Cardiff Lexington Corp S-1, filed Jul 19, 2023

Cardiff Lexington Corp (CDIX)

S-1 2023-07-19

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Added on October 21, 2026

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Large accelerated Filer ☐	Accelerated Filer ☐
Non-accelerated Filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

	Per Share		Total
Public offering price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds to us, before expenses⁽²⁾	$	$

	(1)	Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Craft Capital Management LLC and R.F. Lafferty & Co., Inc., the representatives of the underwriters. We have also agreed to issue warrants to the representatives of the underwriters. See “Underwriting” for a complete description of the compensation arrangements.

	(2)	We estimate the total expenses payable by us, excluding the underwriting discount and non-accountable expense allowance, will be approximately $ .

	Page
Prospectus Summary	1
Risk Factors	10
Cautionary Statement Regarding Forward-Looking Statements	28
Use of Proceeds	30
Dividend Policy	31
Capitalization	32
Dilution	35
Market Price of Common Equity and Related Stockholder Matters	37
Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Business	51
Management	64
Executive Compensation	70
Current Relationships and Related Party Transactions	72
Principal Stockholders	73
Description of Capital Stock	74
Shares Eligible for Future Sale	84
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders	85
Underwriting	89
Legal Matters	93
Experts	93
Where You Can Find More Information	93
Financial Statements	F-1

	·	*Management operating and investing experience*. Our directors and executive officers have significant executive, investment and operational experience in the management and growing of small and middle market companies. We believe that this breadth of experience provides us with a competitive advantage in evaluating businesses and acquisition opportunities.

	·	*Extensive network of small to middle market companies*. As a result of their experience with acquisitions and in providing services to small to middle market companies around the United States, our management team members have developed a broad array of contacts at private and closely held companies. We believe that these contacts will be important in generating potential acquisition opportunities for us.

	·	*Public company benefits*. We believe our structure will make us an attractive business transaction partner to prospective acquisition targets. As an existing public company, we will be able to raise capital to deploy to our acquired businesses for their business operations. Additionally, we will be able to offer to the employees of our subsidiaries equity in our company as an additional means of creating management incentives that are better aligned with stockholder’s interests.

	·	*Maintaining of day-to-day control of operations*. As part of our acquisition criteria for a target company, we search for companies with what we believe are strong management teams, which allows us to have the management team maintain control of the day-to-day operations of the companies. We believe this model is attractive to target companies with management desiring to obtain the benefits of being a public company while maintaining control over the operations of their company.

	·	The report of our independent registered public accounting firm included a “going concern” explanatory paragraph.

	·	Our acquisition strategy exposes us to substantial risk.

	·	We may not be able to effectively integrate the businesses that we acquire.

	·	Failure to manage our growing and changing business could have a material adverse effect on our business, prospects, financial condition, and results of operations.

	·	We face competition for businesses that fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition opportunities.

	·	We may not be able to successfully fund acquisitions due to the unavailability of equity or debt financing on acceptable terms, which could impede the implementation of our acquisition strategy.

	·	Our future success is dependent on the management teams of our businesses, the loss of any of whom could materially adversely affect our financial condition, business and results of operations.

	·	We may engage in a business transaction with one or more target businesses that have relationships with our executive officers, our directors, or any of their respective affiliates, which may create or present conflicts of interest.

	·	Our ability to grow our business through organic expansion either by developing new facilities or by modifying existing facilities is dependent upon many factors.

	·	Changes to payment rates or methods of third-party payors, including government healthcare programs, changes to the laws and regulations that regulate payments for medical services, the failure of payment rates to increase as our costs increase, or changes to our payor mix, could adversely affect our operating margins and revenues.

	·	An increase in uninsured or underinsured patients or the deterioration in the collectability of the accounts of such patients could harm our results of operations.

	·	Failure to timely or accurately bill for services could have a negative impact on our net revenue, bad debt expense and cash flow.

	·	Our facilities face competition for patients from other healthcare providers.

	·	Our performance depends on our ability to recruit and retain quality physicians.

	·	Our performance depends on our ability to attract and retain qualified nurses and medical support staff and we face competition for staffing that may increase our labor costs and harm our results of operations.

	·	If we fail to comply with extensive laws and government regulations, we could suffer civil or criminal penalties or be required to make significant changes to our operations that could reduce our revenue and profitability.

	·	If any of our existing healthcare facilities lose their accreditation or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid.

	·	We could be subject to lawsuits which could harm the value of our business, including litigation for which we are not fully reserved.

	·	We are subject to demand fluctuations in the real estate industry and ny reduction in demand could adversely affect our business, results of operations, and financial condition.

	·	Adverse weather conditions, natural disasters, and other unforeseen and/or unplanned conditions could disrupt our real estate developments.

	·	If the market value of our real estate investments decreases, our results of operations will also likely decrease.

	·	The real estate industry is highly competitive and if other property developers are more successful or offer better value to customers, our business could suffer.

	·	We may incur environmental liabilities with respect to our real estate assets.

	·	We may not be able to satisfy Nasdaq’s listing requirements or maintain a listing of our common stock on Nasdaq.

	·	The market price of our common stock may be highly volatile, and you could lose all or part of your investment.

	·	Our officers and directors own a significant percentage of our outstanding voting securities which could reduce the ability of minority stockholders to effect certain corporate actions.

Shares offered:		shares of common stock (or shares if the underwriters exercise the over-allotment in full).

Offering price:		We currently estimate that the public offering price will be between $ and $ per share. For purposes of this prospectus, the assumed public offering price per share is $ , the midpoint of the anticipated price range. The actual offering price per share will be as determined between the underwriters and us based on market conditions at the time of pricing and the actual number of shares we will offer will be determined based on the actual public offering price. Therefore, the assumed offering price used throughout this prospectus may not be indicative of the final offering price.

Shares to be outstanding after this offering⁽¹⁾:		shares of common stock (or shares if the underwriters exercise the over-allotment option in full), based on an assumed public offering price of $ per share, which is the midpoint of the estimated range of the public offering price shown on the cover page of this prospectus. The number of shares of common stock outstanding after this offering includes the conversion of all shares of our outstanding series B preferred stock, series C preferred stock, series F-1 preferred stock, series I preferred stock, series J preferred stock and series L preferred stock into an aggregate of shares of common stock and the conversion of a convertible promissory note into an estimated shares of common stock, effective automatically on the date on which our common stock begins trading on Nasdaq. See “Description of Capital Stock” for more information regarding the automatic conversion of our preferred stock and convertible note.

Over-allotment option:		We have granted to the underwriters a 45-day option to purchase from us up to an additional 15% of the shares sold in the offering ( additional shares) at the initial public offering price, less the underwriting discounts and commissions.

Representatives’ warrants:		We have agreed to issue to Craft Capital Management LLC and R.F. Lafferty & Co., Inc., as representatives of the underwriters, or their designees, warrants to purchase up to a total number of shares of common stock equal to 5% of the total number of shares sold in this offering at an exercise price equal to 125% of the initial public offering price of the shares sold in this offering (subject to adjustments). The warrants will be exercisable at any time and from time to time, in whole or in part, during the four-and-a-half-year period commencing six months after the date of the commencement of the sales of the public securities. The representatives’ warrants will have a cashless exercise provision and will provide for immediate “piggyback” registration rights with respect to the registration of the shares underlying the warrants for a period of seven years from commencement of sales of this offering. The registration statement of which this prospectus forms a part also registers the representatives’ warrants and the shares of common stock issuable upon exercise of the representatives’ warrants. See the “Underwriting” section for more information.

Use of proceeds:		We expect to receive net proceeds of approximately $ million from this offering (or $ million if the underwriters exercise the over-allotment option in full), based on an assumed public offering price of $ per share, which is the midpoint of the estimated range of the public offering price shown on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for the repayment of certain debt, working capital for Nova, and for other working capital and general corporate purposes. See “Use of Proceeds.”

Risk factors:		Investing in our common stock involves a high degree of risk. As an investor, you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 10.

Lock-up:		We and our directors, officers, and stockholders holding more than 5% of our common stock as of the effective date of this prospectus have agreed not to sell, transfer or dispose of any common stock for a period of six months from the date of this prospectus, subject to certain exceptions. See “Underwriting” for more information.

Trading market and symbol:		Our common stock is currently quoted on the OTC Pink Market under the symbol “CDIX.” In connection with this offering, we intend to apply for the listing of our common stock on the Nasdaq Capital Market under the symbol “CDIX.” The closing of this offering is contingent upon our uplisting to the Nasdaq Capital Market.

	·	2 shares of common stock issuable upon the conversion of our series A preferred stock upon a transfer thereof;

	·	301,500 shares of common stock issuable upon the conversion of our series E preferred stock;

	·	shares of common stock issuable upon the conversion of 868,056 shares of our series N senior convertible preferred stock, which are convertible into a number of shares of common stock determined by dividing the stated value ($4.00 per share), plus accrued, but unpaid, dividends thereon, by a conversion price equal to $0.012 (subject to adjustments);

	·	165 shares of common stock issuable upon the conversion of our series R preferred stock;

	·	shares of common stock issuable upon the conversion of 375,000 shares of our series X senior convertible preferred stock, which are convertible into a number of shares of common stock determined by dividing the stated value ($4.00 per share), plus accrued, but unpaid, dividends thereon, by a conversion price equal to the lower of (i) the lowest volume weighted average price of our common stock on our principal trading market during the five (5) trading days immediately prior to the applicable conversion date and (ii) the price per share paid in any subsequent financing, including this offering;

	·	235,557,856 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $0.02 per share;

	·	shares of common stock that may be issued upon the exercise of outstanding warrants issued to Leonite Capital LLC in connection with convertible promissory notes, which such warrants are for a number of shares of common stock equal to two hundred percent (200%) of the number of shares of common stock that would be issued upon full conversion of such notes, at exercise prices ranging from $0.002 to $0.04;

	·	up to shares of common stock issuable upon exercise of the representatives’ warrants issued in connection with this offering;

	·	shares of common stock issuable upon the conversion of a consolidated senior secured convertible promissory note in the principal amount of $3,195,666 issued to Leonite Capital LLC, which is convertible into shares of common stock at a conversion price equal to the lower of (i) the lowest volume weighted average price of our common stock during the five (5) trading days immediately prior to the applicable conversion date and (ii) the price per share paid in any subsequent financing, including this offering;

	·	shares of common stock issuable upon the conversion of convertible promissory notes in the aggregate principal amount of $216,066 issued to Power Up Lending Group Ltd, which are convertible into shares of common stock at a conversion price equal to 62% of the average of the two (2) lowest closing prices of our common stock during the fifteen (15) trading days prior to the conversion date;

Statements of Operations Data	Three Months Ended March 31,						Years Ended December 31,
	2023			2022			2022			2021
	(unaudited)			(restated and unaudited)							(restated)
Total revenue	$	2,860,798		$	2,897,150		$	11,998,273		$	9,879,057
Total cost of sales		983,124			1,116,228			4,457,381			3,768,453
Gross profit		1,877,674			1,780,922			7,540,892			6,110,604
Total operating expenses		1,164,113			1,059,439			5,848,908			4,448,480
Income from operations		713,561			721,483			1,691,984			1,662,124
Total other income (expense)		(729,552	)		(2,264,722	)		(7,162,454	)		(1,965,736	)
Net loss before discontinued operations		(15,991	)		(1,543,239	)		(5,470,470	)		(303,612	)
Gain (loss) from discontinued operations		–			(19,215	)		40,949			2,171,076
Loss from disposal of discontinued operations		–			–			–			(1,201,171	)
Income from discontinued operations		–			–			40,949			969,905
Net income (loss)	$	(15,991	)	$	(1,562,454	)	$	(5,429,521	)	$	666,293
Deemed dividends on preferred stock		(336,811	)		–			(307,188	)		(201,782	)
Net income (loss) attributable to common shareholders	$	(352,802	)	$	(1,562,454	)	$	(5,736,709	)	$	464,511
Income (loss) per share - continued operations	$	0.00		$	(0.01	)	$	(0.01	)	$	0.00
Weighted average shares outstanding - continued operations		871,989,778			166,130,069			436,636,918			128,021,527

Balance Sheet Data	As of March 31, 2023			As of December 31, 2022			As of December 31, 2021
		(unaudited)						(restated)
Cash	$	350,329		$	226,802		$	580,968
Total current assets		7,801,745			6,836,582			6,592,367
Total assets		14,284,585			13,353,357			15,297,039
Total current liabilities		10,545,044			9,973,503			11,174,656
Total liabilities		10,745,097			10,198,163			11,439,675
Total mezzanine equity		5,171,861			4,625,002			3,125,002
Total stockholders’ equity (deficit)		(1,632,373	)		(1,469,808	)		732,362
Total liabilities, mezzanine equity and stockholders’ equity	$	14,284,585		$	13,353,357		$	15,297,039

	·	the inability to integrate effectively the operations, products, technologies and personnel of the acquired companies (some of which are in diverse geographic regions) and achieve expected synergies;

	·	the potential disruption of existing business and diversion of management’s attention from day-to-day operations;

	·	the inability to maintain uniform standards, controls, procedures and policies;

	·	the need or obligation to divest portions of the acquired companies;

	·	the potential failure to identify material problems and liabilities during due diligence review of acquisition targets;

	·	the potential failure to obtain sufficient indemnification rights to fully offset possible liabilities associated with acquired businesses; and

	·	the challenges associated with operating in new geographic regions.

	·	disputes between payors as to which party is responsible for payment;

	·	failure of information systems and processes to submit and collect claims in a timely manner;

	·	variation in coverage for similar services among various payors;

	·	our reliance on third-parties to provide billing services for certain of our service lines;

	·	the difficulty of adherence to specific compliance requirements, diagnosis coding and other procedures mandated by various payors; and

	·	in connection with billing for physician services, failure to obtain proper physician credentialing and documentation in order to bill various payors.

	·	the possibility that a co-venturer or partner might become bankrupt;

	·	the possibility that development may require additional capital that we or our partner do not have;

	·	the possibility that a co-venturer or partner might breach a loan agreement or other agreement or otherwise, by action or inaction, act in a way detrimental to us;

	·	that such co-venturer or partner may at any time have economic or business interests or goals that are or that become inconsistent with the business interests or goals of our company;

	·	the possibility that we may incur liabilities as the result of the action taken by our partner;

	·	that such co-venturer or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

	·	that such co-partner may exercise buy/sell rights that force us to or dispose of our share, at a time and price that may not be consistent with our objectives.

	·	actual or anticipated variations in our periodic operating results;

	·	increases in market interest rates that lead investors of our common stock to demand a higher investment return;

	·	changes in earnings estimates;

	·	changes in market valuations of similar companies;

	·	actions or announcements by our competitors;

	·	adverse market reaction to any increased indebtedness we may incur in the future;

	·	additions or departures of key personnel;

	·	actions by stockholders;

	·	speculation in the media, online forums, or investment community; and

	·	our intentions and ability to list our common shares on Nasdaq and our subsequent ability to maintain such listing (if approved).

	·	our ability to successfully identify and acquire additional businesses;

	·	our ability to effectively integrate and operate the businesses that we acquire;

	·	our expectations around the performance of our current businesses;

	·	our ability to maintain our business model and improve our capital efficiency;

	·	our ability to effectively manage the growth of our business;

	·	our lack of operating history and ability to attain profitability;

	·	the competitive environment in which our businesses operate;

	·	trends in the industries in which our businesses operate;

	·	the regulatory environment in which our businesses operate under;

	·	changes in general economic or business conditions or economic or demographic trends in the United States, including changes in interest rates and inflation;

	·	our ability to service and comply with the terms of indebtedness;

	·	our ability to retain or replace qualified employees of our businesses;

	·	labor disputes, strikes or other employee disputes or grievances;

	·	casualties, condemnation or catastrophic failures with respect to any of our business’ facilities;

	·	costs and effects of legal and administrative proceedings, settlements, investigations and claims; and

	·	extraordinary or force majeure events affecting the business or operations of our businesses.

		Amount without Over-Allotment Option		Amount with Over-Allotment Option
Repayment of debt⁽¹⁾	$		$
Working capital for Nova
Working capital and general corporate
Total use of proceeds	$		$

	·	on an actual basis;

	·	on a pro forma basis to reflect (i) the issuance of 47,000,000 shares of common stock issued upon the conversion of convertible promissory notes and the cancellation of 3,500 shares of common stock, (ii) the cancellation of all outstanding shares of series K preferred stock and (iii) the conversion of all shares of our outstanding series B preferred stock, series C preferred stock, series F-1 preferred stock, series I preferred stock, series J preferred stock and series L preferred stock into an aggregate of shares of common stock and the conversion of a convertible promissory note into an estimated shares of common stock, effective automatically on the date on which our common stock begins trading on Nasdaq; and

	·	on a pro forma as adjusted basis to reflect the sale of shares of common stock by us in this offering at an assumed price to the public of $ per share, which is the midpoint of the estimated offering range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us (assuming no exercise of the over-allotment option), and after giving effect to the use of proceeds to repay certain debt as described herein.

	As of March 31, 2023
	Actual		Pro Forma	As Adjusted
Cash	$	350,329	$	$
Long-term debt:
Notes payable	$	144,646	$	$
Total long-term debt		144,646
Mezzanine equity:
Series N Senior Convertible Preferred Stock, $0.001 par value, 3,000,000 shares authorized, 868,058 shares issued and outstanding, actual, pro forma and as adjusted		3,578,656
Series X Senior Convertible Preferred Stock, $0.001 par value, 5,000,000 shares authorized, 375,000 shares issued and outstanding, actual, pro forma and as adjusted		1,593,205
Total mezzanine equity		5,171,861
Stockholders’ equity:
Series B Preferred Stock, $0.001 par value, 3,000,000 shares authorized, 2,131,328 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		8,525,313
Series C Preferred Stock, $0.001 par value, 500 shares authorized, 122 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		488
Series E Preferred Stock, $0.001 par value, 1,000,000 shares authorized, 150,750 shares issued and outstanding, actual, pro forma and as adjusted		603,000
Series F-1 Preferred Stock, $0.001 par value, 800,000 shares authorized, 35,752 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		143,008
Series I Preferred Stock, $0.001 par value, 500,000,000 shares authorized, 14,885,000 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		59,540,000

Series J Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 1,713,584 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		6,854,336
Series K Preferred Stock, $0.001 par value, 10,937,500 shares authorized, 8,200,562 shares issued and outstanding, actual; no shares issued and outstanding pro forma and as adjusted		8,201
Series L Preferred Stock, $0.001 par value, 100,000,000 shares authorized, 319,493 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and as adjusted		1,277,972
Series R Preferred Stock, $0.001 par value, 5,000 shares authorized, 165 shares issued and outstanding, actual, pro forma and as adjusted		198,000
Common Stock, $0.001 par value, 7,500,000,000 shares authorized, 908,479,113 shares issued and outstanding, actual; shares issued and outstanding, pro forma; and shares issued and outstanding, as adjusted		908,378
Additional paid-in capital		(8,482,814	)
Accumulated deficit		(71,208,254	)
Total stockholders’ equity		(1,632,372	)
Total capitalization	$	3,684,135		$	$

Assumed public offering price per share				$
Historical net tangible book value (deficit) per share as of March 31, 2023	$	(0.00	)
Increase per share attributable to the pro forma adjustments described above
Pro forma net tangible book value (deficit) per share as of March 31, 2023
Increase in pro forma as adjusted net tangible book value per share attributable to new investors purchasing shares in this offering
Pro forma as adjusted net tangible book value (deficit) per share after this offering
Dilution per share to new investors purchasing shares in this offering	$			$

		Closing Prices
		High		Low

*Fiscal Year Ended December 31, 2021*
1^st Quarter	$	0.0500	$	0.0132
2^nd Quarter		0.0178		0.0116
3^rd Quarter		0.0127		0.0045
4^th Quarter		0.0070		0.0001

*Fiscal Year Ended December 31, 2022*
1^st Quarter		0.0014		0.0002
2^nd Quarter		0.0002		0.0002
3^rd Quarter		0.0050		0.0002
4^th Quarter		0.0029		0.0003

*Fiscal Year Ended December 31, 2023*
1^st Quarter		0.0035		0.0002
2^nd Quarter		0.0006		0.0001
3^rd Quarter (through July 12, 2023)		0.0007		0.0003

	·	*Healthcare Business*. Nova, which we acquired May 31, 2021, operates a group of regional primary specialty and ancillary care facilities throughout Florida that provide traumatic injury victims with primary care evaluations, interventional pain management, and specialty consultation services. We focus on plaintiff related care are and a highly efficient provider of EMC assessments. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. From sports injuries, to sprains, strains, and fractures, our doctors are dedicated to helping patients return to active lifestyles.

	·	*Financial Services (Tax Resolution) Business*. Platinum Tax, which we acquired on July 31, 2018, is a full-service tax resolution firm located in Las Vegas, Nevada that provides fee-based tax resolution services to individuals and companies that have federal and state tax liabilities by assisting clients to settle outstanding tax debts. Given the significant decline in revenues over the past 18 months due to the effects of the COVID-19 pandemic and mounting monthly operating losses, combined with our current focus on acquisitions in the healthcare sector, in July 2023 our board of directors decided to cease operating this business and plans to consider alternatives in the future as economic and market conditions change.

	·	*Real Estate Business*. Edge View, which we acquired on July 16, 2014, is a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted; six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs; and twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond. Salmon is known as Idaho’s premier whitewater destination as well as one of the easier accesses to the Frank Church Wilderness Area - the largest wilderness in the lower 48 states. Salmon’s airport has service to Boise, Idaho and serves as a hub to access whitewater rafting start points and wilderness landing strips. Management has invested years working to develop a new and exciting housing development in Salmon, Idaho and plans to enter into a joint venture agreement with a developer for this planned concept development.

	(1)	Financial Services (Platinum Tax)
	(2)	Healthcare (Nova)
	(3)	Real Estate (Edge View)

	March 31, 2023						March 31, 2022 (restated)
	Amount			% of Revenue			Amount			% of Revenue
Revenue
Financial services	$	154,399			5.40	%	$	464,843			16.04	%
Healthcare		2,706,399			94.60	%		2,432,307			83.96	%
Total revenue		2,860,798			100.00	%		2,897,150			100.00	%
Cost of sales
Financial services		26,829			0.94	%		212,446			7.33	%
Healthcare		956,295			33.43	%		903,782			31.20	%
Total cost of sales		983,124			34.37	%		1,116,228			38.53	%
Gross profit		1,877,674			65.63	%		1,780,922			61.47	%
Operating expenses
Depreciation expense		4,635			0.16	%		5,783			0.20	%
Selling, general and administrative		1,159,478			40.53	%		1,053,656			36.37	%
Total operating expenses		1,164,113			40.69	%		1,059,439			36.57	%
Income from operations		713,561			24.94	%		721,483			24.90	%
Other income (expense)
Other income		205			0.01	%		–			–
Gain on forgiveness of debt		390			0.01	%		–			–
Penalties and fees		(15,000	)		(0.52	)%		–			–
Interest expense and finance charge		(695,164	)		(24.30	)%		(2,220,176	)		(76.63	)%
Conversion cost penalty and reimbursement		(2,000	)		(0.07	)%		–			–
Amortization of debt discounts		(17,983	)		(0.63	)%		(44,546	)		(1.54	)%
Total other income (expense)		(729,552	)		(25.50	)%		(2,264,722	)		(78.17	)%
Net loss before discontinued operations		(15,991	)		(0.56	)%		(1,543,239	)		(53.27	)%
Loss from discontinued operations		–			–			(19,215	)		(0.66	)%
Net loss	$	(15,991	)		(0.56	)%	$	(1,562,454	)		(53.93	)%

	December 31, 2022						December 31, 2021 (restated)
	Amount			% of Revenue			Amount			% of Revenue
Revenue
Financial services	$	1,305,077			10.88	%	$	4,313,167			43.66	%
Healthcare		10,693,196			89.12	%		5,413,890			54.80	%
Real estate		–			–			152,000			1.54	%
Total revenue		11,998,273			100.00	%		9,879,057			100.00	%
Cost of sales
Financial services		397,347			3.31	%		1,942,411			19.66	%
Healthcare		4,060,034			33.84	%		1,746,561			17.68	%
Real estate		–			–			79,481			0.80	%
Total cost of sales		4,457,381			37.15	%		3,768,453			38.15	%
Gross profit		7,540,892			62.85	%		6,110,604			61.85	%
Operating expenses
Depreciation expense		23,132			0.19	%		13,886			0.14	%
Goodwill impairment		2,092,048			17.44	%		–			–
Selling, general and administrative		3,733,728			31.12	%		4,434,594			44.89	%
Total operating expenses		5,848,908			48.75	%		4,448,480			45.03	%
Income from operations		1,691,984			14.10	%		1,662,124			16.82	%
Other income (expense)
Other income		150,256			1.25	%		32,629			0.33	%
Gain on divestiture		–			–			788,500			7.98	%
Gain on debt refinance and forgiveness		1,397,271			11.65	%		–			–
Gain on change of estimate		–			–			184,243			1.86	%
Penalties and fees		(2,063,916	)		(17.20	)%		–			–
Interest expense		(6,392,242	)		(53.28	)%		(1,906,844	)		(19.30	)%
Conversion cost penalty and reimbursement		–			–			(13,000	)		(0.13	)%
Amortization of debt discounts		(253,823	)		(2.12	)%		(1,051,264	)		(10.64	)%
Total other income (expense)		(7,162,454	)		(59.70	)%		(1,965,736	)		(19.90	)%
Net loss before discontinued operations		(5,470,470	)		(45.59	)%		(303,612	)		(3.07	)%
Gain from discontinued operations		40,949			0.34	%		2,171,076			21.98	%
Loss from disposal of discontinued operations		–			–			(1,201,171	)		(12.16	)%
Net income (loss)	$	(5,429,521	)		(45.25	)%	$	666,905			6.74	%

Note #		Issuance Date	Maturity Date	Principal Balance		Accrued Interest		Unamortized Debt Discount
	9	09/12/2016	09/12/2017		50,080		16,627		–
	10	01/24/2017	1/24/2018		55,000		72,588		–
	10-1	02/10/2023	02/10/2024		50,000		1,007		–
	10-2	03/30/2023	03/30/2024		25,000		10
	29-2	11/08/2019	11/08/2020		36,604		22,326		–
	31	08/28/2019	08/28/2020		–		8,385		–
	37-1	09/03/2020	06/30/2021		113,666		38,801		–
	37-2	11/02/2020	08/31/2021		113,167		37,533		–
	37-3	12/29/2020	09/30/2021		113,167		36,497		–
	38	02/09/2021	02/09/2022		47,200		31,260		–
	39	04/26/2021	04/26/2022		168,866		48,844		–
	40-1	09/22/2022	09/22/2023		2,600,000		131,342		–
	40-2	11/04/2022	11/04/2023		68,666		2,765		10,253
	40-3	11/28/2022	11/28/2023		68,667		2,313		11,382
	40-4	12/21/2022	12/21/2023		68,667		1,880		12,464
	40-5	01/24/2023	01/24/2024		90,166		1,630		19,387
	40-6	03/21/2023	03/21/2024		138,167		379		35,661
				$	3,807,083	$	454,188	$	89,147

	·	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 allocation

	·	Recognition of revenue when performance obligations are satisfied.

Classification	Useful Life
Equipment, furniture, and fixtures	5 - 7 years
Medical equipment	10 years
Leasehold improvements	10 years or lease term, if shorter

	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.

	·	our acquisition strategy exposes us to substantial risk;

	·	we may experience difficulty as we evaluate, acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management, and disruptions of our on-going business;

	·	we may not be able to effectively integrate the businesses that we acquire;

	·	we face competition for businesses that fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition opportunities;

	·	we may not be able to successfully fund acquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition strategy; and

	·	we may change our management and acquisition strategies without the consent of our stockholders, which may result in a determination by us to pursue riskier business activities.

	·	Broad array of services focusing on plaintiff related care. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves with a focus on plaintiff related care. From sports injuries, to sprains, strains, and fractures, orthopedic and pain procedure services include hip and knee replacement, shoulder reconstruction, fracture care and hand surgery, as well as spinal surgery. Our service model is designed to promote referral relationships, facilitate patient access, and coordinate administration among medical providers, personal injury attorneys, and chiropractors. As a result, our revenue is primarily provided by bodily injury policies, general liability policies, and personal injury protection policies, which partially insulates our business from the declining reimbursement programs paid from or correlated to Medicare/ Medicaid and traditional health insurance companies.

	·	Opportunities for accelerated growth. We have a track record of delivering strong growth through a combination of organic growth, new contract additions and selective acquisitions. Organic growth has historically been supported by consistent underlying market volume trends, stable pricing and a diversified payor mix. We believe that our networks of high-quality providers position us to take advantage of these trends. We have successfully executed on new contract growth by providing a set of differentiated services and delivering integrated, efficient, high-quality care, which has helped us expand our relationships with our existing customers and compete effectively in the bidding process for new contracts. Additionally, we believe we will have opportunities to expand our services through acquisitions, as discussed in more detail below.

	·	Focus on clinical excellence. We are focused on achieving the best clinical outcomes for our patients through the application of rigorous recruiting and credentialing standards, the promotion of a physician-led leadership culture and the monitoring of our clinical quality measures. Through extensive clinical and leadership development programs, we train our healthcare professionals to continually enhance their skills and deliver innovative and patient-focused experiences and outcomes. We provide internally developed continuing medical education accredited courses to our healthcare professionals, including instructor-led and on-line education sessions. We have developed and implemented quality measurement systems that track multiple key indicators, which assist our professionals in systematically monitoring, examining and analyzing outcomes and processes. These quality measurement systems are supplemented by our active peer review infrastructure designed to ensure the development and implementation of actionable items that will improve patient outcomes. Our ability to deliver high levels of customer service and patient care is a direct result of this focus, which helps us to differentiate our services, and to attract and retain providers.

	·	Ability to attract and retain high-quality providers. Through our processes, we are able to identify and target high-quality providers to match the needs of our customers. We believe that our operating infrastructure enables us to provide attractive opportunities for our providers to enhance their skills through extensive clinical and leadership development programs. We believe that our differentiated recruiting, training and development programs strengthen our customer and provider relationships, enhance our contract and clinician retention rates and allow us to efficiently recruit providers to support our new contract pipeline.