Cardiff Lexington Corp 10-K for FY2025

Cardiff Lexington Corp (CDIX)

10-K 2026-03-10 For: 2025-12-31

Added on April 06, 2026

About this 10-K

Cardiff Lexington Corp filed this 10-K on March 10, 2026, covering the fiscal year ended December 31, 2025 (FY2025).

Headline figures

Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.54M; up 39.5% from $8.27M a year earlier
Net loss: $5.51M; compared with a net loss of $3.3M a year earlier

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Nevada		84-1044583
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

710 East Main Street Lexington, KY		40502
(Address of principal executive offices)		(Zip Code)

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

Item 1.	Business.	1
Item 1A.	Risk Factors.	15
Item 1B.	Unresolved Staff Comments.	34
Item 1C.	Cybersecurity.	34
Item 2.	Properties.	35
Item 3.	Legal Proceedings.	35
Item 4.	Mine Safety Disclosures.	35

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	36
Item 6.	[Reserved]	37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	37
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	50
Item 8.	Financial Statements and Supplementary Data.	51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	51
Item 9A.	Controls and Procedures.	51
Item 9B.	Other Information.	54
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	54

Item 10.	Directors, Executive Officers and Corporate Governance.	55
Item 11.	Executive Compensation.	54
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	67
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	68
Item 14.	Principal Accounting Fees and Services.	69

Item 15.	Exhibits and Financial Statement Schedules.	70
Item 16.	Form 10-K Summary.	73

	·	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 ability to maintain 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.

	·	Core Cash Flow – Acquiring, optimizing, and managing physician practices to drive recurring revenue and operational efficiency.

	·	Asset Acquisition – Expanding our footprint through ownership of real estate assets such as ambulatory surgery centers and orthopedic clinics.

	·	Finance – Retaining and managing personal injury practice accounts receivable to capture long-term income rather than selling at deep discounts, strengthening sustainable profitability.

	·	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.

	·	*Management Operating and Investing Experience*. Our directors and executive officers have significant executive, investment and operational experience in managing and growing small and middle market healthcare 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 stockholders’ interests.

	·	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.

	·	Capitalize on organic growth opportunities. As noted above, management estimates that our eleven facilities are operating at 35% capacity as of December 31, 2025. Accordingly, we believe that we have an opportunity for organic growth at our existing facilities. We also believe our physician-led, patient-focused culture and approach to clinical solutions will allow us to continue to successfully recruit and retain clinical professionals.

	·	Supplement organic growth with strategic acquisitions. The market in which we compete is highly fragmented, presenting significant opportunities for additional acquisitions. We will continue to follow a disciplined strategy in exploring future acquisitions by analyzing the strategic rationale, financial impact and organic growth profile of each potential opportunity. Our current focus for future acquisitions is outpatient Orthopedic Surgery Centers and related Clinics. We have been in discussions with several privately owned Surgery Centers and Clinics. Key targets are strategically located within eighteen states that we have identified to have a combination of favorable dynamics.

	·	Enhance operational efficiencies and productivity. We believe there are significant opportunities to continue to build upon our success in improving our productivity and profitability. We continue to focus on initiatives to improve productivity, including more efficient scheduling, continued use of mid-level providers, enhancing our leadership training programs, improving and realigning compensation programs. We believe that our processes related to managed care contracting, billing, coding, collection and compliance have driven a strong track record of efficient revenue cycle management. We have made significant investments in infrastructure, including management information systems that we believe will continue to enable us to improve clinical results and key client metrics while reducing the cost of providing patient care. We have dedicated teams with business and clinical expertise that are responsible for implementing best practices. Furthermore, we will continue to utilize risk mitigation programs for loss prevention and early intervention. We believe that our significant investments in scalable technology systems will facilitate additional cost reductions and efficiencies.

	·	Liquidity and Cash Flow Constraints: The long duration between the sale of our services and the receipt of payment from our customers can significantly strain our liquidity and cash flow. This extended time period can limit our ability to invest in growth opportunities, meet our operating expenses, and fulfill our obligations as they become due.

	·	Increased Exposure to Credit Losses: Notwithstanding that we typically receive a letter of protection, extended collection periods increase the risk that a net settlement will not be collected in cases where no settlement is reached with the defendant’s insurance company and the plaintiff (our patient) loses the case at trial, or the case is abandoned, potentially leading to higher than anticipated credit losses. For the years ended December 31, 2025 and 2024, we recognized credit losses of $262,928 and $266,000, respectively.

	·	Dependence on External Financing: To mitigate the impact of delayed collections, we may need to rely more heavily on external financing sources such as factoring arrangements, lines of credit, loans, or equity financing. Such dependence may result in increased interest expenses, dilution of stockholders' equity, or restrictive covenants that could limit our operational flexibility.

	·	Impact on Financial Metrics: Prolonged accounts receivable cycles can distort our financial metrics, including working capital ratios, days sales outstanding (DSO), and cash conversion cycle. These distorted metrics may negatively influence investor perceptions, credit ratings, and our overall financial health.

	·	Operational Challenges: Managing long accounts receivable cycles requires robust credit risk management and collections processes. Failure to effectively manage these processes could lead to inefficiencies and higher operational costs.

	·	the inability to effectively integrate 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.

	·	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; and

	·	speculation in the media, online forums, or investment community.

	·	changes in the valuation of our deferred tax assets and liabilities;

	·	expected timing and amount of the release of any tax valuation allowances;

	·	tax effects of stock-based compensation;

	·	costs related to intercompany restructurings; or

	·	changes in tax laws, regulations or interpretations thereof.

	·	On October 31, 2025, we issued a three-year warrant to purchase 100,000 shares of common stock at an exercise price of $3.00 (subject to adjustments) to a service provider.

	·	On November 3, 2025, we issued 16,667 shares of common stock to a service provider.

	·	On November 19, 2025, we issued an aggregate of 6,716,728 shares of common stock upon the conversion of an aggregate of 10,075,092 shares of series I preferred stock.

	·	On November 25, 2025, we issued 30,454 shares of series N senior convertible preferred stock, 10,698 shares of series X senior convertible preferred stock and 26,114 shares of series Y senior convertible preferred stock as payment of accrued dividends.

	·	On November 25, 2025, we issued 100,000 shares of common stock to a consultant for services rendered.

	·	See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Notes” for a description of certain convertible promissory notes, warrants and shares of common stock issued in December 2025.

	December 31, 2025						December 31, 2024
	Amount			% of Revenue			Amount			% of Revenue
Total revenue	$	11,535,577			100.00	%	$	8,270,126			100.00	%
Total cost of sales		4,329,330			37.53	%		3,841,628			46.45	%
Gross profit		7,206,247			62.47	%		4,428,498			53.55	%
Operating expenses
Depreciation expense		5,652			0.05	%		13,461			0.16	%
Loss on disposal		12,593			0.11	%		–			–
Share based compensation		754,475			6.54	%		544,725			6.59	%
Selling, general and administrative		5,332,941			46.23	%		4,063,816			49.14	%
Total operating expense		6,105,661			52.93	%		4,622,002			55.89	%
Income (loss) from continuing operations		1,100,586			9.54	%		(193,504	)		(2.34	)%
Other (expense) income
Other expense		(22,147	)		(0.19	)%		(5,362	)		(0.06	)%
Gain on debt refinance and forgiveness		–			–			78,834			0.95	%
Penalties and fees		(1,500	)		(0.01	)%		(1,330	)		(0.02	)%
Interest expense		(6,822,816	)		(59.15	)%		(3,045,504	)		(36.83	)%
Amortization of debt discounts		–			–			(24,821	)		(0.30	)%
Total other expense		(6,846,463	)		(59.35	)%		(2,998,183	)		(36.25	)%
Net loss before discontinued operations		(5,745,877	)		(49.81	)%		(3,191,687	)		(38.59	)%
Income (loss) from discontinued operations		238,285			2.07	%		(111,312	)		(1.35	)%
Net loss	$	(5,507,592	)		(47.74	)%	$	(3,302,999	)		(39.94	)%

	Years Ended December 31,
	2025			2024 (Restated)
Net cash used in operating activities from continuing operations	$	(2,853,274	)	$	(2,765,797	)
Net cash provided by financing activities		1,983,624			2,975,727
Net change in cash		(869,650	)		321,242
Cash at beginning of year		1,188,185			866,943
Cash at end of year	$	318,535		$	1,188,185

	·	identification of a contract with a customer;

	·	identification of the performance obligations in the contract;

	·	determination of the transaction price;

	·	allocation of the transaction price to the separate performance obligations; and

	·	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.

	(1)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

	(2)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

	(3)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

	·	We had not developed and effectively communicated to our employees our accounting policies and procedure, which had resulted in inconsistent practices.

	·	We lacked formal documentation over internal control procedures and environment.

	·	We lacked proper segregation of duties and multiple level of reviews.

	·	We lacked sufficient process, systems and access to technical accounting resources to enable appropriate accounting for and reporting on complex and/or non-routine debt and equity financing transactions including accounting for derivatives, convertible debt, preferred stock.

	·	We made strategic hiring decisions and provided, and will continue to provide, technical training to our financial team, and other relevant operations personnel, on appropriate GAAP accounting guidelines applicable to financial reporting requirements and internal controls and operating procedures.

	·	We implemented consistent application of new and existing policies and procedures across the organization that address technical, financial and operational controls and the forgoing weaknesses identified. We have developed and formally approved accounting policies and procedures aligned with applicable standards and clearly define roles, responsibilities, and standardized workflows. These policies and procedures have been communicated to all relevant staff and shared ongoing, and have been embedded into daily operation, system-based controls, and month-end checklists. Compliance is monitored through periodic and multiple level reviews, with deviations corrected immediately through root cause analysis, targeted retraining and process updates, ensuring consistent accounting practices and a strengthened internal control environment.

	·	We implemented high quality proper documentation procedures for key functional areas, control objectives and workflows. We significantly improved and continuously enhance processes, routine and non-routine, debt and equity financing transactions including accounting for derivatives, convertible debt, preferred stock, and on occasion management has hired external experts to augment technical and valuation work in order to ensure technical accuracy and timeliness. On an ongoing basis we assess processes to ensure workflows encompass segregation of duties as well as oversight of secondary independent reviews.

Name	Age	Position
Alex Cunningham	70	Chairman, Chief Executive Officer and President
Matthew T. Shafer	55	Senior Vice President and Chief Financial Officer
Gillard B. Johnson, III	77	Director
Cathy Pennington	67	Director
L. Jack Staley	79	Director

	·	been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

	·	had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation, or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

	·	been subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

	·	been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

	·	been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

	·	been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)⁽¹⁾	Total ($)
Alex Cunningham, Chief Executive Officer⁽²⁾	2025	885,000	250,000	242,760	1,377,760
Alex Cunningham, Chief Executive Officer⁽²⁾	2024	360,000	200,000	280,000	840,000
Daniel Thompson, former Chairman of the Board⁽³⁾	2025	700,000	250,000	242,760	1,192,760
Daniel Thompson, former Chairman of the Board⁽³⁾	2024	360,000	200,000	280,000	840,000
Matthew T. Shafer, Chief Financial Officer⁽⁴⁾	2025	250,800	62,700	264,667	578,167
Matthew T. Shafer, Chief Financial Officer⁽⁴⁾	2024	228,000	57,000	22,400	307,400

(1)	The amount is equal to the aggregate grant-date fair value with respect to the awards, computed in accordance with ASC Topic 718.

(2)	For the year ended December 31, 2025, Mr. Cunningham was paid salary of $737,500, with the remaining salary and bonus amounts accrued, and for the year ended December 31, 2024, Mr. Cunningham was paid salary of $360,000, with the remaining salary and bonus amounts accrued. As of December 31, 2025, the total outstanding accrued compensation owed to Mr. Cunningham was $2,163,000. See also Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Related Party Loans” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Conversion of Deferred Compensation.”

(3)	Mr. Thompson served as our Chairman from May 2024 to December 2025. For the year ended December 31, 2025, Mr. Thompson was paid salary of $583,333, with the remaining salary and bonus amounts accrued, and for the year ended December 31, 2024, Mr. Thompson was paid salary of $240,000, with the remaining salary and bonus amounts accrued. As of December 31, 2025, the total outstanding accrued compensation owed to Mr. Thompson was $2,237,167. See also Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Related Party Loans.”

(4)	For the year ended December 31, 2025, Mr. Shafer was paid salary of $250,800, with the bonus amounts accrued, and for the year ended December 31, 2024, Mr. Shafer was paid salary of $228,000, with the bonus amounts accrued. As of December 31, 2025, the total outstanding accrued bonus and stock compensation owed to Mr. Shafer was $406,767. See also Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Related Party Loans.”

Name	Stock Awards
Name	Number of shares or units of stock that have not vested (#)	Market value of shares of units of stock that have not vested ($)	Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)	Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Matthew T. Shafer ⁽¹⁾	8,334	$43,228.46	-	-

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)⁽¹⁾	Option Awards ($)⁽²⁾	Total ($)
Gillard B. Johnson, III	42,500	15,300	85,786	143,586
Cathy Pennington	42,500	15,300	85,786	143,586
L. Jack Staley	42,500	15,300	85,786	143,586

(1)	On September 26, 2025, we granted to each independent director (i) a restricted stock award for 1,667 shares of common stock, which vested in full on the date of grant (as compensation for service in 2024) and (ii) a restricted stock award for 1,667 shares of common stock, with 556 shares vesting immediately and the remaining shares vesting in three (3) quarterly installments commencing on October 1, 2025. The amount is equal to the aggregate grant-date fair value with respect to the awards, computed in accordance with ASC Topic 718.

(2)	On December 11, 2025, we granted to each independent director a stock option for the purchase of 16,667 shares of common stock at an exercise price of $5.187, which vests quarterly over one year commencing on January 1, 2026. The amount is equal to the aggregate grant-date fair value with respect to the awards, computed in accordance with ASC Topic 718.