On October 16, 2024, Cardiff Lexington Corporation's Board of Directors, acting on the Audit Committee's recommendation and discussions with management, determined that previously issued financial statements should no longer be relied upon. This decision impacts the financial statements for the three months ended March 31, 2024 and 2023, and for the three and six months ended June 30, 2024 and 2023.
The conclusion was based on the discovery of an error in the classification of credit loss expense to net revenue. For the three months ended March 31, 2024, the company will reclassify $339,834 of credit loss expense to net revenue as variable consideration under ASC 606.
Additionally, 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 under ASC 606. The Audit Committee discussed these matters with the company's former independent auditors, Grassi & Co., CPAs, P.C., and determined the errors were material.
As a result, Cardiff Lexington plans to restate its financial statements for the affected periods. The company will file amendments to its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, and June 30, 2024, to reflect these restatements.
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