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On September 24, 2026, Cardiff Lexington
Corporation issued a press release, a copy of which is furnished as Exhibit 99.1 to this report.
The information furnished with this Item 8.01,
including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing
under Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as expressly set forth by specific
reference in such a filing.
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Exhibit 99.1
CARDIFF LEXINGTON
CORPORATION ANNOUNCES LETTER OF INTENT FOR PROPOSED ACQUISITION OF LEADING MUSCULOSKELETAL HEALTHCARE PLATFORM
Proposed Combination Would Significantly Expand
Cardiff Lexington’s Musculoskeletal and Ancillary Healthcare Operations
LEXINGTON, KY. — September 24, 2026 — Cardiff Lexington
Corporation (OTC: CDIX) (“Cardiff Lexington” or the “Company”), a healthcare holding company focused on orthopedics,
spine care, pain management and related healthcare services, today announced that it has entered into a letter of intent (“LOI”)
with the owners of a multi-location musculoskeletal healthcare platform regarding a proposed business combination (the “Proposed
Transaction”).
The acquisition target (the “Target”) operates an established
comprehensive multi-location musculoskeletal healthcare platform serving patients in multiple states. The Company believes that the Proposed
Transaction would substantially increase the scale of Cardiff Lexington’s healthcare operations and further the Company’s
strategy of developing an integrated regional healthcare platform encompassing orthopedic and spine care, diagnostic imaging, physical
therapy and other complementary related healthcare services.
Strategic Benefits
Cardiff Lexington believes the Proposed Transaction could create a
significantly larger integrated musculoskeletal healthcare platform with opportunities to increase utilization of existing clinical infrastructure,
expand ancillary services and pursue additional growth opportunities.
The LOI provides Cardiff Lexington with a 30-month option following
closing to acquire, at appraised fair market value, certain healthcare facilities utilized by the Target, together with rights of first
refusal thereafter. These rights extend to certain facilities currently under development.
“We believe this proposed combination has the potential to create
a cornerstone regional healthcare platform for Cardiff Lexington as it is complimentary with and synergistic to our existing Nova organization,
and moreover, will be a force multiplier in accelerating our strategic long term growth and expansion,” said its Chairman and CEO,
Alex Cunningham. “The combination of an established physician-led clinical organization, complementary ancillary services and the
opportunity for future ambulatory surgery center integration is closely aligned with our Nova Ortho and Spine operations and the healthcare
strategy we are building.”
Proposed Transaction Structure
The Company would pay to the sellers an aggregate purchase price consideration
of up to $104 million (the “Purchase Price”). Under the LOI, Cardiff Lexington would acquire the equity interests of the Target
for consideration consisting principally of:
| · | $30
million in cash at closing (before debt retirement, transaction costs, and escrow); |
| | |
| · | $10
million unsecured notes payable two years following closing; |
| | |
| · | Preferred
equity based on the value attributed to the preferred equity under the LOI, resulting in the sellers collectively owning 35% of Cardiff
Lexington’s fully diluted equity post-closing; and |
| | |
| · | Up
to $12 million of additional Cardiff Lexington common stock tied to the Target achieving specified EBITDA performance thresholds for
2027, 2028, and 2029. |
The preferred equity would carry a non-participating 1x preference
senior to Cardiff Lexington common stock, subject to potential seniority of securities issued to cash investors. The preferred equity
may convert into Cardiff Lexington common stock upon a qualifying listing on a national securities exchange at a valuation greater than
$120 million.
The transaction structure is intended to provide the sellers with significant
continuing ownership in Cardiff Lexington and align the interests of the Target’s existing leadership with Cardiff Lexington and
its shareholders following closing.
“This proposed transaction has been structured with the intent
to create a long-term combination rather than simply an acquisition,” said Cunningham. “A substantial portion of the consideration
remains invested in Cardiff Lexington, while additional consideration is tied directly to significant growth of the Target’s EBITDA.
We believe this structure creates meaningful alignment and provides significant value among Cardiff Lexington shareholders, the sellers,
management and our financing partners and is aligned with our longer-term growth strategy.”
Performance-Based Consideration
The LOI provides for three potential performance-based equity payments
based on Target’s EBITDA in each of 2027, 2028 and 2029.
The sellers would be eligible to receive $4 million in Cardiff Lexington
common stock if the Target’s 2027 EBITDA exceeds $15 million, an additional $4 million in Cardiff Lexington common stock if the
Target’s 2028 EBITDA exceeds $18 million, and additional $4 million in Cardiff Lexington common stock if the Target’s 2029
EBITDA exceeds $22 million.
If an applicable EBITDA threshold is not achieved, the corresponding
earnout would not be payable.
“The earnout structure reflects our combined management focus
on profitable growth,” Cunningham said. “Additional consideration is earned only through achievement of significant operating
performance thresholds.”
Continuing Leadership and Alignment
A key element of the Proposed Transaction is the continued participation
of the sellers and the Target’s existing leadership in the combined organization.
Following closing, the sellers are expected to maintain significant
continuing equity ownership in Cardiff Lexington and to assume new and continuing leadership, management, operational and governance roles
within the combined organization. The Proposed Transaction is structured with the intent to retain the Target’s existing leadership,
physicians and employees while integrating the organization into Cardiff Lexington’s broader healthcare platform.
Certain members of the Target’s existing leadership are expected
to enter into long-term employment and management arrangements with Cardiff Lexington and assume expanded responsibilities within the
combined organization. The Proposed Transaction also contemplates representation of the Target’s leadership on Cardiff Lexington’s
Board of Directors following closing.
Cardiff Lexington intends to continue the employment of the Target’s
existing employees and establish an equity-based management incentive program designed to retain and recruit key members of the Target’s
management team.
Capital Structure and Financing
The LOI contemplates a post-closing capital structure under which Cardiff
Lexington would maintain approximately $10 million of cash on its consolidated balance sheet, approximately $35 million of total indebtedness
and approximately $25 million of accounts receivable.
The Proposed Transaction contemplates the inclusion of new equity investment,
conventional debt financing and remains subject to ongoing due diligence, underwriting, an independent quality-of-earnings review and
other customary financing requirements. Cardiff Lexington has not yet obtained binding financing commitments for the Proposed Transaction,
and there can be no assurance that financing will be available on acceptable terms or at all.
Due Diligence and Anticipated Closing
The parties have established a continuing due diligence period of up
to 45 days following execution of the LOI. Cardiff Lexington will endeavor to complete due diligence and finalize acquisition documentation
by October 30, 2026, with the LOI providing for a projected closing date of November 16, 2026, or earlier.
These dates represent current targets and are subject to completion
of due diligence, financing, preparation of required financial statements, negotiation and execution of definitive agreements, required
approvals and satisfaction of other closing conditions.
Following closing, Cardiff Lexington intends to engage a PCAOB-registered
accounting firm to audit the Target’s financial statements for the two fiscal years ended December 31, 2024, and December 31, 2025,
and review its financial statements for the six months ended June 30, 2026.
Important Transaction Information
The LOI does not create a binding obligation for the parties to consummate
the Proposed Transaction. Certain provisions of the LOI, including provisions relating to working capital and accounts receivable, exclusivity,
confidentiality and certain other matters, are binding.
The Target and its owners have agreed to a 45-day exclusivity period
during which they generally may not solicit or negotiate a competing transaction.
Completion of the Proposed Transaction remains subject to due diligence,
an independent quality-of-earnings review, financing, preparation and review or audit of required financial information, negotiation and
execution of definitive agreements, required approvals and customary closing conditions.
There can be no assurance that definitive agreements will be executed,
that Cardiff Lexington will obtain financing on acceptable terms, that the Proposed Transaction will close within the anticipated timeframe
or on the terms contemplated by the LOI, or that the Proposed Transaction will be completed at all.
About Cardiff Lexington Corporation
Cardiff Lexington Corporation is a healthcare holding company focused
on acquiring, developing and operating businesses in orthopedics, spine care, pain management and related healthcare services. Through
its operating subsidiaries, Cardiff Lexington seeks to develop integrated regional healthcare platforms combining physician services with
complementary ancillary services and healthcare assets.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning
of applicable federal securities laws. These statements include, among others, statements concerning the Proposed Transaction; the contemplated
consideration and financing; Cardiff Lexington’s anticipated post-closing capitalization; the potential issuance and conversion
of equity securities; the Target’s potential future EBITDA and earnout performance; anticipated management and Board participation;
the anticipated timing of the Proposed Transaction; potential acquisition of healthcare real estate; the anticipated benefits of the Proposed
Transaction; and Cardiff Lexington’s growth and acquisition strategy.
Forward-looking statements are based upon current expectations and
assumptions and involve risks and uncertainties that could cause actual results to differ materially. Such risks include the possibility
that due diligence or the quality-of-earnings review could result in changes to the Proposed Transaction; financing may not be available
on acceptable terms or at all; definitive agreements may not be executed; required approvals or closing conditions may not be obtained
or satisfied; the Target may not achieve anticipated operating results; and other risks described in Cardiff Lexington’s filings
with the Securities and Exchange Commission.
Readers should not place undue reliance on forward-looking statements.
Cardiff Lexington undertakes no obligation to update such statements except as required by applicable law.
Investor Relations
Cardiff Lexington Investor Relations
investorsrelations@cardifflexington.com
(800) 628-2100 ext. 705
or
IMS Investor Relations
cardifflexington@imsinvestorrelations.com
(203) 972-9200
