CDIX

Cardiff Lexington Corp

OTC · HEALTH CARE · SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE

0.03

+0.01 +50.00%

USD · close Oct 21

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MKT CAP $469KP/E —DIV YIELD —FCF YIELD —REV TTM $10.2M +0.3%NET INCOME −$9.4MNET DEBT $22.2M52W 0.02 – 5.62SEC XBRL · TTM TO Invalid Date

How CDIX rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

65%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−214

words, now 13,375

New in FY2025

The report of our independent registered public accounting firm that accompanies our financial statements for the year ended December 31, 2025 contains an explanatory paragraph relating to our ability to continue as a going concern.
We had previously sustained operating losses since our inception, have an accumulated deficit of $79,490,980 and $72,949,085 as of December 31, 2025 and 2024, respectively, and had negative cash flow from operating activities of $2,853,274 and $2,765,797 during the years ended December 31, 2025 and 2024, respectively.
However, management believes, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year.
Our typical accounts receivable collection lifecycle is between 12 and 24 months.
This extended period creates several risks relating to our liquidity and cash flow, exposure to credit losses, dependence on external financing, negative impact on our financial metrics and operational challenges.
We focus on plaintiff-related care and provide orthopedic healthcare to uninsured patients.
Since the patient is uninsured, we must wait for payments of amounts owed to us until the patient’s lawyer settles the claim against the defendant’s insurance company or the defendant.
As a result of our need to wait for such a settlement, we experience an extended accounts receivable collection period, which typically ranges from 12 to 24 months.
This prolonged collection cycle presents several risks that could materially and adversely affect our business, financial condition, and results of operations, including the following. · 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.
This business model results in an extended accounts receivable collection period of 12 to 24 months.
We believe that these changes to our financial systems will assist us going forward, but we expect a 12 to 24 month lag before we are able to obtain relevant aging data with regard to these receivables.
We expect that it will take 12 to 24 months to support the aging of our accounts receivables and ensure accurate estimation of the receivable lifecycle, and will require us to devote significant resources during that period.
If we are able to successfully grow our operations, which cannot be assured, we expect to encounter additional challenges to our internal processes, capital commitment process, and acquisition funding and financing capabilities.
We have historically financed acquisitions primarily through additional equity and debt financings.
A change in our strategy may increase our exposure to interest rate and currency fluctuations, subject us to regulation under the Investment Company Act of 1940, as amended, or the Investment Company Act, or subject us to other risks and uncertainties that affect our operations and profitability.
We are a holding company and have no material assets other than ownership of equity interests in our subsidiaries.
We have no independent means of generating revenue.
We intend to cause our subsidiaries to make distributions to our company in an amount sufficient to cover all applicable taxes payable and dividends, if any, declared by us.
Our ability to service our debt, if any, depends on the results of operations of our subsidiaries and upon the ability of our subsidiaries to provide us with cash, whether in the form of dividends, loans or other distributions, to pay amounts due on our obligations.
Future financing arrangements may contain negative covenants that limit the ability of our subsidiaries to declare or pay dividends or make distributions.
Our subsidiaries are separate and distinct legal entities.
To the extent that we need funds, and our subsidiaries are restricted from declaring or paying such dividends or making such distributions under applicable law or regulations or are otherwise unable to provide such funds (for example, due to restrictions in future financing arrangements that limit the ability of our operating subsidiaries to distribute funds), our liquidity and financial condition could be materially harmed.
The operational objectives and business plans of our businesses may conflict with our operational and business objectives or with the plans and objectives of another business we own and operate.
Our businesses face different risks and opportunities depending on market and economic conditions in their respective regions.
If we experience unexpected increases in the growth of uninsured and underinsured patients or in credit losses, our results of operations will be harmed.
In particular, the current practice of providing physician services in advance of payment or, in some cases, irrespective of the patient’s ability to pay for such services, may have significant negative impact on our net revenue, credit losses and cash flow.
To the extent that the complexity associated with billing for healthcare services we provide causes delays in our cash collections, we may experience increased carrying costs associated with the aging of our accounts receivable as well as increased potential for credit losses.
Natural disasters, unusually adverse weather conditions or pandemic outbreaks could cause permanent or temporary facility closures or cause patient traffic to decline, all of which could result in lost revenue and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as hurricanes, fires or floods, unusually adverse weather conditions, pandemic outbreaks, terrorist acts, or similar disruptions could adversely affect our operations and financial performance.
For instance, our operations were severely impacted by the COVID-19 pandemic and several of our facilities were temporarily closed due to hurricanes in 2024.
To the extent these events result in the closure of one or more of our facilities, our operations and financial performance could be materially adversely affected through lost revenue.
In addition, these events could result in the temporary lack of an adequate work force in a facility or the temporary or long-term disruption in the supply of materials from suppliers.
These events also could have indirect consequences, such as increases in the cost of insurance, if they were to result in significant loss of property or other insurable damage.
Among these laws are the federal False Claims Act, the Health Insurance Portability and Accountability Act of 1996, or HIPAA and the federal anti-kickback statute and the provision of the Social Security Act commonly known as the “Stark Law.” These laws, and particularly the anti-kickback statute and the Stark Law, impact the relationships that we may have with physicians and other referral sources.
The Centers for Medicare and Medicaid Services published a Medicare self-referral disclosure protocol, which is intended to allow providers to self-disclose actual or potential violations of the Stark Law.
State efforts to regulate the construction or expansion of healthcare facilities could impair our ability to expand.
Many states, including Florida, have enacted certificates of need, or CON, laws as a condition prior to capital expenditures, construction, expansion, modernization, or initiation of major new services.
Demand for properties similar to that owned by us is subject to fluctuations that are often due to factors outside our control.

and 47 more.

Gone since FY2024

The report of our independent registered public accounting firm that accompanies our financial statements for the year ended December 31, 2024 contains an explanatory paragraph relating to our ability to continue as a going concern.
We had previously sustained operating losses since our inception, have an accumulated deficit of $72,949,085 and $68,684,115 as of December 31, 2024 and 2023, respectively, and had negative cash flow from operating activities of $5,858,147 and $1,807,987 during the years ended December 31, 2024 and 2023, respectively.
However, management believes, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year from the financial statement issuance date.
Our typical accounts receivable collection lifecycle is between 18 and 24 months.
This extended period creates several risks relating to our liquidity and cash flow, exposure to bad debt, dependence on external financing, negative impact on our financial metrics and operational challenges.
We operate in the lien-based medical industry.
We provide orthopedic healthcare to uninsured patients.
Since the patient is uninsured, we must wait for payments of amounts owed to us until the patient’s lawyer settles the claim against the defendant’s insurance company or the defendant himself.
As a result of our need to wait for such a settlement, we experience an extended accounts receivable collection period, which typically ranges from 18 to 24 months.
This prolonged collection cycle presents several risks that could materially and adversely affect our business, financial condition, and results of operations, including the following. · Liquidity and Cash Flow Constraints : The long duration between the sale of our products or 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 Bad Debt : 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 bad debt expenses. · 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.
This business model results in an extended accounts receivable collection period of 18 to 24 months.
We believe that these changes to our financial systems will assist us going forward, but we expect an 18 to 24 month lag before we are able to obtain relevant aging data with regard to these receivables.
We expect that it will take 18 to 24 months to support the aging of our accounts receivables and ensure accurate estimation of the receivable lifecycle, and will require us to devote significant resources during that period.
As we grow, we expect to encounter additional challenges to our internal processes, capital commitment process, and acquisition funding and financing capabilities.
We finance acquisitions primarily through additional equity and debt financings.
A change in our strategy may increase our exposure to interest rate and currency fluctuations, subject us to regulation under the Investment Company Act or subject us to other risks and uncertainties that affect our operations and profitability.
Our primary business is the holding and managing of controlling interests our operating businesses.
Therefore, we will be dependent upon the ability of our businesses to generate cash flows and, in turn, distribute cash to us in the form of distributions, advances and other transfers of funds to enable us to satisfy our financial obligations.
The ability of our businesses to make payments to us may also be subject to limitations under laws of the jurisdictions in which they are incorporated or organized.
The operational objectives and business plans of our businesses may conflict with our operational and business objectives or with the plans and objective of another business we own and operate.
Our businesses operate in different industries and face different risks and opportunities depending on market and economic conditions in their respective industries and regions.
We have identified material weaknesses in our internal control over financial reporting.
If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results and prevent fraud.
As a result, current and potential stockholders could lose confidence in our financial statements, which would harm the trading price of our common stock.
Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404.
SOX 404 requires management to establish and maintain a system of internal control over financial reporting and annual reports on Form 10-K filed under the Exchange Act to contain a report from management assessing the effectiveness of a company’s internal control over financial reporting.
Separately, under SOX 404, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, public companies that are large, accelerated filers or accelerated filers must include in their annual reports on Form 10-K an attestation report of their regular auditors attesting to and reporting on management’s assessment of internal control over financial reporting.
Non-accelerated filers and smaller reporting companies, like us, are not required to include an attestation report of their auditors in annual reports.
A report of our management is included under Item 9A “ Controls and Procedures .” We are a smaller reporting company and, consequently, are not required to include an attestation report of our auditor in our annual report.
However, if and when we become subject to the auditor attestation requirements under SOX 404, we can provide no assurance that we will receive a positive attestation from our independent auditors.
During its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2024, management identified material weaknesses.
These material weaknesses were associated with our lack of (i) formal documentation over internal control procedures and environment, (ii) proper segregation of duties and multiple level of reviews and (iii) 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 also have not developed and effectively communicated our accounting policies and procedures to our employees, which has resulted in inconsistent practices.
We are undertaking remedial measures, which measures will take time to implement and test, to address these material weaknesses.
There can be no assurance that such measures will be sufficient to remedy the material weaknesses identified or that additional material weaknesses or other control or significant deficiencies will not be identified in the future.
If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports.
Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline in our stock price.
If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed.
In particular, the current practice of providing physician services in advance of payment or, in some cases, irrespective of the patient’s ability to pay for such services, may have significant negative impact on our net revenue, bad debt expense and cash flow.

and 55 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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