Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related


           Audit Report or Completed Interim Review.

Reference is made to the Forms 12b-25 (or amendments thereto) filed by Cardiff Lexington Corporation (the "Company") on August 24, 2021 and November 12, 2021 (the "12b-25s") with respect to the Company's Quarterly Reports on Form 10-Q for the respective periods ended June 30, 2021 and September 30, 2021, which 12b-25s are incorporated by reference herein.

The Company has now concluded that the Company's previously issued consolidated financial statements as of and for the year ended December 31, 2020 included in our Annual Report on Form 10-K (the "2020 10-K") and the Company's unaudited condensed consolidated financial statements for the three months ended and year-to-date period ended March 31, 2021 (the "2021 Q-1 10-Q") (the periods covered by the 2020 10-K and the 2021 Q-1 10-Q being referred to herein as the "Affected Periods") should no longer be relied upon. Similarly, any previously furnished or filed reports, related earnings releases, investor presentations or similar communications of the Company describing the Company's financial results for the Affected Periods should no longer be relied upon.

As a result, the Company will restate the financial statements for the Affected Periods. The restatement primarily relates to the accounting for (1) the valuation of embedded derivative liabilities in certain matured convertible notes and (2) the accounting treatment for changes in certain rights and privileges with respect to certain classes of preferred stock on January 10, 2020:

· For certain convertible notes in default containing embedded derivatives (the


   "Notes"), the Company originally valued the derivative liability using a
   Black-Scholes Model, but without consideration to a time value component (the
   term, volatility, or discount rates), because these notes had matured and were
   immediately due. As a result, the embedded derivatives for expired notes were
   measured using a valuation methodology which was analogous to the use of
   intrinsic value. Company management has reconsidered the methodology previously
   applied, and determined that the use of all inputs to the Black-Scholes Model
   is more appropriate in the determination to measure the fair value of all
   derivative liabilities.

· The Company originally did not reflect the impact of amendments which resulted


   in modifications in certain rights and privileges for certain classes of its
   preferred stock. Subsequent to the issuance of its financial statements for the
   year ended December 31, 2020, Company management determined that these
   modifications resulted in changes to the carrying value of certain classes of
   preferred stock, which should have been accounted for as a deemed dividend at
   the time of modification.

The Company expects to file amendments to the 2020 10-K and to the 2021 Q-1 10-Q immediately following the filing of this Current Report on Form 8-K.

The Company's management and the Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K with Daszkal Bolton LLP, the company's prior independent registered public accounting firm and with Rosenberg Rich Baker Berman PA, the Company's current registered public accounting firm.







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