CARDIFF INTERNATIONAL, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation.
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial
information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited
condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the
opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results
are not necessarily indicative of results for a full year.
The unaudited condensed consolidated financial
statements and related disclosures have been prepared with the presumption that users of the interim financial information have
read or have access to the Company’s annual audited consolidated financial statements for the preceding fiscal year. Accordingly,
these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and the related notes for the years ended December 31, 2014 and 2013 thereto contained in the Annual Report on Form
10-K for the year ended December 31, 2014.
Organization and Nature of Operations
Legacy Card Company (“Legacy”)
was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, Legacy converted from a California Limited Liability
Company to a Nevada Corporation. On November 10, 2005, Legacy merged with Cardiff International, Inc. (“Cardiff”, the
“Company”), a publicly held corporation. In the first quarter of 2013, it was decided to restructure Cardiff into a
holding company that adopted a new business model known as "Collaborative Governance," a form of governance enabling
businesses to take advantage of the power of a public company. Cardiff began targeting the acquisition of undervalued, niche companies
with high growth potential, income-producing commercial real estate properties, and high return investments, all designed to pay
a dividend to the Company’s shareholders. The reason for this strategy was to protect the Company’s shareholders by
acquiring profitable small- to minimum-sized businesses with little to no debt, seeking support with both financing and management
that had the ability to offer a return to investors. The plan is to establish new classes of preferred stock to streamline voting
rights, negate debt, and acquire new businesses. By December of 2013, the Company had negated more than 90% of all its debt; by
July of 2014, the Company had completed the acquisition of three businesses: We Three, LLC; Romeo’s NY Pizza; and Edge View
Properties, Inc. The Company delayed the filing of its Annual Report on Form 10-K (“Form 10-K”) for the year ended
December 31, 2014 due to difficulty obtaining information from another acquisition, which was subsequently unwound.
Description of Business
Cardiff is a holding company that adopted
a new business model known as "Collaborative Governance.” To date, the Company is not aware of any other domestic holding
company using the same business philosophy or governing policies. The Company’s business footprint is to acquire strong companies
that meet the following criteria: (1) in business for a minimum of two years; (2) profitable; (3) good management team; (4) little
to no debt; and (5) assets of a minimum of $1,000,000. Cardiff continues to practice all business ethics under the Securities Exchange
Act of 1934
(“1934 Act”) and acknowledges that there are more than 43 successful
Business Development Companies subject to the Investment Company Act of 1940 (“1940 Act”), all of which may be considered
competition to Cardiff and that are established and available to the public for investment. These companies offer experienced management,
dividends and financial security.
To date, Cardiff consists of three subsidiaries:
We Three, LLC; Romeo’s NY Pizza; and Edge View Properties, Inc.
Going Concern
The accompanying consolidated financial
statements have been prepared using the going concern basis of accounting, which contemplates continuity of operations, realization
of assets and liabilities and commitments in the normal course of business. The Company is in the development stage and, as such,
has sustained operating losses since its inception and has negative working capital and an accumulated deficit. These factors raise
substantial doubts about the Company’s ability to continue as a going concern. As of June 30, 2015, the Company had shareholders’
deficit of $421,845. 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. As a result, the Company’s independent registered public accounting firm, in its
report on the Company’s December 31, 2014 consolidated financial statements, has raised substantial doubt about the Company’s
ability to continue as a going concern.
The ability of the Company to continue
as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash
infusions. Management has prospective investors and believes the raising of capital will allow the Company to pursue new acquisitions.
There can be no assurance that the Company will be able to obtain sufficient capital from debt or equity transactions or from operations
in the necessary time frame or on terms acceptable to it. Should the Company be unable to raise sufficient funds, it may be required
to curtail its operating plans. In addition, increases in expenses may require cost reductions. No assurance can be given that
the Company will be able to operate profitably on a consistent basis, or at all, in the future. Should the Company not be able
to raise sufficient funds, it may cause cessation of operations.
Recently Issued Accounting Pronouncements
The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements up to ASU 2016-13, and does not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its consolidated financial condition or the consolidated results of its operations.
2. DISCONTINUED OPERATIONS
In April 2015, the Company closed 2 pizza
restaurants located in Alpharetta, Georgia and Lawrenceville, Georgia due to continuing losses in operations and slow traffic at
these 2 locations.
3. PLANT AND EQUIPMENT, NET
Plant and equipment, net as of June 30,
2015 and December 31, 2014 was $538,884 and $534,212, respectively, consisting of the following:
|
|
June 30, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
Furniture, fixture and equipment
|
|
$
|
261,881
|
|
|
$
|
268,055
|
|
Leasehold improvements
|
|
|
591,711
|
|
|
|
545,830
|
|
|
|
$
|
853,592
|
|
|
$
|
813,885
|
|
Less: accumulated depreciation
|
|
|
(314,708
|
)
|
|
|
(279,673
|
)
|
Plant and equipment, net
|
|
$
|
538,884
|
|
|
$
|
534,212
|
|
During the six months ended June 30, 2015
and 2014, depreciation expense was $33,622 and $0, respectively.
During the six months ended June 30, 2015,
the Company disposed 2 smart cars for cash payment of $30,902, resulting in gain of $12,007 from disposal of fixed assets.
4. ACCRUED EXPENSES
As of June 30, 2015 and December 31, 2014,
the Company had accrued expenses of $779,251 and $626,330, respectively, consisted of the following:
|
|
June 30, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
Accrued salaries
|
|
$
|
382,500
|
|
|
$
|
450,000
|
|
Accrued expenses - other
|
|
|
396,751
|
|
|
|
176,330
|
|
Total
|
|
$
|
779,251
|
|
|
$
|
626,330
|
|
5. RELATED PARTY TRANSACTIONS
Due to Officers and Officer Compensation
The Company borrows funds from Daniel Thompson,
who is a Shareholder and Officer of the Company. The terms of repayment stipulate the loans are due 24 months after the launch
of the Legacy Tuition Card (or prior to such date) at an annual interest rate of six percent. As of June 30, 2015, the Company
had $90,805 due to Daniel Thompson.
In addition, the Company has an employment
agreement, renewed May 15, 2014, with Daniel Thompson whereby the Company changed Daniel Thompson’s compensation to $20,000
per month from $25,000. Accordingly, a total salary of $120,000 and $137,500 were accrued and reflected as an expense to Daniel
Thompson during the six months ended June 30, 2015 and 2014, respectively. The accrued salaries payable to Daniel Thompson was
$382,500 as of June 30, 2015.
The Company has an employment agreement with
a former President, Ms. Roberton, whereby the Company provides for compensation of $25,000 per month beginning May 15, 2014. A
total salary of $187,500 was reflected as an expense during the year ended December 31, 2014. On June 1, 2015, Ms. Roberton resigned
from all her positions of the Company and agreed to waive all unpaid salary earned during her employment. Accordingly, the Company
recorded gain of $187,500 from debt forgiveness in the consolidated statements of operations for the six months ended June 30,
2015. The total balance due to Ms. Roberton for accrued salaries at June 30, 2015 and December 31, 2014 was $0 and $0, respectively.
The Company had an employment agreement
with a former Chief Operating Officer, Mr. Levy, whereby the Company provided for compensation of $15,000 per month. A total salary
of $90,000 was accrued and reflected as an expense during the six months ended June 30, 2015. The total balance due to Mr. Levy
for accrued salaries at June 30, 2015 was $90,000.
The Company had an employment agreement
with the Chief Executive Officer, Mr. Cunningham, whereby the Company provided for compensation of $15,000 per month. A total salary
of $90,000 was accrued and reflected as an expense during the six months ended June 30, 2015. The total balance due to Mr. Cunningham
for accrued salaries at June 30, 2015 was $90,000.
Notes Payable – Related Party
The Company has entered into several loan
agreements with related parties (see above; Footnote 6, Notes Payable – Related Party; and Footnote 7, Convertible Notes
Payable – Related Party).
6. NOTES PAYABLE
Notes payable at June 30, 2015 and December
31, 2014 are summarized as follows:
|
|
June 30, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
Notes Payable – Unrelated Party
|
|
$
|
62,736
|
|
|
$
|
129,032
|
|
Notes Payable – Related Party
|
|
|
100,000
|
|
|
|
100,000
|
|
Discount on notes
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
$
|
162,736
|
|
|
$
|
229,032
|
|
Current portion
|
|
|
(62,736
|
)
|
|
|
(129,032
|
)
|
Long-term portion
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Notes Payable – Unrelated Party
On March 12, 2009, the Company entered
into a preferred debenture agreement with a shareholder for $20,000. The note bore interest at 12% per year and matured on September
12, 2009. In conjunction with the preferred debenture, the Company issued 2,000,000 warrants to purchase its Common Stock, exercisable
at $0.10 per share and expired on March 12, 2014. As a result of the warrants issued, the Company recorded a $20,000 debt discount
during 2009 which has been fully amortized. The Company assigned all of its receivables from consumer activations of the rewards
program as collateral on this debenture. On March 24, 2011, the Company amended the note and the principal balance was reduced
to $15,000. The Company was due to pay annual principal payments of $5,000 plus accrued interest beginning March 12, 2012. On
July 20, 2011, the Company repaid $5,000 of the note. As of December 31, 2012, the warrants had not been exercised. As of June
30, 2015, the Company is in default on this debenture. The balance of the note was $10,989 and $10,989 at June 30, 2015 and December
31, 2014, respectively.
The balance of $51,747 in notes payable
to unrelated party was due to the auto loan for the vehicles used in the Pizza restaurants.
Notes Payable – Related Party
On September 7, 2011, the Company entered
into a Promissory Note agreement (“Note 1”) with a related party for $50,000. Note 1 bears interest at 8% per year
and matures on September 7, 2016. Interest is payable annually on the anniversary of Note 1, and the principal and any unpaid interest
will be due upon maturity. In conjunction with Note 1, the Company issued 2,500,000 shares of its Common Stock to the lender. As
a result of the shares issued in conjunction with Note 1, the Company recorded a $50,000 debt discount during 2011. The balance
of Note 1, net of debt discount, was $50,000 and $50,000 at June 30, 2015 and December 31, 2014, respectively.
On November 17, 2011, the Company entered
into a Promissory Note agreement (“Note 2”) with a related party for $50,000. Note 2 bears interest at 8% per year
and matures on November 17, 2016. Interest is payable annually on the anniversary of Note 2, and the principal and any unpaid interest
will be due upon maturity. In conjunction with Note 2, the Company issued 2,500,000 shares of its Common Stock to the lender. As
a result of the shares issued in conjunction with Note 2, the Company recorded a $50,000 debt discount during 2011. The balance
of Note 2, net of debt discount, was $50,000 and $50,000 at June 30, 2015 and December 31, 2014, respectively.
The following is a schedule showing the
future minimum loan payments in the future 5 years.
|
Year ending December 31,
|
|
|
|
|
|
|
2015
|
|
|
$
|
62,736
|
|
|
2016
|
|
|
|
100,000
|
|
|
2017
|
|
|
|
0
|
|
|
2018
|
|
|
|
0
|
|
|
2019
|
|
|
|
0
|
|
|
Total
|
|
|
$
|
162,736
|
|
7. CONVERTIBLE NOTES PAYABLE
Some of the Convertible Notes issued as
described below included an anti-dilution provision that allowed for the adjustment of the conversion price. The Company considered
the guidance provided by the FASB in “
Determining Whether an Instrument Indexed to an Entity’s Own Stock
,”
the result of which indicates that the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined
that, as the conversion price of the Notes issued in connection therewith could fluctuate based future events, such prices were
not fixed amounts. As a result, the Company determined that the conversion features of the Notes issued in connection therewith
are not considered indexed to the Company’s stock and characterized the value of the conversion feature of such notes as
derivative liabilities upon issuance.
Convertible notes at June 30, 2015 and December 31, 2014 are
summarized as follows:
|
|
June 30, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes Payable – Unrelated Party
|
|
$
|
21,200
|
|
|
$
|
9,000
|
|
Convertible Notes Payable – Related Party
|
|
|
165,000
|
|
|
|
165,000
|
|
Discount on notes
|
|
|
(6,208
|
)
|
|
|
–
|
|
Total - Current
|
|
$
|
179,992
|
|
|
$
|
174,000
|
|
Convertible Notes Payable – Unrelated Party
On April 17, 2014, the Company entered
into an unsecured Convertible Note (“Note 3”) in the amount of $9,000. Note 3 was convertible into Common Shares of
the Company at $0.005 per share at the option of the holder. Note 3 bore interest at eight percent per year, matured on June 17,
2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. As of June 30, 2015, the Company is in
default on Note 3. The balance of the note was $9,000 and $9,000 at June 30, 2015 and December 31, 2014, respectively.
On May 6, 2015, the Company entered into
a 10% convertible promissory note (“Note 4”) with an unrelated entity in the amount of $12,200. Note 4 bore interest
at ten percent per year, matured on September 3, 2015, and was unsecured. Note 4 was convertible into Common Shares of the Company
at the conversion ratio of 50% discount to market at the lowest traded price within 20 business days prior to “Notice of
Conversion”. This gives rise to derivative liability accounting related to this Note since the conversion ratio is considered
floorless.
Accordingly, Note 4 has been evaluated
with respect to the terms and conditions of the conversion features contained in Note 4 to determine whether they represent embedded
or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained
in Note 4 for $12,200 carrying value represents a freestanding derivative instrument that meets the requirements for liability
classification under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the
Company’s balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was
measured using the Black-Scholes valuation model at the inception date of Note 4 and will do so again on each subsequent balance
sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income
or expense at each balance sheet date.
The table below sets forth the assumptions
for Black-Scholes valuation model on May 6, 2015 (inception) and June 30, 2015, respectively. For the period ended June 30, 2015,
the Company had initial loss of $10,295 due to derivative liabilities, and decreased the derivative liability of $22,495 by $1,280,
resulting in a derivative liability of $21,215 at June 30, 2015.
Reporting Date
|
|
Fair Value
|
|
|
Term (Years)
|
|
|
Assumed Conversion Price
|
|
|
Market Price on Issuance Date
|
|
|
Volatility Percentage
|
|
|
Risk-free Rate
|
|
5/6/2015
|
|
$
|
22,495
|
|
|
|
0.33
|
|
|
$
|
0.825
|
|
|
$
|
1.69
|
|
|
|
507%
|
|
|
|
0.0002
|
|
6/30/2015
|
|
$
|
21,215
|
|
|
|
0.18
|
|
|
$
|
0.375
|
|
|
$
|
0.80
|
|
|
|
513%
|
|
|
|
0.0001
|
|
As of June 30, 2015, the carrying values
of Note 4 were $5,992 and the debt discount was $6,208. The Company recorded interest expense related to Note 4 in amount of $184
during the six months ended June 30, 2015. The accrued interest of Note 4 was $184 as of June 30, 2015.
The Notes
|
|
|
|
|
Proceeds
|
|
$
|
12,200
|
|
Less derivative liabilities on initial recognition
|
|
|
(12,200
|
)
|
Value of the Notes on initial recognition
|
|
|
0
|
|
Add accumulated accretion expense
|
|
|
5,992
|
|
Balance as of June 30, 2015
|
|
$
|
5,992
|
|
Convertible Notes Payable – Related Party
On April 21, 2008, the Company entered
into an unsecured Convertible Debenture (“Debenture 1”) with a shareholder in the amount of $150,000. Debenture 1 was
convertible into Common Shares of the Company at $0.03 per share at the option of the holder no earlier than August 21, 2008. Debenture
1 bore interest at 12% per year, matured in August 2009, and was unsecured. All principal and unpaid accrued interest was due at
maturity. In conjunction with the Debenture 1, the Company also issued warrants to purchase 5,000,000 shares of the Company’s
Common Stock at $0.03 per share. The warrants expired on April 20, 2013. As a result of issued warrants, the Company recorded a
$150,000 debt discount during 2008 which has been fully amortized. The Company is in default on Debenture 1, and the warrants have
not been exercised. The balance of Debenture 1 was $150,000 and $150,000 at June 30, 2015 and December 31, 2014, respectively.
On March 11, 2009, the Company entered
into an unsecured Convertible Debenture (“Debenture 2”) with a shareholder in the amount of $15,000. Debenture 2 was
convertible into Common Shares of the Company at $0.03 per share at the option of the holder. Debenture 2 bore interest at 12%
per year, matured on March 11, 2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. The balance
of Debenture 2 was $15,000 and $15,000 at June 30, 2015 and December 31, 2014, respectively.
The following is a schedule showing the
future minimum loan payments in the future 5 years.
|
Year ending December 31,
|
|
|
|
|
|
|
2015
|
|
|
$
|
186,200
|
|
|
2016
|
|
|
|
0
|
|
|
2017
|
|
|
|
0
|
|
|
2018
|
|
|
|
0
|
|
|
2019
|
|
|
|
0
|
|
|
Total
|
|
|
$
|
186,200
|
|
8. DERIVATIVE LIABILITIES
As of June 30, 2015, the Company’s
derivative liabilities are embedded derivatives associated with the Company’s convertible note payable (see Footnote 7).
Due to the Notes’ conversion feature, the actual number of shares of common stock that would be required if a conversion
of the note as described in Footnote 7 was made through the issuance of the Company’s common stock cannot be predicted. As
a result, the conversion feature requires derivative accounting treatment and will be bifurcated from the note and “marked
to market” each reporting period through the statement of operations.
The Company measured the fair value of
the derivative liabilities as $22,495 on May 6, 2015, and remeasured the fair value as $21,215 on June 30, 2015, and recorded the
change of fair value of $9,015 in the statements of operations for the six months ended June 30, 2015.
9. PAYROLL TAXES
The Company previously reported that it
has failed to remit payroll tax payments since 2006, as required by various taxing authorities. Payroll taxes and estimated penalties
were accrued in recognition of accrued salaries subsequently settled via stock issue and other agreements that did not result in
reportable or taxable payroll transactions. These accruals were reversed for prior years, and a similar estimated accrual established
for 2014. As of June 30, 2015 and December 31, 2014, the Company estimated the amount of taxes, interest, and penalties that the
Company could incur as a result of payroll related taxes and penalties to be $39,452 and $38,400, respectively.
10. NET LOSS PER SHARE
Basic net loss per share is computed using
the weighted average number of common shares outstanding during the periods. There were no dilutive earnings per share
for the three and six months ended June 30, 2015 and 2014 due to net loss during the periods.
The following table sets forth the computation
of basic net loss per share for the periods indicated:
|
|
For the three months ended
|
|
|
|
June
30, 2015
|
|
|
June 30, 2014
|
|
Numerator:
|
|
|
|
|
|
|
- Net loss for the period
|
|
$
|
(2,879,657
|
)
|
|
$
|
(175,245
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
- Weighted average common shares outstanding
|
|
|
7,778,462
|
|
|
|
100,585
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
|
|
$
|
(0.37
|
)
|
|
$
|
(1.74
|
)
|
|
|
For the six months ended
|
|
|
|
June
30, 2015
|
|
|
June 30, 2014
|
|
Numerator:
|
|
|
|
|
|
|
- Net loss for the period
|
|
$
|
(3,004,148
|
)
|
|
$
|
(293,122
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
- Weighted average common shares outstanding
|
|
|
6,373,118
|
|
|
|
94,556
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
|
|
$
|
(0.47
|
)
|
|
$
|
(3.10
|
)
|
|
|
|
|
|
|
|
|
|
11. CAPITAL STOCK
During the six months ended June 30, 2015,
383,479 shares of Series “B” Preferred Stock were converted into 1,559,156 shares of Common Stock of the Company per
the preferred shareholder’s instruction.
During the six months ended June 30, 2015,
the Company issued 33,197 shares of Series “B” Preferred stock and 3 shares of Series “C” Preferred Stock
to several investors for total cash payment of $82,500 pursuant to the executed subscription agreements.
During the six months ended June 30, 2015,
the Company issued 6,249 shares of Series “F-1” Preferred stock and 1 share of Series “C” Preferred Stock
to an investor for total cash payment of $25,000 pursuant to the executed subscription agreement.
During the six months ended June 30, 2015,
the Company issued 9,999 shares of Series “F-1” Preferred stock and 1 share of Series “C” Preferred Stock
to an investor for total cash payment of $25,000 pursuant to the executed subscription agreement.
12. STOCK BASED COMPENSATION
On April 15, 2015, the Company entered
into three consulting service agreements with three Consultants for marketing, management and financial strategies in exchange
for 1,500,000 shares of Common Stock of the Company. The fair value of this stock issuance was determined by the fair value of
the Company’s Common Stock on the grant date, at a price of approximately $1.78 per share. Accordingly, the Company
calculated the stock based compensation of $2,670,000 at its fair value and included it in the consolidated statements of operations
for the six months ended June 30, 2015.
On June 3, 2015, the Company entered into
a consulting service agreement with a Consultant for marketing, management and financial strategies in exchange for 150,000 shares
of Common Stock of the Company. The fair value of this stock issuance was determined by the fair value of the Company’s Common
Stock on the grant date, at a price of approximately $0.84 per share. Accordingly, the Company calculated the stock based
compensation of $126,000 at its fair value and included it in the consolidated statements of operations for the six months ended
June 30, 2015.
13. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company had operating leases of $66,266
and $131,969 for the three and six months ended June 30, 2015, respectively, consisting of the followings. There was no rent expense
for the three and six months ended June 30, 2014 as such office space was contributed at no cost by Daniel Thompson, the imputed
effects of which are immaterial to the consolidated financial statements taken as a whole.
|
|
For the three months ended
|
|
|
|
June 30, 2015
|
|
|
June 30, 2014
|
|
|
|
|
|
|
|
|
Restaurants
|
|
$
|
43,020
|
|
|
$
|
–
|
|
Lot
|
|
|
14,542
|
|
|
|
–
|
|
Office
|
|
|
7,600
|
|
|
|
–
|
|
Equipment Rentals
|
|
|
1,104
|
|
|
|
–
|
|
Total
|
|
$
|
66,266
|
|
|
$
|
–
|
|
|
|
For the six months ended
|
|
|
|
June 30, 2015
|
|
|
June 30, 2014
|
|
|
|
|
|
|
|
|
Restaurants
|
|
$
|
86,797
|
|
|
$
|
–
|
|
Lot
|
|
|
27,623
|
|
|
|
–
|
|
Office
|
|
|
14,900
|
|
|
|
–
|
|
Equipment Rentals
|
|
|
2,649
|
|
|
|
–
|
|
Total
|
|
$
|
131,969
|
|
|
$
|
–
|
|
14. SEGMENT REPORTING
The Company has two reportable operating
segments as determined by management using the “management approach” as defined by the authoritative guidance on
Disclosures
about Segments of an Enterprise and Related Information
: (1) Mobile home lease (We Three), and (2) Company-owned
Pizza Restaurants (Romeo’s NY Pizza). These segments are a result of differences in the nature of the products
and services sold. Corporate administration costs, which include, but are not limited to, general accounting, human
resources, legal and credit and collections, are partially allocated to the two operating segments. Other revenue consists
of nonrecurring items.
The mobile home lease segment establishes
mobile home business as an option for a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage
payments and high property taxes. If bad credit is an issue preventing people from purchasing a traditional house, the Company
will provide a financial leasing option with "0" interest on the lease providing a "lease to own" option for
their family home.
The Company-owned Pizza Restaurant segment
includes sales and operating results for all Company-owned restaurants. Assets for this segment include equipment, furniture
and fixtures for the Company-owned restaurants.
Corporate administration and other assets
primarily include the deferred tax asset, cash and short-term investments, as well as furniture and fixtures located at the corporate
office and trademarks and other intangible assets. All assets are located within the United States.
|
|
Three Months Ended
June
30, 2015
|
|
|
Six Months Ended
June
30, 2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
We Three
|
|
$
|
42,743
|
|
|
$
|
84,491
|
|
Romeo’s NY Pizza
|
|
|
286,793
|
|
|
|
663,913
|
|
Others
|
|
|
–
|
|
|
|
10,100
|
|
Consolidated revenues
|
|
$
|
329,536
|
|
|
$
|
758,504
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales:
|
|
|
|
|
|
|
|
|
We Three
|
|
$
|
42,306
|
|
|
$
|
71,299
|
|
Romeo’s NY Pizza
|
|
|
200,888
|
|
|
|
473,293
|
|
Others
|
|
|
–
|
|
|
|
–
|
|
Consolidated cost of sales
|
|
$
|
243,194
|
|
|
$
|
544,592
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before taxes
|
|
|
|
|
|
|
|
|
We Three
|
|
$
|
(7,146
|
)
|
|
$
|
2,140
|
|
Romeo’s NY Pizza
|
|
|
(17,561
|
)
|
|
|
50,597
|
|
Others
|
|
|
(2,854,950
|
)
|
|
|
(3,056,885
|
)
|
Consolidated loss before taxes
|
|
$
|
(2,879,657
|
)
|
|
$
|
(3,004,148
|
)
|
|
|
|
|
|
|
|
As of
June 30, 2015
|
|
Assets:
|
|
|
|
|
|
|
|
|
We Three
|
|
|
|
|
|
$
|
211,557
|
|
Romeo’s NY Pizza
|
|
|
|
|
|
|
125,793
|
|
Others
|
|
|
|
|
|
|
894,518
|
|
Combined assets
|
|
|
|
|
|
$
|
1,231,868
|
|
|
|
|
|
|
|
|
|
|
15. SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the
Company has analyzed its operations subsequent to June 30, 2015 to the date these consolidated financial statements were issued,
and has determined that it does not have any material subsequent events to disclose in these financial statements other than those
specified below.
First Acquisition:
As previously disclosed on June 30, 2016, the Company completed
the acquisition of Titancare, LLC. The acquisition became effective (the “Effective day”) on June 27, 2016, a Pennsylvania
At Home Care franchise. The acquisition is subject to Franchisor approval and the completion of an independent audit.
In connection with the closing of the acquisition, at the Effective
Time, each outstanding class of preferred shares of Titan, par value $0.17 per share ("Titan Preferred Class Stock"),
was converted into $0.17 preferred shares (the "Stock Consideration") of the Company’s Preferred Class “G”
Stock, par value $0.001 per share ("CDIF Preferred “G” Stock"). The preferred share Consideration was adjusted
as a result of the authorization and declaration of a special distribution to the preferred Titan stockholders at $0.17 per share
with a conversion rate of 1 to 1.3 Common Stock payable to Titan shareholders of record as of the close of business on June 27,
2016 (the "Special Conversion"). The Special Conversion right is granted as a result of the closing of the sale of certain
interests in assets of Titan to certain parties designated the Company, which closed on June 27, 2016 (the "Asset Sale").
Pursuant to the terms of the Acquisition.
Pending Franchisor approval and the completion of the independent
audit, CDIF will issue approximately 977,247 shares of CDIF Preferred “G” Shares to Titancare shareholders as Stock
Consideration in the Acquisition. Based on the price of CDIF’s Common stock as of June 27 and 29, 2016 at $0.17 per share,
the acquisition consideration represents an approximate value of $166,132. The LLC has filed to convert to a Pennsylvania Corporation.
Second Acquisition:
As previously disclosed on June 29, 2016, the Company completed
the acquisition of York County In Home Care, Inc. The acquisition became effective (the “Effective day”) on June 27,
2016, a Pennsylvania At Home Care franchise. The acquisition is subject to Franchisor approval and the completion of an independent
audit.
In connection with the closing of the acquisition, at the Effective
Time, each outstanding class of preferred shares of York, par value $0.17 per share ("York Preferred Class Stock"), was
converted into $0.17 preferred shares (the "Stock Consideration") of the Company’s Preferred Class “G”
Stock, par value $0.001 per share ("CDIF Preferred “G” Stock"). The preferred share Consideration was adjusted
as a result of the authorization and declaration of a special distribution to the preferred York stockholders at $0.17 per share
with a conversion rate of 1 to 1.3 Common Stock payable to York shareholders of record as of the close of business on June 29,
2016 (the "Special Conversion"). The Special Conversion right is granted as a result of the closing of the sale of certain
interests in assets of York to certain parties designated by the Company, which closed on June 29, 2016 (the "Asset Sale").
Pursuant to the terms of the Acquisition.
Pending Franchisor approval and the completion of the independent
audit, CDIF will issued approximately 8,235,294 shares of CDIF Preferred “G” Shares as Stock Consideration in the Acquisition.
Based on the price of the Company’s Preferred “G” Class of stock on June 29, 2016. The acquisition consideration
(based on the value of $0.17 in CDIF Preferred Stock, represents approximately $1,400,000.00.
Third Acquisition:
On August 10
th
, 2016, Cardiff International, Inc.
(CDIF) completed the acquisition of Refreshment Concepts, LLC. The acquisition became effective (the "Effective day")
on August 10
th
, 2016.
In connection with the closing of the acquisition, at the Effective
Time, each outstanding class of preferred shares of Refreshment Concepts, par value $0.20 per share ("Refreshment Concepts
Preferred Class Stock"), was converted into $0.20 preferred shares (the "Stock Consideration") of CDIF’s Preferred
Class “H” Stock, par value $0.001 per share ("CDIF Preferred “H” Stock"). The preferred share
Consideration was adjusted as a result of the authorization and declaration of a special distribution to the preferred Refreshment
Concepts stockholders at $0.20 per share with a conversion rate of 1 to 1.25 Common Stock payable to Refreshment Concepts shareholders
of record as of the close of business on July 22, 2016 (the "Special Conversion"). The Special Conversion right is granted
as a result of the closing of the sale of certain interests in assets of Refreshment Concepts to certain parties designated by
CDIF, which closed on July 22, 2016 (the "Asset Sale"). Pursuant to the terms of the Acquisition.
CDIF issued approximately 1,440,000 shares of CDIF Preferred
“H” Shares as Stock Consideration in the Acquisition. Based on the price of CDIF’s Preferred “H”
Class of stock on July 1
st
, 2016. The acquisition consideration (based on the value of $0.20 in CDIF Preferred Stock,
represents approximately $288,000.00. The LLC has filed to convert to a Georgia Corporation. An amended 8K will be filed with audited
financials by October 10
th
, 2016.
Fourth Acquisition:
On August 10
th
, 2016, Cardiff International, Inc.
(CDIF) completed the acquisition of F.D.R. Enterprises. The acquisition became effective (the "Effective day") on August
10th, 2016.
In connection with the closing of the acquisition, at the Effective
Time, each outstanding class of preferred shares of F.D.R. Enterprises par value $0.20 per share ("F.D.R. Enterprises Preferred
Class Stock"), was converted into $0.20 preferred shares (the "Stock Consideration") of CDIF’s Preferred Class
“H” Stock, par value $0.001 per share ("CDIF Preferred “H” Stock"). The preferred share Consideration
was adjusted as a result of the authorization and declaration of a special distribution to the preferred F.D.R. Enterprises stockholders
at $0.20 per share with a conversion rate of 1 to 1.25 Common Stock payable to F.D.R. Enterprises shareholders of record as of
the close of business on July 22, 2016 (the "Special Conversion"). The Special Conversion right is granted as a result
of the closing of the sale of certain interests in assets of F.D.R. Enterprises to certain parties designated by CDIF, which closed
on July 22, 2016 (the "Asset Sale"). Pursuant to the terms of the Acquisition.
CDIF issued approximately 1,206,870 shares of CDIF Preferred
“H” Shares as Stock Consideration in the Acquisition. Based on the price of CDIF’s Preferred “H”
Class of stock on July 1
st
, 2016. The acquisition consideration (based on the value of $0.20 in CDIF Preferred Stock,
represents approximately $241,374.00. The LLC has filed to convert to a Tennessee Corporation. An amended 8K will be filed with
audited financials by October 10
th
, 2016.
Fifth Acquisition:
On August 10
th
, 2016, Cardiff International, Inc.
(CDIF) completed the acquisition of Repicci’s Franchise Group. The acquisition became effective (the "Effective day")
on August 10
th
, 2016.
In connection with the closing of the acquisition, at the Effective
Time, each outstanding class of preferred shares of Repicci’s Franchise Group par value $0.20 per share ("Repicci’s
Franchise Group Preferred Class Stock"), was converted into $0.20 preferred shares (the "Stock Consideration") of
CDIF’s Preferred Class “H” Stock, par value $0.001 per share ("CDIF Preferred “H” Stock").
The preferred share Consideration was adjusted as a result of the authorization and declaration of a special distribution to the
preferred Repicci’s Franchise Group stockholders at $0.20 per share with a conversion rate of 1 to 1.25 Common Stock payable
to Repicci’s Franchise Group shareholders of record as of the close of business on July 22, 2016 (the "Special Conversion").
The Special Conversion right is granted as a result of the closing of the sale of certain interests in assets of Repicci’s
Franchise Group to certain parties designated by CDIF, which closed on July 22, 2016 (the "Asset Sale"). Pursuant to
the terms of the Acquisition.
CDIF issued approximately 1,770,000 shares of CDIF Preferred
“H” Shares as Stock Consideration in the Acquisition. Based on the price of CDIF’s Preferred “H”
Class of stock on July 1
st
, 2016. The acquisition consideration (based on the value of $0.20 in CDIF Preferred Stock,
represents approximately $354,000.00. The LLC has filed to convert to a Tennessee Corporation. An amended 8K will be filed with
audited financials by October 10
th
, 2016.