Table of Contents



UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549










FORM 10-K



ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) 4 OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal
year ended December 31, 2018



Commission File
Number 000-49709










CARDIFF LEXINGTON
CORP. (FORMERLY CARDIFF INTERNATIONAL, INC.)

(Exact name
of registrant as specified in its charter)



|Florida                                                            | 84-1044583                              
|------------------------------------------------------------------ | ----------------------------------------
|(State or other jurisdiction of
    incorporation or organization) | (I.R.S. Employer Identification
    No.)



401 East
Las Olas Blvd., Suite 1400, Ft. Lauderdale, FL 33301

(Address of
principal executive offices)



(844) 628-2100

(Registrant's
telephone no., including area code)



Securities registered
pursuant to Section 12(b) of the Exchange Act: None



Securities registered pursuant to
Section 12(g) of the Exchange Act: Par Value $0.001 Common Stock Indicate by check mark if registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No
☒.



Indicate by check mark if registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐    No
☒.



Indicate by
check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒     No
☐



Indicate by
check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).

Yes ☒    No ☐



Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is contained in this form and no disclosure will
be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K. ☒



Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)



| | Large accelerated filer  ☐ | Accelerated filer  ☐        
| | -------------------------- | ----------------------------
| | Non-accelerated filer  ☐   | Smaller reporting company  ☒
| | Emerging growth company  ☐ |                             



If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No
☒



State the aggregate
market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal quarter. $1,378,430.



Common shares
outstanding at April 12, 2019 is 1,494,353 (post-split)with a
par value of $0.001.

















FORM 10-K

CARDIFF
LEXINGTON CORP

INDEX



|                                                                                                                     | Page
|-------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                     |     
|PART I                                                                                                              
|                                                                                                                     |     
|Item 1. Business                                                                                                     | 1   
|                                                                                                                     |     
|Item 1A. Risk Factors                                                                                                | 3   
|                                                                                                                     |     
|Item 1B. Unresolved Staff Comments                                                                                   | 6   
|                                                                                                                     |     
|Item 2. Property                                                                                                     | 7   
|                                                                                                                     |     
|Item 3. Legal Proceedings                                                                                            | 7   
|                                                                                                                     |     
|Item 4. Mine Safety Disclosures                                                                                      | 7   
|                                                                                                                     |     
|PART II                                                                                                             
|                                                                                                                     |     
|Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 8   
|                                                                                                                     |     
|Item 6. Selected Financial Data                                                                                      | 9   
|                                                                                                                     |     
|Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations                        | 9   
|                                                                                                                     |     
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                                  | 17  
|                                                                                                                     |     
|Item 8. Financial Statements and Supplementary Data                                                                  | 17  
|                                                                                                                     |     
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                        | 55  
|                                                                                                                     |     
|Item 9A. Controls and Procedures                                                                                     | 55  
|                                                                                                                     |     
|Item 9B. Other Information                                                                                           | 56  
|                                                                                                                     |     
|PART III                                                                                                            
|                                                                                                                     |     
|Item 10. Directors, Executive Officers and Corporate Governance                                                      | 57  
|                                                                                                                     |     
|Item 11. Executive Compensation                                                                                      | 59  
|                                                                                                                     |     
|Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters              | 60  
|                                                                                                                     |     
|Item 13. Certain Relationships and Related Transactions, and Director Independence                                   | 61  
|                                                                                                                     |     
|Item 14. Principal Accountant Fees and Services                                                                      | 62  
|                                                                                                                     |     
|PART IV                                                                                                             
|                                                                                                                     |     
|Item 15. Exhibits and Financial Statement Schedules                                                                  | 63  
|                                                                                                                     |     
|Signatures                                                                                                           | 64  
|                                                                                                                     |     
|Index to Financial Statements                                                                                        | 18  









i







CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS



This Annual
Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). Forward- looking statements discuss matters that are not historical facts.
Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,”
“believe,” “estimate,” “intend,” “could,” “should,” “would,”
“may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,”
“project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions.
Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations
about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations
or plans expressed or implied by such forward-looking statements.



We cannot predict
all the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions
described in such statements or that our objectives and plans will be achieved, and we do not assume any responsibility for the
accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places
throughout this Report and include information concerning possible or assumed future results of our operations, including statements
about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of
management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future
financial results, and any other statements that are not historical facts.



These forward-looking
statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks,
uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially
from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions,
the events described in the forward- looking statements might not occur or might occur to a different extent or at a different
time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in
this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this Report.



Except to the
extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of
new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.









ii







PART I



Item 1. DESCRIPTION OF BUSINESS.



History of the Business



Legacy Card
Company (“Legacy”) was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, Legacy converted
from a California Limited Liability Company to a Nevada Corporation. On November 10, 2005, Legacy merged with Cardiff Lexington
Corp (formerly Cardiff International, Inc.) (“Cardiff”, the “Company”), a publicly held corporation in
Colorado. On August 27, 2014 Cardiff redomiciled to Florida.



In the first quarter of 2013, it was decided to restructure Cardiff into a holding company enabling
businesses to take advantage of the power of a public company. Cardiff began targeting the acquisition of undervalued, niche companies
with high growth potential, income-producing commercial real estate properties, and high return investments, all designed to pay
a dividend to our shareholders. The reason for this strategy was to protect our shareholders by acquiring profitable small- to
minimum-sized businesses with little to no debt, seeking support with both financing and management that had the ability to offer
a return to investors. The plan is to establish new classes of preferred stock to streamline voting rights, negate debt, and acquire
new businesses. By December 31, 2018, we have acquired eight (8) businesses: We Three (AHI); Romeo’s NY Pizza; Edge View
Properties; Repiici’s Franchise Group; Refreshment Concepts; FDR Enterprises; Red Rock Travel Group and Platinum Tax Defenders.
Cardiff currently has two potential new acquisitions pending.



BUSINESS
DEVELOPMENTS



The following business developments
have been reported in our reports filed with the Securities and Exchange Commission (the “SEC”), which are referenced
in Part IV, Item 15, of this Annual Report:



We Three (dba) Affordable Housing
Initiative acquired in April 2014

Romeo’s Alpharetta, LLC acquired
in June 2014

Fortuna Restaurant Group, Inc. acquired
in June 2014

R&T Restaurant Group, Inc. acquired
in June 2014

Edge View Properties acquired July
2014

FDR Enterprises, Inc. acquired in
August 2016;

Refreshment Concepts, LLC acquired
in August 2016;

Repicci’s Franchise Group,
LLC acquired in August 2016;

In May 2017 the Company terminated
its auditing firm KLJ & Associates

July 2017 increased authorized common
shares to 500,000,000 at par value of $0.001

July 2017 Engaged Malone Bailey
as Cardiff’s new auditors

January 2018 changed name of Corporation
to Cardiff Lexington Corporation

March 2018 increased authorized
common shares to 1 Billion at par value of $0.01

Red Rock Travel Group, LLC acquired
in July 2018

Platinum Tax Defenders acquired
in July 2018

July 2018 amended the Preferred
K Class Rights & Privileges

July 2018 created a new Preferred
L Class of stock to acquire a new business

August 2018 the Company terminated
its auditing firm Malone Bailey

August 2018 Engaged Daszkal Bolton
as Cardiff’s new auditors

September 2018 increased authorized
common shares to 2 Billion at par value of $0.001

November 2018 created a sub-class
of Preferred K1 shares to raise investment funds for subsidiary

November 2018 increased authorized
common shares to 5 Billion at par value of $0.001

December 2018 increase the authorized
Blank Check shares to 1 Billion for future acquisitions

December 2018 filed a 14C increasing
authorized common shares to 7.5 Billion at par value $0.001

December 2018 filed a 14C amending
Rights & Privileges of all Preferred Classes of stock









1







Current Business Operations



Cardiff is
a public holding company, much like a cooperative, leveraging proven management in private companies that become subsidiaries
under our umbrella. Our focus is not based on a specific industry or geographic location, but rather on a proven management, market,
and historical operating margin. We target acquisitions of mature, high growth, niche companies. Cardiff’s strategy identifies
and empowers select income-producing middle market private businesses and commercial real estate properties.



The target
company’s management team typically maintains control of the day to day operations. Acquisitions become standalone autonomous
subsidiaries that gain the advantages of a publicly traded company without losing their independent management control. Management
enjoys the advantage of improved valuation, liquidity, synergies, and support, along with diversification and asset appreciation
through collective subsidiary performance. Diversification and pooled resources leverage value and mitigate risk.



Cardiff provides
these companies both 1) the enhanced ability to raise money for operations or expansion, and 2) an equity exit and liquidity strategy
for the owner, heirs, and/or Investors.



For investors,
Cardiff provides a diversified lower risk to protect and safely enhance their investment by continually adding assets and holdings.



Cardiff employs
a merge, acquire, and hold strategy to maximize value and potential of private, often family run, enterprises while providing
diversification and risk mitigation for all shareholders.



Cardiff is
led by strong and talented roster of executives and advisors providing expert acquisition, market guidance and added value for
subsidiaries and investors. To date, Cardiff consists of the following whole-owned subsidiaries:



We Three, LLC
(Affordable Housing Initiative); Romeo’s NY Pizza (merged Fortuna Restaurant Group and R & T Restaurant Group into Romeo’s
Alpharetta); Edge View Properties, Inc; Repicci’s Franchise Group, Inc. (merged Refreshment Concepts, LLC into Repicci’s
Franchise Group, Inc.); FDR Enterprises, Inc .; Red Rock Travel Group, LLC and Platinum Tax Defenders, LLC.



Organization



We are now
comprised as one parent corporation holding company and seven operating subsidiaries.



Employees



Collectively,
Cardiff and its subsidiaries employ approximately 70 employees and anticipates hiring additional personal with new acquisitions.



Competition



We are a Small
Cap holding company enabling businesses to take advantage of the power of a public company. Cardiff began targeting the acquisition
of undervalued, niche companies with high growth potential, income-producing commercial real estate properties, and high return
investments, all designed to pay a dividend to our shareholders. The reason for this strategy was to protect our shareholders
by acquiring profitable small- to minimum-sized businesses with little to no debt, seeking support with both financing and management
that had the ability to offer a return to investors. The plan is to establish new classes of preferred stock to streamline voting
rights, negate debt, and acquire new businesses.



Proprietary
Information



We own the
following trademarks: Cardiff USA; Mission Tuition, Legacy Card Company and Small Cap Rescue.









2







Government Regulation



We do not expect
to be subject to material governmental regulation. However, it is our policy to fully comply with all governmental regulation
and regulatory authorities.



Research and Development



We have spent
funds on research and development finding an appropriate agency that could develop a new website representing the Company’s
direction, keeping investors more informed, etc. We plan to spend further funds on research and development activities in the
future to increase our social awareness.



Environmental Compliance



We believe that we are not subject
to any material costs for compliance with any environmental laws.



How to Obtain our SEC Filings



We file annual,
quarterly, and special reports, proxy statements, and other information with the Securities Exchange Commission (SEC). Reports,
proxy statements and other information filed with the SEC can be inspected and copied at the public reference facilities of the
SEC at 100 F Street N.E., Washington, DC 20549. Such material may also be accessed electronically by means of the SEC's website
at www.sec.gov.



Our investor
relations department can be contacted at our principal executive office located at, 401 East Las Olas Blvd. Unit 1400, Fort Lauderdale,
FL 33301. Our telephone number is (844-628-2100).



Item 1A. RISK FACTORS



You should
carefully consider the risks and uncertainties described below and the other information in this document before deciding to invest
in shares of our common stock.



The occurrence
of any of the following risks could materially and adversely affect our business, financial condition and operating result. In
this case, the trading price of our common stock could decline, and you might lose all or part of your investment.



During our startup phase we were
not profitable and generated minimal revenue and no profit.



As of this
filing, though still not profitable, Cardiff is generating revenue which helps mitigate the risk. As a result, though pleased
with our acquisitions, we may never become profitable, and could go out of business.



Since 2014,
we have restructured ourselves into a holding company and have acquired seven additional businesses; We Three, LLC (Affordable
Housing Initiative); Romeo’s NY Pizza (merged Fortuna Restaurant Group and R & T Restaurant Group into Romeo’s
Alpharetta); Edge View Properties, Inc; Repicci’s Franchise Group, Inc. (merged Refreshment Concepts, LLC into Repicci’s
Franchise Group, Inc.); FDR Enterprises, Inc.; Red Rock Travel Group, LLC and Platinum Tax Defenders, LLC.









3







Because  we had incurred
operating losses from our inception, we still consider ourselves a going concern.



For the fiscal
years ended December 31, 2018 and December 31, 2017 our auditors have included an emphasis paragraph about our ability to continue
as a going concern, due to our continued losses and deficiencies in working capital. We believe our ability to achieve and maintain
profitability and positive cash flow is dependent upon:



| | · | our ability to acquire profitable businesses within CDIF; and
| | - | -------------------------------------------------------------



| | · | our ability to generate substantial revenues; and
| | - | -------------------------------------------------



| | · | our ability to obtain additional financing
| | - | ------------------------------------------



Based upon
current plans, we may incur operating losses in future periods. Also, we expect approximately $600,000 in operating costs to be
incurred over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or obtaining
other financing in the future to cover these operating costs. Additionally, financing may not be available on terms favorable
to the Company. Failure to generate sufficient revenues may cause us to go out of business.



Since we
are an early stage company that has generated minimal revenue, an investment in our shares is highly risky and could result in
a complete loss of your investment if we are unsuccessful in our business plans.



We were incorporated
in August 2001 and have focused all our efforts on the development of our portfolio of companies which have doubled our revenue
since 2017. However, there is no guarantee that we will be successful in realizing revenues or in achieving or sustaining positive
cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek
additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute
the value of any shares you hold and could result in the loss of your entire investment.



Future acquisitions are important
to our success. We may not be able to successfully integrate our acquisitions into our operations.



The acquisition
of new companies is central to our business model and critically important to our success. Although we generally seek companies
that have positive cash flows, we cannot be certain that the company’s acquired will remain cash flow positive and could
possibly lose revenues. In addition, there are no assurances that the acquisitions acquired will continue as profitable businesses
and could adversely affect our business and any possible revenues.



Successful
implementation of our business strategy depends on factors specific to acquiring successful businesses. Adverse changes in our
acquisition process could undermine our business strategy and have a material adverse effect on our business, financial condition,
and results of operations and cash flow:



| | · | The competitive environment in the specific field of business acquired; and
| | - | ---------------------------------------------------------------------------



| | · | Our ability to acquire the right businesses that meet customers’ needs;
    and
| | - | -------------------------------------------------------------------------------



| | · | Our ability to establish, maintain and eventually grow market share in a competitive
    environment.
| | - | -----------------------------------------------------------------------------------------------------









4







There are
no substantial barriers to acquire established businesses and because we can acquire businesses in all types of industries, there
is no guarantee the Company will acquire additional businesses, which could severely limit our proposed sales and revenues. If
we cannot acquire established businesses, it could result in the loss of your investment.



Since we have
no copyright protection, unauthorized persons may attempt to copy aspects of our business, including our governance design or
functionality, services or marketing materials. Any encroachment upon our corporate information, including the unauthorized use
of our brand name, the use of a similar name by a competing company or a lawsuit initiated against us for infringement upon another
company's proprietary information or improper use of their copyright, may affect our ability to create brand name recognition,
cause customer confusion and/or have a detrimental effect on our business. Litigation or proceedings before the U.S. or International
Patent and Trademark Offices may be necessary in the future to enforce our intellectual property rights, to protect our trade
secrets and domain name and/or to determine the validity and scope of the proprietary rights of others. Any such infringement,
litigation or adverse proceeding could result in substantial costs and diversion of resources and could seriously harm our business
operations and/or results of operations. As a result, an investor could lose his or her entire investment.



The loss
of the services of the current officers and directors could severely impact our business operations and future development, which
could result in a loss of revenues and one’s ability to ever sell any shares.



Our performance
is substantially dependent upon the professional expertise of the current officers and board of directors. Each has extensive
expertise in business development and acquisitions and we are dependent on their abilities. If they are unable to perform their
duties, this could have an adverse effect on business operations, financial condition and operating results if we are unable to
replace them with other individuals qualified to develop and market our business. The loss of their services could result in a
loss of revenues, which could result in a reduction of the value of any shares you hold as well as the complete loss of your investment.



Our stock
has limited liquidity.



Our common
stock trades on the OTC market. Trading volume in our shares may be sporadic and the price could experience volatility. If adverse
market conditions exist, you may have difficulty selling your shares.



The market
price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including
the following:



| | · | actual or anticipated fluctuations in our operating results;
| | - | ------------------------------------------------------------



| | · | changes in financial estimates by securities analysts or our failure to perform
    in line with such estimates;
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | changes in market valuations of other companies, particularly those that market
    services such as ours;
| | - | ----------------------------------------------------------------------------------------------------------



| | · | announcements by us or our competitors of significant innovations, acquisitions,
    strategic partnerships, joint ventures or capital commitments;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | introduction of product enhancements that reduce the need for our products;
| | - | ---------------------------------------------------------------------------



| | · | departure of key personnel.
| | - | ---------------------------









5







In general,
buying low-priced penny stocks is very risky and speculative. Our shares are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. You may not able to sell your shares when you want to do so, if at all.



Our shares
are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and
such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities
to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals
with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions
not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker- dealer must make a suitability
determination for each purchaser and receive the purchaser's written agreement prior to such sale. In addition, the broker-dealer
must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid
and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain
disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a
market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.



Because
of our size and limited resources, we may have difficulty establishing adequate management, legal and financial controls, which
we are required to do in order to comply with U.S. GAAP and securities laws, and which could cause a materially adverse impact
on our financial statements, the trading of our common stock and our business.



We are a small
holding company that lacks the financial resources and qualified personnel to implement and sustain adequate internal controls
As a result, we may experience difficulty in establishing management, legal and financial controls, collecting financial data
and preparing financial statements, books of account and corporate records and instituting business practices that meet proper
internal control standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal
controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material
weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying
with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, material weaknesses
or lack of compliance could result in restatements of our historical financial information, cause investors to lose confidence
in our reported financial information, have an adverse impact on the trading price of our common stock, adversely affect our ability
to access the capital markets and our ability to recruit personnel, lead to the delisting of our securities from the stock exchange
on which they are traded, lead to litigation claims, thereby diverting management’s attention and resources, and which may
lead to the payment of damages to the extent such claims are not resolved in our favor, lead to regulatory proceedings, which
may result in sanctions, monetary or otherwise, and have a materially adverse effect on our reputation and business.



We do not expect to pay dividends
on common stock in the foreseeable future.



We have not paid any cash dividends
with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock for the year. Earnings,
if any, that we may realize will be retained in the business for further development and expansion.



ITEM 1B. UNRESOLVED STAFF COMMENTS



None.









6







ITEM 2. DESCRIPTION OF PROPERTY.



The Company
had operating lease expense of $242,567 and $176,062 for the year ended December 31, 2018 and 2017, respectively, consisting of
the followings.



|                  |  | For
    the year ended |        
|----------------- |  | ---------------------- | -------
|                  |  | December
    31, 2018  |        
|                  |  |                        |        
|Restaurants       |  | $                      | 72,121 
|Lot               |  |                        | 73,782 
|Office            |  |                        | 96,664 
|Equipment Rentals |  |                        | –      
|Total             |  | $                      | 242,567



The Company
has property leases that are renewable on an annual basis, with one long term property lease as of December 31, 2018 through its
subsidiary Red Rock Travel Group. This is a four-year lease expiring on May 31, 20122. PTD entered into a new three-year lease
effective January 2019.



Edge View Properties
consists of 30 prime acres of land; 23.5 acres zoned MDR (Medium Density Residential) with 12 lots already platted and 48 lots
zoned HDR (High Density Residential), 4 acres of dedicated river front property zoned for recreation on the Salmon River, Idaho's
premier whitewater river and 2.5 acres zoned for commercial use. All land is in the city limits of Salmon and adjacent to the
Frank church Wilderness Park (the largest wilderness park in the lower 48 states).



ITEM 3.
LEGAL PROCEEDINGS.



We are not
a party to any material legal proceedings, nor is our property the subject of any material legal proceeding.



ITEM 4.
MINE SAFETY DISCLOSURES.



Not applicable.























7







PART II



ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



Holders



As of December 31, 2018, there were 847 record holders
of our common stock, and there were 901,441,498 (pre-split) shares of our common stock outstanding.



Public Market for Common Stock



Our common stock, par value $.001
per share (the “Common Stock”), is currently quoted on the OTCQB under the symbol “CDIX”. The OTC is a
quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter, or the OTC, equity
securities. An OTC equity security generally is any equity that is not listed or traded on a national securities exchange. The
following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the
OTC quotation service. These bid prices (pre-split) represent prices quoted by broker-dealers on the OTC quotation service. The
quotations reflect inter- dealer prices, without retail mark-up, mark- down or commissions, and may not represent actual transactions.



|                  |  |   | High
                                         Close |  |  |   | Low Close | 
|----------------- |  | - | --------------------------------------------------- |  |  | - | --------- | 
|December 31, 2018 |  |   |                                                     |  |  |   |           | 
|1st Quarter       |  | $ | .005                                                |  |  | $ | .001      | 
|2nd Quarter       |  | $ | .02                                                 |  |  | $ | .002      | 
|3rd Quarter       |  | $ | .03                                                 |  |  | $ | .01       | 
|4th Quarter       |  | $ | .05                                                 |  |  | $ | .02       | 
|December 31, 2017 |  |   |                                                     |  |  |   |           | 
|1st Quarter       |  | $ | .13                                                 |  |  | $ | .04       | 
|2nd Quarter       |  | $ | .16                                                 |  |  | $ | .07       | 
|3rd Quarter       |  | $ | .11                                                 |  |  | $ | .05       | 
|4th Quarter       |  | $ | .06                                                 |  |  | $ | .02       | 



The market
price of our common stock will be subject to significant fluctuations in response to variations in our quarterly operating results,
general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations,
as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless
of our actual or projected performance.



The Securities Enforcement and
Penny Stock Reform Act of 1990



The Securities
and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny
stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system).



A purchaser
is purchasing penny stock which limits the ability to sell the stock. The shares offered by this prospectus constitute penny stock
under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny
stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for
a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to
comply with those rules, some broker- dealers will refuse to attempt to sell penny stock.









8







The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the Commission, which:



| | · | contains a description of the nature and level of risk in the market for penny
    stocks in both public offerings and secondary trading;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | contains a description of the broker's or dealer's duties to the customer
    and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements
    of the Securities Act of 1934, as amended;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | contains a brief, clear, narrative description of a dealer market, including
    "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | contains a toll-free telephone number for inquiries on disciplinary actions;
| | - | ----------------------------------------------------------------------------



| | · | defines significant terms in the disclosure document or in the conduct of
    trading penny stocks; and
| | - | -------------------------------------------------------------------------------------------------------



| | · | contains such other information and is in such form (including language, type,
    size and format) as the Securities and Exchange Commission shall require by rule or regulation;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The broker-dealer also must provide,
prior to effecting any transaction in a penny stock, to the customer:



| | · | the bid and offer quotations for the penny stock;
| | - | -------------------------------------------------



| | · | the compensation of the broker-dealer and its salesperson in the transaction;
| | - | -----------------------------------------------------------------------------



| | · | the number of shares to which such bid and ask prices apply, or other comparable
    information relating to the depth and liquidity of the market for such stock; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | monthly account statements showing the market value of each penny stock held
    in the customer's account.
| | - | -----------------------------------------------------------------------------------------------------------



In addition,
the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-
dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect
of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules.
Therefore, stockholders may have difficulty selling their securities.



Dividend Policy



We have not
previously declared or paid any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable
future. The payment of dividends on our common stock is within the discretion of our board of directors. We intend to retain any
earnings for use in our operations and the expansion of our business. Payment of dividends in the future will depend on our future
earnings, future capital needs and our operating and financial condition, among other factors that our board of directors may
deem relevant. We are not under any contractual restriction as to our present or future ability to pay dividends.



ITEM 6. SELECTED FINANCIAL DATA



We are a smaller reporting company
as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.



ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



This Management’s
Discussion and Analysis or Plan of Operation contains forward-looking statements that involve future events, our future performance
and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words
such as “may”, “will”, “should”, “anticipate”, “believe”, “expect”,
“plan”, “future”, “intend”, “could”, “estimate”, “predict”,
“hope”, “potential”, “continue”, or the negative of these terms or other similar expressions.
These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual
results or actions may differ materially from these forward-looking statements for many reasons, including, but not limited to,
the matters discussed in this report under the caption “Risk Factors”. We urge you not to place undue reliance on
these forward-looking statements, which speak only as of the date of this prospectus. We undertake no obligation to publicly update
any forward looking-statements, whether as a result of new information, future events or otherwise.









9







The following
discussion of our consolidated financial condition and consolidated results of operations should be read in conjunction with our
consolidated financial statements and the related notes included in this report.



The following
table provides selected financial data about us for the fiscal years ended December 31, 2018 and December 31, 2017. For detailed
financial information, see the audited Financial Statements included in this report.



|                    |  | As of                 |           |  | As of                 |  
|------------------- |  | --------------------- | --------- |  | --------------------- | -
|                    |  | December
    31, 2018 |           |  | December
    31, 2017 |  
|Assets:             |  |                       |           |  |                       |  
|We Three            |  | $                     | 318,285   |  |                       | $
|Romeo’s NY Pizza    |  |                       | 108,908   |  |                       |  
|Repicci’s Group     |  |                       | 169,030   |  |                       |  
|Platinum Tax        |  |                       | 60,578    |  |                       |  
|Red Rock Travel     |  |                       | 8,114     |  |                       |  
|Others              |  |                       | 2,676,152 |  |                       |  
|Consolidated assets |  | $                     | 3,341,066 |  |                       | $



Segment reporting for the years
ended December 31, 2018 and 2017 were as follows:



|For the year ended                         
|-------------------------------------------
|                                           
|Revenues:                                  
|We Three                                   
|Romeo’s NY Pizza                           
|Repicci's Group                            
|Platinum Tax                               
|Red Rock Travel                            
|Other                                      
|Consolidated revenues                      
|                                           
|Cost of Sales:                             
|We Three                                   
|Romeo’s NY Pizza                           
|Repicci's Group                            
|Platinum Tax                               
|Red Rock Travel                            
|Other                                      
|Consolidated cost of sales                 
|                                           
|Income (Loss) before taxes                 
|We Three                                   
|Romeo’s NY Pizza                           
|Repicci’s Group                            
|Platinum Tax                               
|Red Rock Travel                            
|Others                                     
|Consolidated income/(loss)
    before taxes









10







Results of Operations



Revenues.We had revenues in the amount of $2,373,938 and $1,625,768 for the years ended December 31, 2018 and 2017, respectively. The
increase in revenue was primarily associated with our new acquisitions of Platinum Tax and Red Rock Travel. We expect revenue
to increase during 2019, as we will realize a full operating cycle for our current operating subsidiaries and planned expansion.



Cost
of Goods Sold. We had costs of sales in the amount of $1,627,698 and $1,431,909 for the years ended December 31, 2018 and
2017, respectively. The increase in cost of sales were also primarily attributable to the addition of our new subsidiaries in
August 2018.



Operating
Expenses. Operating expenses consisted of depreciation, amortization and general and administrative expenses. We had operating
expenses of $4,953,408 and $3,186,399 for the years ended December 31, 2018 and 2017, respectively. The operating expenses in
2018 were primarily attributable to the issuance of 250,000,002 shares of preferred stock and 3,886,9330 shares of (pre- split)
common stock, resulting in non-cash stock based compensation of $287,471 during the year ended December 31, 2018. Additionally,
our expense related to salary and wages increased to $1,351,678 and professional fees were $391,136 for year ended December 31,
2018, compared to $741,261 and $80,000 for December 31, 2017, respectively. We had a loss due to impairment of goodwill of $932,529
and loss on disposal of assets of $38,584  from our Romeo’s Pizza stores , Other operating expenses remained relatively
fixed for the year, for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, we
recorded an asset impairment of $300,000 and goodwill impairments of $1,459,725, related to our acquisitions of Red Rock Travel
Group and Platinum Tax Defenders.



Non-employee stock compensation.
During the years ended December 31, 2018 and 2017, we issued a total of 3,886,930 and 1,306,907   shares of (pre-split)
common stock (2,592 and 872 post-split shares), respectively, and 250,000,002 and -0- shares of preferred stock. The fair value
of the stock issuance was determined by the fair value of the Company’s common stock on the grant date, at prices ranging
from $0.0008-$0.02995  per share ($1.20 - $44.93 post split). Accordingly, we recognized stock based compensation of $287,471
 and $285,623  for the years ended December 31, 2018 and 2017, respectively, in connection with these issuances.



Change in
value of derivative liability. During the years ended December 31, 2018 and 2017 the change in value of derivative liability
amounted to $(629,176) and $(36,469), respectively. In 2018, we issued 10 convertible promissory notes totaling $1,565,120, all
of which were convertible into shares of the Company’s common stock at discount to the market. As a result, we had change
in value of derivative liability amounted to $(629,176) We remeasured the fair value of the beneficial conversion derivative through
the date of conversion (with a change to earnings), with the $1,870,625 derivative liability reclassified to paid-in capital at
conversion.



Amortization
of debt discounts. We had amortization of debt discount of $950,736 and $573,605 for years ended December 31, 2018 and 2017,
respectively. Amortization of debt discount is related to our convertible debt.



Interest
Expense during the years end December 31, 2018 and 2017, interest expense amounted to $360,331 and $111,682, respectively.
The increase in interest was a result of new borrowings in 2018.



Net Loss.As a result of the foregoing,
we had a net loss of $6,168,401 for the December 31, 2018, which is compared to the net loss for the December 31, 2017 of $3,651,995.



Our activities
have a focus on growing revenue. We plan to continue this strategy into 2019.



To try to operate
at a break-even level based upon our current level of proposed business activity, we believe that we must generate approximately
$20,000,000 in revenue per year. Each dollar of revenue is not directly tied to increasing costs. We believe that we can become
profitable without incurring additional costs under our current operating cost structure. However, if our forecasts are inaccurate,
we will need to raise additional funds. If we need additional capital, our directors have informally agreed to loan such funds
as may be necessary through December 31, 2019 for working capital purposes, although they have no obligation to do so.









11







On the other
hand, if we decide that we cannot operate at a profit in our current configuration, we may choose to scale back our operations
to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current
operations. In such event, we will probably not be profitable. In addition, we expect that we will need to raise additional funds
if we decide to pursue more rapid expansion, the development of new or enhanced services or products, appropriate responses to
competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated
events that require us to make additional investments. We cannot assure that additional financing will be available when needed
on favorable terms, or at all.



We expect to
incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect
approximately $600,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in
generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues
or additional financing when needed could cause us to go out of business.



Liquidity
and Capital Resources





As of December 31, 2018, we had cash of
$118,307 and a working capital deficit of $6,858,115. As of December 31, 2017, we had cash of $68,986 and a working capital deficit
of $4,558,777.



Net cash used for operating activities
was $(1,234,099) for the December 31, 2018, representing a $658,411 increase in the net cash used in operating activities of $(614,904)
for the December 31, 2017. The increase in the amount of net cash used in operating activities in 2018 compared to last year was
primarily attributable to a $26 million increase in net loss, offset by a greater amount of non-cash items in 2018 compared to
2017 such as common stock issued for services, accrued expenses and loss on impairment of Goodwill.



Net cash used in investing activities was
$760,153 for the December 31, 2018 compared with cash used in investing activities was $12,800, during the December 31, 2017. The
cash flows used in investing activities in 2018 was primarily attributable to the purchase of fixed assets related to the acquisition
of Platinum Tax Defenders, offset by cash received from disposal of fixed assets.



Cash flows provided by financing activities
were $1,842,153 for the December 31, 2018, which compares to cash flows provided by financing activities of $633,742 for the December
31, 2017. These cash flows were related to sales of stock in the amounts of $40,000 during the years ended December 31, 2017. During
2018, we received $1,783,656 in proceeds from issuances of convertible notes payable, offset by repayment of $40,000 in convertible
notes. During 2017, we received $687,200 in proceeds from issuances of convertible notes payable, which were partially offset by
repayments of $78,684.



There can be no assurance that we will
be able to obtain sufficient capital from debt or equity transactions or from operations in the necessary time frame or on terms
acceptable to us. Should we be unable to raise sufficient funds, we may be required to curtail our operating plans and possibly
relinquish rights to portions of our technology or products. In addition, increases in expenses or delays in product development
may adversely impact our cash position and may require cost reductions. No assurance can be given that we will be able to operate
profitably on a consistent basis, or at all, in the future.



In order to continue our operations, development
of our products, and implementation of our business plan, we need additional financing. We are currently attempting to obtain
additional working capital in a term loan transaction.



Off-Balance
Sheet Arrangements



We have no
off-balance sheet arrangements with any party.



Plan of
Operation



At Cardiff,
we acquire or merge with middle market companies by providing them the ability to have an infusion of equity into their business
or providing them the ability to exit equity out of their company. Our focus is not industry or geographic-specific, but rather
proven management, market and margin - we are opportunity oriented.









12







We target acquisitions
of mature, high growth, niche companies. Our target companies' proven management maintains full operational control, meaning our
acquisitions become standalone autonomous subsidiaries that gain the advantages of a public company without losing their operational
independence. For investors, our goal is to provide a diversified lower risk platform to protect and safely enhance your investment
by continually adding assets and holdings. By employing a merge, acquire and hold strategy, we expect to maximize the value and
potential of private, often family run, enterprises while providing diversification and risk mitigation for all shareholders.
Our portfolio is comprised of mature, high growth and niche companies with great management, in an identifiable market, which
they have penetrated through a significant advantage, and have acceptable margins.



Recent Developments



During 2018
we acquired, Red Rock Travel Group located in Orlando, FL and Platinum Tax Defenders located in Simi Valley, California.



Current
Business Operations



Cardiff Lexington
Corp (formerly Cardiff International, Inc.), is currently structured as a company with holdings of various companies.



The following
milestones are estimates only. The working capital requirements and the projected milestones are approximations only and subject
to adjustment based on sales, costs and needs.



CARDIFF
LEXINGTON CORP (FORMERLY CARDIFF INTERNATIONAL, INC.)is a public Holding company utilizing a new form of Collaborative Governance.
Cardiff targets acquisitions of undervalued, niche companies with high growth potential, income-producing businesses, including
commercial real estate properties all of which offer high returns for our investors. Our goal is to provide a form of governance
enabling businesses to take advantage of the power of a public company without losing management control. Cardiff provides companies
the ability to raise money and investors a low risk environment that protects their investment.



MISSION
TUITION (www.missiontuition.com): Cardiff through Mission Tuition has built one of the largest merchant shopping networks
in America consisting of all the top name merchants; offering in-store savings and coupon savings with local, regional and national
merchants throughout America. With each purchase members earn rebates which goes directly into their educational savings account.
Our Tax-Free educational savings program provides a platform for families to start an “educational savings” program
that encourages regular and daily use of the program. The Mission Tuition program helps families save for college. Mission Tuition
encourages members to contribute to their educational savings with contribution from work, family members or just rebates generated
by online and in- store purchases. The Mission Tuition program leverages the two biggest economic forces in society ––
consumer spent and the cost of education –– to create the most unique value-added rewards program in decades. Cardiff’s
missiontuition.com helps solve a real need for America’s families – saving for your child’s college education.



We have currently
placed Mission Tuition on hold until the Company can hire the appropriate management team.



WE THREE,
LLC (D/B/A AFFORDABLE HOUSING INITIATIVE) (“AHI”): AHI is located in Maryville, Tennessee. AHI acquires both mobile
homes and mobile home parks offering an alternative to traditional housing. Their mobile home business is a popular option for
a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage payments and high property taxes.
If bad credit is an issue preventing people from purchasing a traditional house, AHI will provide a financial leasing option with
“O” interest on the lease providing a “lease to own” option for their family home. Most homes are 3 bedroom/2bath
homes making the dream of owning a home possible.



ROMEO’S
NY PIZZA, INC.:Romeo’s NY Pizza – Established in Paterson, New Jersey in 1945. Romeo’s NY Pizza makes authentic
NY pizza, making their dough in-house, using the finest cheese and ingredients available. No soggy crust or watered down pizza
sauce, only the best. They also serve Chicken Wings, Philly Steak Subs, Calzones and Salads.









13







EDGE VIEW
PROPERTIES LLC: Edge View Properties consists of 30 prime acres of land; 23.5 acres zoned MDR (Medium Density Residential)
with 12 lots already platted and 48 lots zoned HDR (High Density Residential), 4 acres of dedicated river front property zoned
for recreation on the Salmon River, Idaho’s premier whitewater river and 2.5 acres zoned for commercial use. All land is
in the city limits of Salmon and adjacent to the Frank church Wilderness Park (the largest wilderness park in the lower 48 states).



REPICCI’S
FRANCHISE GROUP: The Company sold Refreshment Concepts in 2018; and still operate both Repicci’s Franchise Group
and FDR Enterprises; Repicci’s Franchise Group offers franchisees for the operation of “Repicci’s Italian Ice”
franchises. FDR is a Company owned franchisee. Repicci’s specialize in the distribution of nonfat frozen confections.



The number
of franchise agreements in force as of December 31, 2018 are 49, five of which are “mobile” unites.



The Company
obligates itself to each franchisee to perform the following services:



| | 1. | Designate an exclusive territory;
| | -- | ---------------------------------



| | 2. | Provide guidance and approval for selection and location of site;
| | -- | -----------------------------------------------------------------



| | 3. | Provide initial training of franchisee and employees;
| | -- | -----------------------------------------------------



| | 4. | Provide a company manual and other training aids.
| | -- | -------------------------------------------------



The Company
has developed a new “Mobile Franchise Opportunity”. The total investment for the new opportunity ranges from $155,600
to $165,000, as follows:



$125,000 for
a new Mercedes Sprinter Van, customized for the franchisee, $25,000 for the franchise fee, the balance for product. The Company’s
obligation is as above, except for Item #3, training is specific to the new opportunity.



Critical
Accounting Estimates



The discussion
and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management
to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and
the disclosure of contingent assets and liabilities. We base our estimates on experience and on various other assumptions that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that may not be readily apparent from other sources. On an on-going basis, we evaluate the appropriateness
of our estimates and we maintain a thorough process to review the application of our accounting policies. Our actual results may
differ from these estimates.



We consider
our critical accounting estimates to be those that (1) involve significant judgments and uncertainties, (2) require estimates
that are more difficult for management to determine, and (3) may produce materially different results when using different assumptions.
We have discussed these critical accounting estimates, the basis for their underlying assumptions and estimates and the nature
of our related disclosures herein with the audit committee of our Board of Directors. We believe our accounting policies specific
to share-based compensation expense and estimation of the fair value of derivative liability involve our most significant judgments
and estimates that are material to our consolidated financial statements. They are discussed further below.









14







Derivative
Liability



The Company
evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially
recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements
of operations. For stock-based derivative financial instruments, the Company uses the probability weighted average Lattice Binomial
models to value the derivative instruments at inception and on subsequent valuation dates through the December 31, 2018 reporting
date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is evaluated at the end of each reporting period. Derivative liabilities are classified as current liabilities as of December
31, 2018 and December 31, 2017.



Share-based
compensation expense



The Company
accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under
the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting
Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which
goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value
of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.



The measurement
date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete
or the date on which it is probable that performance will occur.



If the Company
is a newly formed corporation or shares of the Company are thinly traded, the use of share prices established in the Company’s
most recent private placement memorandum (based on sales to third parties), or weekly or monthly price observations would generally
be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread
between the bid and asked quotes and lack of consistent trading in the market.



The fair value
of share options and similar instruments is estimated on the date of grant using a lattice-binomial option pricing valuation model.
The ranges of assumptions for inputs are as follows:



| | · | Expected term of share options and similar instruments:
    The expected life of options and similar instruments represents the period of time the option and/or warrant are expected
    to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term
    of share options and similar instruments represents the period of time the options and similar instruments are expected to
    be outstanding taking into consideration of the contractual term of the instruments and employees expected exercise and post
    vesting employment termination behavior into the fair value (or calculated value) of the instruments. Pursuant to paragraph
    718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original contractual
    term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to
    estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company
    significantly changes the terms of its share option grants or the types of employees that receive share option grants such
    that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii)
    A company has or expects to have significant structural changes in its business such that its historical exercise data may
    no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate
    expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to
    provide a reasonable basis upon which to estimate expected term.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Expected volatility of the entity’s shares
    and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f) (2)(ii) a thinly traded or nonpublic entity that
    uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected
    volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that
    particular index, and how it has calculated historical volatility using that index. The Company uses the average historical
    volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its
    expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally
    be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such
    shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading
    in the market
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | · | Risk-free rate(s). An entity that uses a method
    that employs different risk-free rates shall disclose the range of risk free rates used. The risk-free interest rate is based
    on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options
    and similar instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        









15







Generally,
all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation
rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately
expected to vest.



The expense
resulting from share-based payments is recorded in general and administrative expense in the statements of operations.



Stock Based
Compensation – Nonemployees



Equity Instruments
Issued to Parties Other Than Employees for Acquiring Goods or Services



The Company
accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Subtopic
505-50 of the FASB Accounting Standards Codification (“Subtopic 505-50”).



Pursuant to
ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever
is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier
of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company
is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s
most recent private placement memorandum, or weekly or monthly price observations would generally be more appropriate than the
use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked
quotes and lack of consistent trading in the market.



The fair value
of share options and similar instruments is estimated on the date of grant using a Black-Scholes option pricing valuation model.
The ranges of assumptions for inputs are as follows:



| | · | Expected term of share options and similar instruments:
    Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options
    and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking
    into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair
    value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise
    behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of
    the share options and similar instruments is used as the expected term of share options and similar instruments as the Company
    does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Expected volatility of the entity’s shares
    and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f) (2)(ii) a thinly traded or nonpublic entity that
    uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected
    volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that
    particular index, and how it has calculated historical volatility using that index. The Company uses the average historical
    volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its
    expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally
    be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such
    shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading
    in the market.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Expected annual rate of quarterly dividends. An
    entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected
    dividends used and the weighted average expected dividends. The expected dividend yield is based on the Company’s current
    dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options
    and similar instruments.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Risk-free rate(s). An entity that uses a method
    that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based
    on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options
    and similar instruments.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------









16







Pursuant to
ASC paragraph 505-50-257, if fully vested, no forfeitable equity instruments are issued at the date the grantor and grantee enter
into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments),
then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement
date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement
is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized
as contra equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to
ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return
for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement
for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such
an asset shall not be displayed as contra equity by the grantor of the equity instruments.



The transferability
(or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited
to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section
505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.



Pursuant to
Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable
by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee
achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and
in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of
paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share
option and similar instrument that the counterparty has the right to exercise expires unexercised.



Pursuant to
ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable
equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received
(that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement
date and no entry should be recorded.



Inflation



We do not believe
that inflation will negatively impact our business plans.



Seasonality.



We do not expect
our revenues to be impacted by seasonal demands for our services.  However Repicci’s is a seasonal business who has
shown growth each year in total revenue.



ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.



We are a smaller
reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.



ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



See next page.
Remainder of this page intentionally left blank.









17







INDEX TO
FINANCIAL STATEMENTS



|                                                         |  | Page   
|-------------------------------------------------------- |  | -------
|Reports of Independent Registered Public Accounting Firm |  | 19 - 20
|                                                         |  |        
|Consolidated Balance Sheets                              |  | 21     
|                                                         |  |        
|Consolidated Statements of Operations                    |  | 22     
|                                                         |  |        
|                                                         |  |        
|Consolidated Statements of Shareholders’ Deficit         |  | 23     
|                                                         |  |        
|Consolidated Statements of Cash Flows                    |  | 26     
|                                                         |  |        
|Notes to Consolidated Financial Statements               |  | 28     















18











REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders and Board of Directors of

Cardiff Lexington Corp.

(formerly Cardiff International, Inc.)



Opinion on the Financial Statements



We have audited the accompanying consolidated
balance sheet of Cardiff Lexington Corp (formerly Cardiff International, Inc.) and its subsidiaries (collectively, the “Company”)
as of December 31, 2017, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for
the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017,
and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.



Going Concern Matter



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the
Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.



Restatement



As discussed in Note 18 the financial statements
have been restated for changes to previously issued financial statements that were issued erroneously by the Company.



Basis for Opinion



These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.



Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.



/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

June 29, 2018

We have served as the Company's auditor since 2017.











19











Report of Independent Registered Public
Accounting Firm



To the Board of Directors and Stockholders
of

Cardiff Lexington Corporation (formerly
Cardiff International, Inc.)

Ft. Lauderdale, Florida



Opinion on the Financial Statements

We have audited the accompanying consolidated
balance sheet of Cardiff Lexington Corporation (formerly known as Cardiff International, Inc.) (the “Company”) at December
31, 2018, and the related consolidated statements of operations, changes in stockholders’ deficit (deficit), and cash flows
for each of the year then ended, and the related notes (collectively referred to as the consolidated financial statements). In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.



The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the consolidated
financial statements, the Company has sustained net losses and has accumulated and working capital deficits, which raise substantial
doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note
1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our opinion is not modified with respect to this matter.



Basis for Opinion

These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are
required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.



Our audit included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audit provide a reasonable basis for our opinion.



/s/ Daszkal Bolton LLP



We have served as the Company’s auditor since 2018.

Ft. Lauderdale, Florida April 16, 2019



























20









CARDIFF
LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS
OF DECEMBER  31, 2018 AND DECEMBER 31, 2017

(Audited)





|                                                                                                     |  | December 31, |          
|---------------------------------------------------------------------------------------------------- |  | ------------ | ---------
|                                                                                                     |  | 2018         |          
|ASSETS                                                                                               |  |              |          
|                                                                                                     |  |              |          
|Current assets                                                                                       |  |              |          
|Cash                                                                                                 |  | $            | 118,307  
|Accounts receivable-net                                                                              |  |              | 64,345   
|Inventory-net                                                                                        |  |              | 3,079    
|Prepaid and other                                                                                    |  |              | 46,596   
|Total current assets                                                                                 |  |              | 232,327  
|                                                                                                     |  |              |          
|Property and equipment, net of accumulated depreciation of $921,904
    and $1,030,231, respectively |  |              | 381,301  
|Land                                                                                                 |  |              | 603,000  
|Intangible assets, net                                                                               |  |              | –        
|Goodwill                                                                                             |  |              | 2,092,048
|Deposits                                                                                             |  |              | 24,600   
|Other assets                                                                                         |  |              | 7,790    
|Total assets                                                                                         |  | $            | 3,341,066
|                                                                                                     |  |              |          
|LIABILITIES AND SHAREHOLDERS' (DEFICIT)                                                              |  |              |          
|                                                                                                     |  |              |          
|Current liabilities                                                                                  |  |              |          
|Accounts payable and accrued expense                                                                 |  | $            | 1,094,521
|Accrued expenses - related parties                                                                   |  |              | 747,000  
|Interest payable                                                                                     |  |              | 366,297  
|Due to officers and shareholders                                                                     |  |              | 137,816  
|Deferred Income                                                                                      |  |              | 1,036,039
|Line of credit                                                                                       |  |              | 1,999    
|Common stock to be issued                                                                            |  |              | 500      
|Notes payable, unrelated party                                                                       |  |              | 676,477  
|Notes payable - related party                                                                        |  |              | 265,242  
|Convertible notes payable, net of debt discounts
    of $201,024 and $245,494, respectively          |  |              | 785,776  
|Convertible notes payable - related party                                                            |  |              | 165,000  
|Derivative Liability                                                                                 |  |              | 1,870,625
|Total current liabilities                                                                            |  |              | 7,147,292
|                                                                                                     |  |              |          
|Other Liabilities                                                                                    |  |              |          
|Convertible notes payable,
    net of current portion                                                |  |              | 1,040,000
|                                                                                                     |  |              |          
|Total liabilities                                                                                    |  | $            | 8,187,292



The accompanying notes are an integral
part of these audited consolidated financial statements









21







CARDIFF
LEXINGTON CORP. AND SUBSIDIARIES

CONDENSED
CONSOLIDATED BALANCE SHEETS (continued)

AS
OF DECEMBER 31, 2018 AND DECEMBER 31, 2017

(Audited)





|                                                                                                                                                                                                                                     |  | December 31, |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | -----------
|                                                                                                                                                                                                                                     |  | 2018         |            
|                                                                                                                                                                                                                                     |  |              |            
|                                                                                                                                                                                                                                     |  |              |            
|Shareholders' (deficit)                                                                                                                                                                                                              |  |              |            
|Preferred stock                                                                                                                                                                                                                      |  |              |            
|Preferred Stock all classes                                                                                                                                                                                                          |  |              |            
|Preferred Stock Series A -
    4 Shares authorized, with par value of $.001, 1 and 1 share issued and outstanding at September 30, 2018 and December 31,
    2017                                                                    |  | $            | –          
|Preferred Stock Series B-
    10,000,000 shares authorized, with par value of $.001, 2,773,206 and 2,798,205 shares issued and outstanding at December 31,
    2018 and December 31, 2017                                            |  |              | 2,773      
|Preferred Stock Series C-
    10,000 shares authorized, with par value of $.0.001, 119 and 117 shares issued and outstanding at December 31, 2018 and December
    31, 2017                                                          |  |              | –          
|Preferred Stock Series  D-
    1,000,000 shares authorized, with par value of $.001, 400,000 shares issued and outstanding at December 31, 2018 and December
    31, 2017                                                            |  |              | 400        
|Preferred Stock Series  E-
    2,000,000 shares authorized, with par value of $.001, 241,199  shares issued and outstanding at December 31, 2018
    and December 31, 2017                                                           |  |              | 241        
|Preferred Stock Series  F-
    500,000 shares authorized, with par value of $.001, 280,069 shares issued and outstanding at December 31, 20187 and December
    31, 2017                                                             |  |              | 280        
|Preferred Stock Series  F-1-
    500,000 shares authorized, with par value of $.001, 57,193 shares issued and outstanding at December 31, 2018 and December
    31, 2017                                                             |  |              | 57         
|Preferred Stock Series  G-
    2,000,000 shares authorized, with par value of $.001, -0- shares issued and outstanding                                                                                                               |  |              | –          
|Preferred Stock Series  H-
    4,859,379 shares authorized, with par value of $.001, -0- and 4,859,379 shares issued and outstanding                                                                                                 |  |              | –          
|Preferred Stock Series  H-1-
    3,000,000 shares authorized, with par value of $.001, -0-  shares issued and outstanding                                                                                                            |  |              | –          
|Preferred Stock Series  I-
    20,000,000 shares authorized, with par value of $.001, -0- and 203,655 shares issued and outstanding at December 311, 2018
    and December 31, 2017                                                  |  |              | –          
|Preferred Stock Series J-
    10,000,000 shares authorized, with par value of $.001,- 0-  shares issued and outstanding                                                                                                              |  |              | –          
|Preferred Stock Series J1-
    7,500,000 shares authorized, with par value of $.001, -0- shares issued and outstanding                                                                                                               |  |              | –          
|Preferred Stock Series K-10,937,500
    shares authorized, with par value of $.001, 8,200,562  shares issued and outstanding at December 31, 2018                                                                                    |  |              | 8,200      
|Preferred Stock Series K1-35,000,000
    shares authorized, with par value of $.001, 1,447,157 shares issued and outstanding at December 31, 2018                                                                                    |  |              | 1,447      
|Preferred Stock Series L-100,000,000
    shares authorized, with par value of $.001, 98,307,692 shares issued and outstanding at December 31, 2018                                                                                   |  |              | 98,308     
|Preferred I Shares to be issued                                                                                                                                                                                                      |  |              | 200,000    
|Common stock; 7,500,000,000
    shares authorized with $0.001 par value; 602,826 and 44,808 shares issued and outstanding at December 31, 2018 and December
    31, 2017, respectively (reflects post reverse stock split of 1500:1) |  |              | 603        
|Additional paid-in capital                                                                                                                                                                                                           |  |              | 50,220,067 
|Accumulated deficit                                                                                                                                                                                                                  |  |              | (55,378,603
|Total shareholders'  (deficit)                                                                                                                                                                                                       |  |              | (4,846,226 
|                                                                                                                                                                                                                                     |  |              |            
|Total liabilities and shareholders'
    (deficit)                                                                                                                                                                                    |  | $            | 3,341,066  



The
accompanying notes are an integral part of these audited consolidated financial statements









22









CARDIFF
LEXINGTON CORP. AND SUBSIDIARIES

CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR
THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31,2017

(AUDITED)



|                                                                 |  | DECEMBER 31, |           
|---------------------------------------------------------------- |  | ------------ | ----------
|                                                                 |  |              | 2018      
|                                                                 |  |              |           
|REVENUE                                                          |  |              |           
|Rental income                                                    |  | $            | 186,096   
|Food and beverage                                                |  |              | 883,135   
|Sales to franchisees                                             |  |              |           
|Ice cream                                                        |  |              | 193,071   
|Franchise fees                                                   |  |              | 45,316    
|Royalty fees                                                     |  |              | 19,500    
|Truck and build out                                              |  |              | –         
|Tax Services                                                     |  |              | 899,748   
|Travel Services                                                  |  |              | 147,072   
|Other                                                            |  |              | –         
|Total revenue                                                    |  |              | 2,373,938 
|                                                                 |  |              |           
|COST OF SALES                                                    |  |              |           
|Rental business                                                  |  |              | 182,690   
|Food and beverage                                                |  |              | 950,358   
|Tax Services                                                     |  |              | 337,986   
|Travel Services                                                  |  |              | 156,664   
|Total cost of sales                                              |  |              | 1,627,698 
|                                                                 |  |              |           
|GROSS MARGIN                                                     |  |              | 746,240   
|                                                                 |  |              |           
|OPERATING EXPENSES                                               |  |              |           
|Depreciation and amortization expense                            |  |              | 22,697    
|Impairment of asset                                              |  |              | 300,000   
|Goodwill impairment                                              |  |              | 1,459,725 
|Loss on disposal of assets                                       |  |              | –         
|Selling, general and administrative                              |  |              | 3,267,836 
|Total operating expenses                                         |  |              | 5,050,258 
|                                                                 |  |              |           
|LOSS FROM OPERATIONS                                             |  |              | (4,304,018
|                                                                 |  |              |           
|OTHER INCOME (EXPENSE)                                           |  |              |           
|Other income                                                     |  |              | 1,743     
|Bad debt expense                                                 |  |              | (23,607   
|(Loss) from extinguishment of debt                               |  |              | –         
|Change in value of derivative liability                          |  |              | (629,176  
|Gain/(loss) on sale of assets                                    |  |              | 874       
|Interest expense                                                 |  |              | (360,331  
|Amortization of debt discounts                                   |  |              | (950,736  
|Total other income (expenses)                                    |  |              | (1,961,233
|                                                                 |  |              |           
|NET (LOSS) FOR THE PERIOD                                        |  | $            | (6,265,251
|                                                                 |  |              |           
|(LOSS) PER COMMON SHARE  -BASIC
    AND DILUTED                  |  | $            | (10.41    
|                                                                 |  |              |           
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES -
    BASIC AND DILUTED |  |              | 602,038   





The
accompanying notes are an integral part of these audited consolidated financial statements









23









CARDIFF
LEXINGTON CORP. (FORMERLY CARDIFF INTERNATIONAL, INC.)

CONSOLIDATED
STATEMENT OF SHAREHOLDERS'  (DEFICIENCY)

FOR
THE YEARS ENDED DECEMBER 31, 2016, 2017 and 2018







|                                                                           |  |  | Preferred
                                         Stock Series A |  |  |   | Preferred
                                         Stock Series B, D, E, F, F-1, H, I |  |  |  | Preferred
                                         Shares to be issued |   |  |   | Preferred
                                         Stock, Series C |  
|-------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------- |  |  | - | ------------------------------------------------------------------------------------- |  |  |  | ---------------------------------------------------------------------- | - |  | - | ------------------------------------------------------------------ | -
|                                                                           |  |  | Shares                                                            |  |  |   | Amount                                                                                |  |  |  | Shares                                                                 |   |  |   | Amount                                                             |  
|Balance December
    31, 2016                                              |  |  | 1                                                                 |  |  | $ | –                                                                                     |  |  |  | 5,480,050                                                              |   |  | $ | –                                                                  |  
|Common stock issued for payment
    of accrued expenses                    |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Cancellation of Common Stock
    - accrued liabilities                     |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Conversion of convertible notes
    payable                                |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Common stock issued for debt
    settlement - related party                |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Shares issuance for prior conversion
    error                             |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Series B Preferred Stock issued
    for debt settlement                    |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | 24,000                                                                 |   |  |   | 24                                                                 |  
|Common stock issued for services                                           |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Cancellation of Common Stock                                               |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Common stock compensation for
    shares cancellation                      |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Preferred B issued for service                                             |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | 15,906                                                                 |   |  |   | 16                                                                 |  
|Common stock issued for cash                                               |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Issuance of Series I Preferred
    Stock for cash                          |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | 112,746                                                                |   |  |   | 113                                                                |  
|Preferred I issued for cash  -
    related party                           |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | 90,909                                                                 |   |  |   | 101                                                                |  
|Conversion of Series B Preferred
    Stock                                 |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | (1,627,732                                                             | ) |  |   | (1,628                                                             | )
|Conversion of Series F1 Preferred
    Stock                                |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | (115,955                                                               | ) |  |   | (116                                                               | )
|Conversion of Series C Preferred
    Stock                                 |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Conversion of Series I Preferred
    Stock                                 |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Series H Preferred Stock issued
    for prior year acquisition             |  |  |                                                                   |  |  |   |                                                                                       |  |  |  | 4,859,379                                                              |   |  |   | 4,859                                                              |  
|Warrants granted                                                           |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Derivative resolution upon conversion                                      |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Reclassified to Derivative liabilities
    from Additional Paid in Capital |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Net loss                                                                   |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Balance December 31, 2017
    (Restated)                                   |  |  | 1                                                                 |  |  | $ | –                                                                                     |  |  |  | 8,839,303                                                              |   |  | $ | 8,849                                                              |  









24







CARDIFF
LEXINGTON CORP. (FORMERLY CARDIFF INTERNATIONAL, INC.)

CONSOLIDATED
STATEMENT OF SHAREHOLDERS'  (DEFICIENCY) (continued)

FOR
THE YEARS ENDED DECEMBER 31, 2016, 2017 and 2018





|                                                                           |  |  | Preferred
                                         Stock Series A |  |  |   | Preferred
                                         Stock Series B, D, E, F, F-1, H, I |  |  |  | Preferred
                                         Shares to be issued |   |  |   | Preferred
                                         Stock, Series C |  
|-------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------- |  |  | - | ------------------------------------------------------------------------------------- |  |  |  | ---------------------------------------------------------------------- | - |  | - | ------------------------------------------------------------------ | -
|                                                                           |  |  | Shares                                                            |  |  |   | Amount                                                                                |  |  |  | Shares                                                                 |   |  |   | Amount                                                             |  
|Balance December 31, 2017
    (Restated)                                   |  |  | 1                                                                 |  |  | $ | –                                                                                     |  |  |  | 8,839,303                                                              |   |  | $ | 8,849                                                              |  
|Conversion of Series B Preferred
    Stock                                 |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | (33,999                                                                | ) |  |   | (34                                                                | )
|Conversion of Series H  Preferred
    Stock                                |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | (2,546,259                                                             | ) |  |   | (2,546                                                             | )
|Common stock issued for services
    - Eurasian consulting agreement       |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Conversion of convertible notes
    payable                                |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Warrants granted for services                                              |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Conversion of Series I  Preferred
    Stock                                |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | (203,655                                                               | ) |  |   | (204                                                               | )
|Conversion of Series H  Preferred
    Stock                                |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | (2,313,210                                                             | ) |  |   | (2,313                                                             | )
|Issuance of Series K Preferred
    Stock for acquisition                   |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | 8,200,562                                                              |   |  |   | 8,201                                                              |  
|Issuance of Series K-1  Preferred
    Stock for acquisition                |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | 1,447,157                                                              |   |  |   | 1,447                                                              |  
|Issuance of Series C  Preferred
    Stock for services                     |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Issuance of Series L  Preferred
    Stock for acquisition                  |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | 98,307,692                                                             |   |  |   | 98,308                                                             |  
|Cancelation of previously issued
    common shares for services            |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Common shares issued for accrued
    expense                               |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Common shares to be issued for
    subsidiary obligation                   |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Issuance of I preferred shares
    for officer compensation - bonus        |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Correction of previous issuance
    of commons shares for accrued expense  |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Reclass of settlements                                                     |  |  |                                                                   |  |  |   |                                                                                       |  |  |  |                                                                        |   |  |   |                                                                    |  
|Reclassified to Derivative liabilities
    from Additional Paid in Capital |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Net loss                                                                   |  |  | –                                                                 |  |  |   | –                                                                                     |  |  |  | –                                                                      |   |  |   | –                                                                  |  
|Balance December 31, 2018                                                  |  |  | 1                                                                 |  |  | $ | –                                                                                     |  |  |  | 111,697,591                                                            |   |  | $ | 111,707                                                            |  







25







CARDIFF
LEXINGTON CORP. (FORMERLY CARDIFF INTERNATIONAL, INC.)

CONSOLIDATED
STATEMENT OF SHAREHOLDERS'  (DEFICIENCY) (continued)

FOR
THE YEARS ENDED DECEMBER 31, 2016, 2017 and 2018



|                                                                           |  | Common Stock |        |   | Additional Paid- |   |    | Accumulated |  |   |            |  
|-------------------------------------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | -- | ----------- |  | - | ---------- | -
|                                                                           |  | Shares       |        |   | Amount           |   |    | in Capital  |  |   | Deficit    |  
|Balance December 31, 2016                                                  |  |              | 17,604 |   |                  | $ | 18 |             |  | $ | 43,856,562 |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Common stock issued for payment
    of accrued expenses                    |  |              | 12,667 |   |                  |   | 13 |             |  |   | 1,415,587  |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Cancellation of Common Stock
    - accrued liabilities                     |  |              | (333   | ) |                  |   | (0 | )           |  |   | (2,500     | )
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Conversion of convertible notes
    payable                                |  |              | 6,322  |   |                  |   | 6  |             |  |   | 143,857    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Common stock issued for debt
    settlement - related party                |  |              | 1,496  |   |                  |   | 1  |             |  |   | 535,967    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Shares issuance for prior conversion error                                 |  |              | 1      |   |                  |   | 0  |             |  |   | 76         |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Series B Preferred Stock issued
    for debt settlement                    |  |              |        |   |                  |   |    |             |  |   | 21,756     |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Common stock issued for services                                           |  |              | 1,505  |   |                  |   | 2  |             |  |   | 277,269    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Cancellation of Common Stock                                               |  |              | (667   | ) |                  |   | (1 | )           |  |   | (999       | )
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Common stock compensation for
    shares cancellation                      |  |              | 33     |   |                  |   | 0  |             |  |   | 2,998      |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Preferred B issued for service                                             |  |              |        |   |                  |   |    |             |  |   | 6,338      |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Common stock issued for cash                                               |  |              | 67     |   |                  |   | 0  |             |  |   | 10,000     |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Issuance of Series I Preferred Stock for cash                              |  |              |        |   |                  |   |    |             |  |   | 19,887     |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Preferred I issued for cash  - related party                               |  |              |        |   |                  |   |    |             |  |   | 9,899      |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Conversion of Series B Preferred Stock                                     |  |              | 5,426  |   |                  |   | 5  |             |  |   | 1,623      |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Conversion of Series F1 Preferred Stock                                    |  |              | 387    |   |                  |   | 0  |             |  |   | 116        |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Conversion of Series C Preferred Stock                                     |  |              | 67     |   |                  |   | 0  |             |  |   | (0         | )
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Conversion of Series I Preferred Stock                                     |  |              | 235    |   |                  |   | 0  |             |  |   | (0         | )
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Series H Preferred Stock issued
    for prior year acquisition             |  |              |        |   |                  |   |    |             |  |   | 724,048    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Warrants granted                                                           |  |              |        |   |                  |   |    |             |  |   | 219,210    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Derivative resolution upon conversion                                      |  |              |        |   |                  |   |    |             |  |   | 405,443    |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Reclassified to Derivative liabilities
    from Additional Paid in Capital |  |              |        |   |                  |   |    |             |  |   | (1,972,999 | )
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Net loss                                                                   |  |              |        |   |                  |   |    |             |  |   |            |  
|                                                                           |  |              |        |   |                  |   |    |             |  |   |            |  
|Balance December 31, 2017 (Restated)                                       |  |              | 44,808 |   |                  | $ | 45 |             |  | $ | 45,674,137 |  











26







CARDIFF
LEXINGTON CORP. (FORMERLY CARDIFF INTERNATIONAL, INC.)

CONSOLIDATED
STATEMENT OF SHAREHOLDERS'  (DEFICIENCY) (continued)

FOR
THE YEARS ENDED DECEMBER 31, 2016, 2017 and 2018





|                                                                           |  | Common Stock |         |   | Additional Paid- |   |     | Accumulated |  |   |             |  
|-------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | --- | ----------- |  | - | ----------- | -
|                                                                           |  | Shares       |         |   | Amount           |   |     | in Capital  |  |   | Deficit     |  
|Balance December 31, 2017 (Restated)                                       |  |              | 44,808  |   |                  | $ | 45  |             |  | $ | 45,674,137  |  
|Conversion of Series B Preferred Stock                                     |  |              | 113     |   |                  |   | 0   |             |  |   | 34          |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Conversion of Series H  Preferred Stock                                    |  |              | 2,122   |   |                  |   | 2   |             |  |   | 2,544       |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Common stock issued for services
    - Eurasian consulting agreement       |  |              | 2,591   |   |                  |   | 3   |             |  |   | 86,749      |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Conversion of convertible notes
    payable                                |  |              | 549,441 |   |                  |   | 549 |             |  |   | 996,755     |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Warrants granted for services                                              |  |              | –       |   |                  |   | –   |             |  |   | –           |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Conversion of Series I  Preferred
    Stock                                |  |              | 204     |   |                  |   | 0   |             |  |   | 203         |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Conversion of Series H  Preferred
    Stock                                |  |              | 1,928   |   |                  |   | 2   |             |  |   | 2,311       |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Issuance of Series K Preferred
    Stock for acquisition                   |  |              | –       |   |                  |   | –   |             |  |   | 166,799     |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Issuance of Series K-1  Preferred
    Stock for investment in acquisition  |  |              | –       |   |                  |   | –   |             |  |   | 98,553      |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Issuance of Series C  Preferred
    Stock for services                     |  |              | –       |   |                  |   | –   |             |  |   | 720.0       |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Issuance of Series L  Preferred
    Stock for acquisition                  |  |              | –       |   |                  |   | –   |             |  |   | 1,179,692.3 |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Cancelation of previously issued
    common shares for services            |  |              | (667    | ) |                  |   | (1  | )           |  |   | 1           |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Common shares issued for accrued
    expense                               |  |              | 2,286   |   |                  |   | 2   |             |  |   | 239,998     |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Common shares to be issued for
    subsidiary obligation                   |  |              | –       |   |                  |   | –   |             |  |   | –           |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Issuance of  I preferred
    shares for officer compensation - bonus       |  |              | –       |   |                  |   | –   |             |  |   | –           |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Correction of previous issuance
    of commons shares for accrued expense  |  |              | –       |   |                  |   | –   |             |  |   | (80,000     | )
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Reclass of settlements                                                     |  |              |         |   |                  |   |     |             |  |   | 80,574      |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Reclassified to Derivative liabilities
    from Additional Paid in Capital |  |              | –       |   |                  |   | –   |             |  |   | 1,770,997   |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Net loss                                                                   |  |              | –       |   |                  |   | –   |             |  |   | –           |  
|                                                                           |  |              |         |   |                  |   |     |             |  |   |             |  
|Balance December 31, 2018                                                  |  |              | 602,826 |   |                  | $ | 603 |             |  | $ | 50,220,067  |  



The
accompanying notes are an integral part of these audited consolidated financial statements











27









CARDIFF
INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR
THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31,2017

(AUDITED)



|                                                                                                       |  |   | 2018       |   |  |   | 2017       |  
|------------------------------------------------------------------------------------------------------ |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                       |  |   |            |   |  |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                   |  |   |            |   |  |   |            |  
|Net (Loss) from continuing operations                                                                  |  | $ | (6,265,251 | ) |  | $ | (3,651,995 | )
|Adjustments
    to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |   |            |   |  |   |            |  
|Depreciation                                                                                           |  |   | 80,165     |   |  |   | 227,959    |  
|Loss (gain) from disposal of fixed assets                                                              |  |   | (874       | ) |  |   | 38,584     |  
|Loss (gain) from impairment of goodwill                                                                |  |   | 1,459,725  |   |  |   | 932,529    |  
|Loss (gain) on settlement of liabilities                                                               |  |   | –          |   |  |   | (38,220    | )
|Loss on settlement of note payable - related party                                                     |  |   | –          |   |  |   | 84,153     |  
|Amortization of loan discount                                                                          |  |   | 950,736    |   |  |   | 573,605    |  
|Change in value of derivative liability                                                                |  |   | 629,176    |   |  |   | 36,469     |  
|Stock based compensation                                                                               |  |   | 287,472    |   |  |   | 285,623    |  
|Warrants expense                                                                                       |  |   | –          |   |  |   | 96,753     |  
|Convertible note issued for conversion cost reimbursement                                              |  |   | 137,705    |   |  |   | –          |  
|Other Income                                                                                           |  |   | 16,338     |   |  |   | –          |  
|Convertible note issued for services rendered                                                          |  |   | –          |   |  |   | 80,000     |  
|(Increase) decrease in:                                                                                |  |   |            |   |  |   |            |  
|Accounts receivable                                                                                    |  |   | 88,047     |   |  |   | (31,053    | )
|Inventory                                                                                              |  |   | 43,849     |   |  |   | (4,699     | )
|Deposits                                                                                               |  |   | –          |   |  |   | –          |  
|Prepaids and other                                                                                     |  |   | (34,965    | ) |  |   | 25,359     |  
|Other assets                                                                                           |  |   | 344,251    |   |  |   | (15,072    | )
|Intangible assets                                                                                      |  |   | 15,561     |   |  |   | –          |  
|Increase(decrease) in:                                                                                 |  |   |            |   |  |   |            |  
|Accounts payable                                                                                       |  |   | 455,741    |   |  |   | 140,837    |  
|Accrued expenses                                                                                       |  |   | (371,551   | ) |  |   | (152,261   | )
|Accrued expenses - related party                                                                       |  |   | –          |   |  |   | –          |  
|Interest payable                                                                                       |  |   | 269,706    |   |  |   | 80,740     |  
|Taxes payable                                                                                          |  |   | (15,865    | ) |  |   | (7,579     | )
|Accrued payroll taxes                                                                                  |  |   | (98,868    | ) |  |   | (39,736    | )
|Accrued officers' salaries                                                                             |  |   | 411,487    |   |  |   | 723,100    |  
|Other liabilities - deferred
    revenue                                                               |  |   | 323,316    |   |  |   | –          |  
|                                                                                                       |  |   |            |   |  |   |            |  
|Net cash used in operating
    activities                                                              |  |   | (1,274,099 | ) |  |   | (614,904   | )









28









CARDIFF
INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR
THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31,2017

(AUDITED)



|                                                                     |  |   | 2018      |   |  |   | 2017      |  
|-------------------------------------------------------------------- |  | - | --------- | - |  | - | --------- | -
|INVESTING ACTIVITIES                                                 |  |   |           |   |  |   |           |  
|Purchase of intangible                                               |  |   | –         |   |  |   | (5,000    | )
|Purchase of fixed assets                                             |  |   | (852,000  | ) |  |   | –         |  
|Disposal (Purchase) of fixed
    assets                              |  |   | 91,847    |   |  |   | (7,800    | )
|                                                                     |  |   |           |   |  |   |           |  
|Net cash provided by (used
    in) investing activities              |  |   | (760,153  | ) |  |   | (12,800   | )
|                                                                     |  |   |           |   |  |   |           |  
|FINANCING ACTIVITIES                                                 |  |   |           |   |  |   |           |  
|Due from related party                                               |  |   | –         |   |  |   | (91,791   | )
|Due to related party                                                 |  |   | 111,996   |   |  |   | –         |  
|Proceeds from sales of stock                                         |  |   | –         |   |  |   | 40,000    |  
|Due to shareholder                                                   |  |   | –         |   |  |   | –         |  
|Proceeds from convertible notes payable                              |  |   | 1,702,603 |   |  |   | 687,200   |  
|Proceeds from notes payable - related party                          |  |   | 121,053   |   |  |   | 46,176    |  
|Proceeds from notes payable                                          |  |   | –         |   |  |   | 25,343    |  
|Repayments of convertible notes payable                              |  |   | –         |   |  |   | (10,000   | )
|Repayments of notes payable                                          |  |   | –         |   |  |   | (68,684   | )
|Proceeds from line of credit                                         |  |   | –         |   |  |   | 16,841    |  
|Repayments to line of credit                                         |  |   | (13,499   | ) |  |   | (11,343   | )
|                                                                     |  |   |           |   |  |   |           |  
|Net cash provided by financing
    activities                        |  |   | 1,922,153 |   |  |   | 633,742   |  
|                                                                     |  |   |           |   |  |   |           |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 |  |   | (112,100  | ) |  |   | 6,038     |  
|                                                                     |  |   |           |   |  |   |           |  
|CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD                   |  |   | 230,407   |   |  |   | 62,948    |  
|                                                                     |  |   |           |   |  |   |           |  
|CASH AND CASH EQUIVALENTS,
    END OF PERIOD                         |  | $ | 118,307   |   |  | $ | 68,986    |  
|                                                                     |  |   |           |   |  |   |           |  
|SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION                    |  |   |           |   |  |   |           |  
|Cash paid during the period for:                                     |  |   |           |   |  |   |           |  
|Interest                                                             |  | $ | 215,601   |   |  | $ | 30,866    |  
|                                                                     |  |   |           |   |  |   |           |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                         |  |   |           |   |  |   |           |  
|Common stock issued upon
    conversion of notes payable             |  | $ | 997,303   |   |  | $ | 143,863   |  
|Common stock issued for
    settlement of expense                    |  | $ | 160,000   |   |  | $ | 1,415,600 |  
|Series H Preferred Stock
    issued for acquisition of Repicci Group |  | $ | –         |   |  | $ | 728,907   |  
|Common stock cancellation
    related to accrued liability           |  | $ | –         |   |  | $ | 2,500     |  
|Series I Preferred Stock
    issued for compensation                 |  | $ | 200,000   |   |  | $ | –         |  
|Series B preferred shares
    issued for debt settlement             |  | $ | –         |   |  | $ | 60,000    |  
|Conversion of preferred
    stock to common stock                    |  | $ | 5,097     |   |  | $ | 1,744     |  
|Debt discount from issuance
    of warrant                           |  | $ | –         |   |  | $ | 219,210   |  
|Derivative liability settled
    upon conversion                     |  | $ | 1,770,997 |   |  | $ | 405,443   |  
|Derivative liability settled
    upon conversion                     |  | $ | –         |   |  | $ | 1,972,999 |  
|Debt discount from derivative
    liabilities                        |  | $ | –         |   |  | $ | 535,878   |  



The
accompanying notes are an integral part of these consolidated financial statements









29







NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



Organization and Nature of Operations



Legacy Card Company (“Legacy”)
was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, Legacy converted from a California Limited Liability
Company to a Nevada Corporation. On November 10, 2005, Legacy merged with Cardiff Lexington Corp. (“Cardiff”, the “Company”),
a publicly held corporation.



In the first quarter of 2013, it was decided
to restructure Cardiff into a holding company that adopted a new business model known as "Collaborative Governance,"
a form of governance enabling businesses to take advantage of the power of a public company. Cardiff began targeting the acquisition
of, niche companies with high growth potential,. The reason for this strategy was to protect the Company’s shareholders by
acquiring businesses with little to no debt, seeking support with both financing and management that had the ability to offer a
return to investors.



Description of Business



To date, Cardiff consists of the following wholly-owned subsidiaries:



We Three, LLC (Affordable Housing Initiative) acquired
on May 15, 2014;

Romeo’s NY Pizza acquired on June 30, 2014;

Edge View Properties, Inc. acquired on July 16, 2014;

FDR Enterprises, Inc. acquired on August 10, 2016;

Refreshment Concepts, LLC acquired on August 10, 2016;

Repicci’s Franchise Group, LLC acquired on August
10, 2016;

Red Rock Travel Group, was acquired July31, 2018

Platinum Tax Defenders, LLC was acquired July 31, 2018



Principles of Consolidation



The consolidated financial statements include
the accounts of Cardiff, and its wholly-owned subsidiaries: We Three, LLC; Romeo’s NY Pizza; Edge View Properties, Inc.;
FDR Enterprises, Inc.; Refreshment Concepts, LLC, Repicci’s Franchise Group, LLC, Red Rock Travel Group, and Platinum Tax
Defenders LLC. All significant intercompany accounts and transactions are eliminated in consolidation. Certain prior period amounts
may have been reclassified for consistency with the current period presentation. These reclassifications would have no material
effect on the reported financial results.



Use of Estimates



The preparation of financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
Management uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ
from those estimates.



Change in Capital Structure



Om March 25, 2019 the Company announced
a 1:1500 reverse split of its Common stock, which has been given retrospective treatment in the consolidated financial statements.









30







Revenue Recognition



For the year-ended December 31, 2017, in
general, the Company recognized revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of
the following criteria are met:



1) persuasive evidence of an arrangement exists between the
Company and our customer(s);

2) services have been rendered;

3) our price to our customer is fixed or determinable; and

4) collectability is reasonably assured.



Rental Income



The Company’s rental income is derived
from the mobile home leases. The expired leases are considered month-to-month leases. In accordance with section 605- 10-S99-1
of the FASB Accounting Standards Codification for revenue recognition, the cost of property held for leasing by major classes of
property according to nature or function, and the amount of accumulated depreciation in total, is presented in the accompanying
consolidated balance sheets as of December 31, 2017 and 2016. There are no contingent rentals included in income in the accompanying
statements of operations. With the exception of the month-to-month leases, revenue was recognized on a straight-line basis and
amortized into income on a monthly basis, over the lease term.



Restaurant Sales



Revenue from restaurant sales were recognized
when food and beverage products are sold. The Company reports revenue net of sales taxes collected from customers and remitted
to governmental taxing authorities.



On January 1, 2018, we adopted Topic 606
using the modified retrospective method which did not have a material impact to the opening balance of accumulated deficit.. Results
for reporting periods beginning after January 1, 2018 are presented under Topic 606



The Company applies a five-step approach
in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying
the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the
performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially
all of the Company’s revenue is recognized at the time control of the products transfers to the customer.



The Company generates revenue from our
subsidiaries primarily on a cash basis for sale of food items and monthly rentals of mobile homes. As allowed by a practical expedient
in Topic 606, the entity recognizes revenue in the amount to which the entity has a right to invoice. The term between invoicing
and when payment is due is not significant.



Our subsidiary Repicci, generates revenues
through franchise fees. Revenues from franchise fees are recognized in accordance with guidance Topic 606, as the reference objections
are satistied. The perinate franchise fees associated with the right to intellectual property is earned over the life of the franchise
agreement, which can be up to 15 years.



Our segmented revenue is disclosed more
fully in our financial statements, see footnote 10 for further details.



Cash and Cash Equivalents



The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. The Company has no cash equivalents.









31







Accounts Receivable



Accounts receivable is reported on the
balance sheet at gross amounts due to the Company. Management closely monitors outstanding accounts receivable and charges off
to expense any balances that are determined to be uncollectible. As of December 31, 2018 and 2017, the Company had accounts receivable
of $64,345 and $63,061, respectively. Accounts receivables are primarily generated from our subsidiaries in their normal course
of business.



Inventory



Inventory consists of finished goods purchased,
which are valued at the lower of cost or market value, with cost being determined on the first-in, first-out (FIFO) method. The
Company periodically reviews historical sales activity to determine potentially obsolete items and also evaluates the impact of
any anticipated changes in future demand.



Property and Equipment



Property and equipment are carried at cost.
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures
for maintenance and repairs are charged to expense as incurred. Depreciation and amortization of property and equipment is provided
using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:



|Classification                    | Useful Life                       
|--------------------------------- | ----------------------------------
|Equipment, furniture and fixtures | 5 - 7 years                       
|Leasehold improvements            | 10 years or lease term, if shorter



During the years ended December 31, 2018 and 2017, depreciation
and amortization expense was $80,165 and $227,959 ($108,039 is included in Cost of Goods Sold), respectively.



Goodwill and Other Intangible Assets



Goodwill and indefinite-lived brands are
not amortized, but are evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment
testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles. The annual evaluation
for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal
projections of expected future cash flows and operating plans. The Company believe such assumptions are also comparable to those
that would be used by other marketplace participants. During years-ended December 31, 2018 and 2017, the company had Goodwill impairment
of $1,459,725 and $932,529, respectively, related to its acquisitions of FDR Enterprises, Inc.; Refreshment Concepts, LLC; and
Repicci’s Franchise Group, LLC. (collectively referred to as “Repicci’s Group”) and Red Rock Travel Group.
The Company based this decision on impairment testing off the underlying assets, expected cash flows, decreased asset value and
other factors.



Valuation of long-lived assets



In accordance with the provisions of Accounting
Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all
long-lived assets such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated discounted net cash flows
expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amounts of the assets exceed the fair value of the assets.









32







Valuation of Derivative Instruments



Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 815-10, Derivatives and Hedging (“ASC 815-10”), requires
that embedded derivative instruments be bifurcated and assessed, along with freestanding derivative instruments such as convertible
promissory notes, on their issuance date to determine whether they would be considered a derivative liability and measured at their
fair value for accounting purposes. The Company evaluates all of it financial instruments, including stock purchase warrants, to
determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then
revalued at each reporting date, with changes in the fair value reported as charges or credits to income.



For option based simple derivative financial
instruments, the Company uses the Lattice Binomial option pricing model to value the derivative instruments at inception and subsequent
valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is reassessed at the end of each reporting period.



Beneficial Conversion Feature



For conventional convertible debt where
the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”)
and related debt discount.



When the Company records a BCF, the relative
fair value of the BCF is recorded as a derivative liability with an offset against the face amount of the respective debt instrument
which is and amortized to interest expense over the life of the debt.



Fair Value Measurements



Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are categorized based upon the
level of judgment associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1)
market participant assumptions developed based on market data obtained from independent sources (observable inputs), and (2) an
entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
3). The three levels of the fair value hierarchy are described below:



Level Input Definition



|Level 1 | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|------- | -------------------------------------------------------------------------------------------------------------------



|Level 2 | Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date.
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Level 3 | Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table presents certain investments
and liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s Consolidated
Balance Sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2018 and 2017.









33







|                                                           |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|---------------------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Fair Value of BCF Derivative Liability – December 31, 2018 |  | $       | – |  |         | $ | – |         |  | $ | 1,870,625 | 



|                                                           |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|---------------------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Fair Value of BCF Derivative Liability – December 31, 2017 |  | $       | – |  |         | $ | – |         |  | $ | 2,236,656 | 



Stock-Based Compensation – Employees



The Company accounts for its stock based
compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement
principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant
to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the
fair value of the equity instrument issued, whichever is more reliably measurable.



The measurement date used to determine
the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which
it is probable that performance will occur.



Generally, all forms of share-based payments,
including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value
on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest.



The expense resulting from share-based
payments is recorded in general and administrative expense in the consolidated statements of operations.



Stock-Based Compensation – Non Employees



Equity Instruments Issued to Parties Other Than Employees
for Acquiring Goods or Services



The Company earky adopted ASU No 2018-07
for equity instruments issued to parties other than employees.



Income Taxes



Income taxes are determined in accordance
with ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted
income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.



ASC 740 prescribes a comprehensive model
for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken
or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements
when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must
initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.



For the years ended December 31, 2018 and
2017 the Company did not have any interest and penalties associated with tax positions. As of December 31, 2018 and 2017, the Company
did not have any significant unrecognized uncertain tax positions.









34







Earnings (Loss) per Share



FASB ASC Subtopic 260, Earnings Per
Share (“ASC 260”), provides for the calculation of "Basic" and "Diluted" earnings per share.
Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number
of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available
to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include
the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been
issued. Potentially dilutive securities include outstanding stock options, warrants, and debts convertible into common shares.
The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the
treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock
can result in a greater dilutive effect from potentially dilutive securities.



The following table sets forth the computation
of basic and diluted earnings per common share for the years ended December 31, 2018 and 2017. During a period of net loss, all
potentially dilutive securities are anti-dilutive. Accordingly, for the years ended December 31, 2018 and 2017 potentially dilutive
securities have been excluded from the computations since they would be anti-dilutive. However, these dilutive securities could
potentially dilute earnings per share in the future (weighted average reflected post 1500:1 reverse stock split):



|                                    |  | For the years ended |           
|----------------------------------- |  | ------------------- | ----------
|                                    |  | December 31, 2018   |           
|                                    |  |                     |           
|Numerator:                          |  |                     |           
|Net (loss)                          |  | $                   | (6,265,251
|                                    |  |                     |           
|Denominator:                        |  |                     |           
|Weighted-average shares outstanding |  |                     | 602,038   
|                                    |  |                     |           
|Basic (loss) per share              |  | $                   | (10.41    



This does not include the potential dilutive
effect if all exercisable warrants were exercised or conversions of convertible notes and convertible preferred stock as described
below as of December 31, 2018:



|                                  |  | 2018 |           |  | 2017 | 
|--------------------------------- |  | ---- | --------- |  | ---- | 
|Principal and Interest conversion |  |      | 3,133,104 |  |      | 
|Warrants                          |  |      | 5,833     |  |      | 
|Preferred Stock conversion        |  |      | 350,167   |  |      | 
|Total                             |  |      | 3,489,104 |  |      | 



Going Concern



The accompanying consolidated financial
statements have been prepared using the going concern basis of accounting, which contemplates continuity of operations, realization
of assets and liabilities and commitments in the normal course of business. The Company has sustained operating losses since its
inception and has negative working capital and an accumulated deficit. These factors raise substantial doubts about the Company’s
ability to continue as a going concern. As of December 31, 2018, the Company has sustained recurring loses and accumulated a working
capital deficit. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company
is unable to continue as a going concern. As a result, the Company’s independent registered public accounting firm, in its
report on the Company’s December 31, 2018 consolidated financial statements, has raised substantial doubt about the Company’s
ability to continue as a going concern.









35







The ability of the Company to continue
as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash
infusions. Management has prospective investors and believes the raising of capital will allow the Company to fund its cashflow
shortfalls and pursue new acquisitions. There can be no assurance that the Company will be able to obtain sufficient capital from
debt or equity transactions or from operations in the necessary time frame or on terms acceptable to it. Should the Company be
unable to raise sufficient funds, it may be required to curtail its operating plans. In addition, increases in expenses may require
cost reductions. No assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all,
in the future. Should the Company not be able to raise sufficient funds, it may cause cessation of operations.



Recently Issued Accounting Pronouncements



In February 2016, the FASB issued ASU No.
2016-02,” Leases” (Topic 842) which includes a lessee accounting model that recognizes two types of leases -
finance leases and operating leases. The standard requires that a lessee recognize on the balance sheet assets and liabilities
for leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising
from a lease by a lessee will depend on its classification as a finance or an operating lease. New disclosures to help investors
and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases are
also required. These disclosures include qualitative and quantitative requirements, providing information about the amounts recorded
in the financial statements. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years.



In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock
Compensation (Topic 718): Scope of Modification Accounting”,to provide clarity and reduce both (1) diversity in
practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change
to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions
of a share-based payment award require an entity to apply modification accounting in ASC 718. The amendments are effective for
fiscal years beginning after December 15, 2017 and should be applied prospectively to an award modified on or after the adoption
date. Early adoption is permitted, including adoption in an interim period.



Other pronouncements issued by the FASB or other authoritative
accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the
Company’s financial position, results of operations or cash flows.



|2. | ACQUISITIONS
|-- | ------------



Platinum Tax Defenders



On July 31, 2018, the Company completed
the acquisition of Platinum Tax Defenders. In connection with the closing of the acquisition, a Preferred “L” Class
of stock with a par value of $0.001 was established and issued. The Preferred “L” Class of stock rights and privileges
include voting rights, a conversion ratio of 1:1.25 and were distributed at the adjusted rate of $0.013 per share (pre-splt) for
a total of 98.307,692 representing a value of $1,278,000. These Preferred “L” shares have a lock-up/leak-out limiting
the sale of stock for 12 months after which conversions and sales are limited to 20% of their portfolio per year, pursuant to the
terms of the Acquisition Agreement. The preliminary purchase allocation of the net assets acquired is as follows:



|                       |  | Platinum Fair Value |          
|---------------------- |  | ------------------- | ---------
|Cash                   |  | $                   | 138,906  
|Accounts receivable    |  |                     | 105,669  
|Other assets           |  |                     | 60,041   
|Property and equipment |  |                     | 6,010    
|Goodwill               |  |                     | 2,092,048
|Liabilities            |  |                     | (272,674 
|Total                  |  | $                   | 2,130,000









36







Red Rock Travel Group



On July 31, 2018, the Company completed
the acquisition of Red Rock Travel Group. In connection with the closing of the acquisition, on July 30th, 2018 a Preferred
“K” Class of stock with a par value of $0.001 was established and issued. The Preferred “K” Class of stock
rights and privileges include voting rights, a conversion ratio of 1:1.25 and were distributed at the adjusted rate of $0.021 per
share (pre-splt) for a total of 8,200,562 representing a value of $175,000. These Preferred “K” shares have a lock-up/leak-out
limiting the sale of stock for 12 months after which conversions and sales are limited to 20% of their portfolio per year, pursuant
to the terms of the Forward Acquisition Agreement. The preliminary purchase allocation of the net assets acquired is as follows:



|                       |  | Red Rock Fair Value
|---------------------- |  | -------------------
|Cash                   |  | $22,515            
|Intangible assets*     |  | 300,000            
|Property and equipment |  | 55,286             
|Goodwill*              |  | 1,459,725          
|Liabilities            |  | (1,662,526)        
|Total                  |  | $175,000           



* Subsequent to the acquisition, the Company
determined that the intangible assets and goodwill should be fully impaired and written off.



The results of the operations for Platinum
and Red Rock have been included in the consolidated financial statements since the date of the acquisitions (July 31, 2018). The
following table presents the unaudited pro forma results of continuing operations for the years ended December 31, 2018 and 2017,
respectively, as if the acquisitions had been consummated at the beginning of the period presented. The pro forma results of continuing
operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the
acquisitions occurred at the beginning of the period presented or the results which may occur in the future.



|                                 |  | Pro Forma 2018 |            |   | Pro forma 2017 |  
|-------------------------------- |  | -------------- | ---------- | - | -------------- | -
|                                 |  |                |            |   |                |  
|REVENUE                          |  |                | 1,393,687  |   |                |  
|                                 |  |                |            |   |                |  
|NET INCOME (LOSS) FOR THE PERIOD |  | $              | (7,211,221 | ) |                | $



4. ACCRUED EXPENSES



As of December 31, 2018, and December 31,
2017, the Company had accrued expenses of $1,310,074 and $740,696, respectively, consisted of the following:



|                                 |  | December 31,  2018 |           |  | December 31,  2017 | 
|-------------------------------- |  | ------------------ | --------- |  | ------------------ | 
|                                 |  |                    |           |  |                    | 
|Accrued salaries – related party |  | $                  | 747,000   |  |                    | 
|Lease payable – related party    |  |                    | –         |  |                    | 
|Accrued expenses – other         |  |                    | 563,074   |  |                    | 
|Total                            |  | $                  | 1,310,074 |  |                    | 



|5. | PLANT AND EQUIPMENT, NET
|-- | ------------------------



Plant and equipment, net as of December
31, 2018 and 2017 was $381,301 and $491,474, respectively, consisting of the following:



|                                 |  | December 31, |          |   | December 31, | 
|-------------------------------- |  | ------------ | -------- | - | ------------ | 
|                                 |  | 2018         |          |   | 2017         | 
|Furniture, fixture and equipment |  |              | 715,466  |   |              | 
|Leasehold improvements           |  |              | 161,166  |   |              | 
|Total                            |  |              | 876,632  |   |              | 
|Less: accumulated depreciation   |  |              | (495,331 | ) |              | 
|Plant and equipment, net         |  |              | 381,301  |   |              | 









37







During the years ended December 31, 2018
and 2017, depreciation expense was $80,165 and $227,959, respectively. During the year end December 31, 2018 and 2017, the Company
accounts for depreciation as a separate item in the operational expense of $22,697 and $160,171, respectively and included $57,468
and $108,039, respectively in depreciation in cost of goods sold.



During
the December 31, 2018, the Company disposed fixed assets of$104,886
and related liabilities related to a company-owned franchise, resulting in net cash flow of $91,847 and a gain on sale of $874
from disposal.During the December 31, 2017, the Company disposed
fixed assets of $101,434, resulting in accelerated depreciation expense of $101,434 from disposal of fixed assets.



|6. | LAND
|-- | ----



As of December 31, 2018 and 2017, the Company
had land of $603,000 located in Salmon, Idaho with area of approximately 30 acres, which was in connection with the acquisition
of Edge View Properties, Inc. in July 2014. The Company issued 241,199 shares of Series E Preferred Stock as consideration for
this acquisition. The land is currently vacant and is expected to be developed into residential community.



|7. | LINE OF CREDIT
|-- | --------------



On December 28, 2016, the Company entered
into an unsecured Business Line of Credit Agreement with Fundation Group LLC (“Fundation”), pursuant to which the Company
was allowed to take a draw from Fundation up to $20,000 from time to time. The Line of Credit bears interest at a rate of 11.49%
per annum, subject to increase or decrease with 90 days notice. There was an initial closing fee of $500 and a 2% draw fee on subsequent
draws. Monthly principal and interest payments are due and the line is due in full in 18 months from the latest draw. The outstanding
principal and interest will be due in payments over 18 months.



As of December 31, 2018 and 2017, The Company
had balance of $1,999 and $15,498, respectively.  During the year ended December 31, 2018, the Company made a cash payment
of $13,499. (Included in Note 10)



|8. | RELATED PARTY TRANSACTIONS
|-- | --------------------------



Due to Officers and Officer Compensation



During
theyear ended December 31, 2018, the Companyborrowed $25,000
from a corporate officer, which was repaid. During the year ended December 31, 2017, the Company repaid a total of $91,791
to related parties.



Refreshment
Concepts, LLC leases its premises from its prior owner under a month-to-month lease at the rate of $1,500 per month. As of December
31, 2018 and December 31, 2017, the Company had lease payable of $-0- and $25,250, respectively to the related party, which is
reflected in accrued expenses – related party .



On
January 24, 2017, the Company issued 2,010,490 (pre-split) shares
of Common Stock to settle $482,518 due to theprior owner of Refreshment Concepts LLC, pursuant to the Acquisition Agreement,
dated August 10, 2016. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock
on the grant date, at a price of approximately $0.24 per share (pre-splt), resulting in loss from extinguishment of debt in amount
of $80,420.



On January 24, 2017, the Company issued
173,585 shares of Common Stock to settle $41,660 due to the prior owner of Repicci’s Franchise Group LLC, pursuant to the
Acquisition Agreement, dated August 10, 2016. The fair value of this stock issuance was determined by the fair value of the Company’s
Common Stock on the grant date, at a price of approximately $0.24 per share, resulting in loss from extinguishment of debt
in amount of $6,943. As of December 31, 2017 and December 31, 2016, the outstanding balance due (included in accrued liabilities
to related parties on the financial statements) to the same prior owner was $0 and $40,550, respectively.



During the second quarter of 2017, the
prior owner of Repicci’s Franchise Group LLC submitted a subscription agreement to the Company regarding the purchase of
90,909 shares of the Company’s Series I Preferred Stock by cash payment of $10,000, which was collected during the second
quarter of 2017. The transaction was independently negotiated between the Company and the related party. The proceeds from the
subscription agreement mitigated the Company’s cash pressure in short term. The 90,909 shares of Series I Preferred Stock
were issued as of December 31, 2017.









38







During the second quarter of 2017, the
Company issued 906,907 shares of Common Stock to We three Inc., a related party, for services rendered. The fair value of this
stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately
$.0799 per share. Accordingly, the Company recognized stock based compensation of $72,462 to the consolidated statements of operations
for December 31, 2017.



The Company borrows funds from Daniel Thompson,
who is a Shareholder and Officer of the Company. The terms of repayment stipulate the unsecured loans are due 24 months after the
launch of the Legacy Tuition Card (or prior to such date) at an annual interest rate of 6 % per year. As of December 31, 2018 and
2017, the Company had $77,640 due (included in due to officers and shareholders on the financial statements) to Daniel Thompson,
respectively.



In addition, the Board of Directors of
the Company approved to increase Daniel Thompson’s compensation to $25,000 per month from $20,000 effective January 1, 2017.
Accordingly, a total salary of $300,000 and $300,000 were accrued and reflected as an expense to Daniel Thompson during the year
ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2017, the Company issued 10,000,000 (pre-split
) shares of Common Stock for forgiveness of $800,000 in accrued salaries. The accrued salaries payable to Daniel Thompson was $317,500
and $117,500 as of December 31, 2018 and 2017, respectively.



The Company had an employment agreement
with a former Chief Operating Officer, Mr. Levy, whereby the Company provided for compensation of $15,000 per month in 2015 and
$10,000 per month in 2016. Mr. Levy resigned on June 7, 2016 at which time $160,000 was owed. . During the year ended December
31, 2017, the Company issued 1,000,000 (pre -reverse 1500:1 stock split) shares of Common Stock for forgiveness of $80,000 in accrued
salaries. The total balance due to Mr. Levy for accrued salaries at December 31, 2018 was $80,000.



The Company had an employment agreement
with the Chief Operating Officer, Mr. Roberts, whereby the Company provided for compensation of $10,000 per month effective in
June 2016. The total balance due to Mr. Roberts for accrued salaries at December 31, 2018 and 2017 were $107,000 and $70,000, respectively.
In addition, the Company agreed to grant Mr. Roberts stock options for a minimum of 300,000 shares of the Company's common stock
at an exercise price of 50% of the current last ten (10) day stock average per share, and 600,000 shares of common stock as a key
officer employment incentive to be earned and vested on a pro rata basis at 25,000 shares per month for twenty-four (24) months.
The fair value of both 300,000 options and 600,000 shares were determined by the fair value of the Company’s Common Stock
on the grant date, at a price of approximately $0.226 per share. On August 8, 2017, Mr. Roberts accepted the offer from the
Company to issue 3,000,000 (pre-splt) common shares for forgiveness of all accrued expenses, options, and common stock granted
totaling $135,600 through June 2016.  Additionally, the Company issued 1,000,000 ((pre-splt)) shares of Common Stock as a
bonus to Mr. Roberts for his past service to the Company. The fair value of this stock issuance was determined by the fair value
of the Company’s Common Stock on the grant date, at a price of approximately $.07 (pre-splt) per share. Accordingly,
the Company recognized stock based compensation of $70,000 to the consolidated statements of operations for the year ended December
31, 2017.



The Board of Directors of the Company approved
to increase Chief Executive Officer, Mr. Cunningham’s compensation to $25,000 per month from $15,000 effective January 1,
2017. A total salary of $300,000 and $300,000 were accrued and reflected as an expense during the year ended December 31, 2018
and 2017, respectively. During the year ended December 31, 2017, the Company issued 5,000,000 (pre -reverse 1500:1 stock split)
shares of Common Stock for forgiveness of $400,000 in accrued salaries. The total balance due to Mr. Cunningham for accrued salaries
at December 31, 2018 and 2017 were $322,500 and $122,500, respectively.



Notes Payable – Related Party



The Company has entered into several unsecured
loan agreements with related parties (see below; Footnote 11, Notes Payable – Related Party; and Footnote 12 Convertible
Notes Payable – Related Party).



|9. | NOTES AND LOANS PAYABLE
|-- | -----------------------



Notes payable at December 31, 2018 and
2017 are summarized as follows:



|                                |  | December 31, |          |   | December 31, |  
|------------------------------- |  | ------------ | -------- | - | ------------ | -
|                                |  | 2018         |          |   | 2017         |  
|Loans Payable Unrelated Party   |  | $            | 665,488  |   |              | $
|Notes Payable – Unrelated Party |  |              | 10,989   |   |              |  
|Notes Payable – Related Party   |  |              | 265,242  |   |              |  
|Total                           |  |              | 941,719  |   |              |  
|Current portion                 |  |              | (941,719 | ) |              |  
|Long-term portion               |  | $            | –        |   |              | $









39







As of December 31, 2018, the Company had
lease payable of $40,521 in connection with two capital leases on two Mercedes Sprinter Vans for the ice cream subsidiary and two
loans for auto loan for the vehicles used in the Pizza restaurants and Repicci’s Group and for daily operations. There are
purchase options at the end of all lease terms that are based on the fair market value of the vans at the time.



The balance of $624,967 in notes payable
and loans to unrelated party was due primarily by our new subsidiary Red Rock Travel Group, for funds received through various
loans.



Notes Payable – Unrelated Party



During the year end December 31, 2017,
the Company received $25,343 from third parties and repaid $68,684



On March 12, 2009, the Company entered
into an unsecured preferred debenture agreement (Note 5) with a shareholder for $20,000. The note bore interest at 12% per year
and matured on September 12, 2009. In conjunction with the preferred debenture, the Company issued 2,000,000 (pre-splt) warrants
to purchase its Common Stock, exercisable at $0.10 (pre-splt) per share and expired on March 12, 2014. As a result, of the warrants
issued, the Company recorded a $20,000 debt discount during 2009 which has been fully amortized. The Company assigned all of its
receivables from consumer activations of the rewards program as collateral on this debenture. On March 24, 2011, the Company amended
the note and the principal balance was reduced to $15,000. The Company was due to pay annual principal payments of $5,000 plus
accrued interest beginning March 12, 2012. On July 20, 2011, the Company repaid $5,000 of the note. No warrants had been exercised
before the expiration. As of December 31, 2018, the Company was in default on this debenture. The balance of the note was $10,989
and $10,989 at December 31, 2018 and December 31, 2017, respectively.



As of December 31, 2017, the Company had
lease payable of $140,317 in connection with 2 capital leases on 2 Mercedes Sprinter Vans for the ice cream section. There are
purchase options at the end of all lease terms that are based on the fair market value of the vans at the time. The leases are
not in default at the current time.



The balance of $64,673 in notes payable
to unrelated party was due to the auto loan for the vehicles used in the Pizza restaurants and Repicci’s Group and for daily
operations. The loans carry interest from 0% to 6% interest and are not currently in default.



Notes Payable – Related Party



During the year end December 31, 2018,
the Company received $174,955 from related parties. During the year end December 31, 2017, the Company received $46,176 from related
parties



On September 7, 2011, the Company entered
into an unsecured Promissory Note agreement (“Note 1”) with a related party for $50,000. Note 1 bears interest at 8%
per year and matured on September 7, 2016. Interest is payable annually on the anniversary of Note 1, and the principal and any
unpaid interest were due upon maturity. In conjunction with Note 1, the Company issued 2,500,000 shares (pre-split) of its Common
Stock to the lender. As a result of the shares issued in conjunction with Note 1, the Company recorded a $50,000 debt discount
during 2011. The balance of Note 1, net of debt discount, was $50,000 and $50,000 at December 31, 2018 and December 31, 2017 respectively.
Note 1 is currently in default.



On
November 17, 2011, the Company entered into an unsecured Promissory Note agreement (“Note 2”) with a related party
for $50,000. Note 2 bears interest at 8% per year and matured on November 17, 2016. Interest is payable annually on the anniversary
of Note 2, and the principal and any unpaid interest were due upon maturity. In conjunction with Note 2, the Company issued 2,500,000
shares (pre-split) of its Common Stock to the lender. As a result of the shares issued in conjunction with Note 2, the Company
recorded a $50,000 debt discount during 2011. The balance of Note 2, net of debt discount, was $50,000 and $50,000 at December
31, 2018 and December 31, 2017 , respectively. Note 2 is currently
in default.



On
August 4, 2015, the Company entered into an unsecured Promissory Note agreement (“Note 4 ”)
with a related party for $19,500. Note 3  bears interest at
6% per year and matures on December 31, 2016. Interest is payable annually on the anniversary of Note 4, and the principal and
any unpaid interest were due upon maturity. The principal balance of Note 4 $-0- as of December 31, 2017.









40







As of December 31, 2018 the Company also
had an unsecured note payable of $50,747 and to the prior owner of Red Rock . The note is due on demand and carries no interest.



As
of December 31, 2018 the Company also had an unsecured note payable
of $165,242 and to the prior owner of Platinum Tax Defenders. The note is due on demand and carries no interest.



As of December 31, 2017, the Company also
had an unsecured note payable of $44,189, to the prior owner of Repicci’s Group. The note is due on demand and carries no
interest.



|10. | CONVERTIBLE NOTES PAYABLE
|--- | -------------------------



Some of the Convertible Notes issued as
described below included an anti-dilution provision that allowed for the adjustment of the conversion price. The Company considered
the guidance provided by the FASB in “Determining Whether an Instrument Indexed to an Entity’s Own Stock,” the
result of which indicates that the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined
that, as the conversion price of the Notes issued in connection therewith could fluctuate based future events, such prices were
not fixed amounts. As a result, the Company determined that the conversion features of the Notes issued in connection therewith
are not considered indexed to the Company’s stock and characterized the value of the conversion feature of such notes as
derivative liabilities upon issuance.



During 2018, the company received $1,702,603 cash proceeds,
from convertible notes payable and repaid $-0- in cash. The company recorded amortization of debt discount of $950,736 related
to convertible notes, during the year end December 31, 2018. During 2017, the company received $687,200 cash proceeds, from convertible
notes payable and repaid $10,000 in cash. The company recorded amortization of debt discount of $573,605 related to convertible
notes, during the year end December 31, 2017



During the year ended December 31,
2018, the Company received conversion notices for $748,571 of convertible debt and $251,733 in interest, penalties and fees,
which were converted into 824,162,204 (pre reverse 1500:1 stock split) shares.



Convertible notes at December 31, 2018 and December 31, 2017
are summarized as follows:



|                                                        |  | December 31,  2018 |           |   | December 31, 2017 |  
|------------------------------------------------------- |  | ------------------ | --------- | - | ----------------- | -
|                                                        |  |                    |           |   |                   |  
|Convertible Notes Payable – Unrelated Party             |  | $                  | 2,026,800 |   |                   | $
|Convertible Notes Payable – Related Party               |  |                    | 165,000   |   |                   |  
|Discount on Convertible Notes Payable - Unrelated Party |  |                    | (201,024  | ) |                   |  
|Total                                                   |  | $                  | 1,990,775 |   |                   | $
|Current Portion                                         |  |                    | 950,775   |   |                   |  
|Long-Term Portion                                       |  | $                  | 1,040,000 |   |                   | $

For the year-ended December 31, 2017:



Convertible Notes Payable – Unrelated Party



On April 17, 2014, the Company entered
into an unsecured Convertible Note (“Note 4”) in the amount of $9,000. Note 4 was convertible into Common Shares of
the Company at $0.005 per share at the option of the holder. Note 4 bore interest at eight percent per year, matured on June 17,
2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. During the year end December 31, 2016,
the note holder converted $3,715 principal and $1,310 accrued interest payable into 1,005,000 shares of common stock at a conversion
price of $0.005 per share. And $3,000 of principal is forgiven by the note holder. In addition, the Company agreed to reimburse
the holder’s certificate processing cost by adding $1,000 to the principal for each note conversion pursuant to an addendum,
dated February 3, 2016. During the first quarter of 2017, the note holder converted $2,785 principal, $1,000 processing cost reimbursement
and $102 accrued interest into 777,400 shares of common stock at a conversion price of $0.005 per share. The balance of Note 4
was $2,785 as of December 31, 2016, which was paid in full as of December 31, 2017.









41







On July 29, 2015, the Company entered into
an 8% convertible promissory note (“Note 6”) with an unrelated entity in the amount of $10,000. Note 6 matured on November
26, 2015. The note is convertible into common shares of the Company at the conversion ratio of 50% discount to market or $0.01,
if the bid price falls below $0.10. Note 6 and accrued interest totaled $11,666 was paid in full by cash on May 1, 2017. The principal
balance on Note 6 at December 31, 2016 and 2017 was $10,000 and zero, respectively. The derivative liabilities was reclassified
as additional paid in capital due to the note being paid in cash as of June 30, 2017.



On February 9, 2016, the Company entered
into a 15% convertible line of credit (“Note 7”) with an unrelated entity in the amount up to $50,000. On February
9, 2016, the Company received $17,500 cash for the line of credit, matured on February 9, 2017, and unsecured. Note 7 is convertible
into common shares of the Company at the conversion ratio of $0.03 or 50% discount of the lowest closing price on the primary trading
market on which Company's common stock is quoted for the last five trading days prior to the conversion date, whichever is lower.
In January 2017, the Company determined that the conversion features contained in Note 7 carrying value represents a freestanding
derivative instrument that meets the requirements for liability classification under ASC 815. As a result, the fair value of the
derivative financial instrument in the note is reflected in the Company’s balance sheet as a liability. The fair value of
the derivative financial instrument of the convertible note was measured using the Binomial-Lattice valuation model as of January
2017 and will do so again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments
are recorded as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified
into additional paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



Note 7 principal of $6,000 was converted
into 200,000 shares of common stock at the end of 2016. During the year ended December 31, 2017, the Company recorded interest
expense, late fee of 5% and default interest of 20% related to Note 7 in total amount of $9,258 and amortization of debt discounts
in amount of $3,500. The balance of Note 7 was $11,500 with unamortized debt discount of $3,500 as of December 31, 2016, and without
unamortized debt discount as of December 31, 2017. Note 7, is currently in default and will incur a late fee of 5% and default
interest rate of 20%.



On October 28, 2016, the Company received
$25,000 cash pursuant to the terms of Note 7, matures on October 28, 2017 (“Note 7-1”). Note 7-1 was entitled to conversion
after April 28, 2017 which met the requirements for liability classification under ASC 815. See Footnote 10 for more information
on derivative liabilities.



During the year ended December 31, 2017,
the Company recorded interest expense related to Note 7-1 in amount of $11,454 and amortization of debt discount in amount of $18,333.
This resulted in an unamortized debt discount of $-0- as of December 31, 2017. The balance of Note 7-1 was $25,000 as of December
31, 2017 and December 31, 2016, respectively. Note 7-1 is currently in default and will incur a late fee of 5% and default interest
rate of 20%.



On March 8, 2016, the Company entered into
a 15% convertible promissory note in the principal of $50,000 (“Note 8”) with an unrelated entity for services rendered.
Note 8 is matured on March 8, 2017, and unsecured. This Note is convertible into common shares of the Company at the conversion
ratio of $0.03 or 50% discount of the lowest closing price on the primary trading market on which Company's common stock is quoted
for the last five trading days prior to the conversion date, whichever is lower. The Company determined that the conversion features
contained in Note 8 carrying value represents a freestanding derivative instrument that meets the requirements for liability classification
under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s
balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using
the Binomial-Lattice valuation model at the inception date of the note and will do so again on each subsequent balance sheet date.
Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion. See
Footnote 10 for more information on derivative liabilities.



On February 16, 2017, a portion of principal
of $6,000 was converted into 200,000 shares of common stock at a conversion price of $0.03 per share.



On April 13, 2017, a portion of principal
of $12,853, including $1,000 conversion cost reimbursement, plus accrued interest of $12,247 were converted into 836,667 shares
of common stock at a conversion price of $0.03 per share.









42







On May 4, 2017, a portion of principal
of $6,000, including $2,000 conversion cost reimbursement, plus accrued interest of $70 were converted into 202,333 shares of common
stock at a conversion price of $0.03 per share.



On July 6, 2017, a portion of principal
of $18,147, and $1,000 conversion cost reimbursement, were converted into 704,733 shares of common stock at a conversion price
of $0.03 per share.



Note 8 was in default with principal balance
of $12,294 as of December 31, 2017. During the year ended December 31, 2017, the Company recorded late fee and default interest
related to Note 8 in total amount of $8,748 and amortization of debt discounts in amount of $50,000 The balance of Note 8 was $50,000
with unamortized debt discount of $-0- as of December 31, 2016, and without unamortized debt discount as of December 31, 2017.
Note 8, is currently in default and will incur a late fee of 5% and default interest rate of 20%.



On September 12, 2016, the Company entered
into a 10% convertible promissory note in the principal of $80,000 (“Note 9”) with an unrelated entity for services
rendered. Note 9 is matured on September 12, 2017, and unsecured. This Note is convertible into common shares of the Company at
the conversion ratio of $0.03 or 50% discount of the lowest closing bid price on the primary trading market on which Company's
common stock is quoted for the last five trading days prior to the conversion date, whichever is lower. The Company determined
that the conversion features contained in Note 9 carrying value represents a freestanding derivative instrument that meets the
requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in
the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and will do so
again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded
as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional
paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities. Note 9 is currently in default
and will incur a late fee of 5% and default interest rate of 20%.



As a result, Note 9 was discounted in the
amount of $80,000 and amortized over the remaining life of this Note. As of September 12, 2017, the note was in default. During
the year ended December 31, 2017, the Company recorded late fee and default interest related to Note 9 in total amount of $15,655
and amortization of debt discounts in amount of $80,000. The balance of Note 9 was $80,000 without unamortized debt discount as
of December 31, 2016, and $80,000 with unamortized debt discount of $0 as of December 31, 2017. Note 9 is currently in default
and will incur a late fee of 5% and default interest rate of 20%.



On January 24, 2017, the Company entered
into a 10% convertible promissory note in the principal of $80,000 (“Note 10”) with an unrelated entity for services
rendered. Note 10 is matured on January 24, 2018, and unsecured. This Note is convertible into common shares of the Company at
the conversion ratio of $0.25 or 50% discount of the lowest closing bid price on the primary trading market on which Company's
common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower. As of July 24, 2017 this
Note is convertible into common shares of the Company as described above. The Company determined that the conversion features contained
in Note 10 carrying value represents a freestanding derivative instrument that meets the requirements for liability classification
under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s
balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using
the Binomial-Lattice valuation model at the inception date of the note and will do so again on each subsequent balance sheet date.
Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion. See
Footnote 10 for more information on derivative liabilities.



On October 25, 2017, a portion of principal
of $15,000, plus $1,500 conversion cost reimbursement, were converted into 1,434,782 shares of common stock at a conversion price
of $0.0115 per share.



On November 6, 2017, a portion of principal
of $10,000, plus $1,500 conversion cost reimbursement, were converted into 1,212,121 shares of common stock at a conversion price
of $0.0825 per share.









43







As a result, Note 10 was discounted in
the amount of $80,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $35,555.56.. During the year ended December 31, 2017, the Company recorded
interest expense related to Note 10 in amount of $5,494. The balance of Note 10 was $55,000 with unamortized debt discount of $19,444
as of December 31, 2017. Note 10 is currently in default and will incur a late fee of 5% and default interest rate of 20%.



On January 24, 2017, the Company entered
into a 15% convertible line of credit (“Note 11”) with an unrelated entity in the amount up to $250,000. On January
24, 2017, the Company received $50,000 cash for the line of credit, is matured on January 24, 2018, and unsecured. Note 11 is convertible
into common shares of the Company at the conversion ratio of $0.25 or 50% discount of the lowest closing price on the primary trading
market on which Company's common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower.
However, Note 11 is convertible after 6 months of the effective date of this Note, which is July 27, 2017. The Company determined
that the conversion features contained in Note 10 carrying value represents a freestanding derivative instrument that meets the
requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in
the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and will do so
again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded
as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional
paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



As a result, Note 11 was discounted in
the amount of $50,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $43,611. During the year ended December 31, 2017, the Company recorded interest
expense related to Note 11 in amount of $7,042. The balance of Note 11 was $50,000 with unamortized debt discount of $6,389 as
of December 31, 2017. Note 11 is currently in default and will incur a late fee of 5% and default interest rate of 20%.



On February 21, 2017, the Company received
$25,000 cash pursuant to the terms of Note 11, is matured on February 21, 2018 (“Note 11-1”). Note 11 is convertible
into common shares of the Company at the conversion ratio of $0.25 or 50% discount of the lowest closing price on the primary trading
market on which Company's common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower.
However, Note 11-1 is convertible after 6 months of the effective date of this Note, which is August 21, 2017. The Company determined
that the conversion features contained in Note 11-1 carrying value represents a freestanding derivative instrument that meets the
requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in
the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and will do so
again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded
as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional
paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



As a result, Note 11-1 was discounted in
the amount of $25,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $18,833. The balance of Note 11-1 was $0 without debt discount as of December
31, 2016. During the year ended December 31, 2017, the Company recorded interest expense related to Note 11 in amount of $3,260.
The balance of Note 11-1 was $25,000 with unamortized debt discount of $6,667 as of December 31, 2017. Note 11-1 is currently
in default and will incur a late fee of 5% and default interest rate of 20%.



On March 16, 2017, the Company received
$40,000 cash pursuant to the terms of Note 11, is matured on March 16, 2018 (“Note 11-2”). Note 11-2 is convertible
into common shares of the Company at the conversion ratio of $0.25 or 50% discount of the lowest closing price on the primary trading
market on which Company's common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower.
However, Note 11-2 is convertible after 6 months of the effective date of this Note, which is September 16, 2017. The Company determined
that the conversion features contained in Note 11-2 carrying value represents a freestanding derivative instrument that meets the
requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in
the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and will do so
again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded
as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional
paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.









44







As a result, Note 11-2 was discounted in
the amount of $40,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $23,556. The balance of Note 11-2 was $0 without debt discount as of December
31, 2016. During the year ended December 31, 2017, the Company recorded interest expense related to Note 11-2 in amount of $3,260.
The balance of Note 11-2 was $40,000 with unamortized debt discount of $16,444 as of December 31, 2017. Note 11-2 is currently
in default and will incur a late fee of 5% and default interest rate of 20%.



On April 6, 2017, the Company entered into
a 15% convertible promissory note with an unrelated entity in the amount $50,000 (“Note 12”). Note 12 is matured on
April 6, 2018, and unsecured. This Note is convertible into common shares of the Company at the conversion ratio of $0.25 or 50%
of the lowest trading price on the primary trading market on which Company's common stock is quoted for the last ten trading days
prior to the conversion date, whichever is lower. However, Note 12 is convertible after 6 months of the effective date of this
Note, which is October 6, 2017. The Company determined that the conversion features contained in Note 12 carrying value represents
a freestanding derivative instrument that meets the requirements for liability classification under ASC 815. As a result, the fair
value of the derivative financial instrument in the note is reflected in the Company’s balance sheet as a liability. The
fair value of the derivative financial instrument of the convertible note was measured using the Binomial-Lattice valuation model
at the inception date of the note and will do so again on each subsequent balance sheet date. Any changes in the fair value of
the derivative financial instruments are recorded as non-operating, non-cash income or expense at each balance sheet date. The
derivative liabilities will be reclassified into additional paid in capital upon conversion. See Footnote 10 for more information
on derivative liabilities.



On November 8, 2017, a portion of principal
of $6,503, plus $1,500 conversion cost reimbursement and $1,036 in interest, were converted into 1,095,636 shares of common stock
at a conversion price of $0.0825 per share.



As a result, Note 12 was discounted in
the amount of $50,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $30,392.. During the year ended December 31, 2017, the Company recorded interest
expense related to Note 12 in amount of $5,043. The balance of Note 12 was $43,478 with unamortized debt discount of $19,608 as
of December 31, 2017. Note 12 is currently in default and will incur a late fee of 5% and default interest rate of 20%.



On April 21, 2017, the Company entered
into a Securities Purchase Agreement with an unrelated entity, pursuant to which the purchasers agreed to pay the Company an aggregate
of up to $600,000 for an aggregate of up to 660,000 in Principal Amount of Notes. The first tranche of $330,000 was closed simultaneously
(“Note 13-1”). The proceeds of $300,000, net of $30,000 Original Issuance Discount, was received by the Company. Note
13-1 is convertible into common shares of the Company at the conversion ratio of 60% of the lowest trading price on the primary
trading market on which Company's common stock is quoted for the last ten trading days prior to the conversion date. The Company
determined that the conversion features contained in Note 13-1 carrying value represents a freestanding derivative instrument that
meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument
in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and will do so
again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded
as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional
paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



On October 23 2017, a portion of principal
of $5,000, plus $250 in interest, were converted into 383,772 shares of common stock at a conversion price of $0.013680 per share.



On November 14, 2017, a portion of principal
of $7,500, plus $375 in interest, were converted into 795,455 shares of common stock at a conversion price of $0.00990 per share.



On December 7, 2017, a portion of principal
of $10,000, plus $500 in interest, were converted into 714,286 shares of common stock at a conversion price of $0.01470 per share.



On December 27, 2017, a portion of principal
of $20,000, plus $1,000 in interest, were converted into 1,125,402 shares of common stock at a conversion price of $0.013680 per
share.









45







In addition, in connection with this Securities
Purchase Agreement, the Company granted purchasers 2,357,143 warrants with exercise price of $0.14 per share (“Warrants A”),
1,885,715 warrants with exercise price of $0.175 per share (“Warrants B”) and 1,571,429 warrants with exercise price
of $0.21 per share (“Warrants C”). Warrants A, B and C are exercisable on the grant date and expire in three years,
each of which represents 100% of the Principal Amount at the Closing divided by the respective exercise price.  The fair value
of these warrants was measured using the Black-Scholes valuation model at the grant date. Accordingly, the Company recorded warrant
expenses at the fair market value of $219,210 during the year ended December 31, 2017. See footnote 13 for more information.



As a result, Note 13-1 was discounted in
the amount of $330,000 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded interest expenses related to Note 13-1 in amount of $10,142 and amortization of debt discounts in amount of $293,375.
The balance of Note 13-1 was $287,500 with unamortized debt discount of $36,625 as of December 31, 2017. Note 13-1 is currently
in default.



On October 6, 2017, the Company entered
into a 12% convertible promissory note with an unrelated entity in the amount $82,500, which included an original issue discount
of $6,600, for net cash to the company of $75,900 (“Note 14”). Note 14 is matured on July 6, 2018, and unsecured. This
Note is convertible into common shares of the Company at the conversion ratio of 40% of the lowest trading price on the primary
trading market on which Company's common stock is quoted for the last ten trading days prior to the conversion date. Note 12 is
convertible after 9 months of the effective date of this Note, which is October 6, 2018. Neither derivative liability accounting
nor beneficial conversion feature will be considered before Note 14 is entitled for conversion. During the year ended December
31, 2017, the Company recorded interest expense related to Note 14 in amount of $2,365 and amortization of debt discounts in amount
of $2,079 for the original issue discount of $6,600. The balance of Note 14 was $82,500 unamortized debt discount of $4,521 on
the original issue discount as of December 31, 2017.



On November 2, 2017, the Company entered
into a 8% convertible promissory note with an unrelated entity in the amount $54,600, with original issue discount of $2,100 for
net cash to the company of $52,500 (“Note 15”). Note 15 is matured on November 2, 2018, and unsecured. This Note is
convertible into common shares of the Company at the conversion rate of 60% of the lowest trading price on the primary trading
market on which Company's common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower.
The Company determined that the conversion features contained in Note 15 carrying value represents a freestanding derivative instrument
that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial
instrument in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial
instrument of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and
will do so again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are
recorded as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified
into additional paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



As a result, Note 15 was discounted in
the amount of $54,600 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $8,948. The balance of Note 15 was $0 without debt discount as of December
31, 2016. During the year ended December 31, 2017, the Company recorded interest expense related to Note 15 in amount of $716.
The balance of Note 15 was $54,600 with unamortized debt discount of $45,652 as of December 31, 2017.



On November 27, 2017, the Company entered
into a 12% convertible promissory note with an unrelated entity in the amount $53,800 (“Note 16”). Note 16 is matured
on November 27, 2018, and unsecured. This Note is convertible into common shares of the Company at the conversion ratio of 60%
of the lowest trading price on the primary trading market on which Company's common stock is quoted for the last 20 trading days
prior to the conversion date. Note 14 is convertible immediately. The Company determined that the conversion features contained
in Note 16 carrying value represents a freestanding derivative instrument that meets the requirements for liability classification
under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s
balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using
the Binomial-Lattice valuation model at the inception date of the note and will do so again on each subsequent balance sheet date.
Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion. See
Footnote 10 for more information on derivative liabilities.









46







As a result, Note 16 was discounted in
the amount of $53,800 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $5,081. The balance of Note 16 was $0 without debt discount as of December
31, 2016. During the year ended December 31, 2017, the Company recorded interest expense related to Note 16 in amount of $610.
The balance of Note 16 was $53,800 with unamortized debt discount of $48,719 as of December 31, 2017.



On December 14, 2017, the Company entered
into a 8% convertible promissory note with an unrelated entity in the amount $43,478, with original issue discount of $4,378 for
net cash to the company of $40,000 (“Note 17”). Note 17 is matured on December 14, 2018, and unsecured. This Note is
convertible into common shares of the Company at the conversion rate of 60% of the lowest trading price on the primary trading
market on which Company's common stock is quoted for the last ten trading days prior to the conversion date, whichever is lower.
The Company determined that the conversion features contained in Note 17 carrying value represents a freestanding derivative instrument
that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial
instrument in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial
instrument of the convertible note was measured using the Binomial-Lattice valuation model at the inception date of the note and
will do so again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are
recorded as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified
into additional paid in capital upon conversion. See Footnote 10 for more information on derivative liabilities.



As a result, Note 17 was discounted in
the amount of $43,478 and amortized over the remaining life of this Note. During the year ended December 31, 2017, the Company
recorded amortization of debt discounts in amount of $2,053. The balance of Note 17 was $0 without debt discount as of December
31, 2016. During the year ended December 31, 2017, the Company recorded interest expense related to Note 17 in amount of $164.
The balance of Note 15 was $43,378 with unamortized debt discount of $41,425 as of December 31, 2017.



Convertible Notes Payable – Related Party



On April 21, 2008, the Company entered
into an unsecured Convertible Debenture (“Debenture 1”) with a shareholder in the amount of $150,000. Debenture 1 was
convertible into Common Shares of the Company at $0.03 per share at the option of the holder no earlier than August 21, 2008. Debenture
1 bore interest at 12% per year, matured in August 2009, and was unsecured. All principal and unpaid accrued interest was due at
maturity. In conjunction with the Debenture 1, the Company also issued warrants to purchase 5,000,000 shares of the Company’s
Common Stock at $0.03 per share. The warrants expired on April 20, 2013. As a result, of issued warrants, the Company recorded
a $150,000 debt discount during 2008 which has been fully amortized. The Company was in default on Debenture 1, and no warrants
had been exercised before expiration. The balance of Debenture 1 was $150,000 and $150,000 at December 31, 2017 and December 31,
2016, respectively. The Company recorded interest expense related to Debenture 1 in amount of $18,000 and $18,000 during the year
ended December 31, 2017 and 2016, respectively.



On March 11, 2009, the Company entered
into an unsecured Convertible Debenture (“Debenture 2”) with a shareholder in the amount of $15,000. Debenture 2 was
convertible into Common Shares of the Company at $0.03 per share at the option of the holder. Debenture 2 bore interest at 12%
per year, matured on March 11, 2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. The Company
was in default on Debenture 2. The balance of Debenture 2 was $15,000 and $15,000 at December 31, 2017 and December 31, 2016, respectively.
The Company recorded interest expense related to Debenture 2 in amount of $1,800 and $1,800 during the years ended December 31,
2017 and 2016, respectively.



Resulting from the tainted issue by the
derivative financial instrument of the convertible notes, The Company determined that the conversion features contained in Debenture
1 and Debenture 2 carrying value represents an embedded derivative instrument that meets the requirements for liability classification
under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s
balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using
the Binomial-Lattice valuation model at the inception date of the note and will do so again on each subsequent balance sheet date.
Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion. See
Footnote 10 for more information on derivative liabilities.









47







As of December 31, 2017, the Company’s
derivative liabilities are embedded derivatives associated with the Company’s convertible notes payable. Due to the Notes’
conversion feature, the actual number of shares of common stock that would be required if a conversion of the note as described
in Note 9 was made through the issuance of the Company’s common stock cannot be predicted. As a result, the conversion feature
requires derivative accounting treatment and will be bifurcated from the note and “marked to market” each reporting
period through the statement of operations.



The Company used the Binomial-Lattice valuation
model to measure the fair value of the derivative liabilities as $2,236,656 on December 31, 2017 and will subsequently remeasure
the fair value at the end of each period and record the change of fair value in the consolidated statement of operation during
the corresponding period.



The valuation of the derivative liabilities
attached to the convertible debt was arrived at through the use of the Lattice Bi-nominal Option Pricing Model and the following
assumptions:



|                        |  |  | Year Ended December 31, | 
|----------------------- |  |  | ----------------------- | 
|                        |  |  | 2017                    | 
|Volatility              |  |  | 111.09% - 220.65%       | 
|Risk-free interest rate |  |  | 0.51% - 1.76%           | 
|Expected term           |  |  | .02-1                   | 



For
the year-ended December 31, 2018, the Company has recorded derivative liabilities associated with convertible debt instruments,
as more fully discussed at Note 11.









|Note # | * | Issuance   |  | Maturity   | Rate |     |  | 12/31/2017
        Principal
        Balance |         | 2018 Add Principal |  | 2018 Principal
    Conversions |  | Shares issued upon
    conversion 2018 |              | 12/31/2018 Principal
    Balance |  | Total
        Interest
        expense for Year Ended 12/31/2018 |  | Accrued Interest
    as of 12/31/2018 |              |  | Conversion price
|------ | - | ---------- |  | ---------- | ---- | --- |  | -------------------------------------------- | ------- | ------------------ |  | ------------------------------ |  | -------------------------------------- | ------------ | -------------------------------- |  | ---------------------------------------------------------------- |  | ------------------------------------- | ------------ |  | ----------------
|3      | R | 9/7/2011   |  | 9/7/2016   |      | 8%  |  |                                              | 50,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 50,000.00    |  |                 
|3-1    | R | 11/17/2011 |  | 11/17/2016 |      | 8%  |  |                                              | 50,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 50,000.00    |  |                 
|4      |   | 4/17/2014  |  | 6/17/2014  |      | 8%  |  |                                              | –       |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | –            |  |                 
|5      |   | 3/12/2009  |  | 3/12/2014  |      | 0%  |  |                                              | 10,989  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 10,989.00    |  |                 
|6      |   | 7/29/2015  |  | 11/26/2015 |      | 8%  |  |                                              | –       |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|1      | R | 8/21/2008  |  | 8/21/2009  |      | 12% |  |                                              | 150,000 |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 150,000.00   |  |                 
|2      | R | 3/11/2009  |  | 4/29/2014  |      | 12% |  |                                              | 15,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 15,000.00    |  |                 
|7      |   | 2/9/2016   |  | 2/9/2017   |      | 15% |  |                                              | 11,500  |                    |  | 1,500.00                       |  |                                        | (4,515.00    | )                                |  | 1,200,000                                                        |  |                                       | 8,485.00     |  |                 
|7-1    |   | 10/28/2016 |  | 10/28/2017 |      | 15% |  |                                              | 25,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 25,000.00    |  |                 
|8      |   | 3/8/2016   |  | 3/8/2017   |      | 15% |  |                                              | 10,000  |                    |  | 1,500.00                       |  |                                        | (10,000.00   | )                                |  | 495,411                                                          |  |                                       | 1,499.97     |  |                 
|9      |   | 9/12/2016  |  | 9/12/2017  |      | 10% |  |                                              | 80,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 80,000.00    |  |                 
|10     |   | 1/24/2017  |  | 1/24/2018  |      | 10% |  |                                              | 55,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 55,000.00    |  |                 
|11     |   | 1/27/2017  |  | 1/27/2018  |      | 15% |  |                                              | 50,000  |                    |  | 11,500.00                      |  |                                        | (58,802.00   | )                                |  | 44,810,143                                                       |  |                                       | 2,698.00     |  |                 
|11-1   |   | 2/21/2017  |  | 2/21/2018  |      | 15% |  |                                              | 25,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 25,000.00    |  |                 
|11-2   |   | 3/16/2017  |  | 3/16/2018  |      | 15% |  |                                              | 40,000  |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 40,000.00    |  |                 
|12     |   | 4/6/2017   |  | 4/6/2018   |      | 15% |  |                                              | 43,497  |                    |  | 7,500.00                       |  |                                        | (19,000.00   | )                                |  | 19,286,260                                                       |  |                                       | 31,997.00    |  |                 
|13-1   |   | 4/21/2017  |  | 4/21/2018  |      | 5%  |  |                                              | 287,500 |                    |  | –                              |  |                                        | (115,500.00  | )                                |  | 15,191,152                                                       |  |                                       | 172,000.00   |  |                 
|14     |   | 10/6/2017  |  | 7/6/2018   |      | 12% |  |                                              | 82,500  |                    |  | 5,112.65                       |  |                                        | (87,612.65   | )                                |  | 66,879,492                                                       |  |                                       | –            |  |                 
|15     |   | 11/2/2017  |  | 11/2/2018  |      | 8%  |  |                                              | 54,600  |                    |  | –                              |  |                                        | (54,600.00   | )                                |  | 47,973,252                                                       |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|16     |   | 11/27/2017 |  | 11/27/2018 |      | 12% |  |                                              | 53,800  |                    |  | 115,917.00                     |  |                                        | (122,992.00) |                                  |  | 176,451,571                                                      |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|17     |   | 12/14/2017 |  | 12/14/2018 |      | 8%  |  |                                              | 43,478  |                    |  | –                              |  |                                        | (43,478.26)  |                                  |  | 8,248,054                                                        |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|18     |   | 1/19/2018  |  | 1/19/209   |      | 12% |  |                                              | –       |                    |  | 83,500.00                      |  |                                        | –            |                                  |  | –                                                                |  |                                       | 83,500.00    |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|19     |   | 2/21/2018  |  | 2/21/2019  |      | 8%  |  |                                              | –       |                    |  | 78,750.00                      |  |                                        | (78,750.00)  |                                  |  | 54,957,108                                                       |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|20     |   | 3/29/2018  |  | 3/29/2019  |      | 8%  |  |                                              | –       |                    |  | 100,000.00                     |  |                                        | (74,900.00   | )                                |  | 145,598,889                                                      |  |                                       | 25,100.00    |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|21     |   | 4/9/2018   |  | 4/9/2019   |      | 10% |  |                                              | –       |                    |  | 147,000.00                     |  |                                        | (16,794.00   | )                                |  | 60,041,407                                                       |  |                                       | 130,206.00   |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|22     |   | 7/10/2018  |  | 1/10/2021  |      | 12% |  |                                              | –       |                    |  | 1,040,000.00                   |  |                                        | –            |                                  |  | –                                                                |  |                                       | 1,040,000.00 |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|23     |   | 7/19/2018  |  | 12/31/2018 |      | 8%  |  |                                              | –       |                    |  | 43,478.26                      |  |                                        | (43,478.26   | )                                |  | 14,373,526                                                       |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|24     |   | 7/19/2018  |  | 12/31/2018 |      | 8%  |  |                                              | –       |                    |  | 43,478.26                      |  |                                        | (43,478.26)  |                                  |  | 67,478,054                                                       |  |                                       | –            |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|25     |   | 8/13/2018  |  | 2/13/2019  |      | 12% |  |                                              | –       |                    |  | 126,560.00                     |  |                                        | (48,246.00)  |                                  |  | 101,177,885                                                      |  |                                       | 78,314.00    |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|26     |   | 8/10/2017  |  | 1/27/2018  |      | 15% |  |                                              | –       |                    |  | –                              |  |                                        | –            |                                  |  | –                                                                |  |                                       | 20,000.00    |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|27-1-4 |   | 12/10/2018 |  | 12/10/2019 |      | 8%  |  |                                              | –       |                    |  | 108.000.00                     |  |                                        | –            |                                  |  | –                                                                |  |                                       | 108,000.00   |  |                 
|       |   |            |  |            |      |     |  |                                              |         |                    |  |                                |  |                                        |              |                                  |  |                                                                  |  |                                       |              |  |                 
|28     |   | 12/5/2018  |  | 12/5/2019  |      | 8%  |  |                                              | –       |                    |  | 100,000.00                     |  |                                        | –            |                                  |  | –                                                                |  |                                       | 100,000.00   |  |                 







|        | Convertible                   |  | $ | 861,875   |  |  | $ | 2,013,796 |  |  | $ | (822,146 | ) |  |  | 824,162,204 |  |  | $ | 2,026,800 |  |  | $ | 302,784 |  |  | $ | 173,873 |  | 
|------- | ----------------------------- |  | - | --------- |  |  | - | --------- |  |  | - | -------- | - |  |  | ----------- |  |  | - | --------- |  |  | - | ------- |  |  | - | ------- |  | 
|        | Non-Convertible               |  | $ | 10,989    |  |  | $ | –         |  |  | $ | –        |   |  |  | –           |  |  | $ | 10,989    |  |  | $ | –       |  |  | $ | –       |  | 
|SUMMARY | Related Party Convertible     |  | $ | 165,000   |  |  | $ | –         |  |  | $ | –        |   |  |  | –           |  |  | $ | 165,000   |  |  | $ | 20,075  |  |  | $ | 119,075 |  | 
|        | Related Party Non-Convertible |  | $ | 100,000   |  |  | $ | –         |  |  | $ | –        |   |  |  | –           |  |  | $ | 100,000   |  |  | $ | 8,111   |  |  | $ | 48,111  |  | 
|        | Total                         |  | $ | 1,137,864 |  |  | $ | 2,013,796 |  |  | $ | (822,146 | ) |  |  | 824,162,204 |  |  | $ | 2,302,789 |  |  | $ | 330,970 |  |  | $ | 341,059 |  | 

* R = Related Party









48













|11. | FAIR VALUE MEASUREMENT
|--- | ----------------------



The Company measures assets and liabilities
at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents
the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction
between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset
or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value
on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.



The Company adopted the provisions of Accounting
Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines
fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact
and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer
restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels
of inputs that may be used to measure fair value:



The following are the hierarchical levels
of inputs to measure fair value:



| | • | Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                                               
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | Level 2 Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
| | • | Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.                                                                                                                           



The carrying amounts of the Company’s
financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses,
certain notes payable and notes payable – related party, approximate their fair values because of the short maturity of these
instruments.



The Company recognizes its derivative liabilities
as level 3 and values its derivatives using the methods discussed in note 12. While the Company believes that its valuation methods
are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions
to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting
date. The primary assumptions that would significantly affect the fair values using terms in the notes that are subject to volatility
and market price of the underlying common stock of the Company.



As of December 31, 2018 and December 31,
2017, the Company did not have any derivative instruments that were designated as hedges.



The derivative liability as of December
31, 2017, in the amount of $2, 236,656 has a level 3 classification.



The following table provides a summary
of changes in fair value of the Company’s Level 3 financial liabilities for the year ended December 31, 2017:



|Derivative Liability, December 31, 2016            |  | – |           
|-------------------------------------------------- |  | - | ----------
|Day 1 Loss                                         |  |   | 1,287,744 
|Discount from derivatives                          |  |   | 535,878   
|Warrants reclassified to derivative liabilities    |  |   | 96,753    
|Tainting of Convertible notes                      |  |   | 1,972,999 
|Resolution of derivative liability upon conversion |  |   | (405,443  
|(Gain) on Change in Fair Value                     |  |   | (1,251,275
|                                                   |  |   |           
|Derivative Liability, December 31, 2017            |  |   | 2,236,656 









49







Fluctuations in the Company’s stock
price are a primary driver for the changes in the derivative valuations during each reporting period. During the year ended December
31, 2017, the Company’s stock price decreased from initial valuation and thus, the derivative liability also decreased.  Generally,
as the stock price decreases for each of the related convertible notes that have an embedded derivative liability, the value of
the derivative liability decreases. Stock price is one of the significant unobservable inputs used in the fair value measurement
of each of the Company’s convertible notes with an embedded derivative liability.



The Company used the Binomial-Lattice valuation
model to measure the fair value of the derivative liabilities as $2,236,656 on December 31, 2017, and will subsequently remeasure
the fair value at the end of each period, and record the change of fair value in the consolidated statement of operation during
the corresponding period. The Company recorded a net change of derivative liability of $36,469 for the year ended December 31,
2017.





The derivative liability as of December
31, 2018, in the amount of $1,870,625 has a level 3 classification.



The following table provides a summary
of changes in fair value of the Company’s Level 3 financial liabilities for the year ended December 31, 2018:



|Derivative Liability, December 31,2017             |  |  | 2,236,656  |  
|-------------------------------------------------- |  |  | ---------- | -
|Day 1 Loss                                         |  |  | 987,021    |  
|Discount from derivatives                          |  |  | 775,790    |  
|Resolution of derivative liability upon conversion |  |  | (1,770,997 | )
|Mark to market adjustment                          |  |  | (357,845   | )
|Derivative Liability, December 31, 2018            |  |  | 1,870,625  |  



The above tables also include derivative
liabilities related to warrants to purchase common stock of $3,795 at December 31, 2018. Net loss for the period included mark-to-market
adjustments relating to the liabilities held during the year ended December 31, 2018 in the amounts of $629,176.



Fluctuations in the Company’s stock
price are a primary driver for the changes in the derivative valuations during each reporting period. During the year ended December
31, 2018, the Company’s stock price decreased from initial valuation. As the stock price decreases for each of the related
derivative instruments, the value to the holder of the instrument generally decreases. Stock price is one of the significant unobservable
inputs used in the fair value measurement of each of the Company’s derivative instruments.



The valuation of the derivative liabilities
attached to the convertible debt was arrived at through the use of the Lattice Bi-nominal Option Pricing Model and the following
assumptions:



|                        |  |  | For the period ended      | 
|----------------------- |  |  | ------------------------- | 
|                        |  |  | December 31,
        2018 | 
|Volatility              |  |  | 182.91%-636.13%           | 
|Risk-free interest rate |  |  | 2.13% -2.72%              | 
|Expected term           |  |  | .04 - 5.14                | 



|12. | PAYROLL TAXES
|--- | -------------



The Company previously reported that it
has failed to remit payroll tax payments since 2006, as required by various taxing authorities. Payroll taxes and estimated penalties
were accrued in recognition of accrued salaries subsequently settled via stock issue and other agreements that did not result in
reportable or taxable payroll transactions. These accruals were reversed for prior years, and a similar estimated accrual established
for 2018 and 2017. As of December 31, 2018 and December 31, 2017, the Company estimated the amount of taxes, interest, and penalties
that the Company could incur as a result of payroll related taxes and penalties to be $9,865 and $2,047, respectively.









50







|13. | CAPITAL STOCK
|--- | -------------



2017



During the first quarter of 2017, the Company
filed Amended Articles of Incorporation with the Secretary of State of Florida to amend the rights and privileges for series of
Preferred Stock, and to authorize the issuance of Series I, F1, G1, H1, J1 and K1 Preferred Stock, which was effective on April
26, 2017.



Series A Preferred Stock



The Company has designated four shares
of preferred stock as Series A Preferred Stock (“Series A”), with a par value of $.0001 per share, of which one share
of preferred stock was issued and outstanding as of December 31, 2017 and December 31, 2016. Series A is authorized to have four
shares which do not bear dividends and converts to common shares at four times the sum of: all shares of Common Stock issued and
outstanding at time of conversion plus all shares of Series B Preferred Stock issued and outstanding at time of conversion divided
by the number of issued Class A shares at the time of conversion, and have voting rights four times the sum of: all shares of Common
Stock issued and outstanding at time of voting plus all shares of Series B Preferred Stocks issued and outstanding at time of voting
divided by the number of Class A shares issued at the time of voting.



Series B Preferred Stock



The Company has designated 3,000,000 shares
of preferred stock as Series B Preferred Stock (“Series B”), with a par value $0.001 and $2.50 price per share, of
which 2,798,205 shares of Series B preferred stock were issued and outstanding as of December 31, 2017. Shares of Series B are
anti-dilutive to reverse splits. The conversion rate of shares of Series B, however, would increase proportionately in the case
of forward splits, and may not be diluted by a reverse split following a forward split. Series B is awarded “Voting Right”
at the ratio of 1 vote per share owned. Each one share of Series B converts to 5 shares of Common Stock. The price of each share
of Series B may be changed either through a majority vote of the Board of Directors through a resolution at a meeting of the Board
of Directors, or through a resolution passed at an Action Without Meeting of the unanimous Board of Directors, until such time
as a listed secondary and/or listed public market develops for the shares.



During the year ended December 31, 2016,
591,997 shares of Series B Preferred Stock were converted into 2,959,985 shares of Common Stock of the Company per the preferred
shareholder’s instruction.



During the first quarter of 2017, 1,406,829
shares of Series B Preferred Stock were converted into 7,034,145 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



On March 30, 2017, the Company issued 24,000
shares of Series B Preferred Stock to settle legal expenses of $60,000. Based on the price of $.9075 per share for the Series B
Preferred Stock, which was determined by the market price of common stock at $.1815 per share on the issuance date multiplied by
the conversion ratio of 1:5, the fair value of the stock issuance of Series B Preferred Stock was $21,780, resulting in gain from
extinguishment of debt in amount of $38,220.



During the second quarter of 2017, 193,904
shares of Series B Preferred Stock were converted into 969,520 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



On June 27, 2017, the Company issued 15,906
shares of Series B Preferred Stock to 2 different consultants for services rendered. Based on the price of $.3995 per share for
the Series B Preferred Stock, which was determined by the market price of common stock at $.0799 per share on the issuance date
multiplied by the conversion ratio of 1:5, the fair value of the stock issuance of Series B Preferred Stock was $6,354, which was
recorded as stock based compensation during the six months ended June 30, 2017.









51







During the third quarter of 2017, 20,999
shares of Series B Preferred Stock were converted into 104,995 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



During the fourth quarter of 2017, 6,000
shares of Series B Preferred Stock were converted into 30,000 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



Series C Preferred Stock



The Company has designated 500 shares of
preferred stock as Series C Preferred Stock (“Series C”), with a par value of $.001 per share, of which 117 shares
were issued and outstanding as of December 31, 2017. Shares of Series C are non-dilutive to reverse splits. The conversion rate
of shares of Series C, however, would increase proportionately in the case of forward splits, and may not be diluted by a reverse
split following a forward split. Each one share of Series C converts to 100,000 shares of Common Stock. Each share of Series C
shall have one vote for any election or other vote placed before the shareholders of the Company. The price of each share of Series
C may be changed either through a majority vote of the Board of Directors through a resolution at a meeting of the Board of Directors,
or through a resolution passed at an Action Without Meeting of the unanimous Board of Directors, until such time as a listed secondary
and/or listed public market develops for the shares. Shares of Series C may not be converted into shares of Common Stock for a
period of: a) six months after purchase, if the Company voluntarily or involuntarily files public reports pursuant to Section 12
or 15 of the Securities Exchange Act of 1934; or b) 12 months if the Company does not file such public reports.



During the first quarter of 2017, 1 share
of Series C Preferred Stock were converted into 100,000 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



Blank Check Preferred Stock



As of December 31, 2017, the Company has
designated 100,000,000 shares of Blank Check Preferred Stock, of which 46,132,277 shares have been issued with Designations, Rights
& Privileges. The following Series have been assigned from the inventory of Blank Check Preferred Shares. The amount of undesignated
Blank Check Preferred Stock is 91,160,181 as of December 31, 2017.



Series D Preferred Stock



The Company has designated 800,000 shares
of preferred stock as Series D Preferred Stock (“Series D”), with a par value of $.001 per share, of which 400,000
shares were issued and outstanding as of December 31, 2017. Series D is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series D converts to 5 shares of Common Stock.



On June 30, 2014, the Company completed
the acquisition of Romeo’s NY Pizza. The Company issued 400,000 shares of Series D Preferred Stock (“Series D”)
as consideration for this acquisition. Based on the price of $2.50 per share, the acquisition consideration represents a $1,000,000
valuation. Shares of Series D are anti-dilutive to reverse splits. The conversion rate of shares of Series D, however, would increase
proportionately in the case of forward splits, and may not be diluted by a reverse split following a forward split. Each one share
of Series D shall have voting rights equal to one vote of Common Stock. With respect to all matters upon which stockholders are
entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series D shall
vote together with the holders of Common Stock, without regard to class, except as to those matters on which separate class voting
is required by applicable law or the Corporation’s Certificate of Incorporation or Bylaws. The initial price of each share
of Series D shall be $2.50.



There was no change in Series D Preferred
Stock during the year ended December 31, 2017 and 2016.



Series E Preferred Stock



The Company has designated 1,000,000 shares
of preferred stock as Series E Preferred Stock (“Series E”), with a par value of $.001 per share, of which 241,199
shares were issued and outstanding as of December 31, 2017. Series E is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series E converts to 5 shares of Common Stock.









52







On July 11, 2014, the Company completed
the acquisition of Edge View Properties, Inc. The Company issued 241,199 shares of Series E Preferred Stock (“Series E”)
as consideration for this acquisition. Based on the price of $2.50 per share, the acquisition consideration represents a $603,000
valuation. Shares of Series E are anti-dilutive to reverse splits. The conversion rate of shares of Series E, however, would increase
proportionately in the case of forward splits, and may not be diluted by a reverse split following a forward split. Each one share
of Series E shall have voting rights equal to one vote of Common Stock. With respect to all matters upon which stockholders are
entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series E shall
vote together with the holders of Common Stock, without regard to class, except as to those matters on which separate class voting
is required by applicable law or the Corporation’s Certificate of Incorporation or Bylaws. The initial price of each share
of Series E shall be $2.50.



There was no change in Series E Preferred
Stock during the year ended December 31, 2017 and 2016.



Series F Preferred Stock



The Company has designated 800,000 shares
of preferred stock as Series F Preferred Stock (“Series F”), with a par value of $.001 per share, of which 280,069
shares were issued and outstanding as of December 31, 2017. Series F is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series F converts to 5 shares of Common Stock.



There was no change in Series F Preferred
Stock during the year ended December 31, 2017 and 2016.



The Company has designated 800,000 shares
of preferred stock as Series F1 Preferred Stock (“Series F1”), with a par value of $.001 per share, of which 57,193
shares were issued and outstanding as of December 31, 2017. Series F1 is “non-Voting stock”. Each one share of Series
F1 converts to 5 shares of Common Stock.



On May 15, 2014, the Company completed
the acquisition of We Three, LLC (d/b/a Affordable Housing Initiative) (“AHI”). The Company issued 280,069 shares of
Series F Preferred Stock (“Series F”) as consideration for this acquisition. The fair value of We Three LLC was $1,000,000.
Based on the price of $2.50 per share for the Series F Preferred Stock, the fair value of the stock issuance of Series F Preferred
Stock was $700,174, resulting in the gain of $299,826 on investment in We Three, which was offset the goodwill impairment at the
end of 2014. In addition, the Company sold 156,503 shares of Series F-1 Preferred Stock (Series F-1”), to various investors
at a price of $2.50 per share, or totaled $391,248 in cash. Shares of Series F are anti-dilutive to reverse splits. The conversion
rate of shares of Series F, however, would increase proportionately in the case of forward splits, and may not be diluted by a
reverse split following a forward split. Each one share of Series F shall have voting rights equal to five votes of Common Stock.
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent,
the holders of the outstanding shares of Series F shall vote together with the holders of Common Stock, without regard to class,
except as to those matters on which separate class voting is required by applicable law or the Corporation’s Certificate
of Incorporation or Bylaws. The initial price of each share of Series F shall be $2.50.



During the first quarter of 2017, 31,997
shares of Series F1 Preferred Stock were converted into 159,985 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



During the second quarter of 2017, 42,640
shares of Series F1 Preferred Stock were converted into 213,200 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



During the third quarter of 2017, 41,318
shares of Series F1 Preferred Stock were converted into 206,600 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



Series G Preferred Stock



The Company has designated 20,000,000 shares
of preferred stock as Series G Preferred Stock (“Series G”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series G is awarded “Voting Right” at the ratio of 1 vote per share
owned. Each one share of Series G converts to 1.25 shares of Common Stock.









53







The Company has designated 10,000,000 shares
of preferred stock as Series G1 Preferred Stock (“Series G1”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series G1 is “non-Voting stock”. Each one share of Series G1 converts
to 1.25 shares of Common Stock.



There was no change in Series G and G1
Preferred Stock during the year ended December 31, 2017 and 2016.



Series H Preferred Stock



The Company has designated 4,859,379 shares
of preferred stock as Series H Preferred Stock (“Series H”), with a par value of $.001 per share, of which 4,859,379
shares were issued and outstanding as of December 31, 2017. Series H is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series H converts to 1.25 shares of Common Stock.



The Company has designated 3,000,000 shares
of preferred stock as Series H1 Preferred Stock (“Series H1”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series H1 is “non-Voting stock”. Each one share of Series H1 converts
to 1.25 shares of Common Stock.



On August 10, 2016, the Company completed
the acquisitions of FDR Enterprises, Inc.; Refreshment Concepts, LLC; and Repicci’s Franchise Group, LLC. (collectively referred
to as “Repicci’s Group”). Pursuant to the acquisition agreement, the Company agreed to issue 4,859,379 shares
of Series H Preferred Stock as consideration for the acquisition of Repicci’s Group. The combined book value of Repicci’s
Group was $(203,622). Based on the price of $.15 per share for the Series H Preferred Stock, which was determined by the market
price of common stock at $.12 per share on the acquisition date multiplied by the conversion ratio of 1:1.25, the fair value of
the stock issuance of Series H Preferred Stock was $728,907, resulting in the goodwill of $932,529 which was offset with loss on
goodwill impairment during the quarter ended December 31, 2017. The 4,859,379 shares of Series H Preferred Stock were issued during
the first quarter of 2017.

There was no change in Series H and H1
Preferred Stock during the year ended December 31, 2016.



Series I Preferred Stock



The Company has designated 20,000,000 shares
of preferred stock as Series I Preferred Stock (“Series I”), with a par value of $.001 per share, of which 203,655
shares was issued and outstanding as of December 31, 2017. Series I is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series I converts to 1.50 shares of Common Stock.



During the first quarter of 2017, one investor
submitted a subscription agreement to the Company regarding the purchase of 29,412 shares of the Company’s Series I Preferred
Stock by cash payment of $10,000, which was collected during the first quarter of 2017. During the second quarter of 2017, the
same investor submitted a subscription agreement to the Company regarding the purchase of 83,334 shares of the Company’s
Series I Preferred Stock by cash payment of $10,000. The transactions were independently negotiated between the Company and the
investor. The proceeds from the subscription agreement mitigated the Company’s cash pressure in short term. The total 112,746
shares of Series I Preferred Stock were issued during the second quarter of 2017.



During the second quarter of 2017, a related
party submitted a subscription agreement to the Company regarding the purchase of 90,909 shares of the Company’s Series I
Preferred Stock by cash payment of $10,000, which was collected during the second quarter of 2017. The transaction was independently
negotiated between the Company and the related party. The proceeds from the subscription agreement mitigated the Company’s
cash pressure in short term.



During the year ended December 31, 2017,
564,538 shares of Series I Preferred Stock were converted into 626,220 shares of Common Stock of the Company per the preferred
shareholder’s instruction.



Series J Preferred Stock



The Company has designated 10,000,000 shares
of preferred stock as Series J Preferred Stock (“Series J”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series J is awarded “Voting Right” at the ratio of 1 vote per share
owned. Each one share of Series J converts to 1.25 shares of Common Stock.









54







The Company has designated 7,500,000 shares
of preferred stock as Series J1 Preferred Stock (“Series J1”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of June 30, 2017. Series J1 is “non-Voting stock”. Each one share of Series J1 converts
to 1.25 shares of Common Stock.



There was no change in Series J and J1
Preferred Stock during the year ended December 31, 2017 and 2016.



Series K Preferred Stock



The Company has designated 9,607,840 shares
of preferred stock as Series K Preferred Stock (“Series K”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series K is awarded “Voting Right” at the ratio of 1 vote per share
owned. Each one share of Series K converts to 1.25 shares of Common Stock.



The Company has designated 35,000,000 shares
of preferred stock as Series K1 Preferred Stock (“Series K1”), with a par value of $.001 per share, of which 0 share
was issued and outstanding as of December 31, 2017. Series K1 is “non-Voting stock”. Each one share of Series K1 converts
to 1.25 shares of Common Stock.



There was no change in Series K and K1
Preferred Stock during the year ended December 31, 2017



2018



Series B Preferred Stock



During the year ended December 31, 2018,
the holder of 33,999 shares of Series B Preferred Stock exercised the option to convert into 169,995 shares of Common Stock of
the Company. Pre-reverse.



Series C Preferred Stock



During the year ended December 31, 2018,
the Company issued 2 shares of Series C Preferred stock to the prior owners of Edgeview Properties for services provided to the
Company.



Series H Preferred Stock



During the year ended December 31, 2018,
the holder of 4,859,469 shares of Series H Preferred Stock exercised the option to convert into 6,074,223 shares of Common Stock
of the Company. Pre-reverse.



Series I Preferred Stock



During the year ended December 31, 2018,
the holder of 203,655 shares of Series I Preferred Stock exercised the option to convert into 305,483 shares of Common Stock of
the Company. Pre-reverse.



During the year ended December 31, 2018,
the Company agreed to issued 125,000,000 shares each as a bonus to Daniel Thompson and Alex Cunningham, for their efforts related
to the significant acquisitions that occurred during the year. These shares have not been issued, but are deemed effective on the
grant date of November 27, 2018 and an accrual for stock based compensation of 100,000









55







Series K Preferred Stock



During the year ended December 31, 2018,
the Company issued 8,200,562 shares of series K Preferred
Stock to the prior owners of Red Rock Travel Group. The fair market value of the shares on the date of issuances was $0.0201 per
share, at a total cost of $175,000.



Series K-1 Preferred Stock



During the year ended December 31, 2018,
the Company issued 1,447,457 shares of Series K-1 Preferred Stock in settlement of a note payable. The fair market value of the
shares were valued at the face amount of the note of $100,000.



Series L Preferred Stock



During the year ended December 31, 2018,
the Company issued 98,307,692 shares of Series L Preferred Stock to the prior owner of Platinum Tax Defenders. The fair market
value of the shares on the date of issuances was $0.013 per share, at a total cost of $1,278,000.



Common Stock(pre reverse
1500:1 stock split)



2017



On February 10, 2017, the Company entered
into a consulting agreement with an unrelated party, pursuant to which the Company agreed to issue total 800,000 shares to the
consultant in four allotments, or 200,000 shares each, for consulting services related to marketing and business development. During
the first quarter of 2017, 250,000 shares were issued. The fair value of this stock issuance was determined by the fair value of
the Company’s Common Stock on the grant date, at a price of approximately $.235 per share. During the second quarter of 2017,
the difference of 150,000 shares were not issued as of the date of the Report. The fair value of the 150,000 shares was $15,600,
or approximately $.104 per share. During the third quarter of 2017, the third installment of 200,000 shares were not issued as
of the date of the Report. The fair value of the 200,000 shares was $27,475, or approximately $.1099 per share. Accordingly, the
Company recognized stock based compensation of $101,825 to the consolidated statements of operations for the year ended December
31, 2017 and recorded $43,075 as accrued expenses in the consolidated balance sheet as of December 31, 2017.



During the first quarter of 2017, the note
holder converted $1,785 principal, $2,102 processing cost reimbursement and accrued interest into 777,400 shares of common stock
at a conversion price of $0.005 per share.



During the first quarter of 2017, the note
holder converted $6,000 principal into 200,000 shares of common stock at a conversion price of $0.03 per share.



On January 24, 2017, the Company issued
173,585 shares of Common Stock to settle $34,717 due to the prior owner of Repicci’s Franchise Group LLC, pursuant to the
Acquisition Agreement, dated August 10, 2016. The fair value of this stock issuance was determined by the fair value of the Company’s
Common Stock on the grant date, at a price of approximately $0.24 per share, resulting in loss from extinguishment of debt
in amount of $6,943.



On January 24, 2017, the Company issued
2,010,490 shares of Common Stock to settle $402,098 due to the prior owner of Refreshment Concepts LLC, pursuant to the Acquisition
Agreement, dated August 10, 2016. The fair value of this stock issuance was determined by the fair value of the Company’s
Common Stock on the grant date, at a price of approximately $0.24 per share, resulting in loss from extinguishment of debt
in amount of $80,420.



On March 20, 2017, the Company issued 60,000
shares of Common Stock to settle consulting fees of $15,000. The fair value of this stock issuance was determined by the fair value
of the Company’s Common Stock on the grant date, at a price of approximately $0.1965 per share, resulting in gain from
extinguishment of debt in amount of $3,210.









56







During the three months ended March 31,
2017, one investor submitted a subscription agreement to the Company regarding the purchase of 100,000 shares of Common Stock by
cash payment of $10,000. The transaction was independently negotiated between the Company and the investor. The proceeds from the
subscription agreement mitigated the Company’s cash pressure in short term.



On July 11, 2017 the Company’s Board
of Directors approved a resolution to increase the authorized common shares to 500,000,000 at par value $0.001.



During the second quarter of 2017, the
Company issued 100,000 shares of Common Stock to an attorney for legal services. The fair value of this stock issuance was determined
by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.1145 per share. Accordingly,
the Company recognized stock based compensation of $11,450 to the consolidated statements of operations for the year ended December
31, 2017.



During the second quarter of 2017, the
Company issued 906,907 shares of Common Stock to We Three, a related party, for services rendered. The fair value of this stock
issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately
$.0799 per share. Accordingly, the Company recognized stock based compensation of $90,691 to the consolidated statements of operations
for the year ended December, 2017.



During the second quarter of 2017, the
Company redeemed 500,000 shares from a shareholder for a cash payment of $2,500. The 500,000 shares were returned to the treasury
for cancellation and the $2,500 was recorded as accrued liabilities in the consolidated balance sheet as of December 31, 2017.



During the second quarter of 2017, the
note holders converted $18,853 principal, including $3,000 processing cost reimbursement, and $12,317 accrued interest into 1,039,000
shares of common stock at a conversion price of $0.03 per share.



During the second quarter of 2017, the
note holders converted $18,147 principal, including $2,995 in fees and accrued interest into 704,733 shares of common stock at
a conversion price of $0.03 per share.



On September 15, 2017, the Company issued
19,000,000 shares of Common Stock to settle $1,415,600 in accrued salaries to current and former officers of the Company. Additionally,
the Company issued 1,000,000 shares to a former employee as a one time bonus, valued at $70,000. The fair value of this stock issuance
was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $0.07 per share.
Accordingly, the Company reduced its accrued expenses by $1,415,600 and stock based compensation by $70,000. The difference in
the fair market value of the shares and the related expenses was recorded to additional paid in capital.



During the quarter ended December 31, 2017,
the Company issued 6,761,454 shares of common stock for the conversion of unpaid convertible notes principal and processing cost
reimbursement and interest in the amount of $81,664 at a prices ranging from $0.00825 to $0.01470 per share.



During the fourth quarter of 2017, 6,000
shares of Series B Preferred Stock were converted into 30,000 shares of Common Stock of the Company per the preferred shareholder’s
instruction.



During the fourth quarter of 2017, the
company issued 1,508 shares of Common Stock for a correction of a prior period conversion of Series B Preferred Stock.



During the quarter ended September 30,
2017, the Company negotiated an agreement to cancel 500,000 shares previously issued to a third party consultant for services and
to issue 25,000 shares of common stock for services rendered. The fair value of this stock issuance was determined by the fair
value of the Company’s Common Stock on the grant date, at a price of approximately $0.0699 per share. Accordingly, the
Company calculated the stock based compensation of $1,748 at its fair value and included it in the consolidated statements of operations
for the year ended December 31, 2017 and reduced selling general and administrative expenses by $500.









57







During the quarter ended December 31, 2017,
the Company negotiated an agreement to cancel 500,000 shares previously issued to a third party consultant for services and to
issue 25,000 shares of common stock for services rendered. The fair value of this stock issuance was determined by the fair value
of the Company’s Common Stock on the grant date, at a price of approximately $0.050 per share. Accordingly, the Company
calculated the stock based compensation of $1,250 at its fair value and included it in the consolidated statements of operations
for the year ended December 31, 2017 and reduced selling general and administrative expenses by $500.



2018



See Note 11 for further issuance information
related to conversion of indebtedness to common stock.



During the year ended December 31, 2018,
the Company canceled 1,000,000 shares previously issued and issued 3,886,930 shares to third-party consultants. The fair market
value of the shares on the date of issuances was $0.0186 to $0.0247 per share, at a total cost of $86,751. The Company also issued
3,428,571 shares in settlement of $240,000 in liabilities owed to a former officer of the Company.



|14. | WARRANTS
|--- | --------



Pursuant to the same consulting agreement,
dated February 10, 2017, in addition to the 800,000 shares of common stock, the Company agreed to grant total 800,000 warrants
to the consultant for consulting services related to marketing and business development and are exercisable on the grant date and
expire in three years. The initial allotment of 200,000 warrants were granted during the first quarter of 2017. The second allotment
of 200,000 warrants were granted during the second quarter of 2017. The third allotment of 200,000 warrants were granted during
the third quarter of 2017. The fourth allotment of 200,000 warrants were granted during the fourth quarter of 2017.



The
Company determined that the warrants were tainted  and therefore
the carrying value represents an embedded derivative instrument that meets the requirements for liability classification under
ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s balance
sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using the Black-Scholes
valuation model at the grant dates of the agreement(February 10, 2017, May 10, 2017, August 10, 2017 and December 10, 2017.) and
will do so again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are
recorded as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified
into additional paid in capital upon conversion.



|                  |  | Year Ended  December 31, |       
|----------------- |  | ------------------------ | ------
|Initial Valuation |  |                          | 96,753
|Ending Value      |  |                          | 47,559



The table below sets forth the assumptions
for Black-Scholes valuation model on each initial date and December 31, 2017



|                        |  | Year EndedDecember 31, 2017 | 
|----------------------- |  | --------------------------- | 
|Volatility              |  | 274% - 314%                 | 
|Risk-free interest rate |  | 0.147 - 0.198               | 
|Expected term           |  | 2.11 - 3.0                  | 



During the year ended December 31, 2018,
the Company entered into a note agreement for $1,040,000, as part of the note agreement the Company agreed to issue the noteholder
warrants exercisable for 4,000,000 shares of common stock with a term of eight years, at an exercise price of $0.04. The terms
also include a full-ratchet anti-dilution protection provision and therefore the Company has deemed them to be a derivative liability.



|                  |  | Year Ended  December 31, 2018 |       
|----------------- |  | ----------------------------- | ------
|Initial Valuation |  |                               | 89,359
|Ending Value      |  |                               | 3,795 









58







The table below sets forth the assumptions
for Black-Scholes valuation model on each initial date and December 31, 2018



|                        |  | Year EndedDecember 31, 2018 | 
|----------------------- |  | --------------------------- | 
|Volatility              |  | 213% - 494%                 | 
|Risk-free interest rate |  | 0.147 - 0.269               | 
|Expected term           |  | 2.11 – 2.53                 | 



Accordingly, the Company recorded warrant
expenses of $133,123 during the year ended December 31, 2018.



On April 21, 2017, the Company entered
into a Securities Purchase Agreement with an unrelated entity, pursuant to which the purchasers agreed to pay the Company an aggregate
of up to $600,000 for an aggregate of up to 660,000 in Principal Amount of Notes. The first tranche of $330,000 was closed simultaneously
(“Note 13-1”). The proceeds of $300,000, net of $30,000 Original Issuance Discount, was received by the Company.



In addition, in connection with this Securities
Purchase Agreement, the Company granted purchasers 2,357,143 warrants with exercise price of $0.14 per share (“Warrants A”),
1,885,715 warrants with exercise price of $0.175 per share (“Warrants B”) and 1,571,429 warrants with exercise price
of $0.21 per share (“Warrants C”). Warrants A, B and C are exercisable on the grant date and expire in three years,
each of which represents 100% of the Principal Amount at the Closing divided by the respective exercise price.



The fair value of these warrants was measured
using the Black-Scholes valuation model at the grant date. The table below sets forth the assumptions for Black-Scholes valuation
model on April 21, 2017.



|ReportingDate | FairValue | Term(Years) | ExercisePrice | MarketPrice onGrant Date | VolatilityPercentage | Risk-freeRate
|------------- | --------- | ----------- | ------------- | ------------------------ | -------------------- | -------------
|4/21/2017     | $814,000  | 3           | $0.14 - $0.21 | $0.14                    | 676%                 | 0.0177       



Accordingly, the Company recorded warrant
expenses at the fair market value of $219,210 during the year ended December 31, 2017.



The following tables summarize all warrant
outstanding as of December 31, 2018, and the related changes during this period. The warrants expire three years from grant date,
which as of December 31, 2018 is 3.31 years. The intrinsic value of the warrants as of December 31, 2018 was $-0-.



|                                          |  | Number of  Warrants |           |  | Weighted Average  Exercise  Price |  
|----------------------------------------- |  | ------------------- | --------- |  | --------------------------------- | -
|Stock Warrants                            |  |                     |           |  |                                   |  
|Balance at January 1, 2018                |  |                     | 6,614,287 |  |                                   | $
|Granted                                   |  |                     | –         |  |                                   |  
|Exercised                                 |  |                     | –         |  |                                   |  
|Expired                                   |  |                     | –         |  |                                   |  
|Balance at December 31, 2018              |  |                     | 6,614,287 |  |                                   |  
|Warrants Exercisable at December 31, 2018 |  |                     | 6,614,287 |  |                                   | $









59







15. STOCK OPTIONS



The Company agreed to grant Mr. Roberts
stock options for a minimum of 300,000 shares of the Company's common stock at an exercise price of 50% of the current last ten
(10) day stock average per share, and 600,000 shares of common stock as a key officer employment incentive to be earned and vested
on a pro rata basis at 25,000 shares per month for twenty-four (24) months. The fair value of both 300,000 options and 600,000
shares were determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $0.226
per share. Accordingly, the accrued expense was $135,600 as of December 31, 2017. On August 8, 2017, Mr. Roberts accepted the offer
from the Company to issue 3,000,000 common shares to supersede all his options and warrants in the employment agreement.



After the cancellation of the above transaction,
there were no stock options issued as of December 31, 2017 or as of December 31, 2018.





|16. | COMMITMENTS AND CONTINGENCIES
|--- | -----------------------------



Operating Leases



The Company had operating lease expense
of $242,567 and $176,062 for the year ended December 31, 2018 and 2017, respectively, consisting of
the followings.



|                  |  | For the year ended |        
|----------------- |  | ------------------ | -------
|                  |  | December 31, 2018  |        
|                  |  |                    |        
|Restaurants       |  | $                  | 72,121 
|Lot               |  |                    | 73,782 
|Office            |  |                    | 96,664 
|Equipment Rentals |  |                    | –      
|Total             |  | $                  | 242,567



The Company has property leases that are
renewable on an annual basis, with no long term property leases.



We have an employment
agreement, renewed May 15, 2014, with the Chairman, Mr. Thompson amended on July 27, 2017 and effective on January 1, 2017, whereby
we provide for compensation of $25,000 per month.



We have an employment agreement with the
Chief Executive Officer, Mr. Cunningham, amended on July 27, 2017 and effective on January 1, 2017, whereby we provide for compensation
of $25,000 per month.



We have an employment agreement with the
Chief Operating Officer, Mr. Roberts, effective June 2016, whereby we provide for compensation of $10,000 per month.



There are no other stock option plans,
retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein.



16. INCOME TAXES



At December 31, 2018, the Company had
federal and state net operating loss carry forwards of approximately $15,071,165 that expire in various years through the year
2038.



Due to operating losses, there is no provision
for current federal or state income taxes for the years ended December 31, 2018 and 2017.









60







Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amount used for federal and state income tax purposes.



The Company’s deferred tax asset
at December 31, 2018 and 2017 consists of net operating loss carry forwards calculated using federal and state effective tax rates
equating to approximately $3,815,102 and $3,815,102, respectively, less a valuation allowance in the amount of approximately $3,815,102
and $3,815,102, respectively. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset
by a valuation allowance in both 2018 and 2017. The valuation allowance increased by approximately $811,314 for the year ended
December 31, 2018.



The Company’s total deferred tax
asset as of December 31, 2018 and 2017 is as follows:



|                       |  | 2018 |            |   | 2017 |  
|---------------------- |  | ---- | ---------- | - | ---- | -
|Deferred tax assets    |  | $    | 3,815,102  |   |      | $
|Valuation allowance    |  |      | (3,815,102 | ) |      |  
|                       |  |      |            |   |      |  
|Net deferred tax asset |  | $    | –          |   |      | $



The reconciliation of income taxes computed at the federal and
state statutory income tax rate to total income taxes for the years ended December 31, 2018 and 2017 is as follows:



Repicci,
one of our operating segments, recorded income tax payable of $9,865 as of December 31, 2018 and $15,865 as of December 31, 2017.



On December 22, 2017, the U.S. Tax Cuts
and Jobs Act (the “Tax Reform Act”) was signed into law by President Trump. The Tax Reform Act significantly revised
the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January
1, 2018, while also repealing the deduction for domestic production activities, implementing a territorial tax system and imposing
a repatriation tax on deemed repatriated earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation
be recognized in the period in which the law was enacted. The provisional amounts incorporate assumptions made based upon the Company’s
current interpretation of the Tax Reform Act and may change as the Company receives additional clarification and implementation
guidance.



|17. | SEGMENT REPORTING
|--- | -----------------



The Company has six reportable operating
segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures
about Segments of an Enterprise and Related Information: (1) Mobile home lease (We Three), (2) Company-owned Pizza Restaurants
(Romeo’s NY Pizza), (3) “Repicci’s Italian Ice” franchised stores.(4) Travel related services (Red Rock
Travel Group, and (5) Tax resolution services (Platinum Tax Defenders). These segments are a result of differences in the nature
of the products and services sold. Corporate administration costs, which include, but are not limited to, general accounting, human
resources, legal and credit and collections, are partially allocated to the three operating segments. Other revenue consists of
nonrecurring items.



The mobile home lease segment establishes
mobile home business as an option for a homeowner wishing to avoid large down payments, expensive maintenance costs, monthly mortgage
payments and high property taxes. If bad credit is an issue preventing people from purchasing a traditional house, the Company
will provide a financial leasing option with "0" interest on the lease providing a "lease to own" option for
their family home.



The Company-owned Pizza Restaurant segment
includes sales and operating results for all Company-owned restaurants. Assets for this segment include equipment, furniture and
fixtures for the Company-owned restaurants.



Repicci’s Group offers franchisees
for the operation of “Repicci’s Italian Ice” franchises. These franchised stores specialize in the distribution
of nonfat frozen confections.



The number of franchise agreements in force
as of December 31, 2018 was forty-five (45), seven (7) new state of the art “mobile” units.



Platinum Tax Defenders provides tax resolution
services to individuals and companies that have federal and state tax liabilities. The company collects fees based on efforts to
negotiate and assist in the settlement of outstanding tax debts.



Red Rock Travel Group is a travel services
company that provides discounted travel packages. The packages are marketed in conjunction with interval ownership properties and
the company earns fees for scheduling the client visits and commissions on travel packages sold.



|                                      |  | For the year ended |           
|------------------------------------- |  | ------------------ | ----------
|                                      |  | December 31, 2018  |           
|Revenues:                             |  |                    |           
|We Three                              |  | $                  | 186,096   
|Romeo’s NY Pizza                      |  |                    | 602,866   
|Repicci's Group                       |  |                    | 538,156   
|Platinum Tax                          |  |                    | 899,748   
|Red Rock Travel                       |  |                    | 147,072   
|Other                                 |  |                    | –         
|Consolidated revenues                 |  | $                  | 2,373,938 
|                                      |  |                    |           
|Cost of Sales:                        |  |                    |           
|We Three                              |  | $                  | 182,690   
|Romeo’s NY Pizza                      |  |                    | 446,880   
|Repicci's Group                       |  |                    | 503,478   
|Platinum Tax                          |  |                    | 337,986   
|Red Rock Travel                       |  |                    | 156,664   
|Other                                 |  |                    | –         
|Consolidated cost of sales            |  | $                  | 1,627,698 
|                                      |  |                    |           
|Income (Loss) before taxes            |  |                    |           
|We Three                              |  | $                  | (1,468    
|Romeo’s NY Pizza                      |  |                    | 28,336    
|Repicci’s Group                       |  |                    | (10,395   
|Platinum Tax                          |  |                    | (168,851  
|Red Rock Travel                       |  |                    | (853,768  
|Others                                |  |                    | (5,259,106
|Consolidated gain/(loss) before taxes |  | $                  | (6,265,251









61







|                 |  | As of             |           |  | As of             |  
|---------------- |  | ----------------- | --------- |  | ----------------- | -
|                 |  | December 31, 2018 |           |  | December 31, 2017 |  
|Assets:          |  |                   |           |  |                   |  
|We Three         |  | $                 | 318,285   |  |                   | $
|Romeo’s NY Pizza |  |                   | 108,908   |  |                   |  
|Repicci’s Group  |  |                   | 169,030   |  |                   |  
|Platinum Tax     |  |                   | 60,578    |  |                   |  
|Red Rock Travel  |  |                   | 8,114     |  |                   |  
|Others           |  |                   | 2,676,152 |  |                   |  
|Combined assets  |  | $                 | 3,341,066 |  |                   | $



|18. | RESTATEMENT
|--- | -----------



The Company has restated its previously
issued Consolidated Statements of Operations for the years ended December 31, 2017 to correct for an error in its presentation
previously filed in error by our EDGAR filing agent. Changes to deposits of $10,000 was due to a correction identified. Changes
to accounts payable $13,500, accrued expenses $46,380 and accrued expenses – related parties $22,250 were are related to
reclassifications identified by the Company and an additional expense not previously recorded. Changes to notes payable-related
party $24,061, convertible notes payable – net $18,042 and derivative liability $(182,680) were the result of changes the
Company identified during the audit. Changes to sales of ice cream $(118,887), cost of sales for ice cream $75,501, depreciation
$(86,154) are related to the change in other income $108,234, for a reclass of certain event sales of ice cream and reclass of
depreciation expense from operating expense to cost of sales. Loss on disposal of assets $38,584 were related to the closure of
the Romeo’s stores, selling, general and administrative $3,495 were related to reclass of certain expenses identified by
the Company during our audit. Change in value of derivative liability $1,349,586 and amortization of debt discounts $23,170 were
to due revaluations by the Company for certain convertible debts. Changes in loss from extinguishment of $76 and interest expense
of $(76) related to reclass of certain expenses identified by the Company during our audit. All changes to cash flow are a result
of changes noted above for assets and statements of operations and reclassifications of certain accounts identified by the Company
during our audit.





62







|                                                                                                                                                                                    |  | December 31, 2017 |             |   | Adjustment |   |            | As Restated | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------- | - | ---------- | ----------- | 
|ASSETS                                                                                                                                                                              |  |                   |             |   |            |   |            |             | 
|Current assets                                                                                                                                                                      |  |                   |             |   |            |   |            |             | 
|Cash                                                                                                                                                                                |  |                   | 68,986      |   |            |   | (0         | )           | 
|Accounts receivable-net                                                                                                                                                             |  |                   | 63,061      |   |            |   | 0          |             | 
|Inventory-net                                                                                                                                                                       |  |                   | 46,928      |   |            |   | –          |             | 
|Prepaid and other                                                                                                                                                                   |  |                   | 11,631      |   |            |   | (0         | )           | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Total current assets                                                                                                                                                                |  |                   | 190,606     |   |            |   | (0         | )           | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Property and equipment, net of accumulated depreciation of $1,030,232 and $838,736, respectively                                                                                    |  |                   | 491,473     |   |            |   | 1          |             | 
|Land                                                                                                                                                                                |  |                   | 603,000     |   |            |   | –          |             | 
|Intangible assets, net                                                                                                                                                              |  |                   | 15,561      |   |            |   | –          |             | 
|Deposits                                                                                                                                                                            |  |                   | 6,660       |   |            |   | 10,000     |             | 
|Due from related party                                                                                                                                                              |  |                   | 1,820       |   |            |   | –          |             | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Total assets                                                                                                                                                                        |  |                   | 1,309,061   |   |            |   | 10,000     |             | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|LIABILITIES AND SHAREHOLDERS' DEFICIENCY                                                                                                                                            |  |                   |             |   |            |   |            |             | 
|Current liabilities                                                                                                                                                                 |  |                   |             |   |            |   |            |             | 
|Accounts payable                                                                                                                                                                    |  |                   | 193,239     |   |            |   | 13,500     |             | 
|Accrued expenses                                                                                                                                                                    |  |                   | 291,826     |   |            |   | (46,380    | )           | 
|Accrued expenses - related parties                                                                                                                                                  |  |                   | 472,750     |   |            |   | 22,500     |             | 
|Interest payable                                                                                                                                                                    |  |                   | 312,192     |   |            |   | –          |             | 
|Accrued payroll taxes                                                                                                                                                               |  |                   | 2,047       |   |            |   | –          |             | 
|Due to officers and shareholders                                                                                                                                                    |  |                   | 77,640      |   |            |   | –          |             | 
|Line of credit                                                                                                                                                                      |  |                   | 15,498      |   |            |   | –          |             | 
|Common stock to be issued                                                                                                                                                           |  |                   | 500         |   |            |   | –          |             | 
|Series H preferred shares to be issued                                                                                                                                              |  |                   | –           |   |            |   | –          |             | 
|Notes payable, unrelated party                                                                                                                                                      |  |                   | 215,979     |   |            |   | –          |             | 
|Notes payable - related party                                                                                                                                                       |  |                   | 120,128     |   |            |   | 24,061     |             | 
|Convertible notes payable, net of debt discounts of $263,536 and $21,833, respectively                                                                                              |  |                   | 598,339     |   |            |   | 18,042     |             | 
|Convertible notes payable - related party                                                                                                                                           |  |                   | 165,000     |   |            |   | –          |             | 
|Derivative Liability                                                                                                                                                                |  |                   | 2,419,337   |   |            |   | (182,680   | )           | 
|Income Tax payable                                                                                                                                                                  |  |                   | 15,865      |   |            |   | –          |             | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Total current liabilities                                                                                                                                                           |  |                   | 4,900,340   |   |            |   | (150,958   | )           | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Total liabilities                                                                                                                                                                   |  |                   | 4,900,340   |   |            |   | (150,958   | )           | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Shareholders' (deficit)                                                                                                                                                             |  |                   |             |   |            |   |            |             | 
|Preferred stock                                                                                                                                                                     |  |                   | 8,849       |   |            |   | –          |             | 
|Common stock; 500,000,000 shares authorized with $0.001 par value; 64,414,091 and 25,223,578 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively |  |                   | 66,031      |   |            |   | –          |             | 
|Additional paid-in capital                                                                                                                                                          |  |                   | 46,795,517  |   |            |   | (1,187,366 | )           | 
|Accumulated deficit                                                                                                                                                                 |  |                   | (50,461,676 | ) |            |   | 1,348,324  |             | 
|Total shareholders' deficiency                                                                                                                                                      |  |                   | (3,591,279  | ) |            |   | 160,958    |             | 
|                                                                                                                                                                                    |  |                   |             |   |            |   |            |             | 
|Total liabilities and shareholders' deficiency                                                                                                                                      |  | $                 | 1,309,061   |   |            | $ | 10,000     |             | 









63









|                                                                                               |  | December 31, 2017 |            |   | Adjustment |   |           | As Restated | 
|---------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------- | - | --------- | ----------- | 
|REVENUE                                                                                        |  |                   |            |   |            |   |           |             | 
|Rental income                                                                                  |  | $                 | 193,601    |   |            |   |           |             | 
|Sales of pizza                                                                                 |  |                   | 592,445    |   |            |   |           |             | 
|Sales of ice cream                                                                             |  |                   | 954,855    |   |            |   | (480,309  | )           | 
|Sales to franchisees                                                                           |  |                   |            |   |            |   |           |             | 
|Ice cream                                                                                      |  |                   | –          |   |            |   | 131,487   |             | 
|Franchise fees                                                                                 |  |                   | –          |   |            |   | 81,435    |             | 
|Royalty fees                                                                                   |  |                   | –          |   |            |   | 19,500    |             | 
|Truck sales and build out                                                                      |  |                   | –          |   |            |   | 129,000   |             | 
|Other                                                                                          |  |                   | 3,754      |   |            |   | –         |             | 
|Total revenue                                                                                  |  |                   | 1,744,655  |   |            |   | (118,887  | )           | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|COST OF SALES (Exclusive of depreciation not related to Cost of Sales, shown separately below) |  |                   |            |   |            |   |           |             | 
|Rental business                                                                                |  |                   | 155,416    |   |            |   | –         |             | 
|Pizza restaurants                                                                              |  |                   | 429,779    |   |            |   | –         |             | 
|Ice cream stores                                                                               |  |                   | 771,213    |   |            |   | 75,500    |             | 
|Sales to franchisees                                                                           |  |                   | –          |   |            |   | –         |             | 
|Ice cream                                                                                      |  |                   | –          |   |            |   | –         |             | 
|Franchise fees                                                                                 |  |                   | –          |   |            |   | –         |             | 
|Royalty fees                                                                                   |  |                   | –          |   |            |   | –         |             | 
|Truck sales and build out                                                                      |  |                   | –          |   |            |   | –         |             | 
|Other                                                                                          |  |                   | –          |   |            |   | –         |             | 
|Total cost of sales                                                                            |  |                   | 1,356,408  |   |            |   | 75,501    |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|GROSS MARGIN                                                                                   |  |                   | 388,247    |   |            |   | (194,388  | )           | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|OPERATING EXPENSES                                                                             |  |                   |            |   |            |   |           |             | 
|Depreciation and amortization expense                                                          |  |                   | 246,325    |   |            |   | (86,154   | )           | 
|Goodwill Impairment                                                                            |  |                   | 932,529    |   |            |   | –         |             | 
|Loss on disposal of assets                                                                     |  |                   | –          |   |            |   | 38,584    |             | 
|Selling, general and administrative                                                            |  |                   | 2,051,620  |   |            |   | 3,495     |             | 
|                                                                                               |  |                   |            |   |            |   | –         |             | 
|Total operating cost                                                                           |  |                   | 3,230,474  |   |            |   | (44,075   | )           | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|(LOSS) FROM OPERATIONS                                                                         |  |                   | (2,842,227 | ) |            |   | (150,313  | )           | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|OTHER INCOME (EXPENSE)                                                                         |  |                   |            |   |            |   |           |             | 
|Other Income                                                                                   |  |                   | 0          |   |            |   | 108,234   |             | 
|(Loss) Gain from extinguishment of debt                                                        |  |                   | (46,009    | ) |            |   | 76        |             | 
|Change in value of derivative liability                                                        |  |                   | (1,386,055 | ) |            |   | 1,349,586 |             | 
|Interest expense                                                                               |  |                   | (111,606   | ) |            |   | (76       | )           | 
|Amortization of debt discounts                                                                 |  |                   | (596,775   | ) |            |   | 23,170    |             | 
|Loss on disposal of assets                                                                     |  |                   | (17,647    | ) |            |   | 17,647    |             | 
|Loss on Impairment of Goodwill                                                                 |  |                   | –          |   |            |   | –         |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|Total other income (expenses)                                                                  |  |                   | (2,158,092 | ) |            |   | 1,498,637 |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|(LOSS) FOR THE PERIOD                                                                          |  | $                 | (5,000,319 | ) |            | $ | 1,348,324 |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|                                                                                               |  |                   |            |   |            |   |           |             | 
|(LOSS) PER COMMON SHARE                                                                        |  |                   |            |   |            |   |           |             | 
|-BASIC AND DILUTED                                                                             |  | $                 | (180.00    | ) |            | $ | 222.51    |             | 







64









|                                                                                                   |  | December 31, 2017 |            |   | Adjustment |   |            | As Restated | 
|-------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------- | - | ---------- | ----------- | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                               |  |                   |            |   |            |   |            |             | 
|Net (Loss)                                                                                         |  | $                 | (5,000,319 | ) |            | $ | 1,348,324  |             | 
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |                   |            |   |            |   |            |             | 
|Depreciation                                                                                       |  |                   | 268,211    |   |            |   | (40,252    | )           | 
|Loss from disposal of fixed assets                                                                 |  |                   | 17,647     |   |            |   | 20,937     |             | 
|(Gain) from debt forgiveness                                                                       |  |                   | 46,009     |   |            |   | (46,009    | )           | 
|Loss from impairment of goodwill                                                                   |  |                   | 932,529    |   |            |   | –          |             | 
|(Gain) on settlement of liabilities                                                                |  |                   | –          |   |            |   | (38,220    | )           | 
|Loss on settlement of note payable - related party                                                 |  |                   | –          |   |            |   | 84,153     |             | 
|Amortization of loan discount                                                                      |  |                   | 596,775    |   |            |   | (23,170    | )           | 
|Change in value of derivative liability                                                            |  |                   | 1,386,055  |   |            |   | (1,349,586 | )           | 
|Stock based compensation                                                                           |  |                   | 402,994    |   |            |   | (117,371   | )           | 
|Warrants expense                                                                                   |  |                   | 98,573     |   |            |   | (1,820     | )           | 
|Convertible note issued for conversion cost reimbursement                                          |  |                   | 9,500      |   |            |   | (9,500     | )           | 
|Convertible note issued for services rendered                                                      |  |                   | 80,000     |   |            |   | –          |             | 
|(Increase) decrease in:                                                                            |  |                   |            |   |            |   | –          |             | 
|Accounts receivable                                                                                |  |                   | (31,053    | ) |            |   | –          |             | 
|Inventory                                                                                          |  |                   | (4,699     | ) |            |   | –          |             | 
|Other assets                                                                                       |  |                   | –          |   |            |   | (15,072    | )           | 
|Deposits                                                                                           |  |                   | (5,072     | ) |            |   | 5,072      |             | 
|Prepaids and other current assets                                                                  |  |                   | 25,359     |   |            |   | –          |             | 
|Accounts payable                                                                                   |  |                   | 127,336    |   |            |   | 13,501     |             | 
|Accrued expenses                                                                                   |  |                   | (347,629   | ) |            |   | 195,368    |             | 
|Interest payable                                                                                   |  |                   | 98,315     |   |            |   | (17,575    | )           | 
|Taxes payable                                                                                      |  |                   | 7,579      |   |            |   | (15,158    | )           | 
|Accrued payroll taxes                                                                              |  |                   | (39,736    | ) |            |   | 0          |             | 
|Accrued officers' salaries                                                                         |  |                   | 700,600    |   |            |   | 22,500     |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|Net cash used in operating activities                                                              |  |                   | (663,830   | ) |            |   | 48,926     |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|INVESTING ACTIVITIES                                                                               |  |                   |            |   |            |   |            |             | 
|Purchase of intangible assets                                                                      |  |                   | (5,000     | ) |            |   | –          |             | 
|Disposal of fixed assets                                                                           |  |                   |            |   |            |   |            |             | 
|Purchase of fixed assets                                                                           |  |                   | (9,468     | ) |            |   | 1,668      |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|Net cash provided by (used in) investing activities                                                |  |                   | (14,468    | ) |            |   | 1,668      |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|FINANCING ACTIVITIES                                                                               |  |                   |            |   |            |   |            |             | 
|Due to related party                                                                               |  |                   | (37,059    | ) |            |   | (54,732    | )           | 
|Proceeds from sales of stock                                                                       |  |                   | 40,000     |   |            |   | 0          |             | 
|Shareholder contributions                                                                          |  |                   | 24,061     |   |            |   |            |             | 
|Proceeds from convertible notes payable                                                            |  |                   | 705,177    |   |            |   | (17,977    | )           | 
|Proceeds from notes payable -related party                                                         |  |                   | –          |   |            |   | 46,176     |             | 
|Proceeds from notes payable -3rd party                                                             |  |                   | –          |   |            |   | 25,343     |             | 
|Proceeds from line of credit                                                                       |  |                   | 5,498      |   |            |   | 11,343     |             | 
|Repayments to line of credit                                                                       |  |                   | –          |   |            |   | (11,343    | )           | 
|(Repayments to) convertible notes payable                                                          |  |                   | (43,341    | ) |            |   | (25,343    | )           | 
|(Repayments to) notes payable                                                                      |  |                   | (10,000    | ) |            |   | 0          |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|Net cash provided by financing activities                                                          |  |                   | 684,336    |   |            |   | (50,594    | )           | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                               |  |                   | 6,038      |   |            |   | –          |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                     |  |                   | 62,948     |   |            |   | –          |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                           |  | $                 | 68,986     |   |            | $ | –          |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION                                                  |  |                   |            |   |            |   |            |             | 
|Cash paid during the period for:                                                                   |  |                   |            |   |            |   |            |             | 
|Income tax                                                                                         |  |                   |            |   |            |   |            |             | 
|Interest                                                                                           |  | $                 | –          |   |            | $ | 30,866     |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|                                                                                                   |  |                   |            |   |            |   |            |             | 
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                       |  |                   |            |   |            |   |            |             | 
|Common stock issued for settlement of accrued expense                                              |  | $                 | 1,415,600  |   |            | $ | –          |             | 
|Common stock issued upon conversion of notes payable                                               |  | $                 | 143,863    |   |            | $ | –          |             | 
|Common stock issued for settlement of note payable - related party                                 |  |                   | –          |   |            | $ | 451,891    |             | 
|Conversion of preferred stock into common stock                                                    |  | $                 | 9,171      |   |            | $ | (7,427     | )           | 
|Common stock cancellation related to accrued liability                                             |  |                   | –          |   |            | $ | 2,500      |             | 
|Series H Preferred Stock issued for prior year acquisition                                         |  | $                 | 728,907    |   |            | $ | –          |             | 
|Series B preferred shares issued for debt settlement                                               |  |                   | –          |   |            | $ | 60,000     |             | 
|Debt discount from issuance of warrant                                                             |  |                   | –          |   |            | $ | 219,210    |             | 
|Derivative Resolution upon conversion                                                              |  |                   | –          |   |            | $ | 405,443    |             | 
|Reclassification to derivative liabilities from additional paid in capital                         |  | $                 | 1,033,004  |   |            | $ | 939,995    |             | 
|Debt discount from derivative liabilities                                                          |  |                   | –          |   |            | $ | 535,878    |             | 
|Cash carried over from acquisition                                                                 |  |                   | –          |   |            | $ | –          |             | 









65









19. SUBSEQUENT EVENTS



As announced in our DEF 14C, filed December
24, 2018, we amended the authorized Preferred series “L” to 100,000,000 on March 5th, 2019 with the State of Florida;
stating shares are non-dilutive to a minimum of $1,278,000 in value. This minimum cannot be diluted due to actions taken
by the Company, its BOD and/or its shareholders. All newly issued Stock are subject to a lockup / leakout agreement. Liquidation
limited to 20% per year.



As announced in our DEF 14C, filed December 24, 2018, we amended the authorized Preferred series “L1”
to 100,000,000 on March 5th, 2019 with the State of Florida; stating shares are non-dilutive.  Voting rights – NONE.
Converts to common stock at a ratio of 1 share preferred to 1.25 shares common. 12-month minimum holding period; thereafter liquidation
limited to 20% per year.



On March 5th, 2019 – we changed transfer agencies from Standard Registrar & Transfer to OnlineTransfer,
LLC.



Effective March 21st, Company completed a reverse split of 1500:1 for common shares.



Entered into an amended Promissory Note
agreement with Leonite Capital, LLC, for two additional $50,000 tranches to the Company.



Stock Issuances:



Subsequent to
December 31, 2018, 820,2322,075 (pre-split) shares were issued for debt conversion.











66







ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



There were
no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing
scope or procedure during the two fiscal years and interim periods, including the interim periods up through the date the relationship
ended.



ITEM 9A.
CONTROLS AND PROCEDURES.



Disclosure
Controls and Procedures



Disclosure
controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed and submitted
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules
and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports that are filed under the Exchange Act is accumulated and communicated to management, including
the principal executive officer, as appropriate to allow timely decisions regarding required disclosure. Under the supervision
of and with the participation of its executive officer, the Company has evaluated the effectiveness of its disclosure controls
and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this Annual Report. Based on
that evaluation, the sole executive officer of the Company has concluded that, as of the end of the period covered in this Annual
Report, these disclosure controls and procedures were ineffective.



We maintain
disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules
forms, and that such information is accumulated and communicated to our management, including our principal executive officer
(our president) and our principal accounting and financial officer (our chief financial officer and treasurer) to allow for timely
decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, and our management is required to apply its judgment in evaluation the cost-benefit relationship
of possible controls and procedures.



Our management
does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the
objectives of a control system are met. Further, any control system reflects limitations on resources and benefits of a control
system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a
control system is also based upon certain assumptions about potential future condition; over time controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.



As of December
31, 2018, the year-end period covered by this report, we carried out an evaluation, under the supervision and with the participation
of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer
concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.



There have
been no significant changes in our internal controls over financial reporting that occurred during the fiscal year ended December
31, 2018 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.









67







Management’s
Report on Internal Control over Financial Reporting



Our management
is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a- 15(f)
under the Exchange Act, and assessed the effectiveness of our internal control over financial reporting as of December 31, 2018.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified
the following material weaknesses:



1.                
As of December 31, 2018, our controls over the control environment were not effective. Specifically, we have not developed and
effectively communicated to our employees our accounting policies and procedure. This has resulted in inconsistent practices.
Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee
financial experts as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect
across the organization, management has determined that these circumstances constitute a material weakness.



2.                
As of December 31, 2018, our controls over financial statement disclosure were not effective. Specifically, controls were not
designed and in place to ensure that all disclosures required were originally addressed in our consolidated financial statements.
Accordingly, management has determined that this deficiency constitutes a material weakness.



3.
                Lack of formal documentation over
internal control procedures and environment.



4.                 Lack
of proper segregation of duties and multiple level of reviews.



5.                 Lack
of expertise in accounting of derivative liabilities.



Because of
these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial
reporting as of December 31, 2018, based on the criteria established in “2013 Internal Control-Integrated Framework”
issued by COSO.



This annual
report does not include an attestation report of the company’s independent registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the company’s registered public
accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management’s report.



Changes in Internal Controls



There were no changes in our internal
control over financial reporting during the fiscal year ended December 31, 2018 that have affected, or are reasonably likely to
affect, our internal control over financial reporting.



ITEM 9B.
OTHER INFORMATION.



None.









68









PART III



ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



Officers
and Directors



Our directors
will serve until successors are elected and qualified. Our four officers are elected by the Board of Directors to a term of one
year and serve until a successor is duly elected and qualified, or until that person is removed from office. Our Board of Directors
has no nominating, or compensation committees. Our Board of Directors have three members.





The name, address,
age and position of our sole officer and director is set forth below:



|Name and Address     |  | Age | Positions                            
|-------------------- |  | --- | -------------------------------------
|Daniel Thompson      |  | 68  | Chairman of the Board of Directors   
|Alex Cunningham      |  | 61  | Chief Executive Officer and President
|Dr. Rolan Roberts II |  | 38  | Chief Operating Officer              



Background
of our officers and directors



Daniel
Thompson, 68, Chairman of the Board of Directors. In June of 2010 Thompson was previously appointed Chairman and CEO of
Cardiff formerly a television and entertainment industry professional with a 30-year career that embraces network and cable advertising
sales programming production and product placement, Mr. Thompson was president of Creative Entertainment Services, which he founded
and successfully sold in a transaction. Mr. Thompson also co-founded and successfully sold an industry service company –
Creative Television Marketing, a producer of short-form advertising concepts: Closed- Captioning Sponsorships, 10-Second Promotional
Advertising vehicles, and network Game Show Merchandising. He also oversaw new business for A Creative Group, a full-service entertainment
marketing company. Mr. Thompson also founded CableRep USA, a media sales firm specializing in local market cable advertising,
which he sold to Cox Cable in 1981. Mr. Thompson attended Wayne State University, Bellevue College, and College of Continuing
Studies at University of Nebraska at Omaha.



Alex
Cunningham,60, Chief Executive Officer and President. Mr. Cunningham has agreed to join the Cardiff family in June of
2015. Mr. Cunningham's background is in Business Development. His focus is on identifying prospects for franchising, mergers and
acquisitions specializing in structuring one or multiple franchise acquisitions; and/or franchising existing businesses. He is
a founder of Fran Consult, Inc. a business development company representing over 300 Franchise operations; owner, managing partner
at AH Cunningham & Associates, LLC 2006 - Present; Profit Management Consulting, Inc., founder, President & CEO 1996-2005;
managed projects and staff of 85 for 20 years for over 2000 private or closely held middle-market companies throughout 24 states.
He was a partner at London Capital Corporation 1991 - 1996; President & CFO at Vance Communications, Inc. 1988-1991. Honors
and Awards: 2010 Consultant of the Year - Franchise, Inc. National Association of Franchise Consultants. MBA - Crummer Graduate
School of Business Rollins College - Winter Park, Florida; BBA's - Finance and Business Administration University of Kentucky
- Lexington, Kentucky.



Dr. Rolan
Roberts II, 37, Chief Operating Officer. Dr. Roberts II turned around large, established companies and has created high
growth revenue organizations. Dr. Roberts has passionately led with excellence a multi-billion, publicly-held database company
along with healthcare, technology, manufacturing and direct sales companies. He has led nearly 1,500 employees at a given time
servicing clients such as Capital One, IndyMac Bank, State Farm, Allstate, Nationwide along with federal and state government
agencies.









69







Dr. Roberts
has authored 4 business and leadership books, holds an MBA from Liberty University, a doctorate degree in International Business
& Entrepreneurship from California InterContinental University and was recognized as the “Top 100 Most Influential Floridians”
of 2015. He has served on several industry and civic non-profit boards along with founding a non-profit that serves entrepreneurs
in crisis.



| | · | Successfully led the turnaround, rebranding, and new product line of a 29-year
    old, $250MM life sciences company.
| | - | ---------------------------------------------------------------------------------------------------------------------



| | · | Developed market-disrupting products in a startup environment by partnering
    with cancer treatment centers prior to a successful exit strategy.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Led multi-site, geographically-dispersed team of 1,000 and crisis management
    response as senior executive for a multi-billion, publicly- held company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Recognized for superior interpersonal and communication skills, outstanding
    team leadership and an authority in the consumer, healthcare and technology fields.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Recognized as “Top 100 Most Influential Floridians” of 2015.
| | - | ------------------------------------------------------------



Professional
Accomplishments



| | · | Recognized as “Top 100 Most Influential Floridians” of 2015 by
    Insight Magazine.
| | - | ------------------------------------------------------------------------------------



| | · | Best-selling author who has received international exposure for books based
    on corporate leadership and personal development.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | Professional speaker and TV host with authentic, charismatic and dynamic personality.
| | - | -------------------------------------------------------------------------------------



| | · | Participated and starred in leadership movie titled “The Journey”
    with Brian Tracy.
| | - | ---------------------------------------------------------------------------------------



| | · | Produced two seven-disc audio programs on personal excellence and corporate
    sales growth.
| | - | ---------------------------------------------------------------------------------------------



| | · | Advisor/Strategist to political and business leaders.
| | - | -----------------------------------------------------



| | · | Licensed private pilot.
| | - | -----------------------



Audit Committee
Financial Expert



The functions
of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not
have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of
Directors has determined that the cost of hiring a financial expert to act as a director and to be a member of the Audit Committee
or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee. Our
Board of Directors has three members.



Code of Ethics



We have not
adopted a code of ethics that applies to our President, Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer,
or persons performing similar functions, because of the small number of persons involved in the management of the Company.



Compliance with Section 16 (a)
of the Exchange Act



Under Section
16(a) of the Exchange Act, requires that our directors and executive officers and persons who beneficially own more than 10% of
our Common Stock (referred to herein as the “Reporting Persons”) file with the SEC various reports as to their ownership
of and activities relating to our Common Stock. Such Reporting Persons are required by the SEC regulations to furnish us with
copies of all Section 16(a) reports they file. Based solely upon our review of the copies of the forms we have received and representations
that no other reports were required, we believe that all Reporting Persons complied on a timely basis with all filing requirements
applicable to them with respect to transactions during fiscal year ended December 31, 2018 except as stated below.









70









ITEM 11. EXECUTIVE COMPENSATION



Summary Compensation
Table



|                                      |      |                         |       |        |              |  |          |  | Long-Term
    Compensation
|------------------------------------- | ---- | ----------------------- | ----- | ------ | ------------ |  | -------- |  | --------------------------
|                                      |      | Annual
    Compensation |       | Awards | Payouts     
|Names                                 |      |                         |       |        |              |  | Under    |  | Restricted                
|Executive                             |      |                         |       |        | Other        |  | Options/ |  | Shares or                 
|Officer and                           |      |                         |       |        | Annual       |  | SARs     |  | Restricted                
|Principal                             |      | Salary                  | Bonus |        | Compensation |  | Granted  |  | Share/Units               
|Position                              | Year | (US$)                   | (US$) |        | (US$)        |  | (#)      |  | (US$)                     
|Daniel Thompson                       | 2014 | 300,000                 | 0     |        | 0            |  | 0        |  | 2,257,018                 
|Chairman of the Board of Directors    | 2015 | 240,000                 | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2016 | 240,000                 | 0     |        | 0            |  | 0        |  | 360,000                   
|                                      | 2017 | 300,000                 | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2018 | 300,000                 | 0     |        | 0            |  | 0        |  | 100,000                   
|                                      |      |                         |       |        |              |  |          |  |                           
|Alex Cunningham                       | 2014 | 0                       | 0     |        | 0            |  | 0        |  | 0                         
|President and Chief Executive Officer | 2015 | 180,000                 | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2016 | 180,000                 | 0     |        | 0            |  | 0        |  | 580,000                   
|                                      | 2017 | 300,000                 | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2018 | 300,000                 | 0     |        | 0            |  | 0        |  | 100,000                   
|                                      |      |                         |       |        |              |  |          |  |                           
|Dr. Rolan Roberts II                  | 2014 | 0                       | 0     |        | 0            |  | 0        |  | 0                         
|Chief Operating Officer               | 2015 | 0                       | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2016 | 60,000                  | 0     |        | 0            |  | 0        |  | 0                         
|                                      | 2017 | 100,000                 | 0     |        | 0            |  | 0        |  | 205,600                   
|                                      | 2018 | 100,000                 | 0     |        | 0            |  | 0        |  | 0                         



Employment Agreements



We have an
employment agreement, renewed May 15, 2014, with the Chairman, Mr. Thompson amended on January 1, 2017, whereby we provide for
compensation of $25,000 per month.



We have an
employment agreement with the Chief Executive Officer, Mr. Cunningham, amended on January 1, 2017, whereby we provide for compensation
of $25,000 per month.



We have an
employment agreement with the Chief Operating Officer, Dr. Roberts, effective June 2016, whereby we provide for compensation of
$10,000 per month.



There are no
other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other
than as described herein.









71







Long-Term
Incentive Plan Awards



We do not have
any long-term incentive plans that provide compensation intended to serve as incentive for performance.



Compensation
of Directors



Our directors
do not receive any compensation for serving as members of the Board of Directors.



Indemnification



Under our Articles
of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best
interest. We may advance expenses incurred in defended a proceeding. To the extent that the officer or director is successful
on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred
in defended the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended
to be to the fullest extent permitted by the laws of the State of Florida.



Regarding indemnification
for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we
are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed
in the Act and is, therefore, unenforceable.



ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following
table sets forth certain information regarding our shares of common stock beneficially owned as of December 31, 2017, for (i)
each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive
officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any
shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which
such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants.
Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive
officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.



|Name of Beneficial Owner and Address                                    |  | Amount
    andNature ofBeneficialOwnership ofCommon Stock |        | Percent
    ofCommon Stock (1)
|----------------------------------------------------------------------- |  | --------------------------------------------------------- | ------ | ------------------------------
|Daniel Thompson401 East Las Olas Blvd. Unit 1400Ft. Lauderdale, Florida |  |                                                           | 10,669 |                               
|                                                                        |  |                                                           |        |                               
|Alex Cunningham                                                         |  |                                                           |        |                               
|401 East Las Olas Blvd. Unit 1400                                       |  |                                                           |        |                               
|Ft. Lauderdale, Florida                                                 |  |                                                           | 6,000  |                               
|All directors and officers and 5% stockholders
    as a group           |  |                                                           | 16,669 |                               



(1) Based on 602,826 (post-split)
shares of common stock issued and outstanding as of December 31, 2018.



Note: Daniel Thompson also owns
1 share of Preferred “A”, 720,000 shares of Preferred “B”, 1 share of Preferred “C” and 125,000,000
shares of Preferred “I”; and Alex Cunningham also owns 9,999 shares of Preferred “B”, 1 share of Preferred
“C” and 125,000,000 shares of Preferred “I” , respectively.









72







ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE



The Company
borrows funds from Daniel Thompson, who is a Shareholder and Officer of the Company. The terms of repayment stipulate the loans
are due 24 months after the launch of the Legacy Tuition Card (or prior to such date) at an annual interest rate of six percent.
As of December 31, 2018 and 2017, the Company had $77,640 due to Daniel Thompson.



Conversion
of equity



Preferred
Stock



The Company
authorized an additional one billion preferred blank check shares, during the year-ended December 31, 2018.



During the
year-ended December 31, 2018, 33,999 shares of Series B Preferred Stock were converted into 169,995 (post-split) shares of Common
Stock of the Company per the preferred shareholder’s instruction.



During the
year-ended December 31, 2018 the Company issued 2 shares of Series C Preferred stock to the prior owners of Edgeview Properties
for services provided to the Company. The fair market value of the shares on the date of issuances was $720.



Series H Preferred
Stock



During the
year-ended December 31, 2018, the holder of 4,859,469 shares of Series H Preferred Stock exercised the option to convert into
6,074,223 shares of Common Stock of the Company.



Series I Preferred
Stock



During the
year-ended December 31, 2018, the holder of 203,655 shares of Series I Preferred Stock exercised the option to convert into 305,483
shares of Common Stock of the Company. The Company granted 125,000,000 shares is Preferred I shares each to Daniel Thompson and
Alex Cunningham as a bonus for their efforts in 2018. The shares have not been issued and are recorded at the stock price on the
grant date of November 27, 2018 in the amount of $200,000.



Series K Preferred
Stock



During the
year-ended December 31, 2018, the Company issued 8,200,562 shares of series K Preferred Stock to the prior owners of Red Rock
Travel Group. The fair value of the shares on the date of issuances was $175,000.



Series K-1
Preferred Stock



During the
year-ended December 31, 2018, the Company issued 1,447,457 shares of Series K-1 Preferred Stock in settlement of a note payable.
The fair value of the shares were valued at the face amount of the note of $100,000.



Series L Preferred
Stock



During the
year-ended December 31, 2018, the Company issued 98,307,692 shares of Series L Preferred Stock to the prior owner of Platinum
Tax Defenders. The fair value of the shares on the date of issuances was $1,278,000.









73







Common
Stock



The Company
approved the increase of authorized common stock to seven billion five-hundred thousand shares.



See Note 11
for information related to conversion of indebtedness to common stock.



During the
year ended December 31, 2018, the Company canceled 1,000,000 shares previously issued and issued 2,592 (post-split) shares to
third-party consultants. The fair market value of the shares on the date of issuances was $27.90 to $37.05 per share, at a total
cost of $86,751. The Company also issued 2,286 (post-split) shares in settlement of $240,000 in liabilities owed to a former officer
of the Company.



ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES



The aggregate
fees billed for the years ended December 31, 2018 and 2017 for professional services rendered by the principal accountant for
the audit of its annual financial statements included in Form 10-K (“Audit Fees”), (2) tax compliance, advice, and
planning (“Tax Fees”), and (iv) other products or services provided (“Other Fees”) and for professional
services rendered by company’s legal attorney:



|                |  | Year
                                         Ended December
                                         31, |         |  | Year Ended December 31, |  
|--------------- |  | --------------------------------------------------------------------------------------------------------- | ------- |  | ----------------------- | -
|                |  | 2018                                                                                                      |         |  | 2017                    |  
|Accounting Fees |  | $                                                                                                         | 228,306 |  |                         | $
|Tax Fees        |  |                                                                                                           | –       |  |                         |  
|All Other Fees  |  |                                                                                                           | –       |  |                         |  
|Total           |  | $                                                                                                         | 228,306 |  |                         | $





























74







PART IV



ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES



|Exhibit No. | Description                                                                                                                                                                           
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | Articles
    of Incorporation, (incorporated by reference to the Company’s Form 10 filed
    with the SEC on March 27, 2002                                                           
|3.2         | Articles
    of Amendment, (incorporated by reference to the Company’s Form 10 filed with
    the SEC on March 27, 2002                                                               
|3.3         | Articles
    of Amendment, (incorporated by reference to the Company’s Form 10 filed with
    the SEC on March 27, 2002                                                               
|3.4         | Articles
    of Amendment adopted July 18, 2012, (incorporated by reference to the Company’s
    Form 8-K/A filed with the SEC on August 9, 2012                                      
|3.5         | Articles
    of Incorporation dated August 22, 2014, (incorporated by reference to the Company’s
    Form 8-K filed with the SEC on September 15, 2014                                
|3.6         | Bylaws,
    filed with the Company’s Form 8-K on September 15, 2014                                                                                                                   
|31.1        | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|32.1        | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|101.INS**   | XBRL Instance Document                                                                                                                                                                
|101.SCH**   | XBRL Taxonomy Schema                                                                                                                                                                  
|101.CAL**   | XBRL Taxonomy Calculation Linkbase                                                                                                                                                    
|101.DEF**   | XBRL Taxonomy Definition Linkbase                                                                                                                                                     
|101.LAB**   | XBRL Taxonomy Label Linkbase                                                                                                                                                          
|101.PRE**   | XBRL Taxonomy Presentation Linkbase                                                                                                                                                   



*Previously filed.

**To be filed by amendment.





















75









SIGNATURES



Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of
the Registrant and in the capacities on this 16th  day of April 2019.





| | CARDIFF LEXINGTON CORP (FORMERLY CARDIFF INTERNATIONAL,
    INC.)     
| | ----------------------------------------------------------------------
| |                                                                       
| | /s/ Alex Cunningham                                                   
| | Alex Cunningham                                                       
| | Chief Executive Officer                                               
| |                                                                       
| | /s/ Alex Cunningham                                                   
| | Alex Cunnningham                                                      
| | (Duly Authorized, Principal Executive and Principal Financial Officer)









Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of
the Registrant and in the capacities and on the dates indicated.



|Signature           |  | Title                              |  | Date           
|------------------- |  | ---------------------------------- |  | ---------------
|                    |  |                                    |  |                
|/s/ Daniel Thompson |  | Chairman of the Board of Directors |  | April 16,  2019
|Daniel Thompson     |  |                                    |  |                

























76