Kz550 backfiring

Hello la community. We recently just purchased a 1980 kz550a. It runs okish but it backfired frequently with flames coming out of the tail pipe. We've checked timing, checked/corrected valve clearance, adjusted the air/fuel mixture and it still backfires and doesn't like to run higher than 5k rpm. Any tips what to check next?

Many possibilities.
Faulty coils. 
Points could be getting worn on the pivots so they don't always make contact.
Bad connection in ignition switch or kill switch.
Get a voltage reading on the positive side of the coils while running to rule out bad switches.

The emissions stuff can cause backfires, but would not really cause the lack of power unless some vacuum hoses have come off.
The emissions stuff can be bypassed.

Since you checked the valve lash, did you remember to release chain tension before installing the valve cover.  If not, read the valve warning in my signature.

The links in my sig will also have links to a website about your TK22 carbs.

The carbs were just rebuilt by the previous owner, we checked for vacuum leaks on the intake boots, checked all the spark plugs. 1 and 2 are running lean and 3 and 4 are running rich

I'd recheck the carbs.
Steve