Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A



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



For the fiscal year ended December 31,
2020



or



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



For the transition period
from _____ to _______



Commission File Number 000-49709



CARDIFF LEXINGTON CORP.

(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 Act:



|Title of each class | Trading Symbol(s) | Name of each exchange on which registered
|------------------- | ----------------- | -----------------------------------------
|N/A                 | N/A               | N/A                                      



Securities registered pursuant to Section
12(g) of the Act:



Par Value $0.001 Common Stock

(Title of each class)



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 ☐





Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its annual report. ☐



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. $1,990,001.00



Common shares outstanding at March 30,
2021 is 109,944,821 with a par value of $0.001.



DOCUMENTS INCORPORATED BY REFERENCE



None.

















EXPLANATORY NOTE





Cardiff Lexington Corp. ("Cardiff”
or the “Company”), is filing this Amendment No. 2 (the “2020 Form 10-K/A”) to its Annual Report on Form 10-K
for the year ended December 31, 2020 (the “2020 Form 10-K”) originally filed with the U.S. Securities and Exchange Commission
(“SEC”) on March 31, 2021, and as amended on April 2, 2021. This 2020 Form 10-K/A is being filed to restate its financial
statements as of and for the years ended December 31, 2020 and 2019, and accompanying notes to the financial statements included in the
Amendment, including a description of the impact of restatement on previously reported quarterly amounts for the three-month, six-month,
and nine-month periods ended March 31, June 30, and September 30, respectively.



The restatement primarily relates to the accounting
for (1) the valuation of embedded derivative liabilities in certain matured convertible notes and (2) the accounting treatment for changes
in certain rights and privileges with respect to certain classes of preferred stock on January 10, 2020.



Although
this Form amends and restates the original Form in its entirety, except for the information described above, this Form does not reflect
events occurring after the filing of the original Form 10-K and unless otherwise stated herein, the information contained in this Form
is current only as of the date of the original filing. Except as noted herein, no other changes have been made to the original Form.
Accordingly, this form should be read in conjunction with the Company's filings made with the U.S. Securities and Exchange Commission
subsequent to the filing of the original Forms. The sections of the original Forms affected by the restatement should no longer be relied
upon.



In connection with the restatement, the Company’s
management reassessed the effectiveness of its disclosure controls and procedures as of December 31, 2020. As a result of that reassessment,
the Company’s management determined that its disclosure controls and procedures as of December 31, 2020 were not effective solely
as a result of its accounting for the embedded derivative liabilities and the amendment of certain classes of preferred stock. For more
information, see Item 9A included in this Amendment.



The Company has not amended its previously
filed Quarterly Reports on Form 10-Q or any Current Report on Form 8-K (whether filed or furnished) that are for or relate to the periods
affected by the restatement. The financial information that has been previously filed or otherwise reported for these periods is superseded
by the information in this Amendment.



See Note 2 to the Notes to Financial Statements
included in Part II, Item 8 of this Amendment for additional information on the restatement and the related financial statement effects.



The following items are amended in this Amendment:
(i) Part II, Item 8. Financial Statements and Supplementary Data; (ii) Part II, Item 9A. Controls and Procedures; and (iii) Part IV,
Item 15. Exhibits, Financial Statement Schedules. Additionally, in accordance with Rule 12b-15 under the Securities Exchange Act of 1934,
as amended, the Company is including with this Amendment currently dated certifications from our principal executive officer and principal
financial officer. These certifications are filed or furnished, as applicable, as Exhibits.















FORM 10-K/A

CARDIFF
LEXINGTON CORP

INDEX



|                                                                                                                     | Page
|-------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                     |     
|PART I                                                                                                              
|                                                                                                                     |     
|Item 1. Business                                                                                                     | 1   
|                                                                                                                     |     
|Item 1A. Risk Factors                                                                                                | 4   
|                                                                                                                     |     
|Item 2. Property                                                                                                     | 8   
|                                                                                                                     |     
|Item 3. Legal Proceedings                                                                                            | 8   
|                                                                                                                     |     
|Item 4. Mine Safety Disclosures                                                                                      | 8   
|                                                                                                                     |     
|PART II                                                                                                             
|                                                                                                                     |     
|Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 9   
|                                                                                                                     |     
|Item 6. Selected Financial Data                                                                                      | 11  
|                                                                                                                     |     
|Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations                        | 11  
|                                                                                                                     |     
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                                  | 18  
|                                                                                                                     |     
|Item 8. Financial Statements and Supplementary Data                                                                  | 18  
|                                                                                                                     |     
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                        | 58  
|                                                                                                                     |     
|Item 9A. Controls and Procedures                                                                                     | 58  
|                                                                                                                     |     
|Item 9B. Other Information                                                                                           | 59  
|                                                                                                                     |     
|PART III                                                                                                            
|                                                                                                                     |     
|Item 10. Directors, Executive Officers and Corporate Governance                                                      | 60  
|                                                                                                                     |     
|Item 11. Executive Compensation                                                                                      | 62  
|                                                                                                                     |     
|Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters              | 63  
|                                                                                                                     |     
|Item 13. Certain Relationships and Related Transactions, and Director Independence                                   | 64  
|                                                                                                                     |     
|Item 14. Principal Accountant Fees and Services                                                                      | 65  
|                                                                                                                     |     
|PART IV                                                                                                             
|                                                                                                                     |     
|Item 15. Exhibits and Financial Statement Schedules                                                                  | 66  
|                                                                                                                     |     
|Signatures                                                                                                           | 67  
|                                                                                                                     |     
|Index to Financial Statements                                                                                        | 19  









i









CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS



This Annual Report on Form 10-K/A (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 and Operation of the Business



Legacy Card Company, LLC (“Legacy”)
was formed as a California limited liability company on August 29, 2001. On April 18, 2005, Legacy converted to a Nevada corporation.
On November 10, 2005, Legacy merged with Cardiff Lexington Corp (formerly Cardiff International, Inc.) (“Cardiff Lexington”,
the “Company”), a publicly traded Colorado corporation. On August 27, 2014, Cardiff Lexington redomiciled to Florida.



In the first quarter of 2013, Cardiff
Lexington was restructured into a holding company that began targeting the acquisition of undervalued, niche companies with high
growth potential, income-producing commercial real estate properties, or high return investments, with the goal of generating
the net income required to support a consistent 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, and provide financing and management
support to enhance their ability to provide acceptable returns to investors. New classes of preferred stock have been and may
continue to be created to streamline voting rights, avoid debt, and acquire new businesses. By December 31, 2020, we had acquired
ten businesses. Four of the acquired businesses were merged into two, one was discontinued, and two were sold during 2020. Accordingly,
we currently operate the following four businesses, each as a separate subsidiary:



| | · | We Three, LLC, which operates under the name “Affordable Housing Initiative” or “AHI,” was acquired
in April 2014. 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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Edge View Properties, Inc., was acquired in July 2014 (“Edge View”). Edge View
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).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Platinum Tax Defenders, LLC, a tax resolution service that was acquired in July 2018.
| | - | -------------------------------------------------------------------------------------



| | · | JM Enterprises 1, Inc., a tax resolution service which operates under the name “Key
Tax Group,” that was acquired May 8, 2019.
| | - | ------------------------------------------------------------------------------------------------------------------------------



Cardiff Lexington divested its holdings
in the food services sector: Repicci's Italian Ice and Gelato and Romeo's New York Style Pizza. The companies’ restaurant
franchise operations have been hard hit by the economic pressure of the COVID-19 pandemic and the subsequent directives and responses
to this crisis taken by the federal, state, and local government. In light of current circumstances arising from the COVID-19 pandemic,
management is continuing to evaluate alternatives to mitigate the negative effects of the pandemic on the Company and its shareholders.
Cardiff Lexington Board of Directors has narrowed its forward focus to acquisitions in the financial services, healthcare and real
estate sectors.



Cardiff Lexington is a diversified
holding company that operates much like a cooperative, leveraging proven management in private companies that become
subsidiaries under our umbrella. Our current emphasis is on the financial services, healthcare, and real estate sectors. Our
platform provides an “Equity Exit or Equity Capitalization” strategy for acquisitions as well as a diversified
investment platform for investors that is intended to mitigate risk. Our “Buy and Build” strategy seeks niche
companies which complement existing subsidiaries. Our acquisition strategy is driven by structure, transaction value,
alignment, resources and return on investment. Our acquisition strategy is not limited by geographic location, and is focused
on proven management teams, attractive markets, and historical operating margins. We target acquisitions of mature, high
growth, niche companies. Cardiff Lexington’s strategy identifies and empowers select, income-producing, middle market
private businesses and commercial real estate properties.









1







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 Lexington 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 Lexington provides
a diversified lower risk to protect and safely enhance their investment by continually adding assets and holdings.



Cardiff Lexington 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 Lexington is led by strong and
talented roster of executives and advisors providing expert acquisition, market guidance and added value for subsidiaries and investors.



Impact of COVID-19 Pandemic



The outbreak of a novel coronavirus throughout
the world, including the United States, during early calendar year 2020 has caused widespread business and economic disruption
through mandated and voluntary business closings and restrictions on the movement and activities of people (“COVID-19 Pandemic”).
We are subject to risks and uncertainties as a result of the COVID-19 Pandemic. See “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” for discussion on results of operations for the year ended December 31,
2020. The extent of the impact of the COVID-19 Pandemic on the Company's business is highly uncertain and difficult to predict,
as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the United States and other markets where
the Company operates. It is expected that many of the Company's customers and suppliers will continue to be impacted by these closings
and restrictions which could materially and adversely affect demand for our products, our ability to obtain or deliver inventory
or services, and our ability to collect accounts receivables as customers face higher liquidity and solvency risk. Furthermore,
capital markets and economies worldwide have also been negatively impacted by the COVID-19 Pandemic, and it is possible that economic
distress will continue in many markets for the foreseeable future. Such economic disruption could have a material adverse effect
on our business. Policymakers around the world have responded with fiscal and monetary policy actions to support the economy. The
magnitude and overall effectiveness of these actions remains uncertain.



The Company’s restaurant franchise
operations have been severely and adversely affected by the economic pressure of the COVID-19 pandemic and the subsequent directives
and responses to the crisis taken by the federal, state, and local governments. In light of circumstances arising from the COVID-19
Pandemic, management divested of all food service operations and is continuing to evaluate the Company’s current operations
and acquisition opportunities to mitigate the impact of the pandemic and maximize shareholder value.



The decrease in revenue in 2020 is primarily
attributable to the COVID-19 Pandemic. Both the affordable housing and financial services segments of the economy have been adversely
affected by the COVID-19 Pandemic, due mainly to the significant increase in unemployment, which directly affected our subsidiaries
prospects and customer base. We believe the segment of the population which was adversely affected by unemployment overlaps significantly
with the customer base of our affordable housing and financial services businesses and, consequently, these customers were no longer
able to afford our services.



Human Capital



Collectively, Cardiff Lexington and its
subsidiaries employ approximately 37 employees and anticipates hiring additional personnel with new acquisitions. We believe that
we have good relations with our employees and our employees are not represented by any collective bargaining group or agreement.
We believe our ability to attract and retain employees is a key to a successful acquisition strategy.









2







Competition



We are a small capitalization holding
company that seeks to enable businesses to take advantage of the potential access to capital markets provided by affiliation with
a publicly traded company. Cardiff Lexington 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 generate sufficient
earnings to pay a consistent dividend to our shareholders. The strategy is intended to mitigate risk to shareholders by building
a diversified portfolio of 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. We will continue to establish new classes of preferred stock
to streamline voting rights, negate debt, and acquire new businesses in the financial services and healthcare, and real estate
sectors.



We face significant competition in the
markets in which our subsidiaries operate. Platinum Tax and Key Tax have significant competition in most of the markets in which
they operate from other local tax resolution entities and from larger national companies. AHI has significant competition from
other private companies in the area and a few real estate investment trusts, which compete in the manufactured housing communities
Edgeview competes in the highly competitive housing industry. Some of our subsidiaries’ competitors may have advantages over
us in terms of greater operational, financial, management or other resources in particular markets or in general. Our market position
depends on our financing, development and operation capabilities, reputation, experience and track record. There can be no assurance
that our current or potential competitors will not offer products or services comparable or superior to those that our subsidiaries
offer. Increased competition may result in price reductions, reduced profit margins and loss of market share.



Proprietary Information



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



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 are investing in the development of
a new website that will effectively present the Company’s acquisition strategy and its benefits to prospective acquisition
targets and the communities we serve, as well as keep investors informed of our progress in executing our strategy.



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, information statements, and other information with the Securities and Exchange Commission (the “SEC”). Reports,
information 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).









3







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.



Risks Relating to Our Business, Strategy and Industry



We are a holding company and rely
on distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations.



We have no direct operations and derive
all of our cash flow from our subsidiaries. Because we conduct our operations through our subsidiaries, we depend on those entities
for payments or distributions to meet our obligations. The deterioration of the earnings from, or other available assets of, our
subsidiaries for any reason could limit or impair their ability to pay us.



Our acquisition strategy exposes
us to substantial risk.



Our acquisition of companies is subject
to substantial risk, including but not limited to the failure to identify material problems during due diligence (for which we
may not be indemnified post-closing), the risk of over-paying for assets (or not making acquisitions on an accretive basis), the
ability to obtain or retain customers and the risks of entering markets where we have limited experience. While we perform due
diligence on prospective acquisitions, we may not be able to discover all potential operational deficiencies in such entities.



Our prior and future acquisitions may not
perform as expected or the returns from such acquisitions may not support the financing utilized to acquire them or maintain them.
Furthermore, integration and consolidation of acquisitions requires substantial human, financial and other resources and may divert
management's attention from our existing business concerns, disrupt our ongoing business or not be successfully integrated. Even
if we consummate acquisitions that we believe will be accretive to such cash per unit, those acquisitions may in fact result in
a decrease in such cash per unit as a result of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequences
or other external events beyond our control. Furthermore, if we consummate any future acquisitions, our capitalization and results
of operations may change significantly, and stockholders will generally not have the opportunity to evaluate the economic, financial
and other relevant information that we will consider in determining the application of these funds and other resources. As a result,
the consummation of acquisitions may have a material adverse effect on our business, financial condition, results of operations
and cash flows.



Failure to manage our growing and
changing business could have a material adverse effect on our business, prospects, financial condition and results of operations.



As we grow, we expect to encounter additional
challenges to our internal processes, capital commitment process, and acquisition funding and financing capabilities. Our existing
operations, personnel, systems and internal control may not be adequate to support our growth and expansion and may require us
to make additional unanticipated investments in our infrastructure. To manage the future growth of our operations, we will be required
to improve our administrative, operational and financial systems, procedures and controls, and maintain, expand, train and manage
our growing employee base. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities,
execute our business strategies successfully or respond to competitive pressures. As a result, our business, prospects, financial
condition and results of operations could be materially and adversely affected.









4







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



Since the launch of its acquisition strategy
in 2013, the Company has not been profitable. Although management is pleased with the execution of the Company’s acquisition
strategy and the revenues it has generated to date, the Company may never become profitable, and could go out of business.



Despite having sustained net losses
from our inception, we still consider ourselves a going concern.



For the fiscal years ended December 31,
2020 and December 31, 2019 our independent registered public accounting firm has 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;
| | - | ---------------------------------------------



| | · | 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 to incur approximately $6,400,000 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,
since 2013, have focused all our efforts on the acquisition and development of our portfolio of companies which have quadrupled
our revenue since 2015. 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 acquired companies will remain cash flow positive and could possibly lose revenues. In addition,
there are no assurances that the companies 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;
| | - | -----------------------------------------------------------------------



| | · | 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.
| | - | -------------------------------------------------------------------------------------------------









5







There are no substantial barriers to
acquire established businesses and there is no guarantee the Company will successfully acquire additional businesses, which could
severely limit our anticipated 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 model, 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 confusion among
prospective portfolio companies and their customers, 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.



Risks Associated with our Common Stock



Our stock has limited liquidity.



Our common stock trades on the OTC Pink
Market, which is operated by OTC Markets Group Inc. (“OTC Pink 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; and
| | - | -------------------------------------------------------------------------------



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



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



Our shares are defined as a “penny
stock” under the Exchange Act and rules of the SEC. The Exchange Act and SEC 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.









6







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.



Other General Risks



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.



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 electronic platform 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.







































7







ITEM 2. DESCRIPTION OF PROPERTY.



The Company had operating lease expense
of $87,649 and $210,286 for the years ended December 31, 2020 and 2019, respectively, consisting of the followings.



|       |  | For the year ended |       
|------ |  | ------------------ | ------
|       |  | December 31, 2020  |       
|       |  |                    |       
|Lot    |  | $                  | 408   
|Office |  |                    | 87,169
|Total  |  | $                  | 87,649



Edge View Properties, Inc. holds 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.



Cardiff filed a lawsuit on October 4,
2020 in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida seeking to nullify agreements
with six individuals. In violation of the management agreement entered into by the Company and Ihsane (Jay) Jahid in connection
with the Company’s acquisition of Red Rock Travel Group, LLC, the Company alleges that Mr. Jahid engaged in self-interested,
self-serving conduct utilizing the Company’s goodwill to enter into certain Convertible Note agreements with Matt Kanuck,
Rita Home & Investment, LLC, Taoufik Litefti, Khalid Ahroum, and Iham Taharraoui without the legal authority to bind the Company.
The Company alleges that it did not authorize Mr. Jahid to enter into the subject agreements with the five other defendants, was
not aware that Mr. Jahid had done so, Mr. Jahid was acting outside of the scope of his authority when he caused the Company to
enter into the agreements, the five other defendants knew or should have known that Mr. Jahid did not have the authority to bind
the Company to the obligations contemplated by the subject agreements, and any rights that the five other defendants claim under
the agreements with Mr. Jahid are controverted by the management agreement that was in place between the Company and Mr. Jahid
and therefore cannot form the basis for any breach of contract claims against the Company. The parties are currently engaged in
settlement negotiations.



ITEM 4. MINE SAFETY DISCLOSURES.



Not applicable.



























8







PART II



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



Holders



As of March 24, 2021,
there were 853 record holders of our common stock, and there were 109,944,821 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 OTC Pink Market, which is operated by OTC Markets Group Inc. under
the symbol “CDIX.” The OTC Pink Market is a quotation service that displays real-time quotes, last-sale prices, and
volume information in over the counter, or “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 Pink Market quotation service. These bid prices represent
prices quoted by broker-dealers on the OTC Pink quotation service. The quotations reflect inter- dealer prices, without retail
mark-up, mark- down or commissions, and may not represent actual transactions. The prices presented have not been adjusted to reflect
the impact of a one for ten thousand (1:10.000) reverse stock split of the Company’s common stock effected on April 4, 2020.



|                  |  | High |      |  | Low |  
|----------------- |  | ---- | ---- |  | --- | -
|December 31, 2020 |  |      |      |  |     |  
|1st Quarter       |  | $    | 40   |  |     | $
|2nd Quarter       |  | $    | .51  |  |     | $
|3rd Quarter       |  | $    | .42  |  |     | $
|4th Quarter       |  | $    | .081 |  |     | $
|December 31, 2019 |  |      |      |  |     |  
|1st Quarter       |  | $    | 1.34 |  |     | $
|2nd Quarter       |  | $    | .10  |  |     | $
|3rd Quarter       |  | $    | .01  |  |     | $
|4th Quarter       |  | $    | .006 |  |     | $



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 SEC has 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 Company’s common stock constitute penny stock under the Exchange Act and SEC regulations.
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 promulgated under the Exchange Act. Rather than creating a need to comply with those rules, some broker- dealers will refuse
to attempt to sell penny stock.









9







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;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 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 SEC 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 SEC’s 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 common stock because it will be subject to these penny stock rules. Therefore, shareholders
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.









10







Recent Sales of Unregistered Securities



On January 7, 2020, Cardiff issued the following securities
for services rendered to the Company’s chief operating officer, Dr. Rollan Roberts: one share of Series C preferred stock
valued at $4,000 and 21,000 shares of Series B preferred stock value at $84,000. In addition, during 2020 the Company agreed to
issue 96,000 shares of Series B preferred stock valued at $222,000 to Dr. Roberts.



On February 20, 2020, a preferred stockholder exchanged 1,447,157
shares of Series K-1 preferred stock for 3,500 shares of common stock and 25,000 warrants to purchase common stock.



On June 1, 2020, in connection with the divestiture of Repicci’s,
its founder was issued 119,101 shares of Series H preferred stock valued at $476,404.



On August 29, 2020, in connection with service agreement 163,814
common shares were issued.



On November 5, 2020, in connection with service agreement 18,000
common shares were issued



On November 20, 2020, in with services performed by previous
Chief Financial Officer, 10,000 Series I and 1 Series C preferred stock were issued valued at $14.



On December 15, 2020, in with services performed by previous
Chief Financial Officer, 10,000 Series B preferred stock were issued valued at $40,000.



See footnote Nos. 33 through 37-3 to the Company’s consolidated
financial statements appearing elsewhere in this report for information on convertible notes payable issued during 2020.



The Company relied upon the exemption from registration provided
by Section 4(a)(2) of the Securities Act for transactions not involving any public offering for each issuance of securities during
2020.



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 Financial Condition and Results 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.



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 segment reporting
for selected financial data about the Company as of and for the years ended December 31, 2020 and December 31, 2019. For detailed
financial information, see the audited consolidated financial statements included in this report.









11









|                           |  | As of                                                                                             |           |  | As of                                                                                            |  
|-------------------------- |  | ------------------------------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------------------------------ | -
|                           |  | December 31,
                                                                                2020 |           |  | December
31,
                                                                               2019 |  
|Assets:                    |  |                                                                                                   |           |  |                                                                                                  |  
|Affordable Housing Rentals |  | $                                                                                                 | 258,813   |  |                                                                                                  | $
|Financial Services         |  |                                                                                                   | 4,369,195 |  |                                                                                                  |  
|Others                     |  |                                                                                                   | 302,139   |  |                                                                                                  |  
|Consolidated assets        |  | $                                                                                                 | 4,930,147 |  |                                                                                                  | $





|                                                |  | December 31,
                                                                                2020 |            |   | December 31,
                                                                                2019 |  
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | ---------- | - | ------------------------------------------------------------------------------------------------- | -
|Revenues:                                       |  |                                                                                                   |            |   |                                                                                                   |  
|Affordable Housing Rentals                      |  | $                                                                                                 | 138,832    |   |                                                                                                   | $
|Financial Services                              |  |                                                                                                   | 3,314,226  |   |                                                                                                   |  
|Other                                           |  |                                                                                                   | –          |   |                                                                                                   |  
|Consolidated revenues                           |  | $                                                                                                 | 3,453,058  |   |                                                                                                   | $
|                                                |  |                                                                                                   |            |   |                                                                                                   |  
|Cost of Sales:                                  |  |                                                                                                   |            |   |                                                                                                   |  
|Affordable Housing Rentals                      |  | $                                                                                                 | 156,191    |   |                                                                                                   | $
|Financial Services                              |  |                                                                                                   | 1,511,995  |   |                                                                                                   |  
|Other                                           |  |                                                                                                   | –          |   |                                                                                                   |  
|Consolidated cost of sales                      |  | $                                                                                                 | 1,668,146  |   |                                                                                                   | $
|                                                |  |                                                                                                   |            |   |                                                                                                   |  
|Income (Loss) from operations from subsidiaries |  |                                                                                                   |            |   |                                                                                                   |  
|Affordable Housing Rentals                      |  | $                                                                                                 | (40,378    | ) |                                                                                                   | $
|Financial Services                              |  |                                                                                                   | (190,338   | ) |                                                                                                   |  
|Loss from operations                            |  | $                                                                                                 | (230,716   | ) |                                                                                                   | $
|                                                |  |                                                                                                   |            |   |                                                                                                   |  
|Loss from operations from Cardiff Lexington     |  | $                                                                                                 | (1,573,435 | ) |                                                                                                   | $
|                                                |  |                                                                                                   |            |   |                                                                                                   |  
|Income (Loss) before taxes                      |  |                                                                                                   |            |   |                                                                                                   |  
|Affordable Housing Rentals                      |  | $                                                                                                 | (40,378    | ) |                                                                                                   | $
|Financial Services                              |  |                                                                                                   | (187,943   | ) |                                                                                                   |  
|Corporate and administration                    |  |                                                                                                   | (2,608,572 | ) |                                                                                                   |  
|Consolidated income (loss) before taxes         |  | $                                                                                                 | (2,836,893 | ) |                                                                                                   | $









12







Results of Operations



Revenues. We had revenues in the
amount of $3,453,058 and $3,707,360 for the years ended December 31, 2020 and 2019, respectively. The decrease in revenue was primarily
due to the disposition of our food services sector businesses mid-year and the effect of the COVID 19 Pandemic to ongoing operations.
We expect revenue to increase during 2021, as our financial services sector holdings rebound from the Covid-19 Pandemic. Further,
we continue our e continuous effort for new acquisitions.



Cost of Goods Sold. We had costs
of sales in the amount of $1,668,146 and $1,665,486 for the years ended December 31, 2020 and 2019, respectively. The increase
in cost of sales was primarily due to our Tax Service businesses which incurred increasing labor costs.



Operating Expenses. Operating expenses
consist of depreciation, impairments, and general and administrative expenses. We had operating expenses of $3,589,063 and $3,313,142
for the years ended December 31, 2020 and 2019, respectively. The decrease is primarily due to reduced selling and administrative
expenses as a result of closures due to the COVID-19 Pandemic.



Change in value of derivative liability.
During the years ended December 31, 2020 and 2019 the change in value of derivative liability amounted to $(434,714) and $3,035,271,
respectively. Please refer Note 2 for further explanation. In 2020, we issued nine convertible promissory notes totaling $865,500,
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 of $(751,856). We remeasured the fair value of the beneficial conversion derivative through the date of
conversion (with a change to earnings), with $262,959 derivative liability reclassified to paid-in capital at conversion.



Amortization of debt discounts. We had
amortization of debt discount of $1,192,044 and $648,468 for years ended December 31, 2020 and 2019, respectively. Amortization
of debt discount is related to our convertible debt.



Interest Expense. During the years end
December 31, 2020 and 2019, interest expense amounted to $332,704 and $489,294, respectively. The decrease in interest was a result of
conversions in 2020.



Net Loss. As a result of the foregoing,
we had a net loss of $2,836,893 for the December 31, 2020, which is compared to the net loss for the December 31, 2019 of $7,179,906.



Our activities have a focus on growing
revenue and cash flow. We plan to continue this strategy into 2021.



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 borrow such funds as may be necessary through December
31, 2021 for working capital purposes, although they have no obligation to do so.



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 continue to 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 $6,400,000
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.









13







Liquidity and Capital Resources





As of December 31, 2020, we had cash of $279,311
and a working capital deficit of $13,107,015. As of December 31, 2019, we had cash of $76,902 and a working capital deficit of
$10,561,264.



Net cash used in operating activities was
$903,416 for the December 31, 2020, representing a $743,957 increase in net cash used in operating activities for the year ended
December 31, 2019. The increase in the amount of net cash used in operating activities in 2020 compared to last year was primarily attributable
the recognition of deferred revenue of $222,428.



Net cash used in investing activities was
$0 for the December 31, 2020 compared with cash provided by investing activities of $32,448, during the December 31, 2019.



Cash flows provided by financing activities were
$1,150,423 for the December 31, 2020, which compares to cash flows provided by financing activities of $717,859 for the December
31, 2019.





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. The Company entered into a Security Purchase Agreement dated November 20, 2019 to sell
preferred series R shares. Stated value $1,200 per share. These shares
shall have a $0.001 par value and shall be non-dilutable stock with voting rights – votes with the Common at 1 vote per share.
Conversion rights – converts to Common stock at a ratio of 1 share preferred to 1:25 shares of Common. All newly issued Stock
are subject to a lock-up/leak-out agreement. Liquidation limited to 25% in 6 months and one day and subsequently 25% per year.



During 2020 and 2021 both the Platinum
Tax Subsidiary and the Key Tax Subsidiary secured PPP Funding to sustain their respective payrolls.



The Company’s current funding is
now concentrated with 3 primary lenders and the Company is currently in discussions with each to convert those outstanding notes
to equity to include lockup and leakout agreements.



Off-Balance Sheet Arrangements



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



Plan of Operation



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



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 their investment by continually
adding assets and holdings. By employing a merge or 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.









14







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 publicly-traded holding company utilizing a form of collaborative governance. Cardiff Lexington 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 potential access to capital markets of a publicly-traded company without losing management control. Cardiff
Lexington seeks to provide companies the ability to raise money and investors a low-risk environment that protects their investment.



WE THREE, LLC (D/B/A AFFORDABLE HOUSING
INITIATIVE) (“AHI”): AHI was acquired on May 15, 2014 is located in Maryville, Tennessee. AHI acquires both mobile
homes and mobile home parks offering an alternative to traditional housing and sells them or rents the homes or properties to individual
families. The acquisition of mobile homes and mobile home parks allows AHI to provide an alternative to traditional housing, which
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.



EDGE VIEW PROPERTIES LLC: Edge View
Properties was acquired on July 16, 2014, is a real estate company that owns 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). Edgeview’s plan is to enter into a joint venture agreement with a planned concept developer to develop
the land.



PLATINUM TAX DEFENDERS:Platinum
tax was acquired on July 31, 2018 and is a full-service tax resolution firm located in Los
Angeles, CA.  Since 2011, Platinum Tax has been assisting all types of taxpayers resolve any and all issues with IRS and applicable
state tax agencies. Platinum Tax provides fee-based tax resolution services to individuals and companies that have federal and
state tax liabilities by assisting its clients to settle outstanding tax debts. Specifically, the Platinum Tax teams tax relief
services include but are not limited to, back taxes, offer in compromise, audit representation, amending tax returns, tax preparation,
tax resolution, wage garnishment relief, removal of bank levies and liens, bookkeeping, and other financial challenges. Platinum
Tax team includes tax attorneys, accountants, and enrolled agents that have an aggregate of more than 90 years of experience in
the financial services industry and have resolved tax issues for thousands of clients.



JM ENTERPRISES 1, INC. (DBA) Key Tax
Group (“Key Tax”), was acquired on May 13, 2019, is a full-service tax resolution firm located in Jacksonville,
FL. Key Tax assists businesses and individuals around the nation with tax debt issues. Key Tax has a team of
twelve members, including tax lawyers, enrolled agents, and support staff with an aggregate of more than 35 years of experience
in the tax industry, who are well versed in both the accounting portion of tax debt as well as the resolution side with substantial
experienced in working successfully with revenue officers and collectors. Among other services, Key Tax offers Tax Audit Representation,
IRS Installment Agreements, Sales Tax Representation, 940/941 Payroll Tax, Representation, Foreign Bank Account Report Filings,
OIC/Fresh Start Program, Wage Garnishment, Bank Levies, Tax Lien Removal, State Tax Resolution, Audit Reconsideration, and Penalty
Abatement.









15







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.



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 historically used 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. Subsequently, the Company
changed its estimate methodology to use the Black-Scholes Model in 2019 and 2020. 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, 2020 and December 31, 2019.



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 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.









16







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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



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.









17







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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



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.



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.









18









INDEX TO FINANCIAL STATEMENTS



|                                                           |  | Page
|---------------------------------------------------------- |  | ----
|Reports of Independent Registered Public Accounting Firm   |  | 20  
|                                                           |  |     
|Consolidated Balance Sheets (Restated)                     |  | 22  
|                                                           |  |     
|Consolidated Statements of Operations (Restated)           |  | 24  
|                                                           |  |     
|Consolidated Statements of Shareholders’ Equity (Restated) |  | 25  
|                                                           |  |     
|Consolidated Statements of Cash Flows (Restated)           |  | 27  
|                                                           |  |     
|Notes to Consolidated Financial Statements                 |  | 29  





































19







REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and
Stockholders of Cardiff Lexington Corporation



Opinion on the Financial Statements



We have audited the accompanying consolidated
balance sheets of Cardiff Lexington Corporation (the Company) at December 31, 2020 and 2019, and the related consolidated statements
of operations, deficiency in shareholder’s equity, and cash flows for each of the years in the two-year period ended December
31, 2020, 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, 2020 and 2019, and the results
of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting
principles generally accepted in the United States of America.



Emphasis of Matter



As discussed in Note 2, the accompanying consolidated
financial statements have been restated.



Going Concern Uncertainty



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 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 audits. 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 audits 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 audits, 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 audits 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 audits 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 audits provide a
reasonable basis for our opinion.











20







Critical Audit Matters



The critical audit matters communicated
below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any
way our opinion on the financial statements, taken as whole, and we are not, by communicating the critical matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.



Intangible
Assets Impairment Assessments



As described in
Notes 2 and 8 to the consolidated financial statements, the Company has goodwill of $3.5 million at December 31, 2020. In most
cases, no directly observable market inputs are available to measure the fair value to determine if the asset is impaired. Therefore,
an estimate is derived indirectly and is based on net present value techniques utilizing post-tax cash flows and discount rates.
The estimates that management used in calculating the net present values depend on assumptions specific to the nature of the management
service activities with regard to the amount and timing of projected future cash flows; long-term professional service forecasts;
actions of competitors (competing services), future tax and discount rates.



The principal
considerations for our determination that performing procedures relating to the intangible assets impairment assessment is a critical
audit matter are the significant judgment by management when developing the net present value of the intangible assets. This in
turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s
significant assumptions related to the amount and timing of projected future cash flows and the discount rate.



Addressing the
matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing management’s process for developing the fair value estimate; evaluating
the appropriateness of the net present value techniques; testing the completeness and accuracy of underlying data used in the model;
and evaluating the significant assumptions used by management, including the amount and timing of projected future cash flows and
the discount rate. Evaluating management’s assumptions related to the amount and timing of projected future cash flows and
the discount rate involved evaluating whether the assumptions used by management were reasonable considering the current and past
performance of the intangible assets, the consistency with external market and industry data, and whether these assumptions were
consistent with evidence obtained in other areas of the audit.





/s/ Daszkal Bolton LLP

Daszkal Bolton LLP



March 31, 2021, except for Note 2 as to which
the date is February 8, 2022

Fort Lauderdale, Florida



We have served as the Company’s auditor
since 2018 through 2021.











21







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2020 AND 2019 (Restated)



|                                                                                                             |  | December 31, |           
|------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------
|                                                                                                             |  | 2020         |           
|ASSETS                                                                                                       |  |              |           
|Current assets                                                                                               |  |              |           
|Cash                                                                                                         |  | $            | 279,311   
|Accounts receivable-net                                                                                      |  |              | 16,377    
|Prepaid and other                                                                                            |  |              | –         
|Total current assets                                                                                         |  |              | 295,688   
|                                                                                                             |  |              |           
|Property and equipment, net of accumulated depreciation of $205,443 and $182,343 respectively                |  |              | 211,779   
|Land                                                                                                         |  |              | 603,000   
|Intangible assets, net                                                                                       |  |              | 253,550   
|Goodwill                                                                                                     |  |              | 3,499,963 
|Deposits                                                                                                     |  |              | 13,600    
|Right of use - assets                                                                                        |  |              | 52,567    
|Due from related party                                                                                       |  |              | –         
|Other assets                                                                                                 |  |              | –         
|Total assets                                                                                                 |  | $            | 4,930,147 
|                                                                                                             |  |              |           
|LIABILITIES AND DEFICIENCY IN SHAREHOLDERS' EQUITY                                                           |  |              |           
|Current liabilities                                                                                          |  |              |           
|Accounts payable and accrued expense                                                                         |  | $            | 617,073   
|Accrued expenses - related parties                                                                           |  |              | 2,196,222 
|Accrued interest                                                                                             |  |              | 722,815   
|Right of use - liability                                                                                     |  |              | 54,185    
|Due to director & officer                                                                                    |  |              | 126,849   
|Deferred revenue                                                                                             |  |              | 353,830   
|Line of credit                                                                                               |  |              | 51,927    
|Common stock to be issued                                                                                    |  |              | –         
|Preferred stock to be issued                                                                                 |  |              | 222,000   
|Notes payable                                                                                                |  |              | 947,912   
|Notes payable - related party                                                                                |  |              | 37,885    
|Convertible notes payable, net of debt discounts of $108,321 and $828,468, respectively                      |  |              | 2,476,647 
|Net, liabilities of discontinued operations                                                                  |  |              | 2,691,695 
|Derivative Liability                                                                                         |  |              | 2,903,663 
|Total current liabilities                                                                                    |  |              | 13,402,703
|                                                                                                             |  |              |           
|Other Liabilities                                                                                            |  |              |           
|Notes payable                                                                                                |  |              | 399,778   
|Convertible notes payable, net of current portion and net of debt discounts of $0 and $687,849, respectively |  |              | –         
|                                                                                                             |  |              |           
|Total liabilities                                                                                            |  | $            | 13,802,481



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









22







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

AS OF DECEMBER 31, 2020 AND 2019 (Restated)





|Deficiency in shareholders' equity                                                                                                                                                                 |  |   |             |   |  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------- | - |  | - | ----------- | -
|Preferred stock                                                                                                                                                                                    |  |   |             |   |  |   |             |  
|Preferred Stock Series B- 3,000,000 shares authorized, no par, stated value of $4.00, 1,764,244 and 1,733,254 shares issued and outstanding at December 31, 2020 and 2019, respectively            |  |   | 7,056,977   |   |  |   | 6,933,012   |  
|Preferred Stock Series C- 500 shares authorized, no par, stated value of $4.00, 122 and 120 shares issued and outstanding at December 31, 2020 and 2019, respectively                              |  |   | 488         |   |  |   | –           |  
|Preferred Stock Series D- 800,000 shares authorized, no par, stated value $4.00, 250,000 shares issued and outstanding at December 31, 2020 and 2019                                               |  |   | 1,000,000   |   |  |   | 1,000,000   |  
|Preferred Stock Series E- 1,000,000 shares authorized, no par, stated value $4.00, 150,750 and 150,749 shares issued and outstanding at December 31, 2020 and 2019, respectively                   |  |   | 603,000     |   |  |   | 602,998     |  
|Preferred Stock Series F- 800,000 shares authorized, no par, stated value $4.00, 175,045 and 175,043 shares issued and outstanding at December 31, 2020 and 2019, respectively                     |  |   | 700,180     |   |  |   | 700,173     |  
|Preferred Stock Series F-1- 800,000 shares authorized, no par, stated value $4.00, 35,752 and 35,745 shares issued and outstanding at December 31, 2020 and 2019, respectively                     |  |   | 143,008     |   |  |   | 142,983     |  
|Preferred Stock Series G- 20,000,000 shares authorized, no par, stated value $4.00, 325,244 shares issued and outstanding at December 31, 2020 and 2019                                            |  |   | 1,300,976   |   |  |   | 1,300,976   |  
|Preferred Stock Series H- 4,859,379 shares authorized, no par, stated value $4.00, 119,101 and -0- shares issued and 37,500 and -0- shares outstanding at December 31, 2020 and 2019, respectively |  |   | 476,404     |   |  |   | –           |  
|Preferred Stock Series I- 500,000,000 shares authorized, with par value of $.001, 195,010,000 and 195,000,000 issued and outstanding at December 31, 2020 and 2019, respectively                   |  |   | 195,010     |   |  |   | 195,000     |  
|Preferred Stock Series K- 10,937,500 shares authorized, par value of $.001, 8,200,562 shares issued and outstanding at December 31, 2020 and 2019                                                  |  |   | 8,201       |   |  |   | 8,200       |  
|Preferred Stock Series K1- 35,000,000 shares authorized, par value of $.001, -0- and 1,447,157 shares issued and outstanding at December 31, 2020 and 2019, respectively                           |  |   | –           |   |  |   | 1,447       |  
|Preferred Stock Series L- 100,000,000 shares authorized, no par, stated value $4.00, 319,492 shares issued and outstanding at December 31, 2020 and 2019                                           |  |   | 1,277,972   |   |  |   | 1,277,968   |  
|Preferred Stock Series R-5,000 shares authorized, stated value of $1,200, 165 shares issued and outstanding at December 31, 2020 and 2019                                                          |  |   | 198,000     |   |  |   | 198,000     |  
|Common stock; 7,500,000,000 shares authorized with $0.001 par value; 5,268,797 and 67,742 shares issued and outstanding at December 31, 2020 and 2019, respectively                                |  |   | 5,267       |   |  |   | 677,420     |  
|Treasury stock; 294,101 and -0- shares of Series H Preferred stock at December 31, 2020 and 2019                                                                                                   |  |   | (2,365,864  | ) |  |   | –           |  
|Additional paid-in capital                                                                                                                                                                         |  |   | 46,111,302  |   |  |   | 42,793,628  |  
|Accumulated deficit                                                                                                                                                                                |  |   | (65,583,255 | ) |  |   | (62,558,509 | )
|Total deficiency in shareholders' equity                                                                                                                                                           |  |   | (8,872,334  | ) |  |   | (6,726,704  | )
|                                                                                                                                                                                                   |  |   |             |   |  |   |             |  
|Total liabilities and deficiency in shareholders' equity                                                                                                                                           |  | $ | 4,930,147   |   |  | $ | 4,915,804   |  



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







23









CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2020
AND DECEMBER 31, 2019 (Restated



|                                                                        |  | DECEMBER 31, |                  
|----------------------------------------------------------------------- |  | ------------ | -----------------
|                                                                        |  | 2020         |                  
|REVENUE                                                                 |  |              |                  
|Rental income                                                           |  | $            | 138,832          
|Financial Services                                                      |  |              | 3,314,226        
|Other                                                                   |  |              |                  
|Total revenue                                                           |  |              | 3,453,058        
|                                                                        |  |              |                  
|COST OF SALES                                                           |  |              |                  
|Rental business                                                         |  |              | 156,191          
|Tax Services                                                            |  |              | 1,511,995        
|Total cost of sales                                                     |  |              | 1,668,146        
|                                                                        |  |              |                  
|GROSS MARGIN                                                            |  |              | 1,784,912        
|                                                                        |  |              |                  
|OPERATING EXPENSES                                                      |  |              |                  
|Depreciation expense                                                    |  |              | 1,274            
|Selling, general and administrative                                     |  |              | 3,587,789        
|Total operating expenses                                                |  |              | 3,589,063        
|                                                                        |  |              |                  
|LOSS FROM OPERATIONS                                                    |  |              | (1,804,151       
|                                                                        |  |              |                  
|OTHER INCOME (EXPENSE)                                                  |  |              |                  
|Change in value of derivative liability                                 |  |              | 434,714          
|Interest expense                                                        |  |              | (332,704         
|Conversion cost penalty and reimbursement                               |  |              | (25,400          
|Amortization of debt discounts                                          |  |              | (1,192,044       
|Total other income (expenses)                                           |  |              | (1,115,434       
|                                                                        |  |              |                  
|NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS                        |  |              | (2,919,585       
|                                                                        |  |              |                  
|LOSS FROM DISCONTINUED OPERATIONS                                       |  |              | (112,181         
|                                                                        |  |              |                  
|GAIN (LOSS) FROM DISPOSAL OF DISCONTINUED OPERATIONS                    |  |              | 194,873          
|                                                                        |  |              |                  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS                              |  |              | 82,692           
|NET LOSS FOR THE YEAR                                                   |  | $            | (2,836,893       
|                                                                        |  |              |                  
|Deemed dividend - modification of preferred stock                       |  |              | (1,605,266       
|                                                                        |  |              |                  
|NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                            |  | $            | (4,442,159       
|                                                                        |  |              |                  
|BASIC EARNINGS (LOSS) PER SHARE                                         |  |              |                  
|CONTINUED OPERATIONS                                                    |  | $            | (4.98            
|DISCONTINUED OPERATIONS                                                 |  | $            | 0.09             
|                                                                        |  |              |                  
|DILUTED EARNINGS (LOSS) PER SHARE                                       |  |              |                  
|CONTINUED OPERATIONS                                                    |  | $            | (4.98            
|DISCONTINUED OPERATIONS                                                 |  | $            | (0.00            
|                                                                        |  |              |                  
|WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC EARNING (LOSS) PER SHARE    |  |              |                  
|CONTINUED OPERATIONS                                                    |  |              | 908,485          
|DISCONTINUED OPERATIONS                                                 |  |              | 908,485          
|                                                                        |  |              |                  
|WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED EARNINGS (LOSS) PER SHARE |  |              |                  
|CONTINUED OPERATIONS                                                    |  |              | 908,485          
|DISCONTINUED OPERATIONS                                                 |  |              | 1,444,295,967,109



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





24







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS'
(DEFICIENCY)

FOR THE YEARS ENDED DECEMBER 31, 2020
AND 2019 (Restated)



|                                                                    |  | Preferred
    Stock Series A, I, K, K-1 |             |   | Preferred
    Stock Series B, D, E, F, F-1, G, H, L |   |         | Preferred
    Stock, Series C and R | 
|------------------------------------------------------------------- |  | --------------------------------------- | ----------- | - | --------------------------------------------------- | - | ------- | ----------------------------------- | 
|                                                                    |  | Shares                                  |             |   | Amount                                              |   |         | Shares                              | 
|Balance
    December 31, 2018                                       |  |                                         | 9,647,720   |   |                                                     | $ | 9,648   |                                     | 
|Issuance to balance reverse
    split partial rounding shares       |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Issuance of I Series
    preferred stock as compensation            |  |                                         | 250,000,000 |   |                                                     |   | 250,000 |                                     | 
|Issuance of Series G preferred
    stock for Key Tax acquisition    |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Conversion of preferred stock
    I series                          |  |                                         | (55,000,000 | ) |                                                     |   | (55,000 | )                                   | 
|Issuance of R Series preferred
    stock                            |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Conversion of convertible
    notes payable                         |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Reclassify Derivative liabilities
    to Additional Paid in Capital |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Net loss                                                            |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Balance
    December 31, 2019                                       |  |                                         | 204,647,720 |   |                                                     | $ | 204,648 |                                     | 
|Issuance of common stock for
    services                           |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Issuance of preferred stock
    for services                        |  |                                         | 10,000      |   |                                                     |   | 10      |                                     | 
|Preferred stock to be issued                                        |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Issuance of common stock in
    exchange for preferred stock        |  |                                         | (1,447,157  | ) |                                                     |   | (1,447  | )                                   | 
|Issuance of preferred stock
    in exchange for common stock        |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Dividend on Series G preferred
    stock                            |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Conversion of convertible
    notes payable                         |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Reclassify Derivative liabilities
    to Additional Paid in Capital |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Sale of subsidiaries                                                |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Issuance of common stock                                            |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Net loss                                                            |  |                                         | –           |   |                                                     |   | –       |                                     | 
|Balance,
    December 31, 2020                                      |  |                                         | 203,210,563 |   |                                                     | $ | 203,211 |                                     | 



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









25







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS'
(DEFICIENCY) (continued)

FOR THE YEARS ENDED DECEMBER 31, 2020
AND DECEMBER 31, 2019 (Restated)



|                                                                    |  | Treasury
    Stock |          |   | Common
    Stock |   |            | Additional
    Paid-in |  |  | Accumulated |   |  |         |      
|------------------------------------------------------------------- |  | ------------------ | -------- | - | ---------------- | - | ---------- | ---------------------- |  |  | ----------- | - |  | ------- | -----
|                                                                    |  | Shares             |          |   | Amount           |   |            | Shares                 |  |  | Amount      |   |  | Capital |      
|Balance December
    31, 2018                                       |  |                    | –        |   |                  | $ | –          |                        |  |  | 60          |   |  | $       | 1    
|Issuance to
    balance reverse split partial rounding shares       |  |                    | –        |   |                  |   | –          |                        |  |  | (826        | ) |  |         | –    
|Issuance of I
    Series preferred stock as compensation            |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Issuance of
    Series G preferred stock for Key Tax acquisition    |  |                    | –        |   |                  |   | –          |                        |  |  | 50          |   |  |         | 1    
|Conversion of preferred stock I series                              |  |                    | –        |   |                  |   | –          |                        |  |  | 8,250       |   |  |         | 8    
|Issuance of R Series preferred stock                                |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Conversion of
    convertible notes payable                         |  |                    | –        |   |                  |   | –          |                        |  |  | 59,382      |   |  |         | 59   
|Reclassify Derivative
    liabilities to Additional Paid in Capital |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Net
                                         loss                   |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Balance December 31, 2019                                           |  |                    | –        |   |                  | $ | –          |                        |  |  | 67,742      |   |  | $       | 68   
|Issuance of common stock for services                               |  |                    | –        |   |                  |   | –          |                        |  |  | 18,000      |   |  |         | 18   
|Issuance of preferred stock for services                            |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Preferred stock to be issued                                        |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Issuance of
    common stock in exchange for preferred stock        |  |                    | –        |   |                  |   | –          |                        |  |  | 3,500       |   |  |         | 4    
|Issuance of
    preferred stock in exchange for common stock        |  |                    | –        |   |                  |   | –          |                        |  |  | (320        | ) |  |         | (1   
|Dividend on Series G preferred stock                                |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Conversion of convertible notes payable                             |  |                    | –        |   |                  |   | –          |                        |  |  | 5,014,697   |   |  |         | 5,014
|Reclassify Derivative
    liabilities to Additional Paid in Capital |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Sale of subsidiaries                                                |  |                    | (294,101 | ) |                  |   | (2,365,864 | )                      |  |  | –           |   |  |         | –    
|Issuance of common stock                                            |  |                    | –        |   |                  |   | –          |                        |  |  | 163,814     |   |  |         | 164  
|Net loss                                                            |  |                    | –        |   |                  |   | –          |                        |  |  | –           |   |  |         | –    
|Balance, December 31, 2020                                          |  |                    | (294,101 | ) |                  | $ | (2,365,864 | )                      |  |  | 5,267,433   |   |  | $       | 5,267



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





























26







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020
AND DECEMBER 31, 2019 (Restated)



|                                                                                                   |  | 2020 |            |   | 2019 |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                                                                   |  |      |            |   |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                               |  |      |            |   |      |  
|Net (Loss) from continuing operations                                                              |  | $    | (2,919,585 | ) |      | $
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |      |            |   |      |  
|Depreciation                                                                                       |  |      | 23,100     |   |      |  
|Bad debt expense                                                                                   |  |      | –          |   |      |  
|Amortization of loan discount                                                                      |  |      | 1,183,147  |   |      |  
|Change in value of derivative liability                                                            |  |      | (434,714   | ) |      |  
|Convertible note issued for conversion cost reimbursement                                          |  |      | –          |   |      |  
|Conversion cost penalty                                                                            |  |      | –          |   |      |  
|(Increase) decrease in:                                                                            |  |      |            |   |      |  
|Accounts receivable                                                                                |  |      | 83,163     |   |      |  
|Inventory                                                                                          |  |      | –          |   |      |  
|Deposits                                                                                           |  |      | –          |   |      |  
|Right of use - assets                                                                              |  |      | 38,232     |   |      |  
|Prepaids and other                                                                                 |  |      | 10,234     |   |      |  
|Other assets                                                                                       |  |      | 10,000     |   |      |  
|Intangible assets                                                                                  |  |      | –          |   |      |  
|Increase(decrease) in:                                                                             |  |      |            |   |      |  
|Accounts payable & Accrued expense                                                                 |  |      | (156,678   | ) |      |  
|Accrued officers compensation                                                                      |  |      | 748,735    |   |      |  
|Accrued interest                                                                                   |  |      | 185,820    |   |      |  
|Right of use - liabilities                                                                         |  |      | (38,143    | ) |      |  
|Preferred shares to be issued                                                                      |  |      | 222,000    |   |      |  
|Due to officers and shareholders                                                                   |  |      | 23,338     |   |      |  
|Deferred revenue                                                                                   |  |      | 117,935    |   |      |  
|Net cash provided by (used in) operating activities                                                |  |      | (903,416   | ) |      |  
|                                                                                                   |  |      |            |   |      |  
|Net cash from Discontinued Operations - Operating                                                  |  |      | (44,599    | ) |      |  
|                                                                                                   |  |      |            |   |      |  
|INVESTING ACTIVITIES                                                                               |  |      |            |   |      |  
|Purchase of equipment                                                                              |  |      | –          |   |      |  
|Disposal of equipment                                                                              |  |      | –          |   |      |  
|Net cash provided by (used in) investing activities                                                |  |      |            |   |      |  
|                                                                                                   |  |      |            |   |      |  
|Net cash from Discontinued Operations - Investing                                                  |  |      | –          |   |      |  



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









27







CARDIFF LEXINGTON CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS (continued)

FOR THE YEARS ENDED DECEMBER 31, 2020
AND DECEMBER 31, 2019 (Restated)



|FINANCING ACTIVITIES                                             |  |   |           |   |  |  
|---------------------------------------------------------------- |  | - | --------- | - |  | -
|Proceeds from shareholder                                        |  |   | –         |   |  |  
|Repayments to directors and officers                             |  |   | (9,500    | ) |  |  
|Proceeds from convertible notes payable                          |  |   | 746,072   |   |  |  
|Proceeds from notes payable - related party                      |  |   | 127,445   |   |  |  
|Proceeds from notes payable                                      |  |   | 706,807   |   |  |  
|Proceeds from line of credit                                     |  |   | –         |   |  |  
|Repayment of line of credit                                      |  |   | (39,172   | ) |  |  
|Repayments to convertible notes payable                          |  |   | (27,106   | ) |  |  
|Repayments to notes payable - related party                      |  |   | (163,316  | ) |  |  
|Repayments to notes payable - 3rd party                          |  |   | (2,957)   |   |  |  
|Issuance of preferred I stock                                    |  |   | (87,850   | ) |  |  
|                                                                 |  |   |           |   |  |  
|Net cash provided by (used in) financing activities              |  |   | 1,150,423 |   |  |  
|                                                                 |  |   |           |   |  |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             |  |   | 202,409   |   |  |  
|                                                                 |  |   |           |   |  |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   |  |   | 76,902    |   |  |  
|                                                                 |  |   |           |   |  |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                         |  | $ | 279,311   |   |  | $
|                                                                 |  |   |           |   |  |  
|SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION                |  |   |           |   |  |  
|Cash paid during the period for:                                 |  |   |           |   |  |  
|Interest                                                         |  | $ | 379,892   |   |  | $
|                                                                 |  |   |           |   |  |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                     |  |   |           |   |  |  
|Common stock issued upon conversion of notes payable             |  | $ | 196,291   |   |  | $
|Common stock issued for settlement of accrued expense            |  |   | 49,466    |   |  | $
|Series G Preferred Stock issued for acquisition of Key Tax Group |  | $ | –         |   |  | $
|Series I preferred stock issued for compensation                 |  |   | –         |   |  | $
|Conversion of preferred stock to common stock                    |  | $ | –         |   |  | $
|Derivative liability settled upon conversion                     |  | $ | 611,141   |   |  | $



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









28







NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS



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



Organization and Nature of Operations



Legacy Card Company, LLC (“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 Lexington”,
the “Company”), a publicly held corporation.



In the first quarter of 2013, it was decided
to restructure Cardiff Lexington 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 potential access to capital markets provided by affiliation with
a publicly-traded company. Cardiff Lexington 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



Cardiff Lexington consists of the following wholly owned subsidiaries:



We Three, LLC dba Affordable Housing Initiative (“AHI”),
acquired May 15, 2014

Romeo’s Alpharetta, LLC dba Romeo’s NY
Pizza (“Romeo’s Pizza”), acquired June 30, 2014; Sold July 1, 2020.

Edge View Properties, Inc., (“Edge View”)
acquired July 16, 2014

Repicci’s Franchise Group, LLC (“Repicci’s
Group”), acquired August 10, 2016; Sold June 1, 2020.

Platinum Tax Defenders, LLC (“Platinum Tax”),
acquired July 31, 2018

JM Enterprises 1, Inc. dba Key Tax Group (“Key
Tax”), acquired May 2019

Red Rock Travel Group, LLC (“Red Rock”),
acquired July 31, 2018, discontinued May 31, 2019



Principles of Consolidation



The
consolidated financial statements include the accounts of Cardiff, and its wholly-owned subsidiaries: AHI dba We Three, LLC, Edge
View, Platinum Tax, and Key tax, and subsidiaries shown as discontinued operations includes Red Rock Travel Group, LLC, Romeo’s,
and Repicci’s. 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 condensed consolidated financial results. Subsidiaries discontinued are shown as discontinued operations.



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.











29







Change in Capital Structure



In the first quarter of 2019, the Company
executed a reverse stock split of 1,500:1 effective March 21, 2019.



In January 2020, the Company announced
a reverse split of several of its Preferred Stock Classes which has been given retrospective treatment in the consolidated financial
statements.



In
May 2020, the Company affected a 10,000:1 reverse split of Common Stock which has been given retrospective treatment in the financial
statements for all periods presented.



COVID-19
Pandemic



The
outbreak of a novel coronavirus throughout the world, including the United States, during early calendar year 2020 has caused widespread
business and economic disruption through mandated and voluntary business closings and restrictions on the movement and activities
of people (“COVID-19 Pandemic”). The extent of the impact of the COVID-19 Pandemic on the Company's business is highly
uncertain and difficult to predict, as the response to the COVID-19 Pandemic is rapidly evolving in many countries, including the
United States and other markets where the Company operates. It is expected that many of the Company's customers and suppliers could
be impacted by these closings and restrictions which could materially and adversely affect demand for our products, our ability
to obtain or deliver inventory or services, and our ability to collect accounts receivables as customers face higher liquidity
and solvency risk. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 Pandemic,
and it is possible that it could cause an economic downturn, recession, or depression. Such economic disruption could have a material
adverse effect on our business. Policymakers around the world have responded with fiscal and monetary policy actions to support
the economy. The magnitude and overall effectiveness of these actions remains uncertain.



Revenue Recognition



On January 1, 2018, we adopted ASC 606,
Revenue from contracts with customers (“Topic 606”) using the modified retrospective method applied to those contracts
which were not completed as of January 1, 2018.



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.



Our tax services subsidiaries receive payments
in advance of service and are recorded as deferred revenue. Revenues are as services are provided.











30







Rental Income



The Company’s rent revenue 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, 2020 and 2019. 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.



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.



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 which was $21,870 and none as of December 31, 2020 and 2019, respectfully.
As of December 31, 2020 and 2019, the Company had accounts receivable of $16,377 and $99,540, respectively. Accounts receivables
are primarily generated from our subsidiaries in their normal course of business.



Property, Equipment and Leasehold Improvements



Property, equipment, and leasehold improvements
are carried at cost. Expenditures for renewals and betterments that extend the useful lives of property, equipment or leasehold
improvements are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is calculated
using the straight-line method for financial reporting purposes 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



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, 2020 and 2019, the company did not recognize
any Goodwill impairment. The Company based this decision on impairment testing of the underlying assets, expected cash flows, decreased
asset value and other factors.











31







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.



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”)
discount against the face amount of the respective debt instrument (offset to additional paid in capital).



When the Company records a BCF which is
not a conventional convertible, the 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 term 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:











32







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, 2020 and 2019. Please
refer to Note 2 for further explanation.



|                                                           |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|---------------------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Fair Value of BCF Derivative Liability – December 31, 2020 |  | $       | – |  |         | $ | – |         |  | $ | 2,903,663 | 
|                                                           |  |         |   |  |         |   |   |         |  |   |           | 



|                                                           |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|---------------------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Fair Value of BCF Derivative Liability – December 31, 2019 |  | $       | – |  |         | $ | – |         |  | $ | 3,655,518 | 
|                                                           |  |         |   |  |         |   |   |         |  |   |           | 



Stock-Based Compensation



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.



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



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











33







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, 2020 and
2019 the Company did not have any interest and penalties associated with tax positions. As of December 31, 2020 and 2019, the Company
did not have any significant unrecognized uncertain tax positions.



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.



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, 2020, 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.



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 cash flow
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.











34







Accounting Pronouncements



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.



Reclassifications



Certain prior period amounts have been reclassified
to conform with the current year presentation.



|2. | RESTATEMENT
    OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
|-- | ---------------------------------------------------------



Subsequent to the initial issuance of the Company's 2020 financial
statements on March 31, 2021, management reconsidered the methodology previously applied in its valuation of derivative liabilities contained
in its matured convertible notes which are in default, to include all inputs to measure the time value component to the application of
the Black-Scholes Model. In addition, management also discovered that it did not reflect the impact of amendments which resulted in modifications
in certain rights and privileges for certain classes of its preferred stock, which should have been accounted for as a deemed dividend
at the time of modification.



The restatement primarily relates to the accounting for (1) the valuation
of embedded derivative liabilities in certain matured convertible notes and (2) the accounting treatment for changes in certain rights
and privileges with respect to certain classes of preferred stock on January 10, 2020.



| | (1) | For certain convertible notes in default containing embedded
                                            derivatives (the "Notes"), the Company originally valued the derivative liability
                                            using a Black-Scholes Model, but without consideration to a time value component (the term,
                                            volatility, or discount rates), because these notes had matured and were immediately due.
                                            As a result, the embedded derivatives for expired notes were measured using a valuation methodology
                                            which was analogous to the use of intrinsic value. Company management has reconsidered the
                                            methodology previously applied, and determined that the use of all inputs to the Black-Scholes
                                            Model is more appropriate in the determination to measure the fair value of all derivative
                                            liabilities.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The Company originally did not reflect the impact of amendments
                                            which resulted in modifications in certain rights and privileges for certain classes of its
                                            preferred stock. Subsequent to the issuance of its financial statements for the year ended
                                            December 31, 2020, Company management determined that these modifications resulted in changes
                                            to the carrying value of certain classes of preferred stock, which should have been accounted
                                            for as a deemed dividend at the time of modification.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table summarizes
the impacts of the error corrections on the Company's financial statements for each of the periods presented below:



i. Balance
sheet



|                                            |  | Impact of correction of error |            
|------------------------------------------- |  | ----------------------------- | -----------
|December 31, 2019 (Audited)                 |  | As previously reported        |            
|                                            |  |                               |            
|Total assets                                |  | $                             | 4,915,805  
|                                            |  |                               |            
|Derivative liability                        |  |                               | 3,102,392  
|Net, liabilities of discontinued operations |  |                               | 2,555,837  
|Other                                       |  |                               | 5,168,005  
|Total liabilities                           |  |                               | 10,826,234 
|                                            |  |                               |            
|Accumulated deficit                         |  |                               | (61,742,235
|Others                                      |  |                               | 55,831,806 
|Total deficiency in shareholders' equity    |  | $                             | (5,910,429 







35







i. Balance sheet (Continued)



|                                            |  | Impact of correction of error |            
|------------------------------------------- |  | ----------------------------- | -----------
|March 31, 2020 (Unaudited)                  |  | As previously reported        |            
|                                            |  |                               |            
|Total assets                                |  | $                             | 5,268,016  
|                                            |  |                               |            
|Derivative liability                        |  |                               | 7,416,815  
|Net, liabilities of discontinued operations |  |                               | 2,863,541  
|Other                                       |  |                               | 6,045,172  
|Total liabilities                           |  |                               | 16,325,528 
|                                            |  |                               |            
|Accumulated deficit                         |  |                               | (67,402,951
|Others                                      |  |                               | 56,345,439 
|Total deficiency in shareholders' equity    |  | $                             | (11,057,512



|                                            |  | Impact of correction of error |            
|------------------------------------------- |  | ----------------------------- | -----------
|June 30, 2020 (Unaudited)                   |  | As previously reported        |            
|                                            |  |                               |            
|Total assets                                |  | $                             | 5,146,980  
|                                            |  |                               |            
|Derivative liability                        |  |                               | 6,936,309  
|Net, liabilities of discontinued operations |  |                               | 2,374,181  
|Other                                       |  |                               | 6,016,924  
|Total  liabilities                          |  |                               | 15,327,414 
|                                            |  |                               |            
|Accumulated deficit                         |  |                               | (66,800,912
|Others                                      |  |                               | 56,620,478 
|Total deficiency in shareholders' equity    |  | $                             | (10,180,434





|                                            |  | Impact of correction of error |            
|------------------------------------------- |  | ----------------------------- | -----------
|September 30, 2020 (Unaudited)              |  | As previously reported        |            
|                                            |  |                               |            
|Total assets                                |  | $                             | 4,944,770  
|                                            |  |                               |            
|Derivative liability                        |  |                               | 3,168,106  
|Net, liabilities of discontinued operations |  |                               | 2,425,100  
|Other                                       |  |                               | 6,437,026  
|Total  liabilities                          |  |                               | 12,030,232 
|                                            |  |                               |            
|Accumulated deficit                         |  |                               | (63,858,637
|Others                                      |  |                               | 56,773,175 
|Total deficiency in shareholders' equity    |  | $                             | (7,085,462 







36











i. Balance sheet (Continued)



|                                            |  | Impact of correction of error |            
|------------------------------------------- |  | ----------------------------- | -----------
|December 31, 2020 (Audited)                 |  | As previously reported        |            
|                                            |  |                               |            
|Total assets                                |  | $                             | 4,930,147  
|                                            |  |                               |            
|Derivative liability                        |  |                               | 2,405,358  
|Net, liabilities of discontinued operations |  |                               | 2,441,965  
|Other                                       |  |                               | 8,207,123  
|Total  liabilities                          |  |                               | 13,054,446 
|                                            |  |                               |            
|Accumulated deficit                         |  |                               | (64,835,220
|Others                                      |  |                               | 56,710,921 
|Total deficiency in shareholders' equity    |  | $                             | (8,124,299 



ii.     Statement of operations



|                                                                      | Impact
                                            of correction of error - year |                       
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------
|Year ended December 31, 2019 (Audited)                                |                                                                                  | As previously reported
|                                                                      |                                                                                  |                       
|Loss from operations                                                  |                                                                                  | $                     
|Change in value of derivative liability                               |                                                                                  |                       
|Others                                                                |                                                                                  |                       
|Other income (expense)                                                |                                                                                  |                       
|Net loss before discontinued operations                               |                                                                                  |                       
|Loss from discontinued operations                                     |                                                                                  |                       
|Net loss                                                              |                                                                                  | $                     
|Basic and Diluted Earnings (loss) per Share                           |                                                                                  |                       
|Continued Operations                                                  |                                                                                  |                       
|Discontinued Operations                                               |                                                                                  |                       
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share |                                                                                  |                       
|Continued Operations                                                  |                                                                                  |                       
|Discontinued Operations                                               |                                                                                  |                       











37







ii. Statement of operations (Continued)



|                                                                      |  | Impact of correction of error - quarter |           
|--------------------------------------------------------------------- |  | --------------------------------------- | ----------
|Quarter ended March 31, 2020 (Unaudited)                              |  | As previously reported                  |           
|                                                                      |  |                                         |           
|Loss from operations                                                  |  | $                                       | (257,028  
|Change in value of derivative liability                               |  |                                         | (4,467,534
|Others                                                                |  |                                         | (327,917  
|Other income (expense)                                                |  |                                         | (4,795,451
|Net loss before discontinued operations                               |  |                                         | (5,052,479
|Loss from discontinued operations                                     |  |                                         | (523,280  
|Net loss                                                              |  |                                         | (5,575,759
|Deemed dividend on preferred stock                                    |  |                                         | –         
|Net loss attributable to common stockholders                          |  | $                                       | (5,575,759
|Basic and Diluted Earnings (loss) per Share                           |  |                                         |           
|Continued Operations                                                  |  |                                         | (49.17    
|Discontinued Operations                                               |  |                                         | (5.09     
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share |  |                                         |           
|Continued Operations                                                  |  |                                         | 102,762   
|Discontinued Operations                                               |  |                                         | 102,762   



































38







ii. Statement of operations (Continued)



|                                                                        |  | Impact of correction of error - quarter |         
|----------------------------------------------------------------------- |  | --------------------------------------- | --------
|Three months ended June 30, 2020 (Unaudited)                            |  | As previously reported                  |         
|                                                                        |  |                                         |         
|Loss from operations                                                    |  | $                                       | (126,833
|Change in value of derivative liability                                 |  |                                         | (28,750 
|Others                                                                  |  |                                         | (347,536
|Other income (expense)                                                  |  |                                         | (376,286
|Net loss before discontinued operations                                 |  |                                         | (503,119
|Loss from discontinued operations                                       |  |                                         | (103,390
|Gain from disposal from discontinued operations                         |  |                                         | 216,013 
|Income (loss) from discontinued operations                              |  |                                         | 112,623 
|Net loss                                                                |  |                                         | (390,496
|Deemed dividend on preferred stock                                      |  |                                         | –       
|Net loss attributable to common stockholders                            |  | $                                       | (390,496
|Basic Earnings (loss) per Share                                         |  |                                         |         
|Continued Operations                                                    |  | $                                       | (3.19   
|Discontinued Operations                                                 |  | $                                       | 0.71    
|Diluted Earnings (loss) per Share                                       |  |                                         |         
|Continued Operations                                                    |  | $                                       | –       
|Discontinued Operations                                                 |  | $                                       | –       
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share   |  |                                         |         
|Continued Operations                                                    |  |                                         | 157,856 
|Discontinued Operations                                                 |  |                                         | 157,856 
|Weighted Average Shares Outstanding - Diluted Earnings (loss) per Share |  |                                         |         
|Continued Operations                                                    |  |                                         | –       
|Discontinued Operations                                                 |  |                                         | –       







39







ii. Statement of operations (Continued)



|                                                                        |  | Impact of correction of error - quarter                                                              
|----------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------
|Six months ended June 30, 2020 (Unaudited)                              |  | As previously
                                                                               reported
|                                                                        |  |                                                                                                      
|Loss from operations                                                    |  | $                                                                                                    
|Change in value of derivative liability                                 |  |                                                                                                      
|Others                                                                  |  |                                                                                                      
|Other income (expense)                                                  |  |                                                                                                      
|Net loss before discontinued operations                                 |  |                                                                                                      
|Loss from discontinued operations                                       |  |                                                                                                      
|Gain from disposal from discontinued operations                         |  |                                                                                                      
|Income (loss) from discontinued operations                              |  |                                                                                                      
|Net loss                                                                |  |                                                                                                      
|Deemed dividend on preferred stock                                      |  |                                                                                                      
|Net loss attributable to common stockholders                            |  | $                                                                                                    
|Basic Earnings (loss) per Share                                         |  |                                                                                                      
|Continued Operations                                                    |  | $                                                                                                    
|Discontinued Operations                                                 |  | $                                                                                                    
|Diluted Earnings (loss) per Share                                       |  |                                                                                                      
|Continued Operations                                                    |  | $                                                                                                    
|Discontinued Operations                                                 |  | $                                                                                                    
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share   |  |                                                                                                      
|Continued Operations                                                    |  |                                                                                                      
|Discontinued Operations                                                 |  |                                                                                                      
|Weighted Average Shares Outstanding - Diluted Earnings (loss) per Share |  |                                                                                                      
|Continued Operations                                                    |  |                                                                                                      
|Discontinued Operations                                                 |  |                                                                                                      









40







ii. Statement of operations (Continued)





|                                                                        |  | Impact of correction of error - quarter |              
|----------------------------------------------------------------------- |  | --------------------------------------- | -------------
|Three months ended September 30, 2020 (Unaudited)                       |  | As previously reported                  |              
|                                                                        |  |                                         |              
|Loss from operations                                                    |  | $                                       | (530,568     
|Change in value of derivative liability                                 |  |                                         | 3,864,938    
|Others                                                                  |  |                                         | (348,675     
|Other income (expense)                                                  |  |                                         | 3,516,263    
|Net income (loss) before discontinued operations                        |  |                                         | 2,985,695    
|(Loss) from discontinued operations                                     |  |                                         | (22,280      
|(Loss) Gain from disposal of discontinued operations                    |  |                                         | (21,140      
|Income (loss) from discontinued operations                              |  |                                         | (43,420      
|Net (loss) income                                                       |  |                                         | 2,942,275    
|Deemed dividend on preferred stock                                      |  |                                         | –            
|Net loss attributable to common stockholders                            |  | $                                       | 2,942,275    
|Basic Earnings (loss) per Share                                         |  |                                         |              
|Continued Operations                                                    |  | $                                       | 3.08         
|Discontinued Operations                                                 |  | $                                       | (0.04        
|Diluted Earnings (loss) per Share                                       |  |                                         |              
|Continued Operations                                                    |  |                                         | –            
|Discontinued Operations                                                 |  | $                                       | (0.04        
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share   |  |                                         |              
|Continued Operations                                                    |  |                                         | 968,379      
|Discontinued Operations                                                 |  |                                         | 968,379      
|Weighted Average Shares Outstanding - Diluted Earnings (loss) per Share |  |                                         |              
|Continued Operations                                                    |  |                                         | 6,394,936,792
|Discontinued Operations                                                 |  |                                         | 968,379      









41







ii. Statement of operations (Continued)



|                                                                        |  | Impact of correction of error - year to date                                                         
|----------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------
|Nine months ended September 30, 2020 (Unaudited)                        |  | As previously
                                                                               reported
|                                                                        |  |                                                                                                      
|Loss from operations                                                    |  | $                                                                                                    
|Change in value of derivative liability                                 |  |                                                                                                      
|Others                                                                  |  |                                                                                                      
|Other income (expense)                                                  |  |                                                                                                      
|Net income (loss) before discontinued operations                        |  |                                                                                                      
|(Loss) from discontinued operations                                     |  |                                                                                                      
|(Loss) Gain from disposal of discontinued operations                    |  |                                                                                                      
|Income (loss) from discontinued operations                              |  |                                                                                                      
|Net (loss) income                                                       |  |                                                                                                      
|Deemed dividend on preferred stock                                      |  |                                                                                                      
|Net loss attributable to common stockholders                            |  | $                                                                                                    
|Basic Earnings (loss) per Share                                         |  |                                                                                                      
|Continued Operations                                                    |  | $                                                                                                    
|Discontinued Operations                                                 |  | $                                                                                                    
|Diluted Earnings (loss) per Share                                       |  |                                                                                                      
|Continued Operations                                                    |  | $                                                                                                    
|Discontinued Operations                                                 |  | $                                                                                                    
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share   |  |                                                                                                      
|Continued Operations                                                    |  |                                                                                                      
|Discontinued Operations                                                 |  |                                                                                                      
|Weighted Average Shares Outstanding - Diluted Earnings (loss) per Share |  |                                                                                                      
|Continued Operations                                                    |  |                                                                                                      
|Discontinued Operations                                                 |  |                                                                                                      









42







ii. Statement of operations (Continued)





|                                                                        |  | Impact of correction of error - year |                  
|----------------------------------------------------------------------- |  | ------------------------------------ | -----------------
|Year ended December 31, 2020 (Audited)                                  |  | As previously reported               |                  
|                                                                        |  |                                      |                  
|Loss from operations                                                    |  | $                                    | (1,804,151       
|Change in value of derivative liability                                 |  |                                      | 379,892          
|Others                                                                  |  |                                      | (1,550,148       
|Other income (expense)                                                  |  |                                      | (1,170,256       
|Net loss before discontinued operations                                 |  |                                      | (2,974,407       
|Loss from discontinued operations                                       |  |                                      | (125,599         
|Gain from discontinued operations                                       |  |                                      | 194,873          
|Income (loss) from discontinued operations                              |  |                                      | 69,274           
|Net loss                                                                |  |                                      | (2,905,133       
|Deemed dividend on preferred stock                                      |  |                                      | –                
|Net loss attributable to common stockholders                            |  | $                                    | (2,905,133       
|Basic Earnings (loss) per Share                                         |  |                                      |                  
|Continued Operations                                                    |  | $                                    | (3.20            
|Discontinued Operations                                                 |  | $                                    | 0.08             
|Diluted Earnings (loss) per Share                                       |  |                                      |                  
|Continued Operations                                                    |  | $                                    | (3.20            
|Discontinued Operations                                                 |  | $                                    | –                
|Weighted Average Shares Outstanding - Basic Earnings (loss) per Share   |  |                                      |                  
|Continued Operations                                                    |  |                                      | 908,485          
|Discontinued Operations                                                 |  |                                      | 908,485          
|Weighted Average Shares Outstanding - Diluted Earnings (loss) per Share |  |                                      |                  
|Continued Operations                                                    |  |                                      | 908,485          
|Discontinued Operations                                                 |  |                                      | 1,444,295,967,109











43







|3. | ACQUISITIONS
|-- | ------------



JM Enterprise 1, Inc. (dba) Key Tax
Group



JM Enterprise 1, Inc. (d.b.a. Key Tax Group)
(“Key Tax) and Cardiff Lexington Corp. as previously announced in May 2019 signed a definitive merger agreement under which
Key Tax became a wholly owned subsidiary effective May 8, 2019. In connection with the closing of the acquisition, a Preferred
“G” Class of stock with a par value of $0.001 was established and issued. The Preferred “G” Class of stock
rights and privileges include voting rights, a conversion ratio of 1:1.25 and were distributed at the adjusted rate of $0.07 per
share (pre-split) for a total of 18,571,428 representing a value of $1,300,000. Additionally, the Company issued 500,000 shares
of common stock with a par value of $0.001 to novate a convertible debt of $30,912.32. These Preferred “G” 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 was finalized as follows:



|                         |  | Key Tax Fair Value |          
|------------------------ |  | ------------------ | ---------
|Cash                     |  | $                  | 9,484    
|Accounts receivable      |  |                    | 90,766   
|Key Tax Group trade name |  |                    | 250,000  
|Property and equipment   |  |                    | 6,044    
|Goodwill                 |  |                    | 1,407,915
|Liabilities              |  |                    | (464,209 
|Total                    |  | $                  | 1,300,000



|4. | ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|-- | -------------------------------------



|                                         |  | December 31, |        
|---------------------------------------- |  | ------------ | -------
|                                         |  | 2020         |        
|Accounts payable                         |  | $            | 119,653
|Accrued Credit cards                     |  |              | 28,548 
|Accrued Income, payroll, and other taxes |  |              | 282,798
|Accrued advertising                      |  |              | 75,963 
|Accrued payroll                          |  |              | 27,569 
|Accrue expense - other                   |  |              | 82,543 
|Total                                    |  | $            | 617,074



The Company previously reported that it
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. As of December 31, 2020 and 2019, 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 $0 and $45,238, respectively.











44







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



Plant and equipment, net as of December
31, 2020 and 2019 was $211,779 and $234,879, respectively, consisting of the following:



|                                  |  | December 31, |         
|--------------------------------- |  | ------------ | --------
|                                  |  | 2020         |         
|Residential housing               |  | $            | 341,205 
|Furniture, fixture, and equipment |  |              | 76,017  
|Leasehold improvements            |  |              | –       
|Total                             |  |              | 417,222 
|Less: accumulated depreciation    |  |              | (205,443
|Plant and equipment, net          |  | $            | 211,779 



During the years ended December 31, 2020
and 2019, depreciation expense was $23,100 and $278,154, respectively. During the years end December 31, 2020 and 2019, the Company
recorded depreciation expense of $1,274 and $7,318, in operations expense and $21,826 and $60,384, in cost of goods sold, respectively.



During the year ended December 31, 2019,
the Company disposed fixed assets of $104,886 and related liabilities related to a company-owned franchise, resulting in net cash
flow of $0 and a gain on sale of $91,847 from disposal.



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



As of December 31, 2020 and 2019, the Company
owns 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 a residential community.



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



In February 2018, The Company had a line
of credit with a financial institution for $92,500 which incurs interest of PRIME plus 3.45% (6.7% and 8.2% at December 31, 2020
and 2019, respectively) and is revolving. As of December 31, 2020 and 2019, the Company had balance of $51,927 and 91,099, respectively.



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



The Company has entered into several unsecured
loan agreements with related parties.



The Chairman of the Board was paid deferred
compensation of $360,000 and $300,000 per year for the years 2020 and 2019, respectfully. Additionally, a target bonus was granted
and accrued in the amount of $200,000. Unpaid deferred compensation as of December 31, 2020 and 2019, respectively was $1,020,000
and $642,500.



The Chief Executive Officer was paid compensation
of $360,000 and $300,000 per year for the years 2020 and 2019, respectfully. Additionally, a target bonus was granted and accrued
of $200,000. Unpaid deferred compensation as of December 31, 2020 and 2019, respectively was $1,035,000 and $657,500.



The Chief Operating Officer was paid compensation
of $120,000 per year for the years 2020 and 2019. Unpaid deferred compensation as of December 31, 2020 and 2019, respectively was
$120,000 and $222,000.



The Company obtained short-term advances
from the Chairman of the Board that are non-interest bearing and due on demand. As of December 31, 2020 and 2019, the Company
owed the Chairman $126,849 and $136,349, respectively.











45







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



Notes and loans payable at December 31,
2020 and 2019 are summarized as follows:



|                                          |  | December 31, |          
|----------------------------------------- |  | ------------ | ---------
|                                          |  | 2020         |          
|Notes and Loans Payable - Unrelated Party |  | $            | 1,347,690
|Notes and Loans Payable - Related Party   |  |              | 37,885   
|Total                                     |  |              | 1,385,575
|Notes and Loans Payable - Related Party   |  |              | 37,885   
|Current portion                           |  |              | 947,912  
|Long-term portion                         |  | $            | 399,778  



Notes and Loans Payable – Related
Party



The Company obtained short-term advances
from Managers at several entities that are none interest bearing and due on demand. These balances were $37,885 and $84,746 as
of December 31, 2020 and 2019, respectively.



Loans and Notes Payable – Unrelated
Party



On March 12, 2009, the Company entered
into a preferred debenture agreement with a shareholder for $20,000. The note bore interest at 12% per year and matured on September
12, 2009. The Company assigned all of its receivables from consumer activations of the rewards program as collateral on this debenture.
No warrants had been exercised before the expiration. The balance of the note was $10,989 at December 31, 2020 and 2019, respectively.
The accrued interest of the note was $2,272 and $3,591 at December 31, 2020 and 2019, respectively.



On September 7, 2011, the Company entered
into a Promissory Note agreement with for $50,000. The note bore interest at 8% per year and matured on September 7, 2016. The
balance of the note, was $50,000 at December 31, 2020 and 2019, respectively. The accrued interest of the note was $37,822 and
$33,282 at December 31, 2020 and 2019, respectively.



On November 17, 2011, the Company entered
into a Promissory Note agreement for $50,000. The note bore interest at 8% per year and matured on November 17, 2016. The balance
of the note was $50,000 at December 31, 2020 and 2019, respectively. The accrued interest of the note was $55,500 and $32,505
at December 31, 2020 and 2019, respectively.



On September 9, 2019, the Company obtained
a promissory note for $410,000 at 10% interest which is due in September 9, 2020. The balance of the note, was $410,000 at December
31, 2020 and 2019, respectively. The accrued interest of the note was $53,805 and $41,000 at December 31, 2020 and 2019, respectively











46







Paycheck Protection Program (“PPP”)
Loans



On April 14, 2020, the Company obtained
a PPP loan of $127,400 at an interest rate of 1% with a maturity date of April 14, 2022. This loan has been forgiven as part of
the 2020 US Federal government Coronavirus Aid, Relief and Economic Security Act. The balance and accrued interest at December
31, 2020 was $127,400 and $923, respectively.



On May 8, 2020, the Company obtained a
PPP loan of $257,500 at an interest rate of 1% with a maturity date of May 8, 2022. This loan has been forgiven as part of the
2020 US Federal government Coronavirus Aid, Relief and Economic Security Act. The balance and accrued interest at December 31,
2020 was $257,500 and $1,695, respectively.



The Company obtained short-term loans from
individuals. These short-term loans are due on demand and accrue interest from 12% - 18%. These short-term loans were $119,129
and $166,000 at December 31, 2020 and 2019, respectively. The accrued interest of these short-term loans was $29,544 and $30,050
at December 31, 2020 and 2019, respectively



Small Business Administration (“SBA”)
Loans



On June 2, 2020, The Company obtained an
SBA loan of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The balance and accrued interest at December
31, 2020 was $149,900 and $3,310, respectively.



On April 12, and June 16, 2020, the Company
obtained an SBA grants of $20,000 and mature in one year from advance, if not forgiven. The balances and accrued interest at December
31, 2020 was $20,000 and $628, respectively.



On October 7, 2020, the company obtained
an SBA loan of $150,000 at an interest rate of 3.5% with a maturity date of October 7, 2050. The balance and accrued interest at
December 31, 2020 was $149,900 and $1,239, respectively.



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



Some of the Convertible Notes issued as
described below included an anti-dilution provisions 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.











47







During the years ending December 31, 2020
and 2019, the Company had proceeds of $865,500 and $613,526 from convertible notes, repaid $223,397 and $218,863 to convertible
noteholders resulting in balances due to convertible note holders of $2,476,647 and $1,079,825, as of December 31, 2020 and 2019,
respectively net of debt discounts. The following amounts reflect debt discount of $108,320 and $828,468 as of December 31, 2020
and 2019, respectively.



During the years ending December 31, 2020
and 2019, the Company recorded amortization of debt discounts of $1,192,044 and $972,047 during the years ending December 31, 2020
and 2019, respectively.



During the years ended December 31, 2020
and 2019, respectively, the Company converted $196,291 and $422,809 of convertible debt and $49,466 and $53,255 in interest, penalties,
and fees into 5,014,697 shares of the company’s Common Stock.



Convertible notes at December 31, 2020 and December 31, 2019
are summarized as follows:



|                                            |  | Year Ended December 31, |          
|------------------------------------------- |  | ----------------------- | ---------
|                                            |  | 2020                    |          
|Convertible notes payable - unrelated party |  | $                       | 2,584,967
|Convertible notes payable - related party   |  |                         | –        
|Total convertible debt                      |  |                         | 2,584,967
|Discounts on convertible notes payable      |  |                         | (108,320 
|Total convertible debt less debt discount   |  |                         | 2,476,647
|Current portion                             |  |                         | 2,476,647
|Long-term portion                           |  | $                       | –        



Convertible Notes Payable – Unrelated Party





Note 1



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
bore interest at 12% per year, matured in August 2009, and was unsecured. All principal and unpaid accrued interest was due at
maturity.



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 bore
interest at 12% per year, matured on March 11, 2014. All principal and unpaid accrued interest was due at maturity. The Company
was in default on Debenture 2. The note is in default and currently accrues interest at the default interest rate of 12%.



Note 7



On February 9, 2016, the Company entered
into a 15% convertible line of credit 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, which matured on February 9, 2017. Note 7, is currently in default and accrues at a default
interest rate of 20%.











48







Note 7-1



On October 28, 2016, the Company received
$25,000 cash pursuant to the terms of Note 7, which matured on October 28, Note 7-1 is currently in default and accrues at a default
interest rate of 20%.



Note 8



On March 8, 2016, the Company entered into
a 15% convertible promissory note in the principal of $50,000 \with an unrelated entity for services rendered. Note 8 is matured
on March 8, 2017. Note 8 is currently in default and accrues at a default interest rate of 20%.



Note 9



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, 2017Note 9 is currently in default and accrues at a default interest rate of 20%.



Note 10



On January 24, 2017, the Company entered
into a 10% convertible promissory note in the principal of $80,000 with an unrelated entity for services rendered. Note 10 is matured
on January 24, 2018. Note 10 is currently in default and accrues at a default interest rate of 20%.



Note 11-1



On February 21, 2017, the Company received
$25,000 cash pursuant to the terms of Note 11, which matured on February 21, 2018. Note 11-1 is currently in default and accrues
at a default interest rate of 20%.



Note 11-2



On March 16, 2017, the Company received
$40,000 cash pursuant to the terms of Note 11-2, which matured on March 16, 2018. Note 11-2 is currently in default and accrues
at a default interest rate of 20%.



Note 13-1 & -2



On April 21, 2017, the Company entered
into a convertible promissory note with an unrelated entity in the amount $330,000, with original issue discount of $30,000 for
net cash to the company of $300,000 (“Note 13-1”). Note 13-1 matured on April 21, 2018.



On July 24, 2018, Note 13-1 was purchased
by an unrelated party with a new Replacement Convertible Promissory Note (“Note 13-2”) in the amount of $237,909.
Note 13-2 bears interest at 5%, matured on January 24, 2019.











49







Note 22,-1,&-3



On July 10, 2018, the Company entered into
a Senior Secured Convertible Promissory Note \with an unrelated entity in the amount $1,040,000, with original issue discount of
$103,000, expenses of $64,160 and an interest deposit of $20,000 resulting in net cash to the company of $852,840. Note 22 matures
January 10, 2021 and is current. Note 22 bears interest at a 12 % rate.



Note 25



On August 13, 2018, the Company entered
into a Convertible Promissory Note with an unrelated entity in the amount $126,560, with original issue discount of $13,560 and
expenses of $13,000 resulting in net cash to the company of $100,000. Note 25 matured February 13, 2019 and is currently in default.
The default interest rate is 18%.



Note 26



On August 10, 2017, the Company entered
into a Debt Purchase Agreement with an unrelated entity in the amount $20,000. The Note matured January 27, 2018 and is currently
in default. The default interest rate is 15%.



Note 29



On May 10, 2019, the Company entered into
an 8% Convertible Secured Redeemable Note (“Note 29”) with an unrelated entity in the amount $150,000 and expenses
of $7,500 resulting in net cash to the company of $142,500. Note 29 is secured, prior to maturity of May 10, 2020.



On November 8, 2019, Note 29 was purchased
by and assigned to an unrelated party upon execution of Amendment No. 1 to Convertible Promissory Note. The amount assigned was
the existing principal amount of the Note 29 of $150,000 and accrued interest of $5,917.81 (“Note 29-1”) plus a new
8% Convertible Secured Redeemable Note (“Note 29-2). The total amount assigned to the new note holder is $218,284.93. Note
29-2 bears interest at 8%, matured on November 8. The note is in default and currently accrues interest at the default interest
rate of 24%..



Note 30



On July 26, 2019, the Company entered into
a Convertible Note Payable (“Note 30”) with an unrelated entity in the amount $73,500, with expenses of $3,000 resulting
in net cash to the company of $70,500. Note 30 matured on July 26, 2020. The note is in default and currently accrues interest
at the default interest rate of 22%.



Note 31



On August 28, 2019, the Company entered
into an 8% Convertible Secured Redeemable Note with an unrelated entity in the amount $120,000, with expenses of $6,000 resulting
in net cash to the company of $114,000. Note 31 matured August 28, 2020. The note is in default and currently accrues interest
at the default interest rate of 24%.











50







Note 32



On May 22, 2019, the Company received $25,000
from a draw on the line of credit. Note 32 matured May 22, 2020. The note is in default and currently accrues interest at the
default interest rate of 20%.



Note 33



On February 11, 2020, the Company entered
into a 6% Convertible Promissory Note with an unrelated entity in the amount $157,500, with original issue discount of $7,500 and
expenses of $7,500 resulting in net cash to the company of $142,500. Note 33 is matures February 11, 2021.



Note 34



On May 18, 2020, the Company entered into
a 6% Convertible Promissory Note with an unrelated entity in the amount $63,000 and expenses of $3,000 resulting in net cash to
the company of $60,000. Note 34 matures May 18, 2021.



Note 35



On August 24, 2020, the Company entered
into a 6% Convertible Promissory Note with an unrelated entity in the amount $85,000 with expenses of $3,500 resulting in net cash
to the company of $81,500. Note 35 matures August 24, 2021.



Note 36-1



On September 03, 2020, the Company entered
into a 10% Senior Secured Convertible Promissory Note with an unrelated entity in the amount $733,500, with original issue discount
of $183,500 resulting in net cash to the company of $550,000. Note 36-1 matures September 03, 2021.



Note 36-2



On November 03, 2020, the Company entered
into a 10% Senior Secured Convertible Promissory Note with an unrelated entity in the amount $733,500, with original issue discount
of $183,500 resulting in net cash to the company of $550,000. Note 36- matures November 3, 2021. The first tranche executed upon
closing, the Company received $90,000 and a second tranche of $30,000 resulting in net cash to the Company of $120,000.



Note 36-3



On December 29, 2020, the Company entered
into a 10% Senior Secured Convertible Promissory Note with an unrelated entity in the amount $126,500, with original issue discount
of $13,560 resulting in net cash to the company of $113,000. Note 36-3 matures June 03, 2021 and is current.













51











Note 37-1



On September 03, 2020, the Company entered
into a 10% Senior Secured Convertible Promissory Note \ with an unrelated entity in the amount $200,000, with original issue discount
of $50,000 resulting in net cash to the company of $150,000. Note 37-1 matures June 3, 2021. This Note became eligible to convert
April 03, 2021 and is convertible into shares of the Company’s common stock as defined in the agreement. The first tranche
executed upon closing; the Company received $50,000 resulting in net cash to the Company of $100,000.



Note 37-2



On November 02, 2020, the Company entered
into a 10% Senior Secured Convertible Promissory Note with an unrelated entity in the amount $200,000, with original issue discount
of $50,000 resulting in net cash to the company of $150,000. Note 37-2 matures November 3, 2021. The first tranche executed upon
closing; the Company received $50,000 resulting in net cash to the Company of $100,000.



Note 37-3



On December 29, 2020, the Company entered
into a 10 % Senior Secured Convertible Promissory Note \ with an unrelated entity in the amount $200,000, with original issue
discount of $50,000 resulting in net cash to the company of $150,000. Note 37-3 matures December 29, 2021. The first tranche executed
upon closing; the Company received $50,000 resulting in net cash to the Company of $100,000.



As of December 31, 2020, the Company’s
derivative liabilities are embedded derivatives associated with the Company’s convertible notes payable. Due to the Notes’
conversion features, 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 Black-Scholes Model
to measure the fair value of the derivative liabilities, resulting in a valuation measurement of $2,405,358 and $3,102,392 at December
31, 2020 and 2019, respectively.



The valuation of the derivative liabilities attached to the
convertible debt was arrived at through the use of the Black-Scholes Option Pricing Model (“Black-Scholes Model”).
Refer to Note 10 for the derivative liabilities associated with convertible debt instruments, at December 2020 and 2019.















52







The following is a schedule of convertible notes payable from
December 31, 2019 to December 31, 2020.



|Note # | Issuance |            | Maturity |  | Principal
    Balance 12/31/19 |  |   | New
    Loan |  |  | Cash
    Paydown |         |  | Principal
    Conversions |   |          | Shares
    Issued Upon Conversion |  |   | Principal
    Balance 12/31/20 |   |  | Accrued
    Interest on Convertible Debt at 12/31/19 |  |  | Interest
    Expense On Convertible Debt For the Year Ended 12/31/20 |           |  | Accrued
    Interest on Convertible Debt at 12/31/20 |   |         | Unamortized
    Debt Discount At 12/31/20 | 
|------ | -------- | ---------- | -------- |  | ------------------------------ |  | - | ------------ |  |  | ---------------- | ------- |  | ------------------------- | - | -------- | --------------------------------- |  | - | ------------------------------ | - |  | ---------------------------------------------------- |  |  | -------------------------------------------------------------------- | --------- |  | ---------------------------------------------------- | - | ------- | ----------------------------------------- | 
|1      |          | 8/21/2008  |          |  | 8/21/2009                      |  | $ | 150,000      |  |  | $                | –       |  |                           | $ | –        |                                   |  | $ | –                              |   |  | –                                                    |  |  | $                                                                    | 150,000   |  |                                                      | $ | 204,608 |                                           | 
|7      |          | 2/9/2016   |          |  | On demand                      |  |   | 8,485        |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 8,485     |  |                                                      |   | 2,412   |                                           | 
|7-1    |          | 10/28/2016 |          |  | 10/28/2017                     |  |   | 25,000       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 25,000    |  |                                                      |   | 10,321  |                                           | 
|8      |          | 3/8/2016   |          |  | 3/8/2017                       |  |   | 1,500        |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | –         |  |                                                      |   | 9,863   |                                           | 
|9      |          | 9/12/2016  |          |  | 9/12/2017                      |  |   | 80,000       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 80,000    |  |                                                      |   | 47,876  |                                           | 
|10     |          | 1/24/2017  |          |  | 1/24/2018                      |  |   | 32,621       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 55,000    |  |                                                      |   | 23,212  |                                           | 
|11-1   |          | 2/21/2017  |          |  | 2/21/2018                      |  |   | 9,733        |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | –         |  |                                                      |   | 2,533   |                                           | 
|11-2   |          | 3/16/2017  |          |  | 3/16/2018                      |  |   | 20,032       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 21,345    |  |                                                      |   | 2,367   |                                           | 
|13-2   |          | 7/24/2018  |          |  | 1/24/2019                      |  |   | 92,205       |  |  |                  | –       |  |                           |   | (48,246  | )                                 |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 43,961    |  |                                                      |   | 24,002  |                                           | 
|22     |          | 7/10/2018  |          |  | 1/10/2021                      |  |   | 953,414      |  |  |                  | –       |  |                           |   | (144,905 | )                                 |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 838,433   |  |                                                      |   | 87,762  |                                           | 
|22-1   |          | 2/20/2019  |          |  | 1/10/2021                      |  |   | –            |  |  |                  | –       |  |                           |   | 61,704   |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 61,704    |  |                                                      |   | 6,350   |                                           | 
|22-3   |          | 4/10/2019  |          |  | 1/10/2021                      |  |   | –            |  |  |                  | –       |  |                           |   | 56,095   |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 56,095    |  |                                                      |   | 5,145   |                                           | 
|25     |          | 8/13/2018  |          |  | 2/13/2019                      |  |   | 78,314       |  |  |                  | –       |  |                           |   | 48,246   |                                   |  |   | (8,268                         | ) |  | 1,140,161                                            |  |  |                                                                      | 118,292   |  |                                                      |   | 17,226  |                                           | 
|26     |          | 8/10/2017  |          |  | 1/27/2018                      |  |   | 20,000       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 20,000    |  |                                                      |   | 4,533   |                                           | 
|29-1   |          | 11/8/2019  |          |  | 11/8/2020                      |  |   | 141,122      |  |  |                  | –       |  |                           |   | –        |                                   |  |   | (40,225                        | ) |  | 924,249                                              |  |  |                                                                      | 101,374   |  |                                                      |   | 2,409   |                                           | 
|29-2   |          | 11/8/2019  |          |  | 11/8/2020                      |  |   | 62,367       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 62,367    |  |                                                      |   | –       |                                           | 
|30     |          | 7/26/2019  |          |  | 7/26/2020                      |  |   | 73,500       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | (73,500                        | ) |  | 30,913                                               |  |  |                                                                      | –         |  |                                                      |   | 1,909   |                                           | 
|31     |          | 8/28/2019  |          |  | 8/28/2020                      |  |   | 120,000      |  |  |                  | –       |  |                           |   | –        |                                   |  |   | (58,170                        | ) |  | 1,356,979                                            |  |  |                                                                      | 61,839    |  |                                                      |   | 3,288   |                                           | 
|32     |          | 5/22/2019  |          |  | 5/22/2020                      |  |   | 25,000       |  |  |                  | –       |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 25,000    |  |                                                      |   | 2,291   |                                           | 
|33     |          | 2/11/2020  |          |  | 2/11/2021                      |  |   | –            |  |  |                  | 157,500 |  |                           |   | –        |                                   |  |   | (3,328                         | ) |  | 355,556                                              |  |  |                                                                      | 153,672   |  |                                                      |   | –       |                                           | 
|34     |          | 5/18/2020  |          |  | 5/18/2021                      |  |   | –            |  |  |                  | 63,000  |  |                           |   | –        |                                   |  |   | (12,800                        | ) |  | 1,206,838                                            |  |  |                                                                      | 50,200    |  |                                                      |   | –       |                                           | 
|35     |          | 8/24/2020  |          |  | 8/24/2021                      |  |   | –            |  |  |                  | 85,000  |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 85,000    |  |                                                      |   | –       |                                           | 
|36-1   |          | 9/3/2020   |          |  | 1/3/2021                       |  |   | –            |  |  |                  | 120,000 |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 127,200   |  |                                                      |   | –       |                                           | 
|36-2   |          | 11/3/2020  |          |  | 1/3/2021                       |  |   | –            |  |  |                  | 120,000 |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 120,000   |  |                                                      |   | –       |                                           | 
|36-3   |          | 12/29/2020 |          |  | 1/3/2021                       |  |   | –            |  |  |                  | 120,000 |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 120,000   |  |                                                      |   | –       |                                           | 
|37-1   |          | 9/3/2020   |          |  | 6/30/2021                      |  |   | –            |  |  |                  | 67,000  |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 67,000    |  |                                                      |   | –       |                                           | 
|37-2   |          | 11/2/2020  |          |  | 6/30/2021                      |  |   | –            |  |  |                  | 66,500  |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 66,500    |  |                                                      |   | –       |                                           | 
|37-3   |          | 12/29/2020 |          |  | 6/30/2021                      |  |   | –            |  |  |                  | 66,500  |  |                           |   | –        |                                   |  |   | –                              |   |  | –                                                    |  |  |                                                                      | 66,500    |  |                                                      |   | –       |                                           | 
|       |          |            |          |  |                                |  |   |              |  |  |                  |         |  |                           |   |          |                                   |  |   |                                |   |  |                                                      |  |  |                                                                      |           |  |                                                      |   |         |                                           | 
|       |          |            |          |  |                                |  | $ | 1,893,293    |  |  | $                | 865,500 |  |                           | $ | (27,106  | )                                 |  | $ | (196,291                       | ) |  | 5,014,696                                            |  |  | $                                                                    | 2,584,967 |  |                                                      | $ | 458,107 |                                           | 















53







|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 below. 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, 2020, and December 31,
2019, the Company did not have any derivative instruments that were designated as hedges.



The derivative liability as of December
31, 2020 and 2019, respectively, in the amounts of $2,903,663 and $3,655,518, have a level 3 classification. Please refer to Note 2 for
further explanation.



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, 2020, the Company’s stock price decreased from its 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.











54







The Company used the Black-Scholes Model to measure
the fair value of the derivative liabilities as $2,903,663 and $3,655,518 on December 31, 2020 and 2019, respectively, and will subsequently
remeasures 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 following table provides a summary
of changes in fair value of the Company’s Level 3 financial liabilities for the year ended December 31, 2019:





|Derivative Liability, December 31,2018             |  | $ | 1,870,625  |  
|-------------------------------------------------- |  | - | ---------- | -
|Day 1 Loss                                         |  |   | 24,762,381 |  
|Discount from derivatives                          |  |   | 1,275,912  |  
|Resolution of derivative liability upon conversion |  |   | (2,856,994 | )
|Mark to market adjustment                          |  |   | 21,396,406 |  
|Derivative Liability, December 31, 2019            |  | $ | 3,655,518  |  



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, 2020, 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.



|Derivative Liability, December 31, 2019 |  | $ | 3,655,518 |  
|--------------------------------------- |  | - | --------- | -
|Day 1 Loss                              |  |   | 564,952   |  
|Discount from derivatives               |  |   | 294,000   |  
|Derivatives settled                     |  |   | (611,141  | )
|Mark to market adjustment               |  |   | (999,666  | )
|Derivative Liability, December 31, 2020 |  | $ | 2,903,663 |  



The above tables also include derivative
liabilities related to warrants to purchase common stock of $6,135 at December 31, 2020. Net gain for the period included mark-to-market
adjustments relating to the liabilities held during the year ended December 31, 2019 in the amounts of $2,340.



The valuation of the derivative liabilities
attached to the convertible debt was arrived at through the use of the Black-Scholes Option Pricing Model (“Black-Scholes
Model”) using the following assumptions:



|                        |  | Year Ended December 31, | 
|----------------------- |  | ----------------------- | 
|                        |  | 2020                    | 
|Volatility              |  | 204.5% - 1,005.9%       | 
|Risk-free interest rate |  | .099% - .18%            | 
|Expected term           |  | .33 – 2.5               | 









55







|12. | CAPITAL STOCK
|--- | -------------



Preferred Stock



During January 2020, we facilitated a reverse
split of several classes our Preferred Stock which has been given retrospective treatment in these financial statements. In addition
to the reverse stock split, management established new rights and privileges for certain classes of preferred stock. The reverse
split ratio ranges from 1.6:1 to 307.7:1 resulting in a reclassification of $11,837,482 from preferred stock to additional paid
in capital. The rights and privileges were changed with unanimous consent of all parties. All holders agreed to replace existing
rights and privileges with new uniform conditions and a simplified uniform preferred $4.00 per share stated value.



Holders of Series B, D, D1, E, E1, F, F1, G, G1, H, H1, I, J,
J1, L, L1, M, and P Preferred Stock shall have conversion rights that are affected by the closing common share market price on
the date of conversion as reported on such national exchange where the Company’s common stock is traded:



i. If the closing market price is less than $4 per
share one (1) share of the respective Series of Preferred Stock described in this Section 4(a) shall convert into an amount of
common stock equal to: two (2) times the Stated Value, as defined herein, divided by the closing market price as reported on such
national exchange where the Company’s common stock is traded on the date of conversion. For Example. If the closing price
of the common stock as reported on such national exchange where the Company’s common stock is traded is $1.00 and the Stated
Value is $4.00, one (1) preferred share would convert into eight (8) shares of common stock.



ii. If the closing market price is equal to or greater
than $4 per share one (1) share of the respective Series of Preferred Stock described in this Section 4(a) shall convert into two
(2) shares of common stock. For Example. If the closing price of the common stock as reported on such national exchange where
the Company’s common stock is traded is $5.00 one (1) preferred share would convert into two (2) shares of common stock.



Holders of Series C Preferred Stock shall have Conversion Rights
such that upon Conversion each one (1) share of Series C Preferred Stock shall convert into one hundred thousand (100,000) shares
of the Common Stock. In the event that the Company should up list to a national exchange as defined by the U.S. Securities and
Exchange Commission, each share of Series C Preferred Stock shall automatically be redeemed by the Company in exchange for a total
of Fifty Thousand Dollars ($50,000.00) worth of the Common Stock, valued at the time of redemption.



Holders of the Series K and K1 Preferred Stock shall have Conversion
Rights such that upon Conversion each one (1) share of Series K and K1 Preferred Stock shall convert into 1.25 shares of the Common
Stock.



Holders of Series R Preferred Stock shall
be the amount equal to $0.30; provided, however if the price of the Common Stock closes below $0.30 for the five (5) consecutive
Trading Days immediately prior to the Conversion Date, then the Conversion Price shall be adjusted to $0.20, and if the price of
the Common Stock closes below $0.20 for the five (5) consecutive Trading Days immediately prior to the Conversion Date, then the
Conversion Price shall be adjusted to $0.10.



Common Stock



During the twelve months ended December
31, 2019, we executed the following transactions:



| | · | 59,382 shares of common stock were issued upon conversion of certain convertible notes payable.                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| | · | May 8, 2019, the Company issued 50 shares of common stock with a par value of $0.001 pursuant to the terms of the Acquisition Agreement.
| | · | On March 21, 2019, the Company completed a reverse stock split of 1,500:1 for common shares.                                            
| | · | On April 26, 2019, conversion of 55,000,000 series I shares were converted to common stock of 8,250                                     
| | · | On August 24, 2020, 163,814 shares were issued to a financial advisor for services.                                                     











56







During the twelve months ended December
31, 2020, we executed the following transactions:



| | · | 5,014,697 shares of common stock were issued upon conversion of certain convertible notes payable.                                                                                               
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | On January 9, 2020, we issued 25,000 warrants and a free trading common share certificate in the amount of 3,500 shares of common stock for settlement of a threatened lawsuit, refer to Note 14.
| | · | On May 11, 2020, the Company completed a reverse stock split of 10,000:1 for common shares.                                                                                                      
| | · | On August 24, 2020, 163,814 shares were issued to a financial advisor for services.                                                                                                              
| |   | ·On November 5, 2020, 18,000 shares were issued to investor relations advisor for services ·On February 10, 2020, 320 shares were purchased in exchange for 119,101 preferred series H shares.   



|13. | WARRANTS
|--- | --------



The initial and ending valuation of the
warrants as of December 31, 2020 are as follows:



|                  |  | Year Ended December 31,  2020 |      
|----------------- |  | ----------------------------- | -----
|Initial Valuation |  | $                             | 6,135
|Ending Value      |  | $                             | 3,795



The table below set forth the assumptions
for the Black-Scholes Model on each initial date and December 31, 2020:



|                        |  |  | Year Ended 
December 31, 2020 | 
|----------------------- |  |  | ----------------------------- | 
|Volatility              |  |  | 1,847% - 1,861%               | 
|Risk-free interest rate |  |  | 1.60% - 1.83%                 | 
|Expected term           |  |  | 0.5 – 7.0                     | 



The initial and ending valuation of the
warrants as of December 31, 2019 are as follows:



|                  |  | Year Ended  December 31, 2019 |      
|----------------- |  | ----------------------------- | -----
|Initial Valuation |  | $                             | 3,795
|Ending Value      |  | $                             | 6,135



The table below set forth the assumptions
for the Black-Scholes Model on each initial date and December 31, 2019:



|                        |  |  | Year Ended 
December 31, 2019 | 
|----------------------- |  |  | ----------------------------- | 
|Volatility              |  |  | 1,847% - 1,861%               | 
|Risk-free interest rate |  |  | 1.60% - 1.83%                 | 
|Expected term           |  |  | 0.5 – 7.0                     | 



Accordingly, the Company recorded warrant
expense of $2,340 during the year ended December 31, 2019.











57







The following tables summarize all warrant
outstanding as of December 31, 2020, and the related changes during this period. The warrants expire three years from grant date,
which as of December 31, 2020 is 1.31 years. The intrinsic value of the warrants as of December 31, 2020 was $-0-.



|                                          |  | Number of  Warrants |           |  | Weighted Average  Exercise  Price |  
|----------------------------------------- |  | ------------------- | --------- |  | --------------------------------- | -
|Stock Warrants                            |  |                     |           |  |                                   |  
|Balance at January 1, 2020                |  |                     | 6,614,287 |  |                                   | $
|Granted                                   |  |                     | –         |  |                                   |  
|Exercised                                 |  |                     | –         |  |                                   |  
|Expired                                   |  |                     | –         |  |                                   |  
|Balance at December 31, 2020              |  |                     | 6,614,287 |  |                                   |  
|Warrants Exercisable at December 31, 2020 |  |                     | 6,614,287 |  |                                   | $



|14. | COMMITMENTS AND CONTINGENCIES
|--- | -----------------------------



Operating Leases



The Company had operating lease expense
of $87,649 and $210,286 for the year ended December 31, 2020 and 2019, respectively, consisting of the followings.



|       |  | For the year ended |       
|------ |  | ------------------ | ------
|       |  | December 31, 2020  |       
|       |  |                    |       
|Lot    |  | $                  | 408   
|Office |  |                    | 87,169
|Total  |  | $                  | 87,649



The Company has property leases’
future commitments are as follows at December 31, 2020:



|2020 |  | $ | 50,916 | 
|---- |  | - | ------ | 
|2021 |  |   | 8,486  | 
|     |  | $ | 59,402 | 



We have an employment agreement, renewed
May 15, 2014, with the Chairman, Mr. Thompson amended on July 15, 2020, effective July 15, 2020 to December 31, 2025 with automatic
extension for additional successive one (1) year renewals terms unless terminated as defined the agreement. We provide for compensation
of $30,000 per month along with additional incentives.



We have an employment agreement with the
Chief Executive Officer, Mr. Cunningham, amended on July 15, 2020, effective on July 15, 2020 to December 31, 2025 with automatic
extension for additional successive one (1) year renewals terms unless terminated as defined the agreement. We provide for compensation
of $30,000 per month.











58







We have an employment agreement with the
Chief Operating Officer, effective June 13, 2016 to December 31, 2021 with automatic extension for additional successive one (1)
year renewals terms unless terminated as defined in the agreement. We provide for compensation of $10,000 per month.



We have an employment agreement with a
subsidiary manager, effective May 31, 2019 with a term of 5 years, whereby we provide for compensation of $17,333 per month along
with a bonus incentive if financial performance measures are met.



We have an employment agreement with a
subsidiary manager, effective July 1, 2018 with a term of 5 years, whereby we provide for compensation of $20,000 per month along
with a bonus incentive if financial performance measures are met.



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.



On December 31, 2020, the Company’s
Chief Financial Officer resigned and was replaced on February 8, 2021. Whereby we provide for compensation of $8,500 per month
along with a bonus contingent upon successful up listing on Nasdaq with preferred share and stock options.



The Company is currently in negotiations
for the purchase two companies planning to finalize in first two quarters of 2021. One purchase is for $11,000,000 for a time share
removal service and other is for $9,213,083 for medical doctor’s office who specializes in orthopedic care and surgery.



The Company acquired Redrock Travel on
May 1, 2018. It was determined by the Board of Directors to terminate the acquisition agreement and to file with the State of Florida
the cancelation of the Redrock Stock Class. The Company settled a threatened lawsuit related to this entity with issuance of common
shares, refer to Note 11.



From time to time the Company may be involved in various asserted
claims and legal proceedings arising in the ordinary course of business, some of which may involve claims for substantial amounts.



|15. | INCOME TAXES
|--- | ------------



At December 31, 2020, the Company had federal
and state net operating loss carry forwards of approximately $17,330,000 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, 2020 and 2019.



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.













59







The Company’s deferred tax asset
at December 31, 2020 and 2019 consists of net operating loss carry forwards calculated using federal and state effective tax rates
equating to approximately $4,391,000 and $3,815,102, respectively, less a valuation allowance in the amount of approximately $4,391,000
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 2020 and 2019. The valuation allowance increased by approximately $576,700 for the year ended
December 31, 2020.



The Company’s total deferred tax
asset as of December 31, 2020 and 2019 is as follows:



|                       |  | 2020 |            |   | 2019 |  
|---------------------- |  | ---- | ---------- | - | ---- | -
|Deferred tax assets    |  | $    | 4,391,000  |   |      | $
|Valuation allowance    |  |      | (4,391,000 | ) |      |  
|                       |  |      |            |   |      |  
|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, 2020 and 2019 is as follows:



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.



|16. | SEGMENT REPORTING
|--- | -----------------



The Company has two 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) | Affordable Housing (We Three), and
| | --- | ----------------------------------



| | (2) | Tax Resolution Services (Platinum Tax and Key Tax)
| | --- | --------------------------------------------------



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 Affordable Housing segment leases and
sells mobile homes as an option for a homeowner wishing to avoid large down payments, expensive maintenance costs, large monthly
mortgage payments and high property taxes and insurance which is a common trait of brick-and-mortar homes. Additionally, if bad
credit is an issue preventing potential homeowners from purchasing a traditional house, the Company will provide a "lease
to own" option so people secure their family home.











60







Platinum Tax Defenders and Key Tax 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.



|                           |  | As of             |           |  | As of             |  
|-------------------------- |  | ----------------- | --------- |  | ----------------- | -
|                           |  | December 31, 2020 |           |  | December 31, 2019 |  
|Assets:                    |  |                   |           |  |                   |  
|Affordable Housing Rentals |  | $                 | 258,813   |  |                   | $
|Financial Services         |  |                   | 4,369,195 |  |                   |  
|Others                     |  |                   | 302,139   |  |                   |  
|Consolidated assets        |  | $                 | 4,930,147 |  |                   | $



|                                                |  | December 31, 2020 |            |   | December 31, 2019 |  
|----------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|Revenues:                                       |  |                   |            |   |                   |  
|Affordable Housing Rentals                      |  | $                 | 138,832    |   |                   | $
|Financial Services                              |  |                   | 3,314,226  |   |                   |  
|Other                                           |  |                   | –          |   |                   |  
|Consolidated revenues                           |  | $                 | 3,453,058  |   |                   | $
|                                                |  |                   |            |   |                   |  
|Cost of Sales:                                  |  |                   |            |   |                   |  
|Affordable Housing Rentals                      |  | $                 | 156,191    |   |                   | $
|Financial Services                              |  |                   | 1,511,995  |   |                   |  
|Other                                           |  |                   | –          |   |                   |  
|Consolidated cost of sales                      |  | $                 | 1,668,146  |   |                   | $
|                                                |  |                   |            |   |                   |  
|Income (Loss) from operations from subsidiaries |  |                   |            |   |                   |  
|Affordable Housing Rentals                      |  | $                 | (40,378    | ) |                   | $
|Financial Services                              |  |                   | (190,338   | ) |                   |  
|Loss from operations                            |  | $                 | (230,716   | ) |                   | $
|                                                |  |                   |            |   |                   |  
|Loss from operations from Cardiff Lexington     |  | $                 | (1,573,435 | ) |                   | $
|                                                |  |                   |            |   |                   |  
|Income (Loss) before taxes                      |  |                   |            |   |                   |  
|Affordable Housing Rentals                      |  | $                 | (40,378    | ) |                   | $
|Financial Services                              |  |                   | (187,943   | ) |                   |  
|Corporate and administration                    |  |                   | (2,608,572 | ) |                   |  
|Consolidated income (loss) before taxes         |  | $                 | (2,836,893 | ) |                   | $













61









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



None.



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 are 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
executive officers 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) 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, 2020, 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 chief executive officer and chief
financial officer have 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, 2020 that have materially
or are reasonably likely to materially affect, our internal controls over financial reporting.









62







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, 2020. 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, 2020, 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
expert 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, 2020, 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, 2020, 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 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, 2020 that have affected, or are reasonably likely to affect,
our internal control over financial reporting.



ITEM 9B. OTHER INFORMATION.



None.













63









PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE.



Officers and Directors



Our directors will serve until successors
are elected and qualified. Our Chief Executive Officer is appointed 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 resigns or is removed from office. Our Board of Directors has no
nominating, or compensation committees. Our Board of Directors has two members.



The name, address, age and position of
our officers and directors is set forth below:



|Name and Address      |  | Age | Positions                                      
|--------------------- |  | --- | -----------------------------------------------
|Daniel Thompson       |  | 72  | Chairman of the Board of Directors             
|Alex Cunningham       |  | 65  | Chief Executive Officer and President, Director
|Dr. Rollan Roberts II |  | 43  | Chief Operating Officer                        
|Patrick Lambert       |  | 58  | Chief Financial Officer                        



Background of our officers and directors



Daniel Thompson, 72, Chairman
of the Board of Directors. In June of 2010 Thompson was previously appointed Chairman and CEO of Cardiff Lexington 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,65, Chief
Executive Officer, President, and Director. Mr. Cunningham has agreed to join the Cardiff Lexington 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. Rollan Roberts II, 43,
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.



Dr. Roberts has authored four 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.









64







Patrick
Lambert,58, brings to Cardiff Lexington over 35 years’ progressive public and private company experience in finance
and operations management. He is familiar with and has been instrumental in numerous levels of consolidations in manufacturing,
distribution, retail, and service industries with start-ups, multi-location, and multi-state companies.  Mr. Lambert has
worked in the Banking industry, Consumer goods, and the Hospitality industry for the last 20 years with many years of public company
reporting experience being skilled in SEC reporting including 10Qs, 10Ks, and 8Ks, month end closings and reconciliations, financial
statements, and reports, budgets, and variance analysis. He has designed cash forecasting and debt covenants models. Mr. Lambert
served for 11 years as CFO of Prince-Bush Hotels, a chain of franchised hotels in the United States responsible for SEC reporting
for 10K and 10Q as well as SOX compliance reporting. He was CFO at Kerzner International Resorts, Inc., Atlantis Resort Casino,
One & Only Resorts where he was responsible for all monthly financial reporting, G/L,A/P, & A/R, Payroll & Tax Returns,
and review and analysis of new investment/acquisition opportunities, business plans and strategies. Mr. Lambert was Director of
Finance for Air Jamaica and U.S. Controller for both SuperClubs Resorts & International Lifestyles, (Hotel Corporation) and
Controller for Cendant Corporation-Avis Rent A Car Systems, Wyndham Resorts. He also served as Regional Controller for the Miller
Brewing Company, a Phillip Morris Subsidiary. Mr. Lambert began his career with Citicorp going through their management training
program. He holds a Bachelor's of Science Degree in Business Administration and Finance from The State University of New York.



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 two
 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, 20201 except as stated below.









65







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                       |  | 2019 |  |                     | 300,000 |        |  | 150,000      |  |          | 0 |                        | 
|Chairman of the Board of Directors    |  | 2020 |  |                     | 327,500 |        |  | 200,000      |  |          | 0 |                        | 
|                                      |  |      |  |                     |         |        |  |              |  |          |   |                        | 
|Alex Cunningham                       |  | 2019 |  |                     | 300,000 |        |  | 150,000      |  |          | 0 |                        | 
|President and Chief Executive Officer |  | 2020 |  |                     | 327,500 |        |  | 200,000      |  |          | 0 |                        | 
|                                      |  |      |  |                     |         |        |  |              |  |          |   |                        | 
|Dr. Rollan Roberts II                 |  | 2019 |  |                     | 120,000 |        |  | 0            |  |          | 0 |                        | 
|Chief Operating Officer               |  | 2020 |  |                     | 120,000 |        |  | 0            |  |          | 0 |                        | 



Employment Agreements



The Company has an employment agreement
with Mr. Thompson whereby the Company provides for compensation of $360,000 per year plus additional performance bonus incentives
with a term of July 15, 2020 to December 31, 2025 with automatic extension for additional successive one (1) year renewals terms
unless terminated as defined in the agreement.



The Company has an employment agreement
with Mr. Cunningham whereby the Company provides for compensation of $360,000 per year plus additional performance bonus incentives
with a term of July 15, 2020 to December 31, 2025 with automatic extension for additional successive one (1) year renewals terms
unless terminated as defined in the agreement.



The Company has an employment agreement,
with the Chief Operating Officer, whereby the Company provides for compensation of $120,000 per year plus additional incentives
with a term of June 13, 2016 to December 31, 2021 with automatic extension for additional successive one (1) year renewals terms
unless terminated as defined in the agreement.



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.



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.









66







Indemnification



Under our Articles of Incorporation and
Bylaws, 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 Florida law, we are informed that,
in the opinion of the SEC, 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 March 31, 2021 for (i) each shareholder 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 (1)                  |  | Amount and Nature of Beneficial Ownership of Common Stock |            |  | Percent ofCommon Stock (1) | 
|--------------------------------------------------------- |  | --------------------------------------------------------- | ---------- |  | -------------------------- | 
|Daniel Thompson                                           |  |                                                           |            |  |                            | 
|401 East Las Olas Blvd. Unit 1400                         |  |                                                           |            |  |                            | 
|Ft. Lauderdale, Florida                                   |  |                                                           | 25,095,168 |  |                            | 
|                                                          |  |                                                           |            |  |                            | 
|Alex Cunningham                                           |  |                                                           |            |  |                            | 
|401 East Las Olas Blvd. Unit 1400                         |  |                                                           |            |  |                            | 
|Ft. Lauderdale, Florida                                   |  |                                                           | 25,095,169 |  |                            | 
|                                                          |  |                                                           |            |  |                            | 
|All directors and officers and 5% shareholders as a group |  |                                                           | 50,190,337 |  |                            | 



(1) Based on 303,780 shares of common stock issued and outstanding
as of December 31, 2020.



(2) The above table does not include 176,181,186 of shares of
series A, B, C, D, E, F, F-1, G, H, I, K, K-1, and L preferred stock which are convertible into 398,776,942 shares of common stock.



(3) Daniel Thompson owns 1 share of Preferred “A”,
13,062 shares of Preferred “B”, 1 share of Preferred “C” and 83,500,000 shares of Preferred “I”
and Alex Cunningham 6,250 shares of Preferred “B”, 1 share of Preferred “C” and 83,800,000 shares of Preferred
“I”.









67







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, 2020, the loans
had been repaid.



The Company obtained short-term advances
from the Chairman of the Board that are none interest bearing and due on demand. As of December 31, 2020 and 2019, the Company
owed the Chairman $126,849 and $136,349, respectively.



Blank Check Preferred Stock



As of December 31, 2020, the Company has
designated 100,000,000 shares of Blank Check Preferred Stock zero of which have been issued.



2020 Preferred
Stock Activity:



On
July 20th, 2020 CDIX executed a Buyback Agreement finalizing the sale of Repicci's Franchise Group, LLC (RFG) acquired
by Cardiff, August 10, 2016. The buyer is Frank Repici effective June 1st, 2020. Each Preferred "H" Share,
had a par value $0.001 per share and a Stated Value was $4.00 per share. Repici exchanged 81,601 CDIX Preferred "H"
Shares for the purchase price of $652,808.



On
July 23rd, 2020 CDIX executed a Buyback Agreement finalizing the sale of Romeo's Alpharetta, Inc., Fortuna Restaurant
Group, Inc., R&T Restaurant Group, LLC acquired by Cardiff, June 30, 2014. The purchaser was Gene Romeo effective July 1st,
2020. Each Preferred "D" Shares, had a par value of $0.001 per share and a Stated Value of $4.00 per share. Romeo exchanged
212,500 Preferred "D" Shares for the purchase price of $1,700,000.



2019 Preferred
Stock Activity:



Series I Preferred Stock



In the fourth quarter of 2018, the
Company agreed to issue 125,000,000 preferred I shares each to the Chairman of the Board and the CEO, which were reflected as
preferred shares to be issued on the financial statements at a total cost of stock compensation of $200,000. The shares were
issued in March 2019.



In the fourth quarter of 2019, the Company
issued 165 shares of Series R preferred with a par value of $1,200.



Series R Preferred Stock



The Company has designated shares of preferred
stock as Series R Preferred Stock (“Series R”), with a par value of $1,200 per share, of which 165 shares were issued
November 20, 2019 and outstanding as of December 31, 2020. Series R is awarded “Voting Right” at the ratio of 1 vote
per share owned. Each one share of Series I convertible as defined in the agreement.











68







Common Stock



Effective May 12, 2020 the Company completed
a reverse stock split of 10,000:1 for common shares. In conjunction with the reverse stock split, the Company canceled 826 partial
rounding shares to balance the shares outstanding.



Effective March 21, 2019, the Company completed
a reverse stock split of 1500:1 for common shares. In conjunction with the reverse stock split, the Company canceled 826 partial
rounding shares to balance the shares outstanding.



May 8, 2019, the Company issued 500,000
shares of common stock with a par value of $0.001 to novate a convertible debt of $30,912.32. These Preferred “G” 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.



In the second quarter of 2019, the Company
converted 55,000,000 shares of Preferred Stock I into 82,500,000 shares of common stock at a par value of $0.001. Of the converted
shares, 27,500,000 shares were owed by the Chairman of the Board and 27,500,000 shares were owned by the CEO.



During the years ended December 31, 2020
and 2019, respectively, the Company converted $423,766 and $423,766 of convertible debt and $72,131 and $72,131 in interest, penalties,
and fees into 593,817,812 shares (post reverse split of 1500:1) of the company’s commons stock.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES



The aggregate fees billed for the years ended
December 31, 2020 and 2019 for professional services rendered by the principal accountant for the audit of its annual financial statements
included in Form 10-K/A (“Audit Fees”), (2) tax compliance, advice, and planning (“Tax Fees”), and (iv)
other products or services provided (“Other Fees”) and for other professional services rendered by the Company’s principal
accountant:



|                |  | Year Ended December 31, |         |  | Year Ended December 31, |  
|--------------- |  | ----------------------- | ------- |  | ----------------------- | -
|                |  | 2020                    |         |  | 2019                    |  
|Accounting Fees |  | $                       | 120,000 |  |                         | $
|Tax Fees        |  |                         | –       |  |                         |  
|Other Fees      |  |                         | –       |  |                         |  
|Total           |  | $                       | 120,000 |  |                         | $

























69







PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES



|Exhibit No. | Description1                                                                                                                                  
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|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                                                                               
|4.1         | Description of Cardiff Lexington Corp. Common Stock                                                                                           
|10.1        | Employment Agreement by and between the Company and Daniel Thompson                                                                           
|10.2        | Employment Agreement by and between the Company and Alex Cunningham                                                                           
|10.3        | Employment Agreement by and between the Company and Dr. Rollan Roberts                                                                        
|10.4        | Employment Agreement by and between the Company and Patrick Lambert                                                                           
|21.1        | List of Subsidiaries of the Company                                                                                                           
|31.1        | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                        
|31.2        | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                        
|32.1        | Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                        
|32.2        | Certification by the Chief Financial Officer 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                                                                                                           

_____________________________________________

* To be filed by amendment



1NTD: Item 601(b)(2) requires
filing of material plans of acquisition. Given the company’s strategy, it appears the agreements for each of its acquisitions should
be filed. Item 601(b)(4) requires filing of all instruments defining rights of securities holders. Confirm the Articles of Incorporation
on file reflect all classes of outstanding preferred stock. Item 601(b)(10) requires filing of all material contracts. At a minimum,
each of the executive employments agreements should be filed. Consider other agreements material to the Company’s business other
than plans of acquisition covered by 601(b)(2) mentioned above. Item 601(b)(21) requires current list of subsidiaries and jurisdiction
of organization. Item 601(b)(23) requires auditors consent if 10-K/A will be incorporated by reference into the pending Form S-1
Registration Statement.

























70







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  17th day of February 2022.







| | CARDIFF LEXINGTON CORP 
| | -----------------------
| |                        
| | /s/ Alex Cunningham    
| | Alex Cunningham        
| | Chief Executive 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 |  | February 17, 2022
|Daniel Thompson     |  |                                    |  |                  
|                    |  |                                    |  |                  
|                    |  |                                    |  |                  
|/s/ Alex Cunningham |  | Chief Executive Officer            |  | February 17, 2022
|Alex Cunningham     |  | (Principal Executive Officer)      |  |                  
|                    |  |                                    |  |                  
|                    |  |                                    |  |                  
|/s/ Steven Healy    |  | Chief Financial Officer            |  | February 17, 2022
|StevenHealy         |  | (Principal Financial Officer)      |  |                  
|                    |  | (Principal Accounting Officer)     |  |                  



















71