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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 2024
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to
_____________
Commission File Number: 000-49709
CARDIFF LEXINGTON CORPORATION |
(Exact name of registrant as specified in its charter) |
Nevada |
|
84-1044583 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
3753 Howard Hughes Parkway, Suite 200, Las Vegas, NV |
|
89169 |
(Address of principal executive offices) |
|
(Zip Code) |
844-628-2100 |
(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b)
of the Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒
No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer ☒ |
Smaller reporting company ☒ |
|
Emerging growth company ☐ |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of November 5, 2024, there were 15,036,725 shares of common stock
of the registrant issued and outstanding.
CARDIFF LEXINGTON CORPORATION
Quarterly Report on Form 10-Q
Period Ended September 30, 2024
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
ITEM 1. |
FINANCIAL STATEMENTS. |
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2024 (UNAUDITED) AND DECEMBER
31, 2023
| |
| | |
| |
| |
September 30, 2024 | | |
December 31, 2023 (Restated) | |
ASSETS | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash | |
$ | 1,949,600 | | |
$ | 866,943 | |
Accounts receivable-net | |
| 14,798,220 | | |
| 13,305,254 | |
Prepaid and other current assets | |
| 5,000 | | |
| 5,000 | |
Total current assets | |
| 16,752,820 | | |
| 14,177,197 | |
| |
| | | |
| | |
Property and equipment, net | |
| 24,563 | | |
| 34,661 | |
Land | |
| 540,000 | | |
| 540,000 | |
Goodwill | |
| 5,666,608 | | |
| 5,666,608 | |
Right of use - assets, net | |
| 465,389 | | |
| 289,062 | |
Due from related party | |
| 4,979 | | |
| 4,979 | |
Other assets | |
| 60,403 | | |
| 33,304 | |
Total assets | |
$ | 23,514,762 | | |
$ | 20,745,811 | |
| |
| | | |
| | |
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued expense | |
$ | 1,386,412 | | |
$ | 2,047,131 | |
Accrued expenses - related parties | |
| 4,353,056 | | |
| 4,733,057 | |
Accrued interest | |
| 361,172 | | |
| 620,963 | |
Right of use – lease liabilities | |
| 227,606 | | |
| 157,669 | |
Due to director and officer | |
| – | | |
| 120,997 | |
Notes payable – current portion | |
| 500,826 | | |
| 15,977 | |
Line of credit | |
| 7,468,971 | | |
| 2,120,100 | |
Convertible notes payable, net of debt discounts of $0 and $24,820, respectively | |
| 105,000 | | |
| 3,807,030 | |
Net liabilities of discontinued operations | |
| 237,643 | | |
| 237,643 | |
Total current liabilities | |
| 14,640,686 | | |
| 13,860,567 | |
| |
| | | |
| | |
Notes payable | |
| 140,272 | | |
| 144,666 | |
Operating lease liability – long term | |
| 236,853 | | |
| 119,056 | |
Total liabilities | |
| 15,017,811 | | |
| 14,124,289 | |
| |
| | | |
| | |
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 September 30, 2024 and December 31, 2023, respectively | |
| 3,230,023 | | |
| 3,891,439 | |
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 September 30, 2024 and December 31, 2023, respectively | |
| – | | |
| 307,980 | |
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 September 30, 2024 and December 31, 2023, respectively | |
| 1,537,808 | | |
| 1,690,685 | |
Total Mezzanine Equity | |
| 4,767,831 | | |
| 5,890,104 | |
| |
| | | |
| | |
Stockholders' equity | |
| | | |
| | |
Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value of $4.00, 753,929 and 2,139,478 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 3,015,716 | | |
| 8,557,912 | |
Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value of $4.00, 43 and 123 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 172 | | |
| 492 | |
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 September 30, 2024 and December 31, 2023, respectively | |
| 301,500 | | |
| 623,000 | |
Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $4.00, 9,500 and 35,752 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 38,000 | | |
| 143,008 | |
Series I Preferred Stock - 15,000,000 shares authorized, $0.001 par value, stated value $4.00, 11,540,500 and 14,885,000 issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 46,162,000 | | |
| 59,540,000 | |
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 September 30, 2024 and December 31, 2023, respectively | |
| – | | |
| 6,854,336 | |
Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $4.00, 319,493 shares issued and outstanding at September 30, 2024 and December 31, 2023 | |
| 1,277,972 | | |
| 1,277,972 | |
Series Y Senior Convertible Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value of $4.00, 955,114 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 3,820,456 | | |
| – | |
Common Stock; 300,000,000 shares authorized, $0.001 par value; 14,555,601 and 25,121 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | |
| 14,556 | | |
| 25 | |
Additional paid-in capital | |
| 20,891,337 | | |
| (7,581,212 | ) |
Accumulated deficit | |
| (71,792,589 | ) | |
| (68,684,115 | ) |
Total stockholders’ equity | |
| 3,729,120 | | |
| 731,418 | |
Total liabilities, mezzanine equity and stockholders’ equity | |
$ | 23,514,762 | | |
$ | 20,745,811 | |
The accompanying notes are an integral part of
these condensed consolidated financial statements
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2024 AND 2023
(UNAUDITED)
| |
| | |
| | |
| | |
| |
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
| |
2024 | | |
2023 (Restated) | | |
2024 | | |
2023 (Restated) | |
REVENUE | |
$ | 1,355,641 | | |
$ | 3,405,859 | | |
$ | 5,149,416 | | |
$ | 9,476,764 | |
COST OF SALES | |
| 1,000,601 | | |
| 551,423 | | |
| 2,741,765 | | |
| 2,589,407 | |
GROSS PROFIT | |
| 355,040 | | |
| 2,854,436 | | |
| 2,407,651 | | |
| 6,887,357 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
Depreciation expense | |
| 3,365 | | |
| 3,365 | | |
| 10,096 | | |
| 11,365 | |
Share based compensation | |
| – | | |
| – | | |
| 300,225 | | |
| – | |
Selling, general and administrative | |
| 936,835 | | |
| 577,677 | | |
| 2,622,981 | | |
| 2,095,611 | |
Total operating expenses | |
| 940,200 | | |
| 581,042 | | |
| 2,933,302 | | |
| 2,106,976 | |
| |
| | | |
| | | |
| | | |
| | |
(LOSS) INCOME FROM CONTINUING OPERATIONS | |
| (585,160 | ) | |
| 2,273,394 | | |
| (525,651 | ) | |
| 4,780,381 | |
| |
| | | |
| | | |
| | | |
| | |
OTHER (EXPENSE) INCOME | |
| | | |
| | | |
| | | |
| | |
Other (expense) income | |
| (6,767 | ) | |
| (1 | ) | |
| (4,720 | ) | |
| 204 | |
Gain on debt refinance and forgiveness | |
| – | | |
| – | | |
| 78,834 | | |
| 390 | |
Penalties and fees | |
| – | | |
| (16,000 | ) | |
| (1,330 | ) | |
| (48,000 | ) |
Interest expense | |
| (1,386,041 | ) | |
| (226,119 | ) | |
| (1,803,657 | ) | |
| (1,763,698 | ) |
Amortization of debt discounts | |
| – | | |
| (46,048 | ) | |
| (24,821 | ) | |
| (94,664 | ) |
Total other (expense) income | |
| (1,392,808 | ) | |
| (288,168 | ) | |
| (1,755,694 | ) | |
| (1,905,768 | ) |
| |
| | | |
| | | |
| | | |
| | |
LOSS FROM DISCONTINUED OPERATIONS | |
| – | | |
| (3,705 | ) | |
| (111,312 | ) | |
| (93,005 | ) |
NET (LOSS) INCOME FOR THE PERIOD | |
$ | (1,977,968 | ) | |
$ | 1,981,521 | | |
$ | (2,392,657 | ) | |
$ | 2,781,608 | |
| |
| | | |
| | | |
| | | |
| | |
PREFERRED STOCK DIVIDENDS | |
| (238,009 | ) | |
| (150,965 | ) | |
| (715,817 | ) | |
| (605,384 | ) |
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | |
$ | (2,215,977 | ) | |
$ | 1,830,556 | | |
$ | (3,108,474 | ) | |
$ | 2,176,224 | |
| |
| | | |
| | | |
| | | |
| | |
BASIC (LOSS) INCOME PER SHARE | |
| | | |
| | | |
| | | |
| | |
CONTINUING OPERATIONS | |
$ | (0.16 | ) | |
$ | 136.12 | | |
$ | (0.30 | ) | |
$ | 167.13 | |
DISCONTINUED OPERATIONS | |
$ | 0.00 | | |
$ | (0.28 | ) | |
$ | (0.01 | ) | |
$ | (7.15 | ) |
| |
| | | |
| | | |
| | | |
| | |
DILUTED (LOSS) INCOME PER SHARE | |
| | | |
| | | |
| | | |
| | |
CONTINUING OPERATIONS | |
$ | (0.16 | ) | |
$ | 2.30 | | |
$ | (0.30 | ) | |
$ | 2.40 | |
DISCONTINUED OPERATIONS | |
$ | 0.00 | | |
$ | (0.28 | ) | |
$ | (0.01 | ) | |
$ | (7.15 | ) |
| |
| | | |
| | | |
| | | |
| | |
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC | |
| 14,075,296 | | |
| 13,448 | | |
| 10,242,799 | | |
| 13,005 | |
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED | |
| 14,075,296 | | |
| 794,783 | | |
| 10,242,799 | | |
| 906,441 | |
The accompanying notes are an integral part of
these condensed consolidated financial statements
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (DEFICIT)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
AND 2023
(UNAUDITED)
Three Months Ended September 30, 2024:
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Preferred
Stock Series A,
I and Y | | |
Preferred
Stock Series B,
E, F-1, J and L | | |
Preferred
Stock Series
C | | |
Common
Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance, June 30, 2024
(Restated) | |
| 12,579,410 | | |
$ | 50,317,632 | | – |
| 1,400,797 | | |
$ | 5,603,188 | | |
| 60 | | |
$ | 240 | | |
| 13,626,376 | | |
$ | 13,626 | | |
$ | 19,522,200 | | |
$ | (69,576,612 | ) | |
$ | 5,880,274 | |
Conversion of series B preferred
stock | |
| – | | |
| – | | |
| (226,250 | ) | |
| (905,000 | ) | |
| – | | |
| – | | |
| 452,500 | | |
| 453 | | |
| 904,547 | | |
| – | | |
| – | |
Conversion of series C preferred
stock | |
| – | | |
| – | | |
| – | | |
| – | | |
| (17 | ) | |
| (68 | ) | |
| 170,000 | | |
| 170 | | |
| (102 | ) | |
| – | | |
| – | |
Conversion of series F-1 preferred
stock | |
| – | | |
| – | | |
| (16,250 | ) | |
| (65,000 | ) | |
| – | | |
| – | | |
| 32,500 | | |
| 33 | | |
| 64,967 | | |
| – | | |
| – | |
Conversion of series I preferred
stock | |
| (100,000 | ) | |
| (400,000 | ) | |
| – | | |
| – | | |
| – | | |
| – | | |
| 200,000 | | |
| 200 | | |
| 399,800 | | |
| – | | |
| – | |
Issuance of series Y preferred stock | |
| 16,206 | | |
| 64,824 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (1 | ) | |
| – | | |
| 64,823 | |
Common stock issued in legal settlement | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 74,225 | | |
| 74 | | |
| (74 | ) | |
| – | | |
| – | |
Preferred stock Dividends | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (238,009 | ) | |
| (238,009 | ) |
Net income | |
| – | | |
| – | | – |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (1,977,968 | ) | |
| (1,977,968 | ) |
Balance,
September 30, 2024 | |
| 12,495,616 | | |
$ | 49,982,456 | | – |
| 1,158,297 | | |
$ | 4,633,188 | | |
| 43 | | |
$ | 172 | | |
| 14,555,601 | | |
$ | 14,556 | | |
$ | 20,891,337 | | |
$ | (71,792,589 | ) | |
$ | 3,729,120 | |
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (DEFICIT)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
AND 2023
(UNAUDITED)
(continued)
Nine Months Ended September 30, 2024:
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Preferred
Stock Series A,
I and Y | | |
Preferred
Stock Series B,
E, F-1, J and L | | |
Preferred
Stock Series
C | | |
Common
Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance, December 31, 2023 (Restated) | |
| 14,885,002 | | |
$ | 59,540,000 | | |
| 4,364,057 | | |
$ | 17,456,228 | | |
| 123 | | |
$ | 492 | | |
| 25,121 | | |
$ | 25 | | |
$ | (7,581,212 | ) | |
$ | (68,684,115 | ) | |
$ | 731,418 | |
Conversion of convertible notes payable | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,222 | | |
| 1 | | |
| 1,679 | | |
| – | | |
| 1,680 | |
Conversion of series B preferred stock | |
| – | | |
| – | | |
| (1,385,549 | ) | |
| (5,542,196 | ) | |
| – | | |
| – | | |
| 2,771,098 | | |
| 2,771 | | |
| 5,539,425 | | |
| – | | |
| – | |
Conversion of series C preferred stock | |
| – | | |
| – | | |
| – | | |
| – | | |
| (78 | ) | |
| (312 | ) | |
| 780,000 | | |
| 780 | | |
| (468 | ) | |
| – | | |
| – | |
Conversion of series E preferred stock | |
| – | | |
| – | | |
| (80,375 | ) | |
| (321,500 | ) | |
| – | | |
| – | | |
| 160,750 | | |
| 161 | | |
| 321,339 | | |
| – | | |
| – | |
Conversion of series F-1 preferred stock | |
| – | | |
| – | | |
| (26,252 | ) | |
| (105,008 | ) | |
| – | | |
| – | | |
| 52,504 | | |
| 53 | | |
| 104,955 | | |
| – | | |
| – | |
Conversion of series I preferred stock | |
| (3,477,000 | ) | |
| (13,908,000 | ) | |
| – | | |
| – | | |
| – | | |
| – | | |
| 6,954,000 | | |
| 6,954 | | |
| 13,901,246 | | |
| – | | |
| – | |
Conversion of series J preferred stock | |
| – | | |
| – | | |
| (1,713,584 | ) | |
| (6,854,336 | ) | |
| – | | |
| – | | |
| 3,427,168 | | |
| 3,427 | | |
| 6,850,909 | | |
| – | | |
| – | |
Issuance of series I preferred stock to officers | |
| | |
| 530,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 63,600 | | |
| – | | |
| 593,600 | |
Issuance of series Y preferred stock | |
| 955,114 | | |
| 3,820,456 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 3,820,456 | |
Cancellation of series C preferred stock | |
| – | | |
| – | | |
| – | | |
| – | | |
| (2 | ) | |
| (8 | ) | |
| – | | |
| – | | |
| 8 | | |
| – | | |
| – | |
Common stock issued for services | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 7,500 | | |
| 8 | | |
| 11,617 | | |
| – | | |
| 11,625 | |
Common stock issued to board members | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| | |
| 30 | | |
| 194,970 | | |
| – | | |
| 195,000 | |
Common stock issued in legal settlement | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 74,225 | | |
| 74 | | |
| (74 | ) | |
| – | | |
| – | |
Preferred stock Dividends | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 234,909 | | |
| 235 | | |
| 1,372,269 | | |
| (715,817 | ) | |
| 656,687 | |
Net income | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (2,392,657 | ) | |
| (2,392,657 | ) |
Balance, September 30, 2024 | |
| 12,495,616 | | |
$ | 49,982,456 | | |
| 1,158,297 | | |
$ | 4,633,188 | | |
| 43 | | |
$ | 172 | | |
| 14,555,601 | | |
$ | 14,556 | | |
$ | 20,891,337 | | |
$ | (71,792,589 | ) | |
$ | 3,729,120 | |
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (DEFICIT)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
AND 2023
(UNAUDITED)
(continued)
Three Months Ended September 30, 2023:
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Preferred
Stock Series A
and I | | |
Preferred
Stock Series B,
E, F-1, J and L | | |
Preferred
Stock Series
C | | |
Common
Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholders’ (Deficit) | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance, June 30, 2023 (Restated) |
|
| 14,885,001 | | |
$ | 59,540,000 | | |
| 4,354,057 | | |
$ | 17,416,228 | | |
| 123 | | |
$ | 492 | | |
| 13,636 | | |
$ | 14 | | |
$ | (9,802,172 | ) | |
$ | (68,338,447 | ) | |
$ | (1,183,885 | ) |
Issuance of preferred stock series
E | |
| – | | |
| – | | |
| 5,000 | | |
| 20,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (20,000 | ) | |
| – | | |
| – | |
Conversion of convertible notes payable | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 2,079 | | |
| 2 | | |
| 29,016 | | |
| – | | |
| 29,018 | |
Preferred stock Dividends | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (150,965 | ) | |
| (150,965 | ) |
Net income | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,981,521 | | |
| 1,981,521 | |
Balance,
September 30, 2023 (Restated) | |
| 14,885,001 | | |
$ | 59,540,000 | | |
| 4,359,057 | | |
$ | 17,436,228 | | |
| 123 | | |
$ | 492 | | |
| 15,715 | | |
$ | 16 | | |
$ | (9,793,156 | ) | |
$ | (65,507,891 | ) | |
$ | 675,689 | |
Nine Months Ended September 30, 2023:
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Preferred
Stock Series A
and I | | |
Preferred
Stock Series B,
E, F-1, J and L | | |
Preferred
Stock Series
C | | |
Common
Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Total
Stockholders’ (Deficit) | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance, December 31,
2022 (Restated) | |
| 14,885,001 | | |
$ | 59,540,000 | | |
| 4,350,907 | | |
$ | 17,403,628 | | |
| 123 | | |
$ | 492 | | |
| 12,053 | | |
$ | 12 | | |
$ | (10,004,808 | ) | |
$ | (68,684,115 | ) | |
$ | (1,744,791 | ) |
Issuance of preferred stock series
B | |
| – | | |
| – | | |
| 3,150 | | |
| 12,600 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 12,400 | | |
| – | | |
| 25,000 | |
Issuance of preferred stock series
E | |
| – | | |
| – | | |
| 5,000 | | |
| 20,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (20,000 | ) | |
| – | | |
| – | |
Conversion of convertible notes payable | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 3,662 | | |
| 4 | | |
| 219,252 | | |
| – | | |
| 219,256 | |
Preferred stock Dividends | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (605,384 | ) | |
| (605,384 | ) |
Net income | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 2,781,608 | | |
| 2,781,608 | |
Balance,
September 30, 2023 (Restated) | |
| 14,885,001 | | |
$ | 59,540,000 | | |
| 4,359,057 | | |
$ | 17,436,228 | | |
| 123 | | |
$ | 492 | | |
| 15,715 | | |
$ | 16 | | |
$ | (9,793,156 | ) | |
$ | (65,507,891 | ) | |
$ | 675,689 | |
The accompanying notes are an integral part of
these condensed consolidated financial statements
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
AND 2023
(UNAUDITED)
| |
| | | |
| | |
| |
Nine Months Ended September 30, | |
| |
2024 | | |
2023 (Restated) | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | |
Net (loss) income | |
$ | (2,392,657 | ) | |
$ | 2,781,608 | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |
| | | |
| | |
Depreciation | |
| 10,096 | | |
| 11,365 | |
Amortization of debt discount | |
| 24,821 | | |
| 94,664 | |
Bad debt | |
| – | | |
| 270,000 | |
Change in estimate for settlement realization rate | |
| 1,650,474 | | |
| – | |
Conversion and note issuance cost | |
| 1,000 | | |
| 11,250 | |
Share issuance for compensations to directors and officers | |
| 788,600 | | |
| – | |
Share issuance for service rendered | |
| 11,625 | | |
| 25,000 | |
Fair value settled upon conversion | |
| – | | |
| 141,406 | |
Gain on settlement or forgiveness of debt | |
| (78,834 | ) | |
| (390 | ) |
(Increase) decrease in: | |
| | | |
| | |
Accounts receivable | |
| (3,143,440 | ) | |
| (5,510,098 | ) |
Right of use - assets | |
| (176,327 | ) | |
| 17,763 | |
Prepaids and other current assets | |
| (27,098 | ) | |
| – | |
Increase (decrease) in: | |
| | | |
| | |
Accounts payable and accrued expense | |
| (691,072 | ) | |
| 733,125 | |
Accrued officers compensation | |
| (380,001 | ) | |
| 514,000 | |
Accrued interest | |
| 218,174 | | |
| 380,020 | |
Right of use - liabilities | |
| 187,734 | | |
| (27,255 | ) |
Net cash used in operating activities | |
| (3,996,905 | ) | |
| (557,542 | ) |
| |
| | | |
| | |
Net cash provided by (used in) Discontinued Operations – Operating | |
| 111,312 | | |
| (38,255 | ) |
| |
| | | |
| | |
FINANCING ACTIVITIES | |
| | | |
| | |
Payments to director | |
| (120,997 | ) | |
| – | |
Repayment of SBA loans | |
| (4,545 | ) | |
| (803 | ) |
Proceeds from convertible notes payable | |
| – | | |
| 421,376 | |
Payment of convertible notes | |
| (105,079 | ) | |
| – | |
Net proceeds from line of credit | |
| 5,348,871 | | |
| 5,848 | |
Payment of note payable | |
| (50,000 | ) | |
| – | |
Proceeds from note payable – related party | |
| – | | |
| 250 | |
Payment of dividends on preferred stock | |
| (100,000 | ) | |
| – | |
Net cash provided by financing activities | |
| 4,968,250 | | |
| 426,671 | |
| |
| | | |
| | |
Net cash provided by Discontinued Operations – Financing | |
| – | | |
| 131,260 | |
| |
| | | |
| | |
NET INCREASE (DECREASE) IN CASH | |
| 1,082,657 | | |
| (37,866 | ) |
CASH, BEGINNING OF PERIOD | |
| 866,943 | | |
| 219,085 | |
CASH, END OF PERIOD | |
$ | 1,949,600 | | |
$ | 181,219 | |
| |
| | | |
| | |
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION | |
| | | |
| | |
Cash paid during the year for Interest | |
$ | 126,732 | | |
$ | 6,389 | |
| |
| | | |
| | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
Common stock issued upon conversion of notes payable | |
$ | 1,680 | | |
$ | 99,533 | |
Common stock issued upon conversion of preferred stock | |
$ | 14,158 | | |
$ | – | |
Series Y preferred stock issued in exchange of convertible notes payable | |
$ | 3,755,632 | | |
$ | – | |
Promissory note payable issued in settlement agreement | |
$ | 535,000 | | |
$ | – | |
Right of use assets acquired | |
$ | 363,411 | | |
$ | – | |
The accompanying notes are an integral part of
these condensed consolidated financial statements
CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
AND 2023
(UNAUDITED)
1. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Organization and Nature of Operations
Cardiff Lexington Corporation (“Cardiff”)
was originally incorporated on September 3, 1986 in Colorado as Cardiff International Inc. On November 10, 2005, Cardiff merged with Legacy
Card Company, LLC and changed its name to Cardiff Lexington Corporation. On August 27, 2014, Cardiff redomiciled and became a corporation
under the laws of Florida. On April 13, 2021, Cardiff redomiciled and became a corporation under the laws of Nevada.
Cardiff is an acquisition holding company focused
on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership
to maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for stockholders.
All of Cardiff’s operations are predominantly conducted through, and its income derived from, its Nova Ortho and Spine, LLC (“Nova”)
subsidiary. Its subsidiaries include:
|
· |
Nova, which was acquired on May 31, 2021; |
|
|
|
|
· |
Edge View Properties, Inc. (“Edge View”), which was acquired on July 16, 2014; and |
|
|
|
|
· |
Platinum Tax Defenders (“Platinum Tax”), which was acquired on July 31, 2018 and sold on November 10, 2023. As a result, Platinum Tax is presented as a discontinued operation. |
Principles of Consolidation
The consolidated financial statements include
the accounts of Cardiff and its wholly owned subsidiaries, Nova, Edge View, and Platinum Tax and (collectively, the “Company”).
Subsidiaries shown as discontinued operations include Platinum Tax. All significant intercompany accounts and transactions are eliminated
in consolidation.
Reverse Stock Split
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 share and per share data throughout these
consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. The total number of authorized
shares of common stock did not change. As a result of the reverse stock split, an amount equal to the decreased value of the common stock
was reclassified from “common stock” to “additional paid-in capital.”
Use of Estimates
The preparation of financial statements in conformity
with United States generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Management uses its historical records and knowledge of its business in making estimates.
Accordingly, actual results could differ from those estimates.
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. Accounts receivable consists of amounts due from attorneys
and insurance providers for services provided to patients under the letter of protection. Accounts receivable are recorded at the expected
settlement realization amount, which is less contractual adjustments and an allowance for credit losses. The Company recognizes an allowance
for credit losses for its accounts receivable to present the net amount expected to be collected as of the balance sheet date. This allowance
is determined based on the history of net settlements received, where the net settlement amount is not collected. No collection can happen
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.
The Company monitors outstanding cases as they develop through ongoing discussions with attorneys, doctors and third-party medical billing
company and additionally monitors settlement realization rates over time. Additionally, the Company considers economic factors and events
or trends expected to affect future collections experience. The no collection history of the Company’s customers is considered in
future assessments of collectability as these patterns are established over a longer period. The Company uses the term collection and
collection rate in its disclosures to describe the historical less than 1% occurrence of not collecting under a contract, which aligns
with the Company’s credit loss accounting under ASC 326.
The Company does not have a significant exposure
to credit losses as it has historically had a less than 1.0% loss rate where the Company received no settlement amount for its outstanding
accounts receivable. Although possible, claims resulting in zero collection upon settlement are rare based on the Company’s historical
experience and has historically been 0.5% to 1.0% of its outstanding accounts receivable, thereby resulting in a collection rate of 99%.
The Company uses the loss rate method to record its allowance for credit losses. The Company applies the loss rate method by reviewing
its zero collection history on a quarterly basis and updating its estimates of credit losses to adjust for changes in loss data. The Company
typically collects on its accounts receivable between eighteen and twenty-four months after recording. The Company does not record an
allowance for credit losses based on an aging of its accounts receivable as the aging of the Company’s receivables do not influence
the credit loss rate due to the nature of its business and the letter of protection. The Company does not adjust its receivables for the
effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement,
which is outside of the Company’s control. As of September 30, 2024 and December 31, 2023, the Company’s allowance for
credit losses was $122,190. The Company recognized $0 and $270,000 of credit loss expense during the nine months ended September 30, 2024
and 2023, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statement of operations.
The balance of accounts receivable, net as of January 1, 2023 was $6,603,920.
Property and Equipment
Property and equipment are carried at cost. Expenditures
for renewals and betterments that extend the useful lives of property, equipment or leasehold improvements are capitalized. Expenditures
for maintenance and repairs are charged to expense as incurred. Depreciation is calculated using the straight-line method for financial
reporting purposes based on the following estimated useful lives:
Schedule of estimated useful lives |
|
Classification |
Useful Life |
Equipment, furniture, and fixtures |
5 - 7 years |
Medical equipment |
10 years |
Leasehold improvements |
10 years or lease term, if shorter |
Goodwill
Goodwill is not amortized but is evaluated for
impairment annually or when indicators of a potential impairment are present. The Company reviews goodwill for impairment on a reporting
unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Goodwill
is tested first for impairment based on qualitative factors on an annual basis or in between if an event occurs or circumstances change
that indicate the fair value may be below its carrying amount, otherwise known as a ‘triggering event’. An assessment is made
of these qualitative factors as such to determine whether it is more likely than not the fair value is less than the carry amount, including
goodwill. The annual evaluation for impairment of Goodwill, if needed, is based on valuation models that incorporate assumptions and internal
projections of expected future cash flows and operating plans. The Company believes such assumptions are also comparable to those that
would be used by other marketplace participants. During the nine months ended September 30, 2024 and 2023, the Company did not recognize
any goodwill impairment. The Company based this decision on impairment testing of the underlying assets, expected cash flows, decreased
asset value and other factors.
Valuation of Long-lived Assets
In accordance with the provisions of Accounting
Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets
such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed
the fair value of the assets.
Revenue Recognition
The Company’s primary source of revenue
is its healthcare subsidiary, which records revenues from providing licensed and/or certified orthopedic procedures. Revenue is recognized
at a point in time in accordance with ASC 606 and at an estimated net settlement realization rate based on gross billed charges. The Company’s
healthcare subsidiary does not have contract liabilities or deferred revenue as there are no amounts prepaid for services. The Company
applies the following five-step ASC 606 model to determine revenue recognition:
|
· |
Identification of a contract with a customer |
|
|
|
|
· |
Identification of the performance obligations in the contact |
|
|
|
|
· |
Determination of the transaction price |
|
|
|
|
· |
Allocation of the transaction price to the separate performance obligations |
|
|
|
|
· |
Recognition of revenue when performance obligations are satisfied. |
At contract inception, once the contract is determined
to be within the scope of ASC 606, the Company assesses services promised within each contract and determines those that are a performance
obligation and assesses whether each promised service is distinct.
The Company’s contracts contain a single
performance obligation (providing orthopedic services), as the promise to transfer the individual services is not separately identifiable
from other promises in the contracts and, therefore, not distinct, as a result, the entire transaction price is allocated to this single
performance obligation.
Accordingly, the Company recognizes net revenue when the patient receives
orthopedic care services. The Company’s patient service contracts generally have performance obligations which are satisfied at
a point in time. The performance obligation is for onsite or off-site care provided. Patient service contracts are generally fixed-price,
and the transaction price is in the contract. Revenue is recognized when obligations under the terms of the contract with the Company’s
patients are satisfied; generally, at the time of patient care.
In determining net revenue to record under ASC
606, the Company must estimate the transaction price, including estimates of variable consideration in the contract at inception. In order
to estimate variable consideration, the Company uses established billings rates (also described as “gross charges”) for the
procedures being performed, however, the 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 that designates
relative value units and a suggested range of charges for each procedure which is then assigned a CPT code. This gross charge 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. These adjustments are considered variable consideration under
ASC 606 and are deducted from the calculated fee to arrive at the net transaction price. The Company also estimates changes in the contract
price as a result of price concessions, changes to deductibles, co-pays and other contractual adjustments to determine the eventual settlement
amount the Company expects to receive. The Company uses the term settlement realization in its disclosures to describe the amount of cash
the Company expects to receive based on its estimate of the transaction price under the expected value method of ASC 606.
Where appropriate, the Company utilizes the expected
value method to determine the appropriate amount for estimates of variable consideration, which has been based on a historical 12-month
lookback of its actual settlement realization rates. The estimates of reserves established for variable consideration reflect current
contractual requirements, the Company’s historical experience, specific known market events and trends, industry data and forecasted
patient data and settlement patterns. Settlement realization patterns are assessed based on actual settlements and based on expected settlement
realization trends obtained from discussions with attorneys, doctors and our third-party medical billing company. Settlement amounts are
negotiated, and prolonged settlement negotiations are not indicative of a greater likelihood of reduced settlement realization or zero
settlement.
The Company may accept a lower settlement realization
rate in order to receive faster payment. The Company obtains information about expected settlement realization trends from discussions
with doctors and attorneys and its third-party medical billing company vendor, which handles settlement claims and negotiations. Settlement
amounts are presented to the Company’s third-party medical billing company vendor.
Settlement rates of 49% or higher based on gross
billed amounts are typically accepted without further negotiation. Proposed settlement rates below 49% are negotiated when possible and
longer negotiations typically result in higher settlement rates. If the Company accepts a lower settlement realization rate in order to
receive payments more quickly, the Company considers that a price concession and estimates these concessions at contract inception. The
various forms of variable consideration described above included in the transaction price may be constrained and are included in net revenue
only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in
a future period. The Company has not constrained any of its estimates of variable consideration for any of the periods presented.
Service Fees – Net (PIP)
The Company generates services fees from performing
various procedures on the date the services are performed. These services primarily include slip and falls as well as smaller nominal
Non-PIP services. As described above, these revenues are based on established insurance billing rates, less allowances for contractual
adjustments and uncollectible amounts. These contractual adjustments vary by insurance company and self-pay patients. The Company computes
these contractual and other adjustments based on its historical settlement realization experience. Completing the paperwork for each case
and preparing it for billing takes approximately ten business days after a procedure is performed. The majority of claims are then filed
electronically except for those remaining insurance carriers requiring paper filing. An initial response is usually received within four
weeks from electronic filing and up to six weeks from paper filing. Responses may be a payment, a denial, or a request for additional
information. The Company’s healthcare revenues are generated from professional medical billings including facility and anesthesia
services. With respect to facility and anesthesia services, the Company is the primary obligor as the facility and anesthesia services
are considered part of one integrated performance obligation.
The Company satisfies 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 our patients
which are due upon final settlement of patients claims. During the claims process, legal counsel warranties such claim 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 is resolved.
Once the personal injury case is finalized with the insurance company, the attorney pays the outstanding medical bills from the settlement.
Settlement Rates
Prior to its fiscal year 2024, the Company
has historically had a 49% settlement realization rate from its total gross billed charges. Accordingly, the Company has historically
recognized net healthcare service revenue as 49% of gross billed amounts. During the nine months ended September 30, 2024, the Company
underwent efforts to accelerate cash settlements by accepting lower settlement realization rates in order to settle outstanding accounts
receivable more quickly, which is expected to continue for the foreseeable future. This new initiative caused the Company to reassess
the average settlement rate used to recognize healthcare service revenue as a prospective change in estimate given new information available.
Accordingly, during the third quarter of 2024, the Company completed a thorough review of its third-party billing data, including reviewing
historical reports and new reporting methods as a part of its updated analysis. Based upon this review it was determined that a 24-month
lookback period should be used in the analysis of its historical settlement realization rates. Accordingly, its estimate of its settlement
realization rate was reduced from 49% to 44%, resulting in a $1,650,474 million reduction in its accounts receivable and revenue during
the third quarter of 2024 related to the change in estimate. Additionally, as a result of this reduced settlement realization experience,
the Company recorded reductions to net revenue of $0 and $1,199,155 for the three and nine months ended September 30, 2024, respectively.
The Company will continue to evaluate its estimate
of its settlement realization rates in the future, which will include a monthly review of the Company’s trailing 24-month historical
settlement realization rate, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors
and the Company’s third-party medical billing company in order to determine its variable consideration under ASC 606 and the net
transaction price. The Company will update its settlement realization rate estimate used in determining its accounts receivable and revenue
each quarter based on this review.
Contract Fees (Non-PIP)
The Company has contract fees for amounts earned
from its Non-Personal Injury Protection (“PIP”) related procedures, typically car accidents, and are settled on a contingency
basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the sale of these
cases to a third-party factor resulted in an approximate 54% reduction from the accounts receivables amounts. After selling patient cases
to the factor, any additional funds settled by us were remitted to the factor. The Company evaluated the factored adjustments considering
the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that were factored were recorded
in finance charges as other expenses on the consolidated statement of operations. As a result of the Company’s eighteen to twenty-four
month settlement realization timeframe, the Company has an accrued liability resulting from the settlement of receivables sold to the
third-party factors which fluctuates as settlements 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 the net realizable value of accounts receivable. For the nine months ended September 30, 2023, the Company
factored a total of $544,196 of its accounts receivable in exchange for cash of $253,750. The Company ceased factoring of accounts receivable
in the first quarter of 2023.
Advertising Costs
Advertising costs are expensed as incurred. Advertising
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 $84,914 and $71,636 for the three months ended September 30, 2024 and 2023,
respectively. The Company recognized advertising and marketing expense of $263,864 and $243,315 for the nine months ended September 30,
2024 and 2023, respectively.
Fair Value Measurements
Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment
associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources (observable inputs), and (2) an entity’s own assumptions about
market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair
value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy
are described below:
|
Level 1 |
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. |
|
|
|
|
Level 2 |
Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date. |
|
|
|
|
Level 3 |
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
Distinguishing Liabilities from Equity
The Company accounts for its series N senior convertible
preferred stock, series R convertible preferred stock, and series X senior convertible preferred stock subject to possible redemption
in accordance with ASC 480, “Distinguishing Liabilities from Equity”. Conditionally redeemable preferred shares are classified
as temporary equity within the Company’s consolidated balance sheet.
Stock-Based Compensation
The Company accounts for its stock-based compensation
in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of
the fair value recognition provisions of section 718-10-30 of the Financial Accounting Standards Board (“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.
The measurement date used to determine the fair
value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable
that performance will occur.
Generally, all forms of share-based payments,
including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on
the awards’ grant date, based on estimated number of awards that are ultimately expected to vest.
The expense resulting from share-based payments
is recorded in the consolidated statements of operations.
Income Taxes
Income taxes are determined in accordance with
ASC Topic 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how
companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to
be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the
tax authority assuming full knowledge of the position and relevant facts.
As of September 30, 2024 and 2023, the Company
did not have any interest and penalties associated with tax positions and did not have any significant unrecognized uncertain tax positions.
Income (Loss) per Share
FASB ASC Subtopic 260, “Earnings Per Share,”
provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per common share is computed
by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.
Diluted earnings per common share is computed by dividing income available to common stockholders by the weighted-average number of shares
of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been
outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options,
warrants, and debts convertible into common stock. The dilutive effect of stock options and warrants are reflected in diluted earnings
per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of
the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. The diluted effect of debt
convertibles is reflected utilizing the if converted method.
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 had sustained recurring operating losses since its inception
and has an accumulated deficit of $71,792,589 as of September 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
concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management
is in continuous discussions with prospective investors and believes the raising of capital will allow the Company to fund its cash flow
shortfalls and pursue new acquisitions. There can be no assurance that the Company will be able to obtain sufficient capital from debt
or equity transactions or from operations in the necessary time frame or on terms acceptable to it. Should the Company be unable to raise
sufficient funds, it may be required to curtail its operating plans. In addition, 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. The
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. The
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.
2. |
RESTATEMENT OF FINANCIAL STATEMENTS
|
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 September
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 September
30, 2023 as a $24,681 increase to mezzanine equity and offsetting decrease to the accumulated deficits.
During the preparation of the financial statements
for three months ended March 31, 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.
On November 10, 2023, the Company sold Platinum
Tax, which was a full-service tax resolution firm located in Los Angeles, California. The Company presented in prior periods operating
loss as loss from discontinued operations of $3,705 and $93,005 on the consolidated statement of operations for the three and nine months
ended September 30, 2023, respectively.
The impact of the error corrections also reflected
a $136.12 increase of basic earnings per share, and a $2.30 increase of diluted earnings per share on the consolidated statement of operations
for the three months ended September 30, 2023. For the nine months ended September 30, 2023, the impact of the error correction reflected
a $167.33 increase of basic earnings per share, and an increase of $2.40 of diluted earnings per share.
The following tables summarize the impact of
the corrections on the Company’s condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statement
of operations for the three and nine months ended September 30, 2023, and the condensed consolidated statement of cash flows for the
nine months ended September 30, 2023:
Schedule of restated financial information | |
| | |
| | |
| |
Balance sheet | |
| | |
| | |
| |
| |
Impact of correction of error | |
September 30, 2023 (Unaudited) | |
As previously reported | | |
Adjustments | | |
As restated | |
| |
| | |
| | |
| |
Total assets | |
$ | 18,518,727 | | |
$ | (844 | ) | |
$ | 18,517,883 | |
| |
| | | |
| | | |
| | |
Total liabilities | |
| 12,102,942 | | |
| (244,129 | ) | |
| 11,858,813 | |
| |
| | | |
| | | |
| | |
Mezzanine equity | |
| 5,440,434 | | |
| 299,663 | | |
| 5,740,097 | |
| |
| | | |
| | | |
| | |
Total stockholders' equity | |
$ | 975,352 | | |
$ | (299,663 | ) | |
$ | 675,689 | |
Statement of operations
|
|
Impact of correction of error |
|
Three months ended September 30, 2023 (Unaudited) |
|
As previously reported |
|
|
Adjustments |
|
|
As restated |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
3,438,124 |
|
|
$ |
(32,265 |
) |
|
$ |
3,405,859 |
|
Cost of sales |
|
|
557,028 |
|
|
|
(5,605 |
) |
|
|
551,423 |
|
Gross profit |
|
|
2,881,096 |
|
|
|
(26,660 |
) |
|
|
2,854,436 |
|
Operating expense |
|
|
611,110 |
|
|
|
(30,067 |
) |
|
|
581,043 |
|
Income from operations |
|
|
2,269,986 |
|
|
|
3,407 |
|
|
|
2,273,393 |
|
Other income (expense), net |
|
|
(288,465 |
) |
|
|
298 |
|
|
|
(288,167 |
) |
Net income before discontinued operations |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
|
|
– |
|
|
|
(3,705 |
) |
|
|
(3,705 |
) |
Net income for the period |
|
$ |
1,981,521 |
|
|
$ |
– |
|
|
$ |
1,981,521 |
|
Preferred stock dividends |
|
$ |
(150,965 |
) |
|
$ |
0.00 |
|
|
$ |
(150,965 |
) |
Net income attributable to common shareholders |
|
$ |
1,830,556 |
|
|
$ |
0.00 |
|
|
$ |
1,830,556 |
|
Basic earnings per share for continuing operations |
|
$ |
0.00 |
|
|
$ |
136.12 |
|
|
$ |
136.12 |
|
Diluted earnings per share for continuing operations |
|
$ |
0.00 |
|
|
$ |
2.30 |
|
|
$ |
2.30 |
|
| |
Impact of correction of error | |
Nine months ended September 30, 2023 (Unaudited) | |
As previously reported | | |
Adjustments | | |
As restated | |
| |
| | |
| | |
| |
Revenue | |
$ | 9,781,731 | | |
$ | (304,967 | ) | |
$ | 9,476,764 | |
Cost of sales | |
| 2,643,137 | | |
| (53,730 | ) | |
| 2,589,407 | |
Gross profit | |
| 7,138,594 | | |
| (251,237 | ) | |
| 6,887,357 | |
Operating expense | |
| 2,448,876 | | |
| (341,900 | ) | |
| 2,106,976 | |
Income from operations | |
| 4,689,718 | | |
| 90,663 | | |
| 4,780,381 | |
Other income (expense), net | |
| (1,908,110 | ) | |
| 2,342 | | |
| (1,905,768 | ) |
Net income before discontinued operations | |
| | |
| | |
| |
Loss from discontinued operations | |
| – | | |
| (93,005 | ) | |
| (93,005 | ) |
Net income for the period | |
$ | 2,781,608 | | |
$ | – | | |
$ | 2,781,608 | |
Preferred stock dividends | |
$ | (605,384 | ) | |
$ | 0.00 | | |
$ | (605,384 | ) |
Net income attributable to common shareholders | |
$ | 2,176,224 | | |
$ | 0.00 | | |
$ | 2,176,224 | |
Basic earnings per share for continuing operations | |
$ | 0.00 | | |
$ | 167.33 | | |
$ | 167.33 | |
Diluted earnings per share for continuing operations | |
$ | 0.00 | | |
$ | 2.40 | | |
$ | 2.40 | |
Statement of Cash Flows
| |
Impact of correction of error | |
Nine months ended September 30, 2023 (Unaudited) | |
As previously reported | | |
Adjustments | | |
As restated | |
| |
| | |
| | |
| |
Net cash used in operating activities of continuing operations | |
$ | (603,392 | ) | |
$ | 45,850 | | |
$ | (557,542 | ) |
Net cash provided by financing activities of continuing operations | |
$ | 557,933 | | |
$ | (131,262 | ) | |
$ | 426,671 | |
3. |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
Schedule of accounts payable and accrued expenses | |
| | |
| |
| |
September 30, 2024 | | |
December 31, 2023 | |
Accounts payable | |
$ | 663,381 | | |
$ | 720,774 | |
Accrued credit cards | |
| 8,248 | | |
| 26,645 | |
Accrued liability for settlement of previously factored receivables | |
| 599,956 | | |
| 1,247,772 | |
Accrued income and property taxes | |
| 5,346 | | |
| 5,346 | |
Accrued professional fees | |
| 50,721 | | |
| 29,122 | |
Accrued board fees | |
| 15,000 | | |
| – | |
Accrued dividend | |
| 30,354 | | |
| – | |
Accrued public company fees | |
| 5,000 | | |
| – | |
Accrued travel expense | |
| 1,571 | | |
| – | |
Accrued payroll | |
| 6,835 | | |
| 17,472 | |
Total | |
$ | 1,386,412 | | |
$ | 2,047,131 | |
The Company is delinquent paying certain property
taxes. As of September 30, 2024 and December 31, 2023, the balance for these property taxes was $1,659.
4. |
PLANT AND EQUIPMENT, NET |
Property and equipment as of September 30, 2024
and December 31, 2023 is as follows:
Schedule of property and equipment |
|
|
|
|
|
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
Medical equipment |
|
$ |
96,532 |
|
|
$ |
96,532 |
|
Computer Equipment |
|
|
9,189 |
|
|
|
9,189 |
|
Furniture, fixtures and equipment |
|
|
15,079 |
|
|
|
15,079 |
|
Leasehold Improvement |
|
|
15,950 |
|
|
|
15,950 |
|
Total |
|
|
136,750 |
|
|
|
136,750 |
|
Less: accumulated depreciation |
|
|
(112,187 |
) |
|
|
(102,089 |
) |
Property and equipment, net |
|
$ |
24,563 |
|
|
$ |
34,661 |
|
For the three months ended September 30, 2024
and 2023, depreciation expense was $3,365 and $3,365, respectively. For the nine months ended September 30, 2024 and 2023, depreciation
expense was $10,096 and $11,365, respectively.
As of September 30, 2024 and December 31, 2023,
the Company had 27 acres of land of approximately $540,000. The land is currently vacant and is expected to be developed into a residential
community.
6. |
RELATED PARTY TRANSACTIONS |
In connection with the acquisition of Edge View
on July 16, 2014, the Company assumed amounts due from previous owners who are current managers of Edge View. These amounts are due on
demand and do not bear interest. The balance of these amounts is $4,979 due from the previous owners as of September 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 September 30, 2024 and December 31, 2023, the Company
owed the Chairman $0 and $120,997, respectively. During the nine months ended September 30, 2024, the Company paid $120,997 to the Chairman.
See also Note 8. Convertible Notes Payable
and the disclosure regarding Note payable 41.
See also Note 13. Commitments and Contingencies
for compensation paid to employees of the Company.
7. |
NOTES AND LOANS PAYABLE |
Notes payable at September 30, 2024 and December
31, 2023 are summarized as follows:
Schedule of notes payable | |
| | |
| |
| |
September 30, 2024 | | |
December 31, 2023 | |
Notes and loans payable | |
$ | 8,215,069 | | |
$ | 2,280,743 | |
Less current portion | |
| (8,074,797 | ) | |
| (2,136,077 | ) |
Long-term portion | |
$ | 140,272 | | |
$ | 144,666 | |
Long-term debt matures as follows:
Schedule of maturities of long-term debt | |
| |
| |
Amount | |
2024 (remainder of year) | |
$ | 8,071,169 | |
2025 | |
| 4,837 | |
2026 | |
| 4,837 | |
2027 | |
| 4,837 | |
2028 | |
| 4,837 | |
Thereafter | |
| 124,552 | |
Total | |
$ | 8,215,069 | |
Promissory Note – Settlement Agreement
On June 11, 2024, the Company entered into a settlement
agreement and release of claims with the holder of 165 shares of series R convertible preferred stock and certain convertible promissory
notes (see Notes 29-2, 37-1, 37-2, and 37-3 referenced in Note 8. Convertible Notes Payable). Pursuant to the settlement agreement
and release of claims, the holder agreed to cancel its shares of series R convertible preferred stock and convertible promissory notes
in exchange for a new fixed amount settlement promissory note in the principal amount of $535,000.
The note does not bear interest and requires
fixed payments as follows: (i)
if the Company raises at least $5 million but less than $6 million in its planned underwritten public offering (the
“Offering”), then it must pay $250,000 on the closing date of the Offering, with payments of $125,000, $125,000 and
$35,000 to follow on the 90th, 180th, and 240th days following the closing of the Offering,
respectively; (ii) if the Company raises at least $6 million but less than $7 million in the Offering, then it must pay $390,000 on
the closing date of the Offering and $145,000 on the 90th day following the closing of the Offering; and (iii) if
the Company raises at least $7 million in the Offering, then it must repay the entire principal amount on the closing date of the
Offering. If the Offering is not completed by August 15, 2024, then the Company is required to pay $25,000 on such date and to
continue making payments of $25,000 on each monthly anniversary thereof until the entire principal amount is repaid in full.
Notwithstanding the foregoing, if the Company abandons the Offering and conducts a new public offering thereafter, then the Company
is required to make a payment of $100,000 on the closing date of such other public offering, a second payment of $100,000 on the
90th day following the closing of such offering and $35,000 each month thereafter until the entire principal amount
is repaid in full. If any portion of the principal amount remains unpaid on the second (2nd) anniversary of the
date of the note, it shall become immediately due and payable on such date. The Company may prepay the entire principal amount at
any time without penalty. The note is unsecured and contains customary events of default for a loan of this type. Upon an event of
default, interest would automatically begin to accrue at a simple interest rate of ten percent per annum. This transaction was
accounted for as a debt extinguishment and a gain on settlement of $78,834
was recorded to the unaudited, consolidated statement of operations for the quarter ended June 30, 2024, in accordance with FASB
Topic 470 Borrower’s Accounting for Debt Modifications. During the three months ended September 30, 2024, the Company
paid $50,000
against the outstanding principal balance. At September 30, 2024, the remaining principal balance was $485,000.
Loans and Notes Payable – Unrelated Party
On March 12, 2009, the Company issued a debenture
in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the
debenture was $10,989 at September 30, 2024 and December 31, 2023. The accrued interest of the debenture was $8,537 and $7,547 at September
30, 2024 and December 31, 2023, respectively. The Company assigned all of its receivables from consumer activations of the rewards program
as collateral on this debenture.
Small Business Administration (“SBA”)
Loans
On June 2, 2020, the Company obtained an SBA loan
in the principal amount of $150,000 with an interest rate of 3.75% and a maturity date of June 2, 2050. The principal balance and accrued
interest at September 30, 2024 was $145,109 and $0, respectively, and principal and accrued interest at December 31, 2023 was $149,655
and $956, respectively.
Line of Credit
On September 29, 2023, the Company and Nova entered
into a two-year revolving purchase and security agreement with DML HC Series, LLC (“DML”) to sell, with recourse, Nova’s
accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. A review is performed on a quarterly basis
to assess the adequacy of the maximum amount. If mutually agreed upon by the Company and DML, the maximum amount may be increased. On
April 24, 2024, the Company and Nova entered into amendment No. 1 with DML which increased the maximum advance amount to $8,000,000 and
defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000.
On June 11, 2024, the Company and Nova entered into amendment No. 2 with DML which further increased the maximum advance amount to $11,000,000.
As of September 30, 2024, and December 31, 2023, the Company had $7,468,971 and $2,120,100, respectively, outstanding balance against
the revolving receivable line of credit. As of September 30, 2024, there was $252,628 of interest accrued related to the line of credit.
The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September
29, 2025.
8. |
CONVERTIBLE NOTES PAYABLE |
As of September 30, 2024 and December 31, 2023,
the Company had convertible debt outstanding net of amortized debt discount of $105,000 and $3,807,030, respectively. During the nine
months ended September 30, 2024, the Company paid the total principal outstanding of $100,080 and the total outstanding interest of $22,279
to the holder of Notes 9 and 10-1. The Company also paid the total principal outstanding of $5,000 and the total outstanding interest
of $501 to the holder of Note 41. Additionally, the Company paid $100,000 of accrued interest to convertible noteholder related to note
40-1. On June 11, 2024, the Company entered into a settlement agreement and release of claims with the holder of Notes 29-2, 37-1, 37-2
and 37-3 (see below and also Note 7. Notes and Loans Payable for further details). Pursuant to the settlement agreement and release
of claims, the holder agreed to cancel these notes in exchange for a new fixed amount settlement promissory note in the principal amount
of $535,000. Additionally, during the nine months ended September 30, 2024, the Company exchanged Notes 40-1, 40-2, 40-3, 40-4, 40-5,
40-6, 40-7, 40-8, 40-9 and 40-10 for the issuance of 938,908 shares of series Y senior convertible preferred stock to the noteholder.
See also Note 9. Capital Stock.
During the nine months ended September 30, 2023,
the Company received net proceeds of $421,375 from convertible notes. There were debt discounts associated with the convertible debt of
$0 and $24,820 at September 30, 2024 and December 31, 2023, respectively. For the three months ended September 30, 2024 and 2023, the
Company recorded amortization of debt discounts of $0 and $46,048, respectively. For the nine months ended September 30, 2024 and 2023,
the Company recorded amortization of debt discounts of $24,821and $94,664, respectively.
During the nine months ended September 30, 2024,
the Company converted $680 in accrued interest and $1,000 in conversion cost into 1,222 shares of common stock. The Company recognized
$1,679 of additional paid-in capital to adjust fair value for the debt settlement during the nine months ended September 30, 2024. During
the nine months ended September 30, 2023, the Company converted $87,460 of convertible debt, $12,073 in accrued interest and $3,000 in
conversion cost into 3,662 shares of the Company’s common stock. The Company recognized $141,406 of interest expense and additional
paid-in capital to adjust fair value for the debt settlement during the nine months ended September 30, 2023.
Convertible notes as of September 30, 2024 and
December 31, 2023 are summarized as follows:
Schedule of convertible notes |
|
|
|
|
|
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
Convertible notes payable |
|
$ |
105,000 |
|
|
$ |
3,831,850 |
|
Discounts on convertible notes payable |
|
|
– |
|
|
|
(24,820 |
) |
Total convertible debt less debt discount |
|
|
105,000 |
|
|
|
3,807,030 |
|
Current portion |
|
|
105,000 |
|
|
|
3,807,030 |
|
Long-term portion |
|
$ |
– |
|
|
$ |
– |
|
The following is a schedule of convertible notes
payable as of and for the nine months ended September 30, 2024.
Schedule of convertible notes payable | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Note # | |
Issuance | |
Maturity | |
Principal Balance 12/31/23 | | |
Settlements and/or Principal Conversions | | |
New Loans or (Cash Paydown) | | |
Shares Issued Upon Conversion or Exchange | | |
Principal Balance 09/30/24 | | |
Accrued Interest on Convertible Debt at 12/31/23 | | |
Interest On Convertible Debt For the Period Ended 09/30/24 | | |
Accrued Interest on Convertible Debt at 09/30/24 | | |
Unamortized Debt Discount At 09/30/24 | |
9 | |
09/12/2016 | |
09/12/2017 | |
$ | 50,080 | | |
$ | – | | |
$ | (50,080 | ) | |
| 1,222 | | |
$ | – | | |
$ | 5,581 | | |
$ | (5,581 | ) | |
$ | – | | |
$ | – | |
10 | |
01/24/2017 | |
01/24/2018 | |
| 55,000 | | |
| – | | |
| – | | |
| – | | |
| 55,000 | | |
| 80,875 | | |
| 8,258 | | |
| 89,134 | | |
| – | |
10-1 | |
02/10/2023 | |
02/10/2024 | |
| 50,000 | | |
| – | | |
| (50,000 | ) | |
| – | | |
| – | | |
| 6,658 | | |
| (6,658 | ) | |
| – | | |
| – | |
10-2 | |
03/30/2023 | |
03/30/2024 | |
| 25,000 | | |
| – | | |
| – | | |
| – | | |
| 25,000 | | |
| 2,836 | | |
| 3,442 | | |
| 6,277 | | |
| – | |
10-3 | |
08/11/2023 | |
08/11/2024 | |
| 25,000 | | |
| – | | |
| – | | |
| – | | |
| 25,000 | | |
| 1,469 | | |
| 3,130 | | |
| 4,599 | | |
| – | |
29-2 | |
11/08/2019 | |
11/08/2020 | |
| 36,604 | | |
| (36,604 | ) | |
| – | | |
| – | | |
| – | | |
| 10,109 | | |
| (10,109 | ) | |
| – | | |
| – | |
31 | |
08/28/2019 | |
08/28/2020 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 8,385 | | |
| (8,385 | ) | |
| – | | |
| – | |
37-1 | |
09/03/2020 | |
06/30/2021 | |
| 113,667 | | |
| (113,667 | ) | |
| – | | |
| – | | |
| – | | |
| 64,929 | | |
| (64,929 | ) | |
| – | | |
| – | |
37-2 | |
11/02/2020 | |
08/31/2021 | |
| 113,167 | | |
| (113,167 | ) | |
| – | | |
| – | | |
| – | | |
| 63,594 | | |
| (63,594 | ) | |
| – | | |
| – | |
37-3 | |
12/29/2020 | |
09/30/2021 | |
| 113,166 | | |
| (113,166 | ) | |
| – | | |
| – | | |
| – | | |
| 62,558 | | |
| (62,558 | ) | |
| – | | |
| – | |
40-1 | |
09/22/2022 | |
09/22/2024 | |
| 2,600,000 | | |
| (2,600,000 | ) | |
| – | | |
| 938,908 | (1) | |
| – | | |
| 252,665 | | |
| (252,655 | ) | |
| – | | |
| – | |
40-2 | |
11/04/2022 | |
09/22/2024 | |
| 68,667 | | |
| (68,667 | ) | |
| – | | |
| – | | |
| – | | |
| 7,939 | | |
| (7,939 | ) | |
| – | | |
| – | |
40-3 | |
11/28/2022 | |
09/22/2024 | |
| 68,667 | | |
| (68,667 | ) | |
| – | | |
| – | | |
| – | | |
| 7,506 | | |
| |