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Cardiff Lexington Corporation

3753 Howard Hughes Parkway, Suite 200

Las Vegas, NV 89169

September [*], 2024

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, DC. 20549

Attn: Tracey Houser

  Re:
  Cardiff Lexington Corp

  Form 10-K for Fiscal Year Ended December 31, 2023

  Filed March 27, 2024

  Form 10-Q for Fiscal Quarter Ended June 30, 2024

  Filed August 14, 2024

  Response Letter Dated August 7, 2024

  File No. 000-49709

Ladies and Gentlemen:

We hereby submit the responses of Cardiff Lexington
Corporation (the “Company”) to the comments of the staff (the “Staff”) of the U.S. Securities and
Exchange Commission (the “Commission”) set forth in the Staff’s letter, dated August 16, 2024, providing the
Staff’s comments with respect to the above-referenced Form 10-K for the fiscal year ended December 31, 2023, as amended (the “Form
10-K”), and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the “Q2 10-Q”). Attached
hereto as Annex A is a draft copy of the Form 10-K with our proposed changes to address the Staff’s comments as described below.
Attached hereto as Annex B is a draft copy of an amendment to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the
“Q1 10-Q”) with our proposed changes to address the Staff’s comments as described below. Attached hereto as Annex
C is a draft copy of the Q2 10-Q with our proposed changes to address the Staff’s comments as described below. Additionally, as
provided to the SEC Staff supplementally is our detailed assessment memo of the accounting conclusions described in our responses below.

For the convenience of the Staff, each
of the Staff’s comments is included and is followed by the corresponding response of the Company. Unless the context
indicates otherwise, references in this letter to “we,” “us” and “our” refer to the Company on a consolidated
basis.

Form 10-Q for Fiscal Quarter Ended
June 30, 2024

1. Summary of Significant Accounting
Policies

Account Receivable, page 9

 1. We note that during the first quarter of fiscal year 2024 you recognized $0
credit loss expense for the accounts receivable recognized during the period. However, your accounting policy indicates that you use the
loss rate method to recognize an allowance for credit losses to present the net amount expected to be collected for trade receivables.
Based on your accounting policy and the guidance in ASC 326-20-30-1 through 30-10, it is unclear how you concluded that the associated
credit loss risk was zero. Please advise. To the extent that you did not recognize a credit loss expense for the accounts receivable recognized
during the second quarter of fiscal year 2024, please explain the appropriateness of your accounting.

Response:
Subsequent to filing our Q2 10-Q, we identified an error in our accounting
for credit loss expense and we are in the process of amending our filing, along with our Q1 10-Q and our Form 10-K. In our response below
to comment 1, we will provide an overview of the error we identified and our proposed edits, which will provide a response to question
1 and will provide context for further responses.

For the six months
ended June 30, 2024, we reported bad debt expense (credit loss expense) of $1,242,017 in our statement of cash flows. Similarly, in our
accounts receivable summary of significant accounting policies in footnote 1, we disclosed this charge as our current period provision
after adopting ASU 2016-13 “Financial Instruments – Credit Losses” and accounting for credit loss expense under ASC
326. After further investigation, we determined the bad debt expense of $1,242,017 does not constitute credit loss expense as it does
not relate to a deterioration in the credit worthiness of our customers under ASC 326-20. Further evaluation is provided next:

      1

What do we
consider credit loss expense under ASC 326 and what do we plan to disclose

In considering the amount of allowance
and credit loss expense to record under ASC 326, we considered our historical loss percentages under the loss rate methodology of ASC
326-20-30-3. We chose this methodology as we do not currently maintain an accounts receivable aging due to the nature of our receivable
balances. In reviewing loss data from 2020-2023, we determined that losses on accounts receivable were insignificant. Our actual losses
from 2020-2023 were approximately $110,000 (rounded). As our accounts receivable balances are maintained for 18-24 months while settlements
develop, the relevant data used to support this analysis is through 2023. While 2024 data is relevant to support this analysis, we do
not believe there is a change in the creditworthiness of our customers and our resulting loss rates that would warrant an increase in
our allowance during the six months ended June 30, 2024. As such, our ending allowance for credit losses should be $122,190 as of June
30, 2024, which is the same allowance for credit losses that we reported as of December 31, 2023.

Our revised disclosure in our accounts
receivable summary of significant accounting policies in footnote 1 is provided as follows for the six months ended June 30, 2024. A similar
disclosure will be included in amended filings for our Q1 10-Q and our 10-K:

“Accounts Receivable

In the normal course of business, the
Company is in the lien based medical industry providing orthopedic healthcare servicing an uninsured market insulated by a letter of protection
which insulates the Company and insures payment in full from insurance settlements. Accounts receivable consists of amounts due from attorneys
and insurance providers for services provided to patients under the letter of protection. The accounts receivable are recorded at the
expected settlement amount, which is less contractual adjustments and an allowance for credit losses. The Company recognizes an allowance
for credit losses for its accounts receivable to present the net amount expected to be collected as of the balance sheet date. This allowance
is determined based on the history of net settlements received by the Company, where the net settlement amount is not collected. No collection
can happen if no settlement is reached with the defendant’s insurance company and the plaintiff (the patient) loses the case at
trial, or the case is abandoned, then the Company will not be able to collect on its letter of protection and its receivable will not
be collected. In the case of a partial settlement or award at trial, the Company might only be able to collect a portion of its receivable.
Additionally, the Company considers economic factors and events or trends expected to affect future collections experience. The net settlement
history of the Company’s customers is considered in future assessments of collectability as these patterns are established over
a longer period.

The Company does not have a significant
exposure to credit losses as the Company has historically had a 99% collection rate based on net settlements recorded to its accounts
receivable. Although possible, no collection on settlements is rare based on the Company’s historical experience. The Company typically
collects on its accounts receivable between eighteen and twenty-four months after recording. The Company does not adjust its receivables
for the effects of a significant financing component at contract inception as the timing of variable consideration is determined by the
settlement, which is outside of the Company’s control. As of June 30, 2024 and December 31, 2023, the Company’s allowance
for credit losses was $122,190. The Company recognized $0 and $270,000 of credit loss expense during the six months ended June 30, 2024
and 2023, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statement of operations.”

How will the
Company account for the $1,242,017 it previously reported as credit loss expense for the six months ended June 30, 2024

We further evaluated
our accounting for the bad debt expense reported of $1,242,017 and determined that the expense was the result of our receiving settlements
earlier than previously contemplated, which was a new effort established towards the end of the first quarter 2024 and throughout the
second quarter 2024.

      2

As such, we considered
the guidance in ASC 606-10-45-4 that discusses credit risk versus variable consideration. Based on our review, we determined our reduced
settlements during the six months ended June 30, 2024 were the result of price concessions being granted during the settlement process.
Additionally, we considered whether our price concessions were variable consideration and determined they were variable consideration,
as if the concessions were known or knowable at contract inception, the concession would have affected the amount of consideration recognized
in accordance with ASC 606-10-32-5 - 12.

Once we determined
the reduced settlements should be accounted for as variable consideration and that we had no prior practice of granting these concessions,
we would account for the change as a contract modification affecting price only under ASC 606-10-25-12(a).

Accordingly, we will reduce our reported
bad debt expense by $1,242,017. This will be reflected as a reduction of revenue for the six months ended June 30, 2024 of $1,199,155
and a reduction of our allowance for credit losses by $42,862. We will also revise our Q1 10-Q as attached to remove bad debt expense
and show a reduction in revenue.

The following tables will be included
in our Footnote 2 – Restatement of Financial Statements for each period noted below. Also reference the attached Annex for the Q1
10-Q for the tables included in the Q1 10-Q:

      3

Additionally,
we will revise our footnote 1 disclosure surrounding our revenue recognitions as follows:

“In order to determine net revenue,
the Company must estimate the variable consideration in the contract at inception. Established billing rates are not the same as actual
amounts recovered for the Company’s healthcare subsidiary. They generally do not reflect what the Company is ultimately paid
by the customer, insurance carriers and other payors, and therefore are not reported in the consolidated financial statements at that
rate. The Company is typically paid amounts based on established charges per procedure with guidance from the annually updated CPT guidelines
that designates relative value units and a suggested range of charges for each procedure which is then assigned a CPT code.

This fee is discounted to reflect the
percentage paid to the Company “using a modifier” recognized by each insurance carrier for services, less deductible, co-pay,
and contractual adjustments which are deducted from the calculated fee. These adjustments to the transaction price are considered variable
consideration, which is deducted from revenue and accounts receivable and the net revenue is recorded at the time the services are rendered.
Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration.
The estimates of reserves established for variable consideration reflect current contractual requirements, the Company’s historical
experience, specific known market events and trends, industry data and forecasted patient data and settlement patterns. The amount of
variable consideration that is included in the transaction price may be constrained and is included in net revenue only to the extent
that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.
Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s
estimates, the Company adjusts these estimates in the period such change in estimate becomes known, which could affect net revenue and
earnings in the period of the adjustment.

Service Fees – Net (PIP)

The Company generates services fees
from performing various procedures on the date the services are performed. These services primarily include slip and falls as well as
smaller nominal Non-PIP services. These revenues are based on established insurance billing rates, less allowances for contractual adjustments
and uncollectible amounts. These contractual adjustments vary by insurance company and self-pay patients. The Company computes these contractual
adjustments and collection allowances based on its historical collection experience.

      4

Completing the paperwork for each case
and preparing it for billing takes approximately ten business days after a procedure is performed. The majority of claims are then filed
electronically except for those remaining insurance carriers requiring paper filing. An initial response is usually received within four
weeks from electronic filing and up to six weeks from paper filing. Responses may be a payment, a denial, or a request for additional
information.

The Company’s healthcare revenues
are generated from professional medical billings including facility and anesthesia services. With respect to facility and anesthesia services,
the Company is the primary obligor as the facility and anesthesia services are considered part of one integrated performance obligation.

Prior to its fiscal year 2024, the Company
has historically received 49% of collections from total gross billed charges. Accordingly, the Company has historically recognized net
healthcare service revenue as 49% of gross billed amounts. However, during the six months ended June 30, 2024, the Company underwent efforts
to accelerate cash collections throughout 2024. As a result of the new collections efforts, during the six months ended June 30, 2024
the Company realized a 42.3% average collection percentage of its gross billed charges collected during this time frame, which were historically
recorded in accounts receivable and revenue at 49% of gross billings. As a result of this reduced collection percentage, the Company recorded
a reduction to net revenue of $859,321 and $1,199,155 for the three and six months ended June 30, 2024, respectively.

The Company will continue to reassess
its net collection percentage in the future and incorporate changes in collections in its estimate of variable consideration due under
its contracts. See additional disclosure in Note 17 ( Subsequent Events) regarding the Company’s collection percentage subsequent
to the quarter ended June 30, 2024.

Contract Fees (Non-PIP)

The Company has contract fees for amounts
earned from its Non-Personal Injury Protection (“PIP”) related procedures, typically car accidents, and are collected on a
contingency basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the
sale of these cases to a third party factor resulted in an approximate 54% reduction from the accounts receivables amounts. After selling
patient cases to the factor, any additional funds collected by the Company were remitted to the factor. The Company evaluated the factored
adjustments considering the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that
were factored were recorded in finance charges as other expenses on the consolidated statement of operations. As a result of eighteen
to twenty-four month collection timeframe, the Company has an accrued liability resulting from the collections of receivables sold to
the third party factors which fluctuates as collections are made and remitted to those third party factors. These accounts receivables
sold to these third party factors are not included in the Company’s financial statements accounts receivable balance once sold and
therefore are not part of the assessment of accounts receivable collectability. For the six months ended June 30, 2023, the Company fac