DEF 14C: Cardiff Lexington Plans Reverse Stock Split

Cardiff Lexington Corporation announces stockholder approval for a discretionary reverse stock split ranging from 1-for-2 to 1-for-6 to boost share price and marketability.

Summary

• Stockholders of Cardiff Lexington Corporation have approved a reverse stock split.
• The Board of Directors is authorized to implement the split at a ratio between 1-for-2 and 1-for-6.
• The split can be implemented at any time prior to March 31, 2026.
• The approval was obtained via written consent from majority stockholders on November 14, 2025, to reduce costs and ensure timely implementation.
• The Information Statement is being mailed to stockholders on or about December 2, 2025.
• No further stockholder vote is required for the Board to effect or abandon the Reverse Split.

Sentiment

Score: 6

Explanation: The reverse stock split aims to address marketability and investor perception issues, which is a positive strategic move. However, the filing explicitly states there's no assurance of sustained price increase or improved liquidity, and acknowledges potential negative impacts, leading to a cautiously optimistic but realistic sentiment.

Positives

• Expected to increase the per share market price of common stock.
• Aims to enhance the acceptability and marketability of common stock to the financial community and institutional investors.
• May mitigate reluctance of certain brokers and investors to trade in lower-priced stocks.
• Fractional shares resulting from the split will be rounded up to the nearest whole share, benefiting affected stockholders.

Negatives

• No assurance that the trading price will rise proportionally to the reduction in shares.
• No assurance that the reverse split will lead to a sustained increase in the trading price.
• Liquidity of common stock may be harmed due to the reduced number of outstanding shares.
• May increase the number of stockholders owning "odd lots" (less than 100 shares).
• The resulting per share price may still fail to attract institutional investors or satisfy their guidelines.
• Individual stockholders may face higher transaction costs as a percentage of total share value on lower-priced stocks.

Risks

• Uncertainty regarding the specific effect of the reverse split on the market price of common stock.
• Risk that the trading price of common stock after the reverse split may not rise in proportion to the reduction in shares.
• Risk that the reverse split may not lead to a sustained increase in the trading price of common stock.
• Potential harm to the liquidity of trading in common stock due to the reduced number of outstanding shares.
• Risk that the increased per share stock price may not attract institutional investors or improve trading liquidity.

Future Outlook

The Board of Directors retains discretion to implement the reverse stock split at any time prior to March 31, 2026, or to abandon it entirely. If implemented, the company expects a proportionate increase in the market price of its common stock and will adjust historical per share amounts in future financial statements. The Board will consider marketability, liquidity, prevailing market conditions, and projected performance when deciding on implementation and the specific ratio.

Management Comments

• The board of directors approved the Reverse Split and recommended that our stockholders approve it as well.
• In connection with the adoption of the Reverse Split, our board of directors elected to seek the written consent of the holders of our outstanding voting shares in order to reduce associated costs and implement the Reverse Split in a timely manner.

Industry Context

Reverse stock splits are often undertaken by companies whose stock prices have fallen to low levels, making them less attractive to institutional investors and potentially risking delisting from major exchanges. The stated reasons, such as increasing per-share price to attract institutional investors and improve marketability, are common motivations for such corporate actions across various industries. This move aligns with a strategy to improve the company's perception and accessibility within the broader financial market.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct comparison.
• Reverse stock splits are a common corporate action, particularly for companies trading at low per-share prices, to meet exchange listing requirements or attract institutional investment.
• Many institutional investors and brokerage firms have internal policies that restrict investment in or recommendations of stocks trading below certain price thresholds (e.g., $1.00 or $5.00 per share).
• The rationale provided (improving marketability, attracting institutional investors, mitigating broker reluctance) is consistent with industry-wide practices for companies seeking to enhance their stock's appeal.
• The effectiveness of reverse splits varies across the industry; some companies see sustained price increases and improved liquidity, while others do not, as acknowledged in the filing.

Corporate Governance

Related Party Transactions

• Daniel Thompson, Chairman of the Board, and Alex Cunningham, CEO and Director, along with their affiliated entities (the Majority Stockholders), executed and delivered the written consent. They beneficially owned approximately 83.51% of the total votes eligible to be cast as of the Record Date.

Stakeholder Impact

• Shareholders: Will own a smaller number of shares post-split, but their percentage ownership and proportionate voting power will remain largely unchanged (except for fractional share rounding). May experience improved marketability and potentially higher per-share price, but also face risks of reduced liquidity and no guaranteed sustained price increase.
• Institutional Investors: The reverse split aims to make the stock more attractive to institutional investors who have policies against holding low-priced stocks.
• Brokers: The split intends to mitigate reluctance from brokers to deal in low-priced stocks, potentially improving trading activity.

Next Steps

• The Board of Directors will determine the specific ratio for the reverse stock split (between 1-for-2 and 1-for-6).
• The company will file a certificate of amendment to its amended and restated articles of incorporation with the Nevada Secretary of State's Office.
• The Charter Amendment will be filed no earlier than 20 days after the mailing of this Information Statement.
• The company will adjust historical per share amounts in future financial statements.

Key Dates

Keywords

Reverse Stock Split, Corporate Governance, Stock Market, Share Price, Liquidity, Institutional Investors, SEC Filing, DEF 14C, Cardiff Lexington Corporation