, 2023

Redeemable Series R Senior Convertible Preferred Stock - 5,000 shares authorized, $0.001 par value, stated value of $ 1,200 , 0 and 165 , shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Redeemable Series X Senior Convertible Preferred Stock - 5,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 par value;

375,000 shares issued and outstanding at March 31, 2024 and December 31, 2023

375,000 shares issued and outstanding at June 30, 2024 and December 31, 2023

Total Mezzanine Equity

Stockholders' equity

Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 1,360,679 and 2,139,478 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value of $ 4.00 , 99 and 123 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 155,750 shares issued and outstanding at March 31, 2024 and December 31, 2023

Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $ 4.00 , 35,752 shares issued and outstanding at March 31, 2024 and December 31, 2023

Series I Preferred Stock - 15,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 12,089,000 and 14,885,000 issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Series J Preferred Stock - 2,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 171,359 and 1,713,584 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at March 31, 2024 and December 31, 2023

Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 980,179 and 2,139,478 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value of $ 4.00 , 60 and 123 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 75,375 and 155,750 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $ 4.00 , 25,750 and 35,752 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series I Preferred Stock - 15,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 11,640,500 and 14,885,000 issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series J Preferred Stock - 2,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 0 and 1,713,584 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at June 30, 2024 and December 31, 2023

Series Y Senior Convertible Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 938,908 and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common Stock;

300,000,000 shares authorized, $ 0.001 par value;

10,819,995 and 25,121 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

13,626,376 and 25,121 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND

Three Months Ended March 31,

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2024 AND 2023

Ended June 30,

COST OF SALES

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Total operating expenses

INCOME FROM CONTINUING OPERATIONS

(LOSS) INCOME FROM CONTINUING OPERATIONS

OTHER INCOME (EXPENSE)

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Interest expense

( 1,537,579 )

Amortization of debt discounts

Total other expenses

Total other income (expense)

( 1,617,601 )

NET (LOSS) INCOME BEFORE DISCONTINUED OPERATIONS

LOSS FROM DISCONTINUED OPERATIONS

NET LOSS FOR THE PERIOD

NET (LOSS) INCOME FOR THE PERIOD

$ ( 174,447 )

$ ( 457,551 )

PREFERRED STOCK DIVIDENDS

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ ( 125,744 )

$ ( 477,808 )

BASIC LOSS PER SHARE

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ ( 500,621 )

$ ( 935,359 )

BASIC (LOSS) INCOME PER SHARE

CONTINUING OPERATIONS

DISCONTINUED OPERATIONS

DILUTED LOSS PER SHARE

DILUTED (LOSS) INCOME PER SHARE

CONTINUING OPERATIONS

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EQUITY (DEFICIENCY)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

E, F-1, J and L

Additional Paid-In

Total Stockholders’

Balance, December 31,

2022 (Restated)

Stockholders’ (Deficit)

Balance, December 31, 2022 (Restated)

$ 59,540,000 –

1 unchanged sentence

$ ( 68,684,115 )

$ ( 1,744,791 )

Conversion of convertible notes payable

Preferred stock Dividends

Balance, March

31, 2023 (Restated)

Issuance of preferred stock series B

Balance, June 30, 2023 (Restated)

$ 59,540,000 –

1 unchanged sentence

$ ( 68,228,975 )

$ ( 1,074,413 )

E, F-1, J and L

1 unchanged sentence

Stockholders’ (Deficit)

Balance, December 31,

2023 (Restated)

Balance, December 31, 2023 (Restated)

$ ( 7,581,212 )

1 unchanged sentence

Conversion of convertible notes payable

Conversion of series B preferred

Conversion of series B preferred stock

( 1,159,299 )

Conversion of series C preferred

Conversion of series I preferred

( 4,637,196 )

Conversion of series C preferred stock

Conversion of series E preferred stock

Conversion of series F-1 preferred stock

Conversion of series I preferred stock

( 3,377,000 )

Conversion of series J preferred

( 13,508,000 )

Conversion of series J preferred stock

( 1,713,584 )

Issuance of series I preferred stock

Cancellation of series C preferred

( 6,854,336 )

Issuance of series I preferred stock to officers

Issuance of series Y preferred stock

Cancellation of series C preferred stock

Common stock issued for services

2 unchanged sentences

Preferred stock Dividends

Balance, March

Balance, June 30, 2024

$ ( 69,619,474 )

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND

Three Months Ended March 31,

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss from continuing operations

Net (loss) income from continuing operations

$ ( 457,551 )

5 unchanged sentences

Fair value settled upon conversion

Gain on forgiveness of debt

Gain on settlement or forgiveness of debt

(Increase) decrease in:

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Accounts payable and accrued expense

Due to related party

Accrued officers compensation

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FINANCING ACTIVITIES

Proceeds from convertible notes payable

Payments to director

Repayment of SBA loans

Payment of convertible notes

Proceeds from line of credit

Payment of line of credit

Payment of dividends on preferred stock

Net cash provided by financing activities

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Common stock issued upon conversion of notes payable

Common stock issued upon conversion of preferred stock

Series Y preferred stock issued in exchange of convertible notes payable

Promissory note payable issued in settlement agreement

Right of use assets acquired

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Edge View Properties, Inc.

(“Edge View”),

which was acquired on July 16, 2014;

· Platinum Tax Defenders (“Platinum Tax”),

which was acquired on July 31, 2018 and sold on November 10, 2023;

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

Platinum Tax Defenders (“Platinum Tax”), which was acquired on July 31, 2018 and sold on November 10, 2023;

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

8 unchanged sentences

On January 9, 2024, the Company effected a 1-for-75,000 reverse split of its outstanding common stock.

All outstanding shares of common stock and warrant to purchase common stock

were adjusted to reflect the 1-for-75,000 reverse split, with respective exercise prices of the warrants proportionately increased.

The conversion prices of the outstanding convertible notes and certain series of preferred stock were adjusted to reflect a

proportional decrease in the number of shares of common stock to be issued upon conversion.

All outstanding shares of common stock and warrant to purchase common stock were adjusted

to reflect the 1-for-75,000 reverse split, with respective exercise prices of the warrants proportionately increased.

The conversion prices

of the outstanding convertible notes and certain series of preferred stock were adjusted to reflect a proportional decrease in the number

of shares of common stock to be issued upon conversion.

All share and per share data throughout these

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was reclassified from “common stock” to “additional paid-in capital.”

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Use of Estimates

6 unchanged sentences

Accounts Receivable

In the normal course of business, the Company

is in the lien based medical industry providing orthopedic healthcare servicing an uninsured market insulated by a letter of protection

which insulates the Company and insures payment in full from insurance settlements.

A letter of protection is a legally binding contract

between the patient (i.e., the Company’s customer), the patient’s law firm and the Company, as a medical provider.

as a critical legal agreement between an experienced personal injury attorney and the Company, as a medical provider, allowing an injured

victim to receive vital medical treatment needed after an accident without paying exorbitant out-of-pocket medical expenses prior to settlement.

For medical professionals, letters of protection provide guaranteed payment out of settlement proceeds for services rendered as the provider

does not have to attempt collection from an uninsured or underinsured injured patient.

The medical provider knows that payment will come

directly from the law firm out of the settlement.

This legally binding contract offers crucial protection when someone is hurt due to

another party’s negligence but lacks sufficient health insurance or faces denial of claim payments from insurance companies.

bills may not be paid for six months to two or more years until case resolution.

Providers must be willing to wait for payment.

cases settle in increments over several years instead of one lump payment at the end.

A letter of protection enables injured clients to

obtain essential care, avoid collections, restore their credit, and focus wholly on recovery.

Attorneys utilize letters of protection

to construct stronger injury claims, while medical professionals gain guaranteed payment out of settlement proceeds even if treatment

is lengthy or ongoing.

In a personal injury case, the at-fault party

is responsible for paying the medical bills of the injured person.

However, insurance companies will often refuse to pay these medical

expenses until liability has been determined.

This can leave an injured person unable to get the medical treatment needed, especially

if they do not have health insurance.

A letter of protection allows an accident victim to receive medical care while the personal injury

case is being resolved.

An attorney sends a letter of protection to the Company, as a medical provider, on behalf of the client patient.

This letter states that the attorney is responsible for paying the client’s medical bills when the case is fully developed and settles.

The medical professional agrees to provide treatment to the injured person and refrain from attempting to collect payment as it is developing

and until the case is resolved.

Once the personal injury case is finalized with the insurance company, the attorney pays the outstanding

medical bills from the settlement.

The letter of protection is fulfilled.

If no settlement is reached with the defendant’s insurance

company and the plaintiff (the patient) loses the case at trial, or the case is abandoned, then the Company will not be able to collect

on its letter of protection and its receivable will not be collected.

In the case of a partial settlement or award at trial, the Company

might only be able to collect a portion of its receivable.

The Company has a 99% collection rate based on

net settlements recorded to its accounts receivable and revenue.

The Company’s accounts receivable balance each reporting period

does not include accounts receivables that were factored (sold).

Further, accounts receivable and revenue are recorded at what the Company

anticipates will ultimately be collected, which historically is 99% of the net recognized upon billing to its patients of gross amounts

for services.

In the past, for those receivables that were factored, the Company was advanced 46% of the accounts receivable balance and

recorded 54% to finance charge.

The Company last factored its accounts receivable in the first quarter of fiscal 2023.

Collection rates

are estimated considering the Company’s 48-month historical collections with primary emphasis to the most current prior 12-month

trailing payment and collection percentage rates.

The Company acquired Nova in May 2021.

Nova was founded in January 2019.

As of December

31, 2023, the Company based its 48-month historical collections analysis on a look back period from December 31, 2023 to 48 months, part

of which was a period of time Cardiff did not yet own Nova.

The method the Company uses to measure expected credit losses is the loss

rate method, and in addition the Company qualitatively evaluates on an ongoing basis various factors, which include market conditions

in which the Company operates, and the status of claims being settled.

The Company has established billing rates, which are not the same

as actual amounts recovered.

These rates generally do not reflect what is ultimately paid by the customer, insurance carriers, law firms

and other payors, which is typically received eighteen to twenty-four months later, and are not reported in the consolidated financial

statements at those established billing rates.

The Company’s customers, its patients, typically pay amounts based on established

charges per procedure with guidance from the annually updated Current Procedural Terminology (“CPT”) guidelines (a code set

maintained by the American Medical Association through the CPT Editorial Panel), that designates relative value units and a suggested

range of charges for each procedure which is then assigned a CPT code.

This fee is discounted to reflect the percentage paid to the Company

“using a modifier” recognized by each insurance carrier for services, less deductible, co-pay, and contractual adjustments

which are deducted from the calculated fee.

The net revenue is recorded at the time the services are rendered.

Collection of that revenue

typically occurs eighteen to twenty-four months later and after the patient claim develops and settles.

Historical collection rates are

estimated using the most current prior 12-month historical payment and collection percentages.

The Company may incur instances whereby

patient claims are not settled.

However, these instances are very rare.

For example, if a patient dies during the claim’s development

period and there is no estate to bequeath, the claim may not be settled.

Settlements that are less than what was billed to the patient

are covered in the Company’s 99% collectability rate.

The Company adopted ASU 2016-13,

3 unchanged sentences

Accounts receivable is reported on the balance sheet at the net amounts expected to be collected by the Company.

closely monitors outstanding accounts receivable and recognized an additional allowance for credit losses in the amount of $ 122,190

closely monitors outstanding accounts receivable and recognized an allowance for credit losses in the amount of $ 165,052 as of June

30, 2024, and $ 122,190

as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024 and December 31, 2023, the Company had net accounts receivable of

as of December 31, 2023.

As of June 30, 2024 and December 31, 2023, the Company had net accounts receivable of

and $ 13,305,254 ,

1 unchanged sentence

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

The Company recognizes credit losses when such

losses are expected.

These credit losses include those amounts the Company determines will not be collectible when billed.

Historically,

the Company has conducted an annual assessment of its collectability rate of its patients accounts receivables, and then recorded a provision

for changes to this collectability rate as a provision.

The Company calculates a forward-looking collectability rate which it then applies

to its gross billings.

The amount recorded in accounts receivables approximates the amount expected to actually be collected.

The allowance

for credit losses represents any adjustments deemed necessary to the collectability rate based upon an annual review of both actual collections,

as well as any changes in industry billing and collection, and/or legal practices.

During the three and six months ended

June 30, 2024, the Company recognized $ 1,242,017

of allowance for credit losses as bad debt expense.

The Company recognized $ 270,000

of allowance for credit losses as bad debt expense during the three and six months ended June 30, 2023.

As a result of the Company’s

efforts to accelerate cash collections throughout 2024, the Company has experienced lower than normal settlements of its accounts receivable.

This may continue as the Company continues to pay down the liability associated with the third-party factoring of accounts receivable

from previous years.

The Company continues to assess its collections of its accounts receivable through industry analysis and its collectability

rate assessment of 99% by applying a 12-month look back to collections from settlements made on claims.

Based on the Company’s

accounts receivable balances and its revenue, the Company does not believe the bad debt is a material amount.

The following table shows the allowance for credit

losses activity:

Schedule of allowance for credit

losses activity

Beginning Balance at December 31, 2023

$ ( 122,190 )

Current period provision

( 1,242,017 )

Write-off charged against the allowance

Balance at June 30, 2024

$ ( 165,052 )

Property and Equipment

25 unchanged sentences

The Company believes such assumptions are also comparable to those that would be used by other marketplace participants.

During the three months ended March 31, 2024 and 2023, the Company did no t recognize any goodwill impairment.

During the six months ended June 30, 2024 and 2023, 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.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Valuation of Long-lived Assets

40 unchanged sentences

generally, at the time of patient care.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Established billing rates are not the same as

actual amounts recovered for the Company’s healthcare subsidiary.

They generally do not reflect what the Company is

ultimately paid by the customer, insurance carriers and other payors, and therefore are not reported in the consolidated financial statements

at that rate.

The Company is typically paid amounts based on established charges per procedure with guidance from the annually updated

Current Procedural Terminology (“CPT”) guidelines (a code set maintained by the American Medical Association through the

CPT Editorial Panel), that designates relative value units and a suggested range of charges for each procedure which is then assigned

They generally do not reflect what the Company is ultimately

paid by the customer, insurance carriers and other payors, and therefore are not reported in the consolidated financial statements at

The Company is typically paid amounts based on established charges per procedure with guidance from the annually updated CPT

guidelines that designates relative value units and a suggested range of charges for each procedure which is then assigned a CPT code.

This fee is discounted to reflect the percentage

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except for those remaining insurance carriers requiring paper filing.

An initial response is usually received within four weeks from

electronic filing and up to six weeks from paper filing.

An initial response is usually received within four weeks from electronic

filing and up to six weeks from paper filing.

Responses may be a payment, a denial, or a request for additional information.

7 unchanged sentences

Historical collection rates are estimated using the most current prior 12-month historical payment and collection

The Company satisfies its performance obligations

as services are performed and then billed to the patient.

Payment in most cases is made by an attorney for such services to the Company’s

patients, which are due upon final settlement of patients claims.

During the claims process, legal counsel warranties such claims through

the letter of protection, which is sent to the Company, as a medical provider, on behalf of the client patient.

This letter states that

the attorney is responsible for paying the client’s medical bills when the case is fully developed and settles.

The medical professional

agrees to provide treatment to the injured person and refrain from attempting to collect payment as it is developing and until the case

Once the personal injury case is finalized with the insurance company, the attorney pays the outstanding medical bills from

the settlement.

Historically through April 2023, the Company’s

4 unchanged sentences

were recorded in finance charges as other expenses on the consolidated statement of operations.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

As a result of eighteen to twenty-four

month collection timeframe, the Company has an accrued liability resulting from the collections of receivables sold to the third party

factors which fluctuates as collections are made and remitted to those third party factors.

These accounts receivables sold to these third

party factors are not included in the Company’s financial statements accounts receivable balance once sold and therefore are not

part of the assessment of accounts receivable collectability.

Advertising Costs

1 unchanged sentence

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

The Company recognized advertising and marketing expense of $ 82,051 and $ 83,223 for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized advertising and marketing expense of $ 96,899 and $ 133,326 for the three months ended June 30, 2024 and 2023, respectively.

The Company recognized advertising and marketing expense of $ 171,950 and $ 171,679 for the six months ended June 30, 2024 and 2023, respectively.

Fair Value Measurements

11 unchanged sentences

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

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

the measurement date.

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

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

7 unchanged sentences

in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of

the fair value recognition provisions of section 718-10-30 of the FASB ASC.

Pursuant to paragraph 718-10-30-6 of the FASB ASC, all transactions

in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value

of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

the fair value recognition provisions of section 718-10-30 of the Financial Accounting Standards Board (“FASB”) ASC.

to paragraph 718-10-30-6 of the FASB ASC, all transactions in which goods or services are the consideration received for the issuance

of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument

issued, whichever is more reliably measurable.

The measurement date used to determine the fair

22 unchanged sentences

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

As of March 31, 2024 and 2023, the Company did

As of June 30, 2024 and 2023, the Company did

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

15 unchanged sentences

convertibles is reflected utilizing the if converted method.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Going Concern

3 unchanged sentences

The Company had sustained recurring operating losses since its inception

and has an accumulated deficit of $ 69,118,853 as of March 31, 2024.

These factors raise a substantial doubt about the Company’s

ability to continue as a going concern.

The accompanying consolidated financial statements do not reflect any adjustments relating to

the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if

the Company is unable to continue as a going concern.

and has an accumulated deficit of $ 69,619,474 as of June 30, 2024.

These factors raise a substantial doubt about the Company’s ability

to continue as a going concern.

The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability

and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable

to continue as a going concern.

The ability of the Company to continue as a going

6 unchanged sentences

sufficient funds, it may be required to curtail its operating plans.

In addition, increases in expenses may require cost reductions.

assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all, in the future.

Company not be able to raise sufficient funds, it may cause cessation of operations.

Recent Accounting Standards

The FASB issued ASU 2023-07 on

November 27, 2023.

The amendments “improve reportable segment disclosure requirements, primarily through enhanced disclosures

about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify

circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure

requirements for entities with a single reportable segment, and contain other disclosure requirements.

The purpose of the amendments

is to enable “investors to better understand an entity’s overall performance” and assess “potential future

cash flows.” The Management is evaluating the impact of ASU 2023-07 on the consolidated financial statements and does not

expect there to be any changes or impact to the financial statements.

In addition, if overall Company expenses increase, the Company may

need to implement cost reductions.

No assurance can be given that the Company will be able to operate profitably on a consistent basis,

or at all, in the future.

Should the Company not be able to raise sufficient funds, it may cause cessation of operations.

Recently Issued Accounting Standards

The FASB issued Accounting Standards Update (“ASU”)

2023-07, “Segment Reporting:

Improvements to Reportable Segment Disclosures” (“Topic 280”) in November 2023.

amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December

15, 2024, with early adoption permitted.

Topic 280 improves “reportable segment disclosure requirements, primarily through enhanced

disclosures about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify circumstances

in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities

with a single reportable segment, and contain other disclosure requirements.

The purpose of the amendments is to enable “investors

to better understand an entity’s overall performance” and assess “potential future cash flows.” Management is

evaluating the impact of ASU 2023-07 on the consolidated financial statements and does not expect there to be any changes or impact to

the financial statements.

Recently Adopted Accounting Standards

The FASB issued ASU 2020-06, “Debt—Debt

with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic

81540).” The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within that period.

The FASB also specified

that an entity must adopt the guidance as of the beginning of its annual fiscal year and is not permitted to adopt the guidance in an

interim period, other than the first interim period of their fiscal year.

ASU 2020-06 reduces the number of accounting models for convertible

debt and convertible preferred stock instruments and makes certain disclosure amendments to improve the information provided to users.

There were no material impacts on the consolidated financial statements at adoption.

RESTATEMENT OF FINANCIAL STATEMENTS

During the preparation of the year ended December

31, 2023 financial statements, the Company identified and corrected its classification and accounting treatment for its series R convertible

preferred stock and the related dividend accrual.

Pursuant to ASC 250, “Accounting changes and error corrections” issued by

FASB and SAB 99 “Materiality” issued by Securities and Exchange Commission, the Company determined the impact of the error

was immaterial.

The impact of the error correction is reflected in a $274,982 increase to the mezzanine equity and offsetting decrease

to the series R convertible preferred stock and subject to possible redemption mezzanine equity line item on the consolidated balance

sheet as of March 31, 2023.

In addition, the impact of the unpaid dividend accrual is reflected in $8,136 increase to mezzanine equity

and offsetting decrease to the accumulated deficits as of March 31, 2023.

The impact of the error correction is also reflected $1 decrease

of earnings (loss) per share on the consolidated statement of operations for the three months ended March 31, 2023.

During the preparation of the three months ended March 31, 2024 financial

statements, the Company identified and corrected its classification for its all outstanding common stock amount per par value of $ 0.001

with additional paid-in-capital related with a 1-for-75,000 reverse split executed on January 9, 2024.

During the preparation of the financial statements

for the year ended December 31, 2023, the Company identified and corrected its classification and accounting treatment for its series

R convertible preferred stock and the related dividend accrual.

Pursuant to ASC 250, Accounting changes and error corrections issued

by FASB and Staff Accounting Bulletin 99 Materiality , issued by Securities and Exchange Commission, the Company determined the

impact of the error was immaterial.

The impact of the error correction is reflected in the consolidated balance sheet as of June 30, 2023

as a $274,982 increase to the mezzanine equity and offsetting decrease to the series R convertible preferred stock and subject to possible

redemption mezzanine equity line item.

In addition, the impact of the unpaid dividend accrual was reflected as of June 30, 2023 as a

$16,363 increase to mezzanine equity and offsetting decrease to the accumulated deficits.

During the preparation of the financial

statements for three and six months ended June 30, 2024, the Company identified and corrected its classification for all its

outstanding common stock amount per par value of $ 0.001

with additional paid-in-capital related with a 1-for-75,000 reverse split

executed on January 9, 2024.

The impact of this adjustment decreased $ 1,804,774

to common stock and offsetting increase to additional paid-in-capital as of December 31, 2023.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

On November 10, 2023, the Company sold Platinum

1 unchanged sentence

The Company presented in prior periods operating

loss as loss from discontinued operations in the amount of $45,490 on the consolidated statement of operations for the three months ended

March 31, 2023.

The following table summarizes the impact of the corrections on the Company’s condensed consolidated statement

of operations for the three months ended March 31, 2023:

loss as loss from discontinued operations of $43,810 and $89,300 on the consolidated statement of operations for the three and six months

ended June 30, 2023, respectively.

The impact of the error corrections also reflected

a $55.66 increase of basic earnings per share, and a $3.59 increase of diluted earnings per share on the consolidated statement of operations

for the three months ended June 30, 2023.

For the six months ended June 30, 2023, the impact of the error correction reflected a $28.75

increase of basic earnings per share, and an increase of $1.45 of diluted earnings per share.

The following tables summarize the impact of the

corrections on the Company’s condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statement of operations

for the three and six months ended June 30, 2023, and the condensed consolidated statement of cash flows for the six months ended June

Balance sheet

Schedule of restated financial information

Schedule of of of restated financial information

Impact of correction of error

March 31, 2023 (Unaudited)

June 30, 2023 (Unaudited)

As previously reported

7 unchanged sentences

Impact of correction of error

Three months ended March 31, 2023 (Unaudited)

Three months ended June 30, 2023 (Unaudited)

As previously reported

4 unchanged sentences

Other income (expense), net

Net loss before discontinued operations

Net income before discontinued operations

Loss from discontinued operations

Net loss for the period

Net income for the period

Preferred stock dividends

1 unchanged sentence

$ ( 125,744 )

Net loss attributable to common shareholders

Net income attributable to common shareholders

Basic earnings per share for continuing operations

Diluted earnings per share for continuing operations

Impact of correction of error

Six months ended June 30, 2023 (Unaudited)

As previously reported

$ ( 272,703 )

Cost of sales

Operating expense

Income from operations

Other income (expense), net

( 1,619,644 )

Basic and diluted earnings (loss) per share for continuing operations

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

( 1,617,601 )

Net income before discontinued operations

Loss from discontinued operations

Net income for the period

Preferred stock dividends

$ ( 462,555 )

$ ( 454,419 )

Net income attributable to common shareholders

Basic earnings per share for continuing operations

Diluted earnings per share for continuing operations

Statement of Cash Flows

Impact of correction of error

Six months ended June 30, 2023 (Unaudited)

As previously reported

Net cash used in operating activities of continuing operations

$ ( 304,173 )

$ ( 260,466 )

Net cash provided by financing activities of continuing operations

$ ( 128,110 )

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Schedule of accounts payable and accrued expenses

March 31, 2024

June 30, 2024

December 31, 2023

2 unchanged sentences

Accrued liability for collections of previously factored receivables

Accrued property taxes

Accrued income and property taxes

Accrued professional fees

Accrued board fees

Accrued public company fees

Accrued payroll

The Company is delinquent paying certain property

As of March 31, 2024 and December 31, 2023, the balance for these property taxes, was $ 5,346 .

As of June 30, 2024 and December 31, 2023, the balance for these property taxes was $ 1,649 .

PLANT AND EQUIPMENT, NET

Property and equipment as of March 31, 2024 and

Property and equipment as of June 30, 2024 and

December 31, 2023 is as follows:

Schedule of property and equipment

March 31, 2024

June 30, 2024

December 31, 2023

5 unchanged sentences

Property and equipment, net

For the three months ended March 31, 2024 and

For the three months ended June 30, 2024 and 2023,

depreciation expense was $ 3,366 and $ 3,365 , respectively.

As of March 31, 2024 and December 31, 2023, the

For the six months ended June 30, 2024 and 2023, depreciation expense was $ 6,731

and $ 8,000 , respectively.

As of June 30, 2024 and December 31, 2023, the

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

5 unchanged sentences

and do not bear interest.

The balance of these amounts are $ 4,979 due from the previous owners as of March 31, 2024 and December 31, 2023.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

The balance of these amounts are $ 4,979 due from the previous owners as of June 30, 2024 and December 31, 2023.

The Company obtained short-term advances from

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

As of March 31, 2024 and December 31, 2023, the Company owed

As of June 30, 2024 and December 31, 2023, the Company owed

the Chairman $ 0 and $ 120,997 , respectively.

During the three months ended March 31, 2024, the Company paid $ 75,153 to the Chairman.

See also Note 8 and the disclosure regarding Note

See also Note 13 for compensation paid to employees

of the Company.

During the six months ended June 30, 2024, the Company paid $ 120,997 to the Chairman.

See also Note 7.

Notes and Loans Payable and Note 8.

Notes Payable .

The series R convertible preferred

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

stock ranked, 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

6 unchanged sentences

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Dividend Rights.

The holders of series

R convertible preferred stock are entitled to receive cumulative dividends in the amount of twelve percent (12%) per annum, payable quarterly.

In addition, holders of series R convertible preferred stock are entitled to receive dividends equal (on an as converted to common stock

R convertible preferred stock were entitled to receive cumulative dividends in the amount of twelve percent (12%) per annum, payable quarterly.

In addition, holders of series R convertible preferred stock were 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.

Any dividends that are not paid when due shall continue to accrue and shall entail a late fee, which must be paid in

cash, at the rate of 18% per annum or the lesser rate permitted by applicable law which shall accrue and compound daily from the missed

payment date through and including the date of actual payment in full.

At March 31, 2024 and December 31, 2023, cumulative dividends on

Series R Preferred Stock were $ 119,194 and $ 109,980 , respectively.

Any dividends that were not paid when due were to continue to accrue and entailed a late fee, which must be paid in cash,

at the rate of 18% per annum or the lesser rate permitted by applicable law which was to accrue and compound daily from the missed payment

date through and including the date of actual payment in full.

At June 30, 2024 and December 31, 2023, cumulative dividends on Series

R Preferred Stock were $ 0 and $ 109,980 , respectively.

Liquidation Rights .

Upon any liquidation,

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

be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the stated value ($1,200), plus

any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing, for each share of series R convertible

preferred stock before any distribution or payment shall be made to the holders of any junior securities.

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

to receive out of the assets, whether capital or surplus, of the Company an amount equal to the stated value ($1,200), plus any accrued

and unpaid dividends thereon and any other fees or liquidated damages then due and owing, for each share of series R convertible preferred

stock before any distribution or payment shall be made to the holders of any junior securities.

Voting Rights .

The holders of series R

convertible preferred stock will vote together with the common stock on an as-converted basis.

However, as long as any shares of series

R convertible preferred stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the

convertible preferred stock voted together with the common stock on an as-converted basis.

However, as long as any shares of series R

convertible preferred stock were outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the

then outstanding shares of the series R convertible preferred stock, directly and/or indirectly (i) alter or change adversely the powers,

6 unchanged sentences

Conversion Rights .

Each shares of series

R convertible preferred stock shall be convertible, at the option of the holder thereof, at any time and from time to time, into such

number of fully paid and nonassessable shares of common stock determined by dividing the stated value ($1,200 per share) by a conversion

price equal to the lower of (i) $75.0 and (ii) the lowest daily VWAP during the twenty (20) trading days immediately prior to the applicable

Each share of series

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

of fully paid and nonassessable shares of common stock determined by dividing the stated value ($1,200 per share) by a conversion price

equal to the lower of (i) $75.0 and (ii) the lowest daily VWAP during the twenty (20) trading days immediately prior to the applicable

conversion date.

4 unchanged sentences

The conversion

price is subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately

price was subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately

decreases or increases the common stock, as well as for mergers, business combinations and certain other fundamental transactions.

addition, subject to certain exceptions, upon any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents

for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the holder may elect, in

its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of series R convertible preferred stock

then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis.

for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the holder could have elected,

in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of series R convertible preferred

stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis.

Participation Rights .

Subject to certain

exceptions, upon a Subsequent Financing, a holder of at least 100 shares of series R convertible preferred stock shall have the right

exceptions, upon a Subsequent Financing, a holder of at least 100 shares of series R convertible preferred stock were to have the right

to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions

and price provided for in the Subsequent Financing.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Company Redemption Rights .

has the right to redeem all (but not less than all), shares of the series R convertible preferred stock issued and outstanding at any

had the right to redeem all (but not less than all), shares of the series R convertible preferred stock issued and outstanding at any

time upon three (3) business days’ notice, at a redemption price per share equal to the product of (i) the Premium Rate multiplied

8 unchanged sentences

Redemption Upon Triggering Events .

the occurrence of a Triggering Event (as defined below), each holder of series R convertible preferred stock shall (in addition to all

other rights it may have) have the right, exercisable at the sole option of such holder, to require the Company to (A) redeem all of the

series R convertible preferred stock then held by such holder for a redemption price, in cash, equal to the Triggering Redemption Amount

(as defined below), or (B) at the option of each holder either (i) redeem all of the series R convertible preferred stock then held by

such holder though the issuance to such holder of such number of shares of common stock equal to the quotient of (x) the Triggering Redemption

Amount, divided by (y) the lowest of (1) the conversion price, and (2) 75% of the average of the 10 VWAPs immediately prior to the date

of election, or (ii) increase the dividend rate on all of the outstanding series R convertible preferred stock held by such holder retroactively

to the initial issuance date to 18% per annum thereafter.

“Triggering Redemption Amount” means, for each share of series R

convertible preferred stock, the sum of (a) the greater of (i) 130% of the stated value and (ii) the product of (y) the VWAP on the trading

day immediately preceding the date of the Triggering Event, multiplied by (z) the stated value divided by the then applicable conversion

price, (b) all accrued but unpaid dividends thereon and (c) all liquidated damages, late fees and other costs, expenses or amounts due

in respect of the series R convertible preferred stock including, but not limited to legal fees and expenses of legal counsel to the holder

in connection with, related to and/or arising out of a Triggering Event.

A “Triggering Event” means any of the following events

(whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant

to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

· the Company shall fail to deliver the shares of common stock issuable upon a conversion prior to the fifth

(5 th ) trading day after such shares are required to be delivered, or the Company shall provide written notice to any holder,

including by way of public announcement, at any time, of its intention not to comply with requests for conversion of any shares of series

R convertible preferred stock in accordance with the terms of the certificate of designation;

· the Company shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In (as defined

in the certificate of designation) within five (5) trading days after notice therefor is delivered;

· the Company shall fail to have available a sufficient number of authorized and unreserved shares of common

stock to issue to such holder upon a conversion;

· unless specifically addressed elsewhere in the certificate of designation as a Triggering Event, the Company

shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction

Documents (as defined in the certificate of designation), and such failure or breach shall not, if subject to the possibility of a cure

by the Company, have been cured within five (5) calendar days after the date on which written notice of such failure or breach shall have

been delivered;

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

the occurrence of a Triggering Event (as defined below), each holder of series R convertible preferred stock had (in addition to all other

rights it may have) the right, exercisable at the sole option of such holder, to require the Company to (A) redeem all of the series R

convertible preferred stock then held by such holder for a redemption price, in cash, equal to the Triggering Redemption Amount (as defined

below), or (B) at the option of each holder either (i) redeem all of the series R convertible preferred stock then held by such holder

though the issuance to such holder of such number of shares of common stock equal to the quotient of (x) the Triggering Redemption Amount,

divided by (y) the lowest of (1) the conversion price, and (2) 75% of the average of the 10 VWAPs immediately prior to the date of election,

or (ii) increase the dividend rate on all of the outstanding series R convertible preferred stock held by such holder retroactively to

the initial issuance date to 18% per annum thereafter.

“Triggering Redemption Amount” means, for each share of series R convertible

preferred stock, the sum of (a) the greater of (i) 130% of the stated value and (ii) the product of (y) the VWAP on the trading day immediately

preceding the date of the Triggering Event, multiplied by (z) the stated value divided by the then applicable conversion price, (b) all

accrued but unpaid dividends thereon and (c) all liquidated damages, late fees and other costs, expenses or amounts due in respect of

the series R convertible preferred stock including, but not limited to legal fees and expenses of legal counsel to the holder in connection

with, related to and/or arising out of a Triggering Event.

A “Triggering Event” means any of the following events (whatever

the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any

judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

the Company shall fail to deliver the shares of common stock issuable upon a conversion prior to the fifth (5 th ) trading day after such shares are required to be delivered, or the Company shall provide written notice to any holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversion of any shares of series R convertible preferred stock in accordance with the terms of the certificate of designation;

the Company shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In (as defined in the certificate of designation) within five (5) trading days after notice therefor is delivered;

the Company shall fail to have available a sufficient number of authorized and unreserved shares of common stock to issue to such holder upon a conversion;

unless specifically addressed elsewhere in the certificate of designation as a Triggering Event, the Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents (as defined in the certificate of designation), and such failure or breach shall not, if subject to the possibility of a cure by the Company, have been cured within five (5) calendar days after the date on which written notice of such failure or breach shall have been delivered;

the Company shall redeem junior securities or pari passu securities;

1 unchanged sentence

there shall have occurred a Bankruptcy Event (as defined in the certificate of designation);

· any monetary judgment, writ or similar final process shall be entered or filed against the Company, any

subsidiary or any of their respective property or other assets for more than $50,000 (provided that amounts covered by the Company’s

insurance policies are not counted toward this $50,000 threshold), and such judgment, writ or similar final process shall remain unvacated,

unbonded or unstayed for a period of thirty (30) trading days;

· the electronic transfer by the Company of shares of common stock through the Depository Trust Company

or another established clearing corporation once established subsequent to the date of the certificate of designation is no longer available

or is subject to a ‘freeze” and/or “chill;” or

· any “Event of Default,” as defined in the Purchase Agreement (as defined in the certificate

of designation).

any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $50,000 (provided that amounts covered by the Company’s insurance policies are not counted toward this $50,000 threshold), and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of thirty (30) trading days;

the electronic transfer by the Company of shares of common stock through the Depository Trust Company or another established clearing corporation once established subsequent to the date of the certificate of designation is no longer available or is subject to a ‘freeze” and/or “chill;” or

any “Event of Default,” as defined in the Purchase Agreement (as defined in the certificate of designation).

Series X Senior Convertible Preferred Stock

11 unchanged sentences

upon an event of default (as defined in the certificate of designation for the series X senior convertible preferred stock), such rate

shall increase by 5% per annum.

Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.

Dividends shall

be payable quarterly in arrears on each dividend payment date.

At March 31, 2024 and December 31, 2023, cumulative dividends on Series

X Preferred Stock were $ 228,082 and $ 190,685 , respectively.

was to increase by 5% per annum.

Dividends accrue from day to day, whether or not declared, and are cumulative.

Dividends are payable

quarterly in arrears on each dividend payment date.

At June 30, 2024 and December 31, 2023, cumulative dividends earned on the series

X senior convertible preferred stock were $ 183,210 and $ 190,685 , respectively.

The total balance of the cumulative accrued dividends was

paid by the Company via the issuance of 25,173 shares of the Company’s common stock as of June 30, 2024.

Liquidation Rights.

2 unchanged sentences

(in each case, as defined in the certificate of designation), upon any liquidation of the Company or its subsidiaries, before any payment

or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of junior securities

or distribution of the assets of the Company (whether capital or surplus) are to be made to or set apart for the holders of junior securities

(as defined in the certificate of designation), including the common stock, each holder of outstanding series N senior convertible preferred

stock shall be entitled to receive an amount of cash equal to 100% of the stated value of $4.00 per share, plus an amount of cash equal

to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution

to such holders.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

stock is entitled to receive an amount of cash equal to 100% of the stated value of $4.00 per share, plus an amount of cash equal to all

accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such

Voting Rights .

4 unchanged sentences

must include Leonite Capital LLC so long as it holds any shares of series X senior convertible preferred stock, voting as a separate class,

shall be necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate

of designation or prior to the creation or issuance of any parity securities or new indebtedness (as defined in the certificate of designation);

provided that the foregoing shall not apply to any financing transaction the use of proceeds of which will be used to redeem the series

is necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate of

designation or prior to the creation or issuance of any parity securities or new indebtedness (as defined in the certificate of designation);

provided that the foregoing does not apply to any financing transaction the use of proceeds of which were to be used to redeem the series

X senior convertible preferred stock and the warrants issued in connection therewith.

3 unchanged sentences

Conversion Rights .

Each shares of series

X senior convertible preferred stock, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder

thereof, at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing

the stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price equal to the lower

Each share of series

X senior convertible preferred stock, plus all accrued and unpaid dividends thereon, are convertible, at the option of the holder thereof,

at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the

stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price equal to the lower

of (i) the lowest VWAP during the five (5) trading days immediately prior to the applicable conversion date and (ii) the price per share

13 unchanged sentences

Redemption Rights .

Commencing on September

22, 2023, any holder may require the Company to redeem its shares by the payment in cash therefore of a sum equal to 100% of the stated

value of $4.00 per share, plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the certificate

of designation;

provided however, that in the event that the Company completes a public offering prior to the redemption date, then any

holder may only cause the Company to redeem any outstanding series X senior convertible preferred stock by paying such redemption price

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

Company completes such public offering.

Commencing on

September 22, 2023, any holder may require the Company to redeem its shares by the payment in cash therefore of a sum equal to 100% of

the stated value of $4.00 per share, plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of

the certificate of designation;

provided however, that in the event that the Company completes a public offering prior to the redemption

date, then any holder may only cause the Company to redeem any outstanding series X senior convertible preferred stock by paying such

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

the date that the Company completes such public offering.

Non-redeemable Preferred Stock

10 unchanged sentences

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Dividend Rights.

51 unchanged sentences

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Voting Rights .

56 unchanged sentences

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

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Voting Rights .

50 unchanged sentences

paid on shares of series E preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Liquidation Rights .

53 unchanged sentences

paid on shares of series F-1 preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Liquidation Rights .

53 unchanged sentences

paid on shares of series I preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Liquidation Rights .

56 unchanged sentences

paid on shares of series J preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Liquidation Rights .

56 unchanged sentences

paid on shares of series L preferred stock.

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023

Liquidation Rights .

39 unchanged sentences

preferred stock do not have any redemption rights.

Series Y Senior Preferred Stock

On May 15, 2024, in conjunction with the exchange

of certain senior secured convertible promissory notes, 938,908 shares of series Y preferred senior convertible preferred stock were issued

with an aggregate value of $ 3,755,632 .

What changed 10-Q

Item 1. Financial Statements