Non Reliance of Financial Report Form 8 K

On October 16, 2024, the Board of Directors of Cardiff Lexington Corporation (the "Company"), upon recommendation of the Audit Committee and following discussions with management, determined that the following previously issued financial statements should no longer be relied upon:

The conclusion was based on the discovery that the previously issued financial statements for the three months ended March 31, 2024 and 2023 should be revised to reflect a change in the classification of credit loss expense to net revenue, and that the previously issued financial statements for the three and six months ended June 30, 2024 and 2023 should be revised to reflect a change in the classification of credit loss expense to net revenue and a related adjustment to the allowance for credit losses. For the three months ended March 31, 2024, the Company will correct its accounting for its credit loss expense of $339,834, which will be reclassified to net revenue as variable consideration accounted for under ASC 606. The Company's allowance for credit losses of $122,190 did not require adjustment during the six months ended June 30, 2024, and as a result, the Company will reverse its credit loss expense associated with this adjustment. The remaining $1,199,155 of credit loss expense for the six months ended June 30, 2024 will be reclassified to net revenue as variable consideration accounted for under ASC 606.

The Audit Committee discussed these matters with the Company's former independent auditors, Grassi & Co., CPAs, P.C., and determined that the effect of such errors were material. As a result, the Company has decided to restate its financial statements for the periods ended March 31, 2024 and 2023 included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and for the periods ended June 30, 2024 and 2023 included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. The financial statements noted above should no longer be relied upon. Similarly, related reports, press releases, earnings releases, and investor communications describing the Company's financial statements for these periods should no longer be relied upon.

The Company will file amendments to its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024 in which the financial statements for the quarters ended March 31, 2024 and 2023 and for the quarters ended June 30, 2024 and 2023, respectively, and will be restated.