UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

 

REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT OF 1933

 

OzopEnergy Solutions, Inc.

(Exactname of registrant as specified in its charter)

 

Nevada		3841		35-2540672
(State of Incorporation)		(Primary Standard Industrial Classification Number)		(IRS Employer Identification Number)

 

55Ronald Reagan Blvd.

Warwick,NY 10990

(877)785-6967

info@ozopenergy.com

(Address,including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Pleasesend copies of all communications to:

 

BRUNSONCHANDLER & JONES, PLLC

175South Main Street, Suite 1410

SaltLake City, Utah 84111

801-303-5772

chase@bcjlaw.com

(Address,including zip code, and telephone, including area code)

 

Approximatedate of proposed sale to the public: From time to time after the effective date of this registration statement.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933, check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

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

 

	Large accelerated filer	☐		Accelerated filer	☐
	Non-accelerated filer	☒		Smaller reporting company	☒
	(do not check if a smaller reporting company)			Emerging Growth Company	☐

 

Wehereby amend this registration statement on such date or dates as may be necessary to delay our effective date until the registrant shallfile a further amendment which specifically states that this registration statement shall, thereafter, become effective in accordancewith Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission,acting pursuant to Section 8(a) may determine.

 

 

 

PRELIMINARYPROSPECTUS SUBJECT TO COMPLETION DATED JULY___, 2024

 

Theinformation in this prospectus is not complete and may be changed. These securities may not be sold until the registration statementfiled with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securitiesand is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

OZOPENERGY SOLUTIONS, INC.

2,000,000,000Common Shares

 

Theselling stockholder identified in this prospectus may offer an indeterminate number of shares of its common stock, which will consistof up to 2,000,000,000 shares of common stock to be sold by GHS Investments LLC (“GHS”) pursuant to an Equity Financing Agreement(the “Financing Agreement”) dated May 2, 2023. If issued presently, the 2,000,000,000 shares of common stock registered forresale by GHS would represent 23.18% of our issued and outstanding shares of common stock as of July 8, 2024.

 

Theselling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailingmarket prices at the time of sale, at varying prices, or at negotiated prices.

 

Wewill not receive any proceeds from the sale of the shares of our common stock by GHS. However, we will receive proceeds from our initialsale of shares to GHS pursuant to the Financing Agreement. We will sell shares to GHS at a price equal to 80% of the lowest daily volumeweighted average trading price (the “VWAP”) of our common stock during the ten (10) consecutive trading day period precedingthe date on which we deliver a put notice to GHS (the “Market Price”).

 

GHSis an underwriter within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are involved in selling theshares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by themmay be deemed to be underwriting commissions or discounts under the Securities Act of 1933.

 

Ourcommon stock is traded on OTC Markets under the symbol “OZSC”. On July 8, 2024, the last reported sale price for our commonstock was $0.0009 per share.

 

Priorto this offering, there has been a limited market for our securities. While our common stock is on the OTC Markets, there has been negligibletrading volume. There is no guarantee that an active trading market will develop in our securities.

 

Thisoffering is highly speculative, and these securities involve a high degree of risk and should be considered only by persons who can affordthe loss of their entire investment. See “Risk Factors” beginning on page 6. Neither the Securities and Exchange Commissionnor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.Any representation to the contrary is a criminal offense.

 

Thedate of this prospectus is ________________, 2024.

 

 

Tableof Contents

 

Thefollowing table of contents has been designed to help you find information contained in this prospectus. We encourage you to read theentire prospectus.

 

Item 3. SUMMARY INFORMATION, RISK FACTORS, AND RATIO OF EARNINGS TO FIXED CHARGES	4
Item 4. USE OF PROCEEDS	18
Item 5. DETERMINATION OF OFFERING PRICE	18
Item 6. DILUTION	19
Item 7. SELLING SECURITY HOLDER	19
Item 8. PLAN OF DISTRIBUTION	21
Item 9. DESCRIPTION OF SECURITIES TO BE REGISTERED	22
Item 10. INTERESTS OF NAMED EXPERTS AND COUNSEL	24
Item 11. INFORMATION WITH RESPECT TO THE REGISTRANT	24
Item 11A. MATERIAL CHANGES	37
Item 12. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.	37
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION	38
Item 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS	38
Item 15. RECENT SALES OF UNREGISTERED SECURITIES	38
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	39

 

 

Wehave not authorized any person to give you any supplemental information or to make any representations for us. You should not rely uponany information about our company that is not contained in this prospectus. Information contained in this prospectus may become stale.You should not assume the information contained in this prospectus or any prospectus supplement is accurate as of any date other thantheir respective dates, regardless of the time of delivery of this prospectus, any prospectus supplement or of any sale of the shares.Our business, financial condition, results of operations, and prospects may have changed since those dates. The selling stockholdersare offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted.

 

Inthis prospectus, “Ozop” the “Company,” “we,” “us,” and “our” refer to OzopEnergy Solutions, Inc., a Nevada corporation.

 

Item3. SUMMARY INFORMATION, RISK FACTORS, AND RATIO OF EARNINGS TO FIXED CHARGES

 

Youshould carefully read all information in the prospectus, including the financial statements and their explanatory notes under the FinancialStatements prior to making an investment decision.

 

CorporateBackground

 

OzopEnergy Solutions, Inc. (the” Company,” “we,” “us” or “our”) was originally incorporatedas Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada. On October 29, 2020, the Company formed a new wholly ownedsubsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation (“Merger Sub”). The Merger Sub was formed underthe Nevada Revised Statutes for the sole purpose and effect of changing the Company’s name to “Ozop Energy Solutions, Inc.”That same day the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Merger Sub and filedArticles of Merger (the “Articles of Merger”) with the Nevada Secretary of State, merging the Merger Sub into the Company,which were stamped effective as of November 3, 2020. As permitted by the Section 92.A.180 of the Nevada Revised Statutes, the sole purposeand effect of the filing of Articles of Merger was to change the name of the Company to “Ozop Energy Solutions, Inc.”

 

OzopEnergy Systems Overview

 

OnDecember 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiaryof the Company. OES was formed to be a manufacturer and distributor of renewable energy products.

 

OESis actively engaged in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. On April 15,2021, OES signed a five-year lease beginning June 1, 2021, for approximately 8,100 SF in California. We are engaged in multiple businesslines that include Project Development as well as Equipment Distribution. Our solar and energy storage projects involve large-scale batteryand solar photovoltaics (PV) installations. The utility-scale storage business is based on an arbitrage business model in which we installmultiple 1+ megawatt batteries, charge them with off-peak grid electricity under contract with the utility, then sell the power backduring peak load hours at a premium, as dictated by prevailing electricity tariffs.

 

SolarPV: Our PV business model involves the design and construction of electrical generating PV systems that can resell power to theutilities or be used for off grid use as part of our developing Neo-Grids solution. The Neo-Grids proprietary program, patent pending,was developed for the off-grid distribution of electricity to reduce the rates, fees and charges currently burdening the EV Chargingand residential carport sectors. It will also reduce the lengthy permitting processes and streamline the installations.

 

ElectricVehicle Chargers: The Neo-Grids, patent pending, is comprised of the design, engineering, installation, and operational methodologiesas well as the financial arbitrage of how we produce, capture and distribute electrical energy for the EV markets. Neo-Grids will serveboth the private auto and the commercial sectors. OES has license rights to the proprietary “flow” that was filed with theUnited States Patent and Trademark Office in March 2021. The exponential growth of the EV industry has been accelerated by the recentmajor commitments of most of the major car manufacturers. Our Neo-Grids business model leverages this accelerated growth by offering(1) charging locations that can be installed at a significant discount to utility-tied installations and (2) EV charger electricity thatis both renewable and less expensive than comparable grid supplied power as offered by local suppliers.

 

OEShas developed a business plan for the Neo Grids distribution solution that is being executed now and will be coming out of Research andDevelopment for proof of concept in Q4 2021. Having identified several manufacturers and established a supply line for EV chargers, wehave entered into agreements for EV charger installations as part of this proof of concept and plan to service them under multi-yearagreements.

 

 

EquipmentDistributor: OES has entered the component supply/distribution side of the renewable, resiliency and energy storage industriesdistributing the core components associated with commercial solar PV systems as well as onsite battery storage and power generation.The components we are distributing include PV panels, solar inverters, solar mounting systems, stationary batteries, onsite generatorsand other associated electrical equipment and components that are all manufactured by multiple companies, both domestic and international.These core products are sourced from management-developed relationships and are distributed through our existing network and our in-housesales team.

 

OESmanagement has decades of experience in the renewable, storage and resilient energy businesses and associated markets, which includebut are not limited to project finance, project development, equipment finance, construction, utility protocol, regulatory policy andtechnology assessment.

 

WhereYou Can Find Us

 

Ouroffices are currently located at 55 Ronald Reagan Blvd., Warwick, NY 10990. Our telephone number is (877) 785-6967.

GHSEquity Financing Agreement and Registration Rights Agreement

 

Summaryof the Offering

 

Shares currently outstanding:		6,628,031,093
Shares being offered:		2,000,000,000
Offering Price per share:		The selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing market prices at the time of sale, at varying prices or at negotiated prices.
Use of Proceeds:		We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholder. However, we will receive proceeds from our initial sale of shares to GHS, pursuant to the Financing Agreement. The proceeds from the initial sale of shares will be used for the purpose of working capital and for potential acquisitions.
OTC Markets Symbol:		OZSC
Risk Factors:		See “Risk Factors” and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.

 

FinancialSummary

 

Thetables and information below are derived from our consolidated financial statements for the twelve months ended December 31, 2023 and2022.

 

		December 31, 2023				December 31, 2022
Cash		$	1,446,029			$	1,369,210
Total Assets			3,784,639				9,489,342
Total Liabilities			30,302,826				30,466,111
Total Stockholder’s Equity (Deficit)		$	(26,518,187	)		$	(20,976,769	)

 

Statementof Operations

 

		Year End December 31, 2023				Year End December 31, 2022
Revenue		$	4,760,705			$	16,629,450
Total Operating Expenses			5,644,981				5,959,344
Net Income (Loss) for the Period			7,369,681				6,025,812
Net Income (Loss) per Share		$	0.00			$	0.00

 

 

RISKFACTORS

 

Thisinvestment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below andthe other information in this prospectus. If any of the following risks actually occur, our business, operating results and financialcondition could be harmed, and the value of our stock could go down. This means you could lose all or a part of your investment.

 

SpecialInformation Regarding Forward-Looking Statements

 

Someof the statements in this prospectus are “forward-looking statements.” These forward-looking statements involve certain knownand unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially differentfrom any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include,among others, the factors set forth herein under “Risk Factors.” The words “believe,” “expect,” “anticipate,”“intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place unduereliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publiclyannounce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments.However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non- reporting issuer. Further, Section 27A(b)(2)(D)of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward lookingstatements does not apply to statements made in connection with an initial public offering.

 

RisksRelated to Our Business and Industry

 

Readersshould carefully consider the risks and uncertainties described below.

 

Ourfailure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financialcondition and/or results of operations, and the trading price of our common stock may decline and investors may lose all or part of theirinvestment. We cannot assure you that we will successfully address these risks or other unknown risks that may affect our business.

 

Asan enterprise engaged in the development of new technology, our business is inherently risky. Our common shares are considered speculativeduring the development of our new business operations. Prospective investors should carefully consider the risk factors set out below.

 

Businessinterruptions, including any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a materialadverse impact on us if the situation continues.

 

Theongoing coronavirus outbreak which began in China at the beginning of 2020 has impacted various businesses throughout the world, includingtravel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If the coronavirus outbreak situationshould worsen, we may experience disruptions to our business including, but not limited to equipment, to our workforce, or to our businessrelationships with other third parties.

 

Theextent to which the coronavirus impacts our operations or those of our third-party partners will depend on future developments, whichare highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emergeconcerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Any such disruptionsor losses we incur could have a material adverse effect on our financial results and our ability to conduct business as expected.

 

TheCompany always maintains the ability for team members to work virtually.

 

 

Weneed to continue as a going concern if our business is to succeed.

 

Ourindependent registered public accounting firm reports on our audited financial statements for the years ended December 31, 2023, and2022, indicate that there are a number of factors that raise substantial risks about our ability to continue as a going concern. Suchfactors identified in the report are our accumulated deficit since inception, our failure to attain profitable operations, the excessof liabilities over assets, and our dependence upon obtaining adequate additional financing to pay our liabilities. If we are not ableto continue as a going concern, investors could lose their investments.

 

Becauseof the unique difficulties and uncertainties inherent in technology development, we face a risk of business failure.

 

Potentialinvestors should be aware of the difficulties normally encountered by companies developing new technology and the high rate of failureof such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications anddelays encountered in connection with the development of new technology with limited personnel and financial means. These potential problemsinclude, but are not limited to, unanticipated technical problems that extend the time and cost of product development, or unanticipatedproblems with the operation of our technology.

 

Productdevelopment involves significant time and expense and can be uncertain.

 

Thedevelopment of technology and products for OES is costly, complex and time-consuming. Any investment into product development often involvesa long wait until a return, if any, is achieved on such investment. We continue to make significant investments in research and developmentrelating to our technology and products. Investments in new technology and processes are inherently speculative.

 

Ifwe do not obtain additional financing or sufficient revenues, our business will fail.

 

Ourbusiness plan calls for significant expenses in connection with developing our OES systems and paying our current obligations. The Companywill require additional financing to execute its business plan through raising additional capital and/or revenue. Obtaining additionalfinancing is subject to a number of factors, including investor acceptance of OES technology and current financial condition as wellas general market conditions. These factors affect the timing, amount, terms or conditions of additional financing unavailable to us.And if additional financing is not arranged, the Company faces the risk of going out of business. The Company’s management is currentlyengaged in actively pursuing multiple financing options in order to obtain the capital necessary to execute the Company’s businessplan. There is no history upon which to base any assumption as to the likelihood we will prove successful, and we can provide investorswith no assurance that we will achieve profitable operations. If we are unsuccessful in addressing these risks, our business will mostlikely fail.

 

Successfultechnical development of our products does not guarantee successful commercialization.

 

Wemay successfully complete the technical development for one or all of our product development programs, but still fail to develop a commerciallysuccessful product for a number of reasons, including among others the following:

 

●	competing products;
●	ineffective distribution and marketing;
●	lack of sufficient cooperation from our partners; and
●	demonstrations of the products not aligning with or meeting customer needs.

 

Oursuccess in the market for the products we develop will depend largely on our ability to prove our products’ capabilities. Upondemonstration, our products and/or technology may not have the capabilities they were designed to have or that we believed they wouldhave. Furthermore, even if we do successfully demonstrate our products’ capabilities, potential customers may be more comfortabledoing business with a larger, more established, more proven company than us. Moreover, competing products may prevent us from gainingwide market acceptance of our products. Significant revenue from new product investments may not be achieved for a number of years, ifat all.

 

 

Ifwe fail to protect our intellectual property rights, we could lose our ability to compete in the market.

 

Ourintellectual property and proprietary rights are important to our ability to remain competitive and for the success of our products andour business. We rely on a combination of patent, trademark and trade secret laws as well as confidentiality agreements and procedures,non-compete agreements and other contractual provisions to protect our intellectual property, other proprietary rights and our brand.We have confidentiality agreements in place with our consultants, customers and certain business suppliers and plan to require futureemployees to enter into confidentiality and non-compete agreements. We have little protection when we must rely on trade secrets andnondisclosure agreements. Our intellectual property rights may be challenged, invalidated or circumvented by third parties. We may notbe able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by employees or competitors.Furthermore, our competitors may independently develop technologies and products that are substantially equivalent or superior to ourtechnologies and/or products, which could result in decreased revenues. Moreover, the laws of foreign countries may not protect our intellectualproperty rights to the same extent as the laws of the U.S. Litigation may be necessary to enforce our intellectual property rights whichcould result in substantial costs to us and substantial diversion of management attention. If we do not adequately protect our intellectualproperty, our competitors could use it to enhance their products. Our inability to adequately protect our intellectual property rightscould adversely affect our business and financial condition, and the value of our brand and other intangible assets.

 

Othercompanies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability to generatefuture revenue and profit.

 

Wedo not believe that we infringe the proprietary rights of any third party, but claims of infringement are becoming increasingly commonand third parties may assert infringement claims against us. It may be difficult or impossible to identify, prior to receipt of noticefrom a third party, the trade secrets, patent position or other intellectual property rights of a third party, either in the United Statesor in foreign jurisdictions. Any such assertion may result in litigation or may require us to obtain a license for the intellectual propertyrights of third parties. If we are required to obtain licenses to use any third-party technology, we would have to pay royalties, whichmay significantly reduce any profit on our products. In addition, any such litigation could be expensive and disruptive to our abilityto generate revenue or enter into new market opportunities. If any of our products were found to infringe other parties’ proprietaryrights and we are unable to come to terms regarding a license with such parties, we may be forced to modify our products to make themnon-infringing or to cease production of such products altogether.

 

Thenature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnity.

 

Wedevelop and sell products where insurance or indemnification may not be available, including designing and developing products usingadvanced and unproven technologies in solar and electric vehicle charging applications that are intended to operate in a variety of situations.Failure of certain of our products could result in loss of life or property damage. Certain products may raise questions with respectto issues of privacy rights, civil liberties, intellectual property, trespass, conversion and similar concepts, which may raise new legalissues. Indemnification to cover potential claims or liabilities resulting from a failure of technologies developed or deployed may beavailable in certain circumstances but not in others. We are not able to maintain insurance to protect against all operational risksand uncertainties. Substantial claims resulting from an accident, failure of our product, or liability arising from our products in excessof any indemnity or insurance coverage (or for which indemnity or insurance is not available or was not obtained) could harm our financialcondition, cash flows, and operating results. Any accident, even if fully covered or insured, could negatively affect our reputationamong our customers and the public, and make it more difficult for us to compete effectively.

 

 

Ifwe are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected.

 

Forour business to be successful, we need to attract and retain highly qualified technical, management and sales personnel. The failureto recruit additional key personnel when needed with specific qualifications and on acceptable terms or to retain good relationshipswith our partners might impede our ability to continue to develop, commercialize and sell our products. To the extent the demand forskilled personnel exceeds supply, we could experience higher labor, recruiting and training costs in order to attract and retain suchemployees. We face competition for qualified personnel from other companies with significantly more resources available to them and thusmay not be able to attract the level of personnel needed for our business to succeed.

 

Thereduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and othersupport for on-grid solar electricity applications, or other public policies, such as tariffs or other trade remedies imposed on solarcells and modules, could negatively impact demand and/or price levels for our solar modules and systems and limit our growth or leadto a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.

 

Althoughwe believe that solar energy will experience widespread adoption in those applications where it competes economically with traditionalforms of energy without any support programs, in certain markets our net sales and profits remain subject to variability based on theavailability and size of government subsidies and economic incentives. Federal, state, and local governmental bodies in many states haveprovided subsidies in the form of rebates, tax incentives, and other incentives to end users. Many of these support programs expire,phase out over time, require renewal by the applicable authority, or may be amended. To the extent these support programs are reducedearlier than previously expected or are changed retroactively, such changes could negatively impact demand and/or price levels for oursolar modules and systems, lead to a reduction in our net sales, and adversely impact our operating results.

 

Severalof our key products are either single-sourced or sourced from a limited number of suppliers, and their failure to perform could causedelays and impair our ability to deliver solar modules to customers in the required quality and quantities and at a price that is profitableto us.

 

Ourfailure to obtain products that meet our quality, quantity, and cost requirements in a timely manner could interrupt or impair our abilityto sell our solar modules or increase our product costs. Several of our key products are either single-sourced or sourced from a limitednumber of suppliers. As a result, the failure of any of our suppliers to perform could disrupt our supply chain and adversely impactour operations.

 

Wemay be unable to profitably provide new product offerings or achieve sufficient market penetration with such offerings.

 

Wemay expand our portfolio of offerings to include solutions that build upon our core competencies but for which we have not had significanthistorical experience, including variations in our traditional product offerings or other offerings related to commercial and industrialcustomers. We cannot be certain that we will be able to ascertain and allocate the appropriate financial and human resources necessaryto grow these business areas. We could invest capital into growing these businesses but fail to address market or customer needs or otherwisenot experience a satisfactory level of financial return. Also, in expanding into these areas, we may be competing against companies thatpreviously have not been significant competitors, such as companies that currently have substantially more experience than we do in theresidential, commercial and industrial, or other targeted offerings. If we are unable to achieve growth in these areas, our overall growthand financial performance may be limited relative to our competitors and our operating results could be adversely impacted.

 

Materialweaknesses in our internal control over financing reporting may, until remedied, cause errors in our financial statements or cause ourfilings with the SEC to not be timely.

 

TheCompany believes that material weaknesses exist in our internal control over financial reporting as of December 31, 2023, including thoserelated to (i) our internal audit functions and (ii) a lack of segregation of duties within accounting functions. If our internal controlover financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements thatcould require a restatement or our filings may not be timely made with the SEC. We intend to implement additional corporate governanceand control measures to strengthen our control environment as we are able, but we may not achieve our desired objectives. Moreover, nocontrol environment, no matter how well designed and operated, can prevent or detect all errors or fraud. We may identify material weaknessesand control deficiencies in our internal control over financial reporting in the future that may require remediation and could lead investorslosing confidence in our reported financial information, which could lead to a decline in our stock price.

 

 

Wecannot guarantee continued sales of our products or services.

 

Wecannot provide any assurance that our products and services will sell or continue to sell at rates they have historically. Our productsand services may become less attractive compared to competing products and services, and our business would be harmed.

 

Wemay be unable to effectively implement our business model and expand.

 

Ourbusiness model and growth and marketing strategy is predicated on its ability to introduce our products and services to the market. Wecannot assure that we will be able to execute our business plan, introducing our products and services into new markets, that customerswill embrace our products compared to competing products and services already well established in those markets, that any of the targetmarkets will adopt our products and services, or that prospective customers will agree to pay the prices for our products and servicesin those new markets we plan to charge. In the event prospective customers resist our products and services and paying the prices wewill charge, the Company’s business, financial condition, and results of operations will be materially and adversely affected.

 

Wemay incur significant debt to finance our operations.

 

Thereis no assurance that the Company will not incur debt in the future, that it will have sufficient funds to repay its indebtedness, orthat the Company will not default on its debt, jeopardizing its business viability. Furthermore, the Company may not be able to borrowor raise additional capital in the future to meet the Company’s needs or to otherwise provide the capital necessary to conductits business.

 

TheCompany has not established consistent methods for determining the consideration paid to management.

 

Theconsideration being paid by the Company to its CEO, Mr. Conway, has not been determined based on arm’s length negotiation. Whilemanagement believes that Mr. Conway’s current compensation arrangement is fair for the work being performed, there is no assurancethat the consideration to management reflects the true market value of his services. Additionally, in the future, the Company may grantnet profits interests to its executive officers in addition to stock options, which may further dilute shareholders’ ownershipof the Company.

 

Thereis no guarantee that the Company will pay dividends to its shareholders.

 

TheCompany does not anticipate declaring and paying dividends to its shareholders in the near future. It is the Company’s currentintention to apply net earnings, if any, in the foreseeable future to increasing its capital base and marketing. Prospective investorsseeking or needing dividend income or liquidity should therefore not purchase the Shares. There can be no assurance that the Companywill ever have sufficient earnings to declare and pay dividends to the holders of the Company’s Common Stock, and in any event,a decision to declare and pay dividends is at the sole discretion of the Company’s Board of Directors.

 

Managementcannot guarantee that its relationship with the Company does not create conflicts of interest.

 

Therelationship of management and its affiliates to the Company could create conflicts of interest. While management has a fiduciary dutyto the Company, it also determines its compensation from the Company. Management’s compensation from the Company has not been determinedpursuant to arm’s-length negotiation.

 

TheCompany may sustain losses that cannot be recovered through insurance or other preventative measures.

 

Thereis no assurance that the Company will not incur uninsured liabilities and losses as a result of the conduct of its business. The Companyplans to maintain comprehensive liability and property insurance at customary levels. The Company will also evaluate the availabilityand cost of business interruption insurance. However, should uninsured losses occur, the Shareholders could lose their invested capital.

 

 

Wemay be subject to liabilities that are not readily identifiable at this time.

 

TheCompany may have liabilities to affiliated or unaffiliated lenders. These liabilities would represent fixed costs we would be requiredto be pay, regardless of the level of business or profitability experienced by the Company. There is no assurance that the Company willbe able to pay all of its liabilities. Furthermore, the Company is always subject to the risk of litigation from customers, suppliers,employees, and others. Litigation can cause the Company to incur substantial expenses and, if cases are lost, judgments, and awards canadd to the Company’s costs.

 

Inthe course of business, the Company may incur expenses beyond what was anticipated.

 

Unanticipatedcosts may force the Company to obtain additional capital or financing from other sources or may cause the Company to lose its entireinvestment in the Company if it is unable to obtain the additional funds necessary to implement its business plan. There is no assurancethat the Company will be able to obtain sufficient capital to implement its business plan successfully. If a greater investment is requiredin the business because of cost overruns, the probability of earning a profit or a return of shareholder investment in the Company isdiminished.

 

TheCompany will rely on management to execute the business plan and manage the Company’s affairs.

 

Underapplicable state corporate law and the Bylaws of the Company, the officers and directors of the Company have the power and authorityto manage all aspects of the Company’s business. Shareholders must be willing to entrust all aspects of the Company’s businessto its directors and executive officers.

 

Thereis no assurance the Company will always have adequate capital to conduct its business.

 

TheCompany will have limited capital available to it. If the Company’s entire original capital is fully expended and additional costscannot be funded from borrowings or capital from other sources, then the Company’s financial condition, results of operations andbusiness performance would be materially adversely affected.

 

TheCompany is required to indemnify its directors and officers.

 

TheCompany’s Bylaws provide that the Company will indemnify its officers and directors to the maximum extent permitted by Nevada law.If the Company were called upon to indemnify an officer or director, then the portion of its assets expended for such a purpose wouldreduce the amount otherwise available for the Company’s business.

 

Wemay encounter difficulties managing any growth, and if we are unable to do so, our business, financial condition and results of operationsmay be adversely affected.

 

Ifwe are able to successfully launch our apps and websites, as our operations grow, the simultaneous management of development, productionand commercialization across our target markets will become increasingly complex and may result in less-than-optimal allocation of managementand other administrative resources, increase our operating expenses and harm our operating results.

 

Ourability to effectively manage our operations, growth and various projects across our target markets will require us to make additionalinvestments in our infrastructure to continue to improve our operational, financial and management controls and our reporting systemsand procedures and to attract and retain sufficient numbers of talented employees, which we may be unable to do effectively. We may beunable to successfully manage our expenses in the future, which may negatively impact our gross margins or operating margins in any particularquarter.

 

RisksRelated to Our Intellectual Property

 

Wemay become involved in intellectual property disputes, which may disrupt our business and require us to pay significant damage awards.

 

Thirdparties may sue us for intellectual property infringement, which, if successful, could disrupt our business, cause us to pay significantdamage awards or require us to pay licensing fees. We may also be required to pay penalties, judgments, royalties or significant settlementcosts. If we fail or are unable to develop non-infringing technology our business could suffer.

 

 

Thirdparties may misappropriate our proprietary technologies, information, or trade secrets despite a contractual obligation not to do so.

 

Thirdparties (including joint venture, collaboration, development partners, contract manufacturers, and other contractors and shipping agents)may have custody or control of any proprietary processes and technologies developed by us. If proprietary technologies developed by uswere stolen or misappropriated, they could be used by other parties who may be able to use the technologies for their own commercialgain. In the event that any proprietary technologies are developed and then misappropriated, it could be difficult for us to challengethe misappropriation or prevent reverse engineering, especially in countries with limited legal and intellectual property protection.

 

RisksRelating to Our Common Stock

 

Aninvestment in our securities is extremely speculative, and there can be no assurance of any return on the investment.

 

Aninvestment in our securities is extremely speculative, and there is no assurance that investors will obtain any return on their investment.Investors will be subject to substantial risks, including the risk of losing their entire investment in our securities. For example,the market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results,general trends in the market and other factors, many of which we have little or no control over. 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 ouractual or projected performance.

 

Becausethe Company is a “smaller reporting company,” we may take advantage of certain scaled disclosures available to us, resultingin holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reportingcompany.

 

Weare a “smaller reporting company” as defined in the Exchange Act. As a smaller reporting company, we may take advantage ofcertain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosuresfor so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last businessday of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal yearand our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of oursecond fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors toanalyze the Company’s results of operations and financial prospectus in comparison with other public companies.

 

Tofund its operations, the Company may conduct further offerings in the future, in which case our common stock will be diluted.

 

Tofund its business operations, the Company anticipates continuing to rely on sales of its securities, which may include common stock,preferred stock, convertible debt and/or warrants convertible or exercisable into shares of common stock. Common stock may be issuedin return for additional funds or upon conversion or exercise of outstanding convertible debentures or warrants. If additional commonstock is issued, the price per share of the common stock could be lower than the price paid by existing holders of common stock, andthe percentage interest in the Company of those shareholders will be lower. This result is referred to as “dilution,” whichcould result in a reduction in the per share value of your shares of common stock. The Company’s failure or inability to raisecapital when needed or on terms acceptable to the Company and our shareholders could have a material adverse effect on the Company’sbusiness, financial condition and results of operations and would also have a negative adverse effect on the price of our common stock.

 

 

TheCompany may utilize debt financing to fund its operations.

 

Ifthe Company undertakes debt financing to fund its operations, the financing may involve significant restrictive covenants. In addition,there can be no assurance that such financing will be available on terms satisfactory to the Company, if at all. The Company’sfailure or inability to obtain financing when needed or on terms acceptable to the Company and our shareholders could have a materialadverse effect on the Company’s business, financial condition and results of operations and would also have a negative adverseeffect on the price of our common stock.

 

Thetrading price of our common stock may fluctuate significantly.

 

Volatilityin the trading price of shares of our common stock may prevent shareholders from being able to sell shares of common stock at pricesequal to or greater than their purchase price. The trading price of our common stock could fluctuate significantly for various reasons,including:

 

●	our operating and financial performance and prospects;
●	our quarterly or annual earning or those of other companies in the same industry;
●	sales of our common stock by management of the Company;
●	public reaction to our press releases, public announcements and filing with the SEC;
●	changes in earnings estimates or recommendations by research analysts who track the Company’s common stock or the stock of other companies in the same industry;
●	strategic actions by us or our competitors;
●	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
●	changes in accounting standards, policies, guidance, interpretations or principles; and
●	changes in general economic conditions in the U.S. and in global economies and financial markets, including changes resulting from war or terrorist incidents.

 

Inaddition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a substantialimpact on the trading price of securities issued by many companies. The changes frequently occur irrespective of the operating performanceof the affected companies. As a result, the trading price of our common stock could fluctuate based upon factors that have little ornothing to do with our business.

 

Becausewe are a small company with a limited operating history, holders of common stock may find it difficult to sell their stock in the publicmarkets.

 

Thenumber of persons interested in purchasing our common stock at any given time may be relatively small. This situation is attributableto a number of factors. One factor is that we are a small company that is still relatively unknown to stock analysts, stock brokers,institutional investors, and others in the investment community that generate or influence sales volume. Another factor is that, evenif the Company came to the attention of these persons, they tend to be risk-averse and would likely be reluctant to follow an unprovencompany such as ours. Furthermore, many brokerage firms may not be willing to effect transactions in our securities, including our commonstock. As a consequence, there may be periods when trading activity in our common stock is minimal or even non-existent, as comparedto trading activity in the securities of a seasoned issuer with a large and steady volume of trading activity. We cannot give you anyassurance that an active public trading market for our common stock or other securities will develop or be sustained, or that, if developed,the trading levels will be sustained.

 

FINRAsales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

 

Inaddition to the “penny stock” rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonablegrounds for believing that an investment is suitable for a customer before recommending the investment. Before recommending speculativelow-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about thecustomer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRAbelieves that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. TheFINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limityour ability to buy and sell shares of common stock and may have an adverse effect on the market for our securities.

 

 

TheCompany does not anticipate paying dividends in the future.

 

Wehave never declared or paid any cash dividends on our common stock. Our current policy is to retain earnings to reinvest in our business.Therefore, we do not anticipate paying cash dividends in the foreseeable future. The Company’s dividend policy will be reviewedfrom time to time by the Board of Directors in the context of its earnings, financial condition and other relevant factors. Until theCompany pays dividends, which it may never do, the holders of shares of common stock will not receive a return on those shares unlessthey are able to sell those shares at the desired price, if at all, of which there can be no assurance. In addition, there is no guaranteethat our common stock will appreciate in value or even maintain the price at which holders purchased their common stock.

 

Wewill continue to incur significant costs to ensure compliance with United States corporate governance and accounting requirements.

 

Wewill continue to incur significant costs associated with our public company reporting requirements, including costs associated with applicablecorporate governance requirements such as those required by the Sarbanes-Oxley Act of 2002, and with other rules issued or implementedby the SEC. We expect all of these applicable rules and regulations will result in significant legal and financial compliance costs andto make some activities more time-consuming and costly. We are currently evaluating and monitoring developments with respect to theserules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

Wemay, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our sharevalue.

 

OurArticles of Incorporation authorize the issuance of 8,990,000,000 shares of common stock, par value $0.001 per share, of which 6,628,031,093shares are issued and outstanding as of July 8, 2024. The future issuance of common stock may result in substantial dilution in the percentageof our common stock held by our then-existing shareholders. We may value any common stock issued in the future on an arbitrary basis.The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the valueof the shares held by our investors and might have an adverse effect on any trading market for our common stock.

 

Ourcommon shares are subject to the “Penny Stock” rules of the SEC, and the trading market in our securities will likely belimited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

TheSecurities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposesrelevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

	●	That a broker or dealer approve a person’s account for transactions in penny stocks; and
	●	The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quality of the penny stock to be purchased.

 

Inorder to approve a person’s account for transactions in penny stocks, the broker or dealer must:

 

	●	Obtain financial information and investment experience objectives of the person; and
	●	Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

Thebroker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relatingto the penny stock market, which, in highlight form:

 

	●	Sets forth the basis on which the broker or dealer made the suitability determination; and
	●	That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally,brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it moredifficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

 

Disclosurealso has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissionspayable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remediesavailable to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recentprice information for the penny stock held in the account and information on the limited market in penny stocks.

 

Thereis a very limited market for our securities. While our common stock is on the OTC Markets, there has been negligible trading volume.There is no guarantee that an active trading market will develop in our securities and if a trading market does not develop, purchasersof our securities may have difficulty selling their shares.

 

Thereis currently no established public trading market for our securities, and an active trading market in our securities may not develop,or, if developed, may not be sustained. Accordingly, investors may have a difficult time selling their shares.

 

Ourcommon stock is quoted through the OTC Markets, which may have an unfavorable impact on our stock price and liquidity.

 

TheCompany’s common stock is quoted on the OTC Markets, which is a significantly more limited market than the New York Stock Exchangeor NASDAQ. The trading volume may be limited by the fact that many major institutional investment funds, including mutual funds, followa policy of not investing in OTC Markets stocks and certain major brokerage firms restrict their brokers from recommending OTC Marketsstocks because they are considered speculative and volatile.

 

Thetrading volume of the Company’s common stock has been and may continue to be limited and sporadic. As a result, the quoted pricefor the Company’s common stock on the OTC Markets may not necessarily be a reliable indicator of its fair market value.

 

Additionally,the securities of small capitalization companies may trade less frequently and in more limited volume than those of more establishedcompanies. The market for small capitalization companies is generally volatile, with wide price fluctuations not necessarily relatedto the operating performance of such companies.

 

Tradingon the OTC Markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for ourstockholders to resell their shares.

 

Ourcommon stock is quoted on OTC Markets. Trading in stock quoted on OTC Markets is often thin and characterized by wide fluctuations intrading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depressthe market price of our common stock for reasons unrelated to operating performance. Moreover, OTC Markets is not a stock exchange, andtrading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like NASDAQor a stock exchange like the American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares.

 

Statesecurities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the sharesoffered by this prospectus.

 

Secondarytrading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under theapplicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securitiesmanuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption forthe secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by,a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, theliquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.

 

 

Wemay issue shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.

 

Becauseour CEO and director, Mr. Conway, owns a majority of the voting control of the Company, he could authorize our Board of Directors todetermine the relative rights and preferences of preferred shares without further stockholder approval. As a result, our Board of Directorscould then authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation,the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of suchpreferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue shares of preferredstock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interestsin us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removalof management more difficult, which may not be in your interest as a holder of common stock.

 

Wemay seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock.

 

Wemay finance our operations and develop strategic relationships by issuing equity or debt securities, which could significantly reducethe percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privilegessenior to those of our existing stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market priceof our stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our stockto decline.

 

Theremay be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls,we may be subject to sanctions by the SEC.

 

Weare exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404a of the Sarbanes-OxleyAct of 2002. As a smaller reporting company and emerging growth company, we will not be required to provide a report on the effectivenessof our internal controls over financial reporting until our second annual report, and we will be exempt from the auditor attestationrequirements concerning any such report so long as we are an emerging growth company or a smaller reporting company. We have not yetevaluated whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors inour internal controls or reported financial statements as compared to issuers that have conducted such evaluations. If we are not ableto meet the requirements of Section 404a in a timely manner or with adequate compliance, we might be subject to sanctions or investigationby regulatory authorities, such as the SEC.

 

Weare susceptible to general economic conditions, natural catastrophic events and public health crises, and a potential downturn in advertisingand marketing spending by advertisers could adversely affect our operating results in the near future.

 

Ourbusiness is subject to the impact of natural catastrophic events, such as earthquakes, or floods, public health crisis, such as diseaseoutbreaks, epidemics, or pandemics, and all these could result in a decrease or sharp downturn of economies, including our markets andbusiness locations in the current and future periods. The outbreak of the coronavirus (COVID-19) resulted in increased travel restrictions,and shutdown of businesses, which may cause slower recovery of the economy. We may experience impact from quarantines, market downturnsand changes in customer behavior related to pandemic fears and impact on our workforce if the virus continues to spread. In addition,one or more of our customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment,file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. The extentto which the coronavirus impacts our results will depend on future developments and reactions throughout the world, which are highlyuncertain and will include emerging information concerning the severity of the coronavirus and the actions taken by governments and privatebusinesses to attempt to contain the coronavirus. It is likely to result in a potential material adverse impact on our business, resultsof operations and financial condition. Wider-spread COVID-19 globally could prolong the deterioration in economic conditions and couldcause decreases in or delays in advertising spending and reduce and/or negatively impact our short-term ability to grow our revenues.Any decreased collectability of accounts receivable, bankruptcy of small and medium businesses, or early termination of agreements dueto deterioration in economic conditions could negatively impact our results of operations.

 

 

Weare a “controlled company” within the meaning of the listing rules of Nasdaq and, as a result, can rely on exemptions fromcertain corporate governance requirements that provide protection to shareholders of other companies.

 

Becauseour sole officer, Mr. Conway, owns a majority of voting control of the Company and will own a majority of the voting control after thisoffering, we are and will continue to be after the offering a “controlled company” as defined under the listing rules ofNasdaq. Under Nasdaq listing rules, controlled companies are companies of which more than 50% of the voting power for the election ofdirectors is held by an individual, a group, or another company. For as long as we remain a controlled company, we are permitted to electto rely on certain exemptions from Nasdaq’s corporate governance rules, including the following:

 

	●	an exemption from the rule that a majority of our board of directors must be independent directors;
	●	an exemption from the rule that our compensation committee be composed entirely of independent directors;
	●	an exemption from the rule that our director nominees must be selected or recommended solely by independent;
	●	directors or a nominating committee composed solely of independent directors;

 

Ifwe elected to rely on the “controlled company” exemptions, a majority of the members of our board of directors might notbe independent directors, our nominating and corporate governance and compensation committees might not consist entirely of independentdirectors, and you would not have the same protection afforded to shareholders of companies that are subject to Nasdaq’s corporategovernance rules.

 

RISKSRELATED TO THE OFFERING

 

Ourexisting stockholders may experience significant dilution from the sale of our common stock pursuant to the GHS Financing Agreement.

 

Thesale of our common stock to GHS Investments LLC in accordance with the Financing Agreement may have a dilutive impact on our shareholders.As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise ourput options, the more shares of our common stock we will have to issue to GHS in order to exercise a put under the Financing Agreement.If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar amount raised throughthe offering.

 

Theperceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock.Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage inshort sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could furthercontribute to progressive price declines in our common stock.

 

Theissuance of shares pursuant to the GHS Financing Agreement may have a significant dilutive effect.

 

Dependingon the number of shares we issue pursuant to the GHS Financing Agreement, it could have a significant dilutive effect upon our existingshareholders. Although the number of shares that we may issue pursuant to the Financing Agreement will vary based on our stock price(the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to our shareholders, based ondifferent potential future stock prices, if the full amount of the Financing Agreement is realized. Dilution is based upon common stockput to GHS and the stock price discounted to GHS’s purchase price of 80% of the lowest VWAP during the pricing period.

 

GHSInvestments LLC will pay less than the then-prevailing market price of our common stock which could cause the price of our common stockto decline.

 

Ourcommon stock to be issued under the GHS Financing Agreement will be purchased at a twenty percent (20%) discount, or eighty percent (80%)of the lowest VWAP during the ten (10) consecutive trading days immediately preceding our notice to GHS of our election to exercise our“put” right.

 

GHShas a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted price and themarket price. If GHS sells our shares, the price of our common stock may decrease. If our stock price decreases, GHS may have furtherincentive to sell such shares. Accordingly, the discounted sales price in the Financing Agreement may cause the price of our common stockto decline.

 

 

Wemay not have access to the full amount under the Financing Agreement.

 

OnJuly 8, 2024, the lowest VWAP of the Company’s common stock during the ten (10) consecutive trading day period was approximately$0.0009 At that price we would be able to sell shares to GHS under the Financing Agreement at the discounted price of $0.00072 At thatdiscounted price, the 2,000,000,000 shares registered for issuance to GHS under the Financing Agreement would, if sold by us to GHS,result in aggregate proceeds of $1,440,000. There is no assurance the price of our common stock will remain the same as the market priceor increase.

 

Sinceour common stock is thinly traded it is more susceptible to extreme rises or declines in price, and you may not be able to sell yourshares at or above the price paid.

 

Sinceour common stock is thinly traded its trading price is likely to be highly volatile and could be subject to extreme fluctuations in responseto various factors, many of which are beyond our control, including (but not necessarily limited to):

 

	●	the trading volume of our shares;
	●	the number of securities analysts, market-makers and brokers following our common stock;
	●	new products or services introduced or announced by us or our competitors;
	●	actual or anticipated variations in quarterly operating results;
	●	conditions or trends in our business industries;
	●	announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
	●	additions or departures of key personnel;
	●	sales of our common stock; and
	●	general stock market price and volume fluctuations of publicly-traded, and particularly microcap, companies.

 

Investorsmay have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair marketvalue. The stock markets often experience significant price and volume changes that are not related to the operating performance of individualcompanies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes maycause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a historyof securities class action litigation following periods of volatility in the market price of a company’s securities. Although thereis no such litigation currently pending or threatened against us, such a suit against us could result in the incursion of substantiallegal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and asnoted below, our shares are currently traded on the OTC Link (OTC Pink tier) and, further, are subject to the penny stock regulations.Price fluctuations in such shares are particularly volatile and subject to potential manipulation by market-makers, short-sellers andoption traders.

 

Item4. USE OF PROCEEDS

 

TheCompany will use the proceeds from the sale of the Shares for general corporate and working capital purposes and acquisitions of assets,businesses or operations or for other purposes that the Board of Directors, in good faith, deem to be in the best interest of the Company.

 

Item5. DETERMINATION OF OFFERING PRICE

 

Wehave not set an offering price for the shares registered hereunder, as the only shares being registered are those sold pursuant to theGHS Financing Agreement. GHS may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailingmarket prices at the time of sale, at varying prices or at negotiated prices.

 

 

Item6. DILUTION

 

Notapplicable. The shares registered under this registration statement are not being offered for purchase. The shares are being registeredon behalf of our selling shareholders pursuant to the GHS Financing Agreement.

 

Item7. SELLING SECURITY HOLDER

 

Theselling stockholder identified in this prospectus may offer and sell up to 2,000,000,000 shares of our common stock, which consists ofshares of common stock to be sold by GHS pursuant to the Financing Agreement. If issued presently, the shares of common stock registeredfor resale by GHS would represent 23.18%[●] of our issued and outstanding shares of common stock as of July 8, 2024.

 

Wemay require the selling stockholder to suspend the sales of the shares of our common stock being offered pursuant to this prospectusupon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any materialrespect or that requires the changing of statements in those documents in order to make statements in those documents not misleading.

 

Theselling stockholder identified in the table below may from time to time offer and sell under this prospectus any or all of the sharesof common stock described under the column “Shares of Common Stock Being Offered” in the table below.

 

GHSwill be deemed to be an underwriter within the meaning of the Securities Act. Any profits realized by such selling stockholder may bedeemed to be underwriting commissions.

 

Informationconcerning the selling stockholder may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly.We cannot give an estimate as to the number of shares of common stock that will actually be held by the selling stockholder upon terminationof this offering, because the selling stockholders may offer some or all of the common stock under the offering contemplated by thisprospectus or acquire additional shares of common stock. The total number of shares that may be sold, hereunder, will not exceed thenumber of shares offered, hereby. Please read the section entitled “Plan of Distribution” in this prospectus.

 

Themanner in which the selling stockholder acquired or will acquire shares of our common stock is discussed below under “The Offering.”

 

Thefollowing table sets forth the name of each selling stockholder, the number of shares of our common stock beneficially owned by suchstockholder before this offering, the number of shares to be offered for such stockholder’s account and the number and (if onepercent or more) the percentage of the class to be beneficially owned by such stockholder after completion of the offering. The numberof shares owned are those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicativeof beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares of our common stock as to whicha person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquirewithin 60 days, through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatictermination of a power of attorney or revocation of a trust, discretionary account or similar arrangement, and such shares are deemedto be beneficially owned and outstanding for computing the share ownership and percentage of the person holding such options, warrantsor other rights, but are not deemed outstanding for computing the percentage of any other person. Beneficial ownership percentages arecalculated based on 6,628,031,093[●] shares of our common stock outstanding as of July 8, 2024.

 

Unlessotherwise set forth below, (a) the persons and entities named in the table have sole voting and sole investment power with respect tothe shares set forth opposite the selling stockholder’s name, subject to community property laws, where applicable, and (b) noselling stockholder had any position, office or other material relationship within the past three years, with us or with any of our predecessorsor affiliates. The number of shares of common stock shown as beneficially owned before the offering is based on information furnishedto us or otherwise based on information available to us at the timing of the filing of the registration statement of which this prospectusforms a part.

 

 

		Shares Owned by the Selling Stockholders				Shares of Common Stock				Number of Shares to be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares
Name of Selling Stockholder		before the Offering (1)				Being Offered				# of Shares (2)				% of Class (2)
GHS Investments LLC (3)			0				2,000,000,000	(4)			0				0	%

 

Notes:

 

(1)	Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment power with respect to shares of common stock. Shares of common stock subject to options, warrants and convertible debentures currently exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares of common stock issuable upon the conversion of the convertible debentures is subject to adjustment depending on, among other factors, the future market price of our common stock, and could be materially less or more than the number estimated in the table.
(2)	Because the selling stockholders may offer and sell all or only some portion of the 2,000,000,000 shares of our common stock being offered pursuant to this prospectus and may acquire additional shares of our common stock in the future, we can only estimate the number and percentage of shares of our common stock that any of the selling stockholders will hold upon termination of the offering.
(3)	Mark Grober exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by GHS Investments LLC.
(4)	Consists of up to 2,000,000,000 shares of common stock to be sold by GHS pursuant to the Financing Agreement.

 

THEOFFERING

 

OnMay 2, 2023, we entered into an Equity Financing Agreement (the “Financing Agreement”) with GHS Investments LLC (“GHS”).Although we are not mandated to sell shares under the Financing Agreement, the Financing Agreement gives us the option to sell to GHS,up to $10,000,000 worth of our common stock over the period ending twenty-four (24) months after the date this Registration Statementis deemed effective. The $10,000,000 was stated as the total amount of available funding in the Financing Agreement because this wasthe maximum amount that GHS agreed to offer us in funding. There is no assurance the market price of our common stock will increase inthe future. The number of common shares that remain issuable may not be sufficient, dependent upon the share price, to allow us to accessthe full amount contemplated under the Financing Agreement. If the bid/ask spread remains the same, we will not be able to place a putfor the full commitment under the Financing Agreement. Based on the lowest VWAP of our common stock during the ten (10) consecutive tradingday period preceding July 8, 2024 of approximately $0.0009, the registration statement covers the offer and possible sale of $1,440,000worth of our shares.

 

Thepurchase price of the common stock will be set at eighty percent (80%) of the lowest average daily volume weighted average trading priceof the common stock during the ten (10) consecutive trading day period immediately preceding the date on which the Company delivers aput notice to GHS. In addition, there is an ownership limit for GHS of 4.99%.

 

GHSis not permitted to engage in short sales involving our common stock during the term of the commitment period. In accordance with RegulationSHO, however, sales of our common stock by GHS after delivery of a put notice of such number of shares reasonably expected to be purchasedby GHS under a put will not be deemed a short sale.

 

Inaddition, we must deliver the other required documents, instruments and writings required. GHS is not required to purchase the put sharesunless:

 

●

Our registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable put shall have been declared effective;

 

 

	●	we shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable securities; and
	●	we shall have filed all requisite reports, notices, and other documents with the SEC in a timely manner.

 

Aswe draw down on the equity line of credit, shares of our common stock will be sold into the market by GHS. The sale of these shares couldcause our stock price to decline. In turn, if our stock price declines and we issue more puts, more shares will come into the market,which could cause a further drop in our stock price. You should be aware that there is an inverse relationship between the market priceof our common stock and the number of shares to be issued under the equity line of credit. If our stock price declines, we will be requiredto issue a greater number of shares under the equity line of credit. We have no obligation to utilize the full amount available underthe equity line of credit.

 

Neitherthe Financing Agreement nor any of our rights or GHS’s rights thereunder may be assigned to any other person.

 

Item8. PLAN OF DISTRIBUTION

 

Eachof the selling stockholders named above and any of their pledgees and successors-in-interest may, from time to time, sell any or allof their shares of common stock on OTC Markets or any other stock exchange, market or trading facility on which the shares of our commonstock are traded or in private transactions. These sales may be at fixed prices and prevailing market prices at the time of sale, atvarying prices or at negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	privately negotiated transactions;
	●	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
	●	a combination of any such methods of sale; or

 

Broker-dealersengaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissionsor discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) inamounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excessof a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdownin compliance with FINRA IM-2440.

 

GHSis an underwriter within the meaning of the Securities Act of 1933 and any broker-dealers or agents that are involved in selling theshares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by themmay be deemed to be underwriting commissions or discounts under the Securities Act of 1933. GHS has informed us that it does not haveany written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock of our company.Pursuant to a requirement by FINRA, the maximum commission or discount to be received by any FINRA member or independent broker-dealermay not be greater than 8% of the gross proceeds received by us for the sale of any securities being registered pursuant to Rule 415promulgated under the Securities Act of 1933.

 

Discounts,concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder.The selling stockholder may agree to indemnify any agent, dealer, or broker-dealer that participates in transactions involving salesof the shares if liabilities are imposed on that person under the Securities Act of 1933.

 

Weare required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus. Wehave agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities underthe Securities Act of 1933. We will not receive any proceeds from the resale of any of the shares of our common stock by the sellingstockholders. We may, however, receive proceeds from the sale of our common stock under the Financing Agreement with GHS. Neither theFinancing Agreement with GHS nor any rights of the parties under the Financing Agreement with GHS may be assigned or delegated to anyother person.

 

 

Wehave entered into an agreement with GHS to keep this prospectus effective until GHS has sold all of the common shares purchased by itunder the Financing Agreement and has no right to acquire any additional shares of common stock under the Financing Agreement.

 

Theresale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws.In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicablestate or an exemption from the registration or qualification requirement is available and is complied with.

 

Underapplicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale sharesmay not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as definedin Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisionsof the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing ofpurchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectusavailable to the selling stockholders.

 

Item9. DESCRIPTION OF SECURITIES TO BE REGISTERED

 

General

 

Weare authorized to issue 8,990,000,000 shares of common stock, par value $0.001, of which 6,628,031,093shares are issued and outstandingas of July 8, 2024. Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submittedto the vote of stockholders, including the election of Directors. The holders of shares of common stock have no preemptive, conversion,subscription or cumulative voting rights. There is no provision in our Articles of Incorporation or By-laws that would delay, defer,or prevent a change in control of our Company.

 

Dividends

 

Wehave not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our boardof directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions,and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvestearnings, if any, in our business operations.

 

Warrantsand Options

 

Currently,there are no warrants or options outstanding; nor are there any other equity or debt securities convertible into common stock other thandisclosed in the “Convertible Note” paragraph above.

 

NevadaAnti-Takeover Laws

 

Asa Nevada corporation, we are subject to certain anti-takeover provisions that apply to public corporations under Nevada law. Pursuantto Section 607.0901 of the Nevada Business Corporation Act, or the Nevada Act, a publicly held Nevada corporation may not engage in abroad range of business combinations or other extraordinary corporate transactions with an interested shareholder without the approvalof the holders of two-thirds of the voting shares of the corporation (excluding shares held by the interested shareholder), unless:

 

●

the transaction is approved by a majority of disinterested directors before the shareholder becomes an interested shareholder;

 

 

	●	the interested shareholder has owned at least 80% of the corporation’s outstanding voting shares for at least five years preceding the announcement date of any such business combination;
	●	the interested shareholder is the beneficial owner of at least 90% of the outstanding voting shares of the corporation, exclusive of shares acquired directly from the corporation in a transaction not approved by a majority of the disinterested directors; or
	●	the consideration paid to the holders of the corporation’s voting stock is at least equal to certain fair price criteria.

 

Aninterested shareholder is defined as a person who, together with affiliates and associates, beneficially owns more than 10% of a corporation’soutstanding voting shares. We have not made an election in our amended Articles of Incorporation to opt out of Section 607.0901.

 

Inaddition, we are subject to Section 607.0902 of the Nevada Act which prohibits the voting of shares in a publicly held Nevada corporationthat are acquired in a control share acquisition unless (i) our board of directors approved such acquisition prior to its consummationor (ii) after such acquisition, in lieu of prior approval by our board of directors, the holders of a majority of the corporation’svoting shares, exclusive of shares owned by officers of the corporation, employee directors or the acquiring party, approve the grantingof voting rights as to the shares acquired in the control share acquisition. A control share acquisition is defined as an acquisitionthat immediately thereafter entitles the acquiring party to 20% or more of the total voting power in an election of directors.

 

PennyStock Considerations

 

Ourshares will be “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securitieswith a price of less than $5.00 per share. Thus, our shares will be subject to rules that impose sales practice and disclosure requirementson broker-dealers who engage in certain transactions involving a penny stock. Under the penny stock regulations, a broker-dealer sellinga penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser andmust receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.

 

Inaddition, under the penny stock regulations, the broker-dealer is required to:

 

	●	Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
	●	Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
	●	Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value, and information regarding the limited market in penny stocks; and
	●	Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

 

Becauseof these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affectthe ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing thelevel of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the saleof our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a correspondingdecrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholderswill, in all likelihood, find it difficult to sell their securities.

 

 

Item10. INTERESTS OF NAMED EXPERTS AND COUNSEL

 

Exceptas disclosed herein, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or havinggiven an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registrationor offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantialinterest, directly or indirectly, in the registrant or its subsidiary. Nor was any such person connected with the registrant or any ofits parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

 

Thefinancial statements of the Company as of December 31, 2023, and 2022, have been included herein in reliance on the report of PragerMetis CPA’s LLC, an independent registered public accounting firm and the report is given on the authority of that firm as expertsin auditing and accounting. The legal opinion rendered by Brunson Chandler & Jones, PLLC, regarding our common stock registered inthe registration statement of which this prospectus is a part, is as set forth in its opinion letter included in this prospectus. Theaddress of Brunson Chandler & Jones, PLLC, is Walker Center, 175 S. Main Street, 14^th Floor, Salt Lake City, Utah, 84111.

 

Item11. INFORMATION WITH RESPECT TO THE REGISTRANT

 

DESCRIPTIONOF BUSINESS

 

ORGANIZATION

 

OzopEnergy Solutions, Inc. (the” Company,” “we,” “us” or “our”) was originally incorporatedas Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada.

 

Ourcorporate website is located at http://ozopenergy.com, and the contents of our website are expressly not incorporated herein.

 

OnJuly 10, 2020, the Company entered into a Stock Purchase Agreement (the “SPA”) with Power Conversion Technologies, Inc.,a Pennsylvania corporation (“PCTI”), and Catherine Chis (“Chis”), PCTI’s Chief Executive Officer (“CEO”)and its sole shareholder. Under the terms of the SPA, the Company acquired one thousand (1,000) shares of PCTI, which represents allof the outstanding shares of PCTI, from Chis in exchange for the issuance of 47,500 shares of the Company’s Series C PreferredStock, 18,667 shares of the Company’s Series D Preferred Stock, and 500 shares of the Company’s Series E Preferred Stockto Chis.

 

OnOctober 29, 2020, the Company formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation(“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the sole purpose and effect of changing theCompany’s name to “Ozop Energy Solutions, Inc.” That same day the Company entered into an Agreement and Plan of Merger(the “Merger Agreement”) with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with theNevada Secretary of State, merging the Merger Sub into the Company, which were stamped effective as of November 3, 2020. As permittedby the Section 92.A.180 of the Nevada Revised Statutes, the sole purpose and effect of the filing of Articles of Merger was to changethe name of the Company from Ozop Surgical Corp to “Ozop Energy Solutions, Inc.”

 

OnDecember 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiaryof the Company. OES was formed to be a manufacturer and distributor of renewable energy products.

 

OnAugust 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly ownedsubsidiary of the Company. Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of OzopCapital.

 

OnOctober 29, 2021, EV Insurance Company, Inc. (“EVCO”) was formed as a captive insurance company in the State of Delaware.EVCO is a wholly owned subsidiary of Ozop Capital. On January 7, 2022, EVCO filed with New Castle County, Delaware DBA OZOP Plus.

 

OnFebruary 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiaryof the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design supportfor lighting and solar projects with a focus on fast lead times and technical support. OED and our partners are able to offer the resourcesneeded for lighting, solar and electrical design projects. OED will provide customers systems to coordinate the understanding of electricalusage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs. We workwith architects, engineers, facility managers, electrical contractors and engineers.

 

 

OnMay 5, 2023, the Board of Directors of the Company approved to amend the Company’s Articles of Incorporation (the “Amendment”)to increase the authorized capital stock of the Company to 7,000,000,000 shares, of which 6,990,000,000 shall be authorized as commonshares and 10,000,000 shall be authorized as preferred shares. The Company filed the Amendment with the State of Nevada on June 23, 2023.

 

DiscontinuedOperations

 

Inaccordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entityor a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shiftthat has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meet thecriteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria themajor current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets andliabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations,less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuingoperations.

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinuedoperation. Accordingly, the operating results of PCTI are reported as a loss from discontinued operations in the accompanying consolidatedfinancial statements for the years ended December 31, 2023, and 2022.

 

BusinessOverview

 

OzopEnergy Systems

 

OESoperates in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. We are engaged in multiplebusiness lines that include project development as well as equipment distribution.

 

EquipmentDistributor: In April 2021, the Company signed a five-year lease (beginning June 1, 2021) of approximately 8,100 SF in California,for office and warehouse space to support the sales and distribution of our west coast operations. On February 22, 2023, with an effectivedate of March 1, 2023, the Company entered into a Sublease for a Single Subleasee Agreement (the “Sublease”) with the landlordand a third party for the office and warehouse in Carlsbad California. Pursuant to the Sublease agreement, the third party will be responsiblefor all of the Company’s lease obligations through May 31, 2026, the lease termination date. The Company and the subleasee haveagreed to work together regarding any existing Company inventory in the facility. OES currently is focused on solar panel sales to otherdistributors and large installation companies.

 

ModularEnergy Distribution System: The Neo-Grid^TM System patent pending, consists of the design, engineering, installation,and operational methodologies as well as the financial arbitrage of how we produce, capture and distribute electrical energy for theEV markets. OES has acquired through a license the rights to a proprietary system, the Neo-Grids^TM System (patent pending),for the capture and distribution of electrical energy for the EV market. The Neo-Grids^TM System will serve both theprivate auto and the commercial sectors. Our Neo-Grids^TM System leverages this accelerated growth by offering (1) charginglocations that can be rapidly installed in restricted areas or load limits and (2) EV charger electricity that is produced from renewablesources having little to no carbon footprint.

 

 

OEShas developed a business plan for the Neo Grid^TM distribution system, a solution to alleviate the stress on the existing grid-tiedinfrastructure. The Company has completed its’ Neo Grid^TM research and development as well as the first stage that includesthe specifications and engineered technical drawings. This completion of the first stage of allows us to move forward with stage two,as well as to begin to construct the first prototype or proof of concept, (“PoC”). Our PoC design is partially reliant onauto manufacturers establishing standardizations of the actual charging/discharging protocols of the batteries such as on-board invertersas well as bi-directional capabilities in electric vehicles, which have only recently been established.

 

OzopPlus

 

OnAugust 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly ownedsubsidiary of the Company. On October 29, 2021, EV Insurance Company, Inc. (“EVCO”) was formed as a captive insurer thatreinsures in the State of Delaware. EVCO (DBA “OZOP Plus”) is a wholly owned subsidiary of Ozop Capital. EVCO has agreementswith others whereby the battery premium associated with any EV VSC will be ceded to EVCO. Ozop Plus markets vehicle service contracts(“VSC’s”) for electric vehicles (EV’s) that offer consumers to be able to purchase additional months and milesabove the manufacturer’s warranty and to also bring added value to EV owners by utilizing our partnerships and strengths in theenergy market to offer unique and innovative services. Among EV owners’ concerns are the EV battery repair and replacement costs,range anxiety, environmental responsibilities, roadside assistance, and the accelerated wear on additional components that EV vehiclesexperience. Management believes that the Ozop Plus marketed VSC’s will give “peace of mind” to the EV buyer.

 

OzopEngineering and Design

 

OEDwas formed to become a premier engineering and lighting control design firm. OED offers product and design support for lighting and solarprojects with a focus on fast lead times and technical support. OED and our partners are able to offer the resources needed for lighting,solar and electrical design projects. OED provides its’ customers systems to coordinate the understanding of electrical usage withthe relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs by working with architects,engineers, facility managers, electrical contractors and engineers.

 

OEDis developing a product branded OZOP ARC. OZOP ARC is an advanced lighting controls system, intricately engineered to integrate sophisticatedwired and wireless technologies. At its core, it employs a hybrid network topology that facilitates both resilient wired connectionsand flexible wireless communications, making it suitable for complex infrastructural environments. The system is equipped with an arrayof sensors and control nodes, enabling precise light management and energy usage monitoring. With support for protocols such as DALIand Zigbee, alongside the capability for seamless integration with IoT platforms, OZOP ARC offers a comprehensive solution for intricatelighting networks. This system is designed not just for control and efficiency, but also for adaptability to diverse architectural andelectrical layouts, embodying a technical solution for advanced, energy-conscious lighting management.

 

Salesand marketing

 

TheCompany markets its products through its websites as well as attending industry specific trade shows. Additionally, Ozop Plus marketsthe EV VSC in conjunction with Royal Administration Services, Inc. (“Royal”) through Royal’s agents and the Companyalso will begin marketing the product through various third-party websites and portals for additional direct to consumer marketing toEV owners. In April 2023, OED began marketing its’ maintenance and support contract program, named Ozop Secure to existing customersas well as through other distributors.

 

Competition

 

Wecompete with many companies in the various application segments including larger, more established companies with substantial capabilities,personnel and financial resources. Many of our competitors have a larger presence in global markets.

 

 

Employees

 

TheCompany employs 9 full time employees. Ozop also has contracts with various independent contractors and consultants to fulfill additionalneeds, including accounting, investor relations, business development, permitting, and other corporate functions, and may increase stafffurther as we expand activities and bring new projects online.

 

LegalProceedings

 

Weknow of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation,other than below. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficialstockholder, is an adverse party or has a material interest adverse to our interest.

 

OtherInformation

 

None.

 

MARKETPRICE OF THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

CommonStock

 

Ourcommon stock is currently quoted on the OTC Market’s OTCQB Venture Marketplace (“OTCQB”) under the symbol “OZSC”.The following table sets forth for the periods indicated the high and low traded price per share of our common stock as reported on theOTCQB. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actualtransactions:

 

OTCMarkets Group Inc. OTCQB ⁽¹⁾

 

		High $				Low $
July 1, 2023-July 11, 2024			0.0084				0.0008

 

(1)Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not representactual transactions.

 

Holdersof Record

 

Asof July 8, 2024, we had 64 holders of record of our common stock. The actual number of stockholders is greater than this number of recordholders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

 

Dividends

 

Wehave never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earningsfor use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future, ifat all. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on ourfinancial condition, results of operations, capital requirements, general business conditions and other factors that our board of directorsmay deem relevant.

 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

hefollowing is management’s discussion and analysis of certain significant factors that have affected our financial position andoperating results during the periods included in the accompanying unaudited consolidated financial statements, as well as informationrelating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes,”“anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,”“continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-lookingstatements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reportsor documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differmaterially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the datehereof. We undertake no obligation to update these forward-looking statements.

 

Whileour financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets and thesatisfaction of liabilities in the normal course of business over a reasonable length of time, our auditors have raised a substantialdoubt about our ability to continue as a going concern.

 

Althoughthe Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee futureresults, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of theUnited States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Ourfinancial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments,and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments,and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as ofthe date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financialstatements would be affected to the extent there are material differences between these estimates.

 

Thefollowing discussion should be read in conjunction with our unaudited consolidated financial statements and the related notes that appearelsewhere in this Quarterly Report on Form 10-Q.

 

THECOMPANY

 

OzopEnergy Solutions, Inc. (the “Company,” “we,” “us” or “our”) was originally incorporatedas Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada.

 

OnDecember 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiaryof the Company. OES was formed to be a manufacturer and distributor of renewable energy products.

 

OESoperates in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. We are engaged in multiplebusiness lines that include project development as well as equipment distribution.

 

EquipmentDistributor: In April 2021, the Company signed a five-year lease (beginning June 1, 2021) of approximately 8,100 SF in California,for office and warehouse space to support the sales and distribution of our west coast operations. On February 22, 2023, with an effectivedate of March 1, 2023, the Company entered into a Sublease for a Single Subleasee Agreement (the “Sublease”) with the landlordand a third party for the office and warehouse in Carlsbad California. Pursuant to the Sublease agreement, the third party will be responsiblefor all of the Company’s lease obligations through May 31, 2026, the lease termination date. The Company and the subleasee haveagreed to work together regarding any existing Company inventory in the facility. OES currently is focused on solar panel sales to otherdistributors and large installation companies.

 

 

ModularEnergy Distribution System: The Neo-Grid^TM System comprises of the design engineering, installation, and operationalmethodologies as well as the financial arbitrage of how we produce, capture and distribute electrical energy for the EV markets. TheCompany has acquired the license rights to the Neo-Grid^TM System, a proprietary system (patent pending), for the captureand distribution of electrical energy for the EV market. The Neo-Grid^TM System will serve both the private autoand the commercial sectors. Our Neo-Grid^TM System offers (1) charginglocations that can be installed with reduced delays, restricted areas or load limits and (2) EV charger electricity that is producedfrom renewable sources claiming little to no carbon footprint.

 

TheCompany has developed a business plan for the Neo-Grid^TM System for the distribution of electrical energy providinga solution to the inevitable stress to the existing grid infrastructure. The Company has completed its’ research and developmentof the Neo-Grid^TM System as well as completed the first set of engineeredtechnical drawings. This first stage of the engineered technical drawings allows us to move forward with stage two, as well as to beginto construct the first prototype or proof of concept, (“PoC”). Our PoC design is partially reliant on auto manufacturersestablishing standardizations of the actual charging/discharging protocols of the batteries such as on-board inverters as well as bi-directionalcapabilities in electric vehicles, which have only recently been established.

 

OnAugust 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly ownedsubsidiary of the Company and was formed as a holding company. On October 29, 2021, EV Insurance Company, Inc. (“EVCO”) wasformed as a captive insurer that reinsures in the State of Delaware. EVCO (DBA “OZOP Plus”) is a wholly owned subsidiaryof Ozop Capital.

 

OzopPlus markets vehicle service contracts (“VSC’s”) for electric vehicles (EV’s) that offer consumers to be ableto purchase additional months and miles above the manufacturer’s warranty and to also bring added value to EV owners by utilizingour partnerships and strengths in the energy market to offer unique and innovative services. Among EV owners’ concerns are theEV battery repair and replacement costs, range anxiety, environmental responsibilities, roadside assistance, and the accelerated wearon additional components that EV vehicles experience. Management believes that the Ozop Plus marketed VSC’s will give “peaceof mind” to the EV buyer.

 

OnFebruary 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiaryof the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design supportfor lighting and solar projects with a focus on fast lead times and technical support. OED and our partners can offer the resources neededfor lighting, solar and electrical design projects. OED will provide its’ customers systems to coordinate the understanding ofelectrical usage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designsby working with architects, engineers, facility managers, electrical contractors and engineers.

 

OEDis developing a product branded OZOP ARC. OZOP ARC is an advanced lighting controls system, intricately engineered to integrate sophisticatedwired and wireless technologies. At its core, it employs a hybrid network topology that facilitates both resilient wired connectionsand flexible wireless communications, making it suitable for complex infrastructural environments. The system is equipped with an arrayof sensors and control nodes, enabling precise light management and energy usage monitoring. With support for protocols such as DALIand Zigbee, alongside the capability for seamless integration with IoT platforms, OZOP ARC offers a comprehensive solution for intricatelighting networks. This system is designed not just for control and efficiency, but also for adaptability to diverse architectural andelectrical layouts, embodying a technical solution for advanced, energy-conscious lighting management.

 

DiscontinuedOperations

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinuedoperation. Accordingly, the operating results of PCTI are reported as income from discontinued operations in the accompanying unauditedconsolidated financial statements for the three months ended March 31, 2024, and 2023.

 

 

Resultsof Operations for the three months ended March 31, 2024, and 2023:

 

Revenue

 

Forthe three months ended March 31, 2024, the Company generated revenue of $251,722 compared to $2,791,198 for the three months ended March31, 2023. Revenues from Ozop Energy Systems, Inc. (“OES”) are classified as sourced and distributed products. Revenues fromOzop Engineering and Design (“OED”) are classified as design and installation. Sales are summarized as follows:

 

		Three months ended March 31,
		2024				2023
Sourced and distributed products		$	75,222			$	2,758,798
Design and installation			176,500				32,400
Total		$	251,722			$	2,791,198

 

Salesof sourced and distributed products (solar product) were significantly lower for the three months ended March 31, 2024, compared to thethree months ended March 31, 2023. The Company believes the lower revenues were due to higher interest rates affecting homeowners’ability and desire for residential rooftop solar installations as well as competitors lowering their selling prices to try to capturea part of the lower demand. These factors also resulted in our customers having excess inventory on hand. Design and installation revenuesincreased for the three months ended March 31, 2024, as the Company received additional and larger installation jobs.

 

Costof sales

 

Forthe three months ended March 31, 2024, and 2023, the Company recognized $115,445 and $2,394,700, respectively, of cost of sales.

 

		Three months ended March 31,
		2024				2023
Sourced and distributed products		$	63,331			$	2,394,700
Design and installation			52,114				-
Total		$	115,445			$	2,394,700

 

Duringthe year ended December 31, 2023, the Company reviewed its inventory valuation to determine if the historical cost of its solar panelswas less than their net realizable value. Management also considers, if applicable, other factors, including known trends, market conditions,and other such issues. Based on current market conditions related to solar panels including but not limited to reduced selling pricesin the industry and the abundance of inventory supply in the market, management determined that the net realizable value of certain ofthe Company’s inventory required a lower of cost or market adjustment of $1,495,978 (the “Inventory Adjustment”) tothe historical cost of inventory purchased.

 

Pursuantto the Inventory Adjustment, the Company recognized a gross margin on solar products of 15.8% for the three months ended March 31, 2024,compared to 13.2% for the three months ended March 31, 2023.

 

Designand installation cost of sales is comprised of OED’s labor costs for each job.

 

Operatingexpenses

 

Totaloperating expenses for the three months ended March 31, 2024, and 2023, were $968,763 and $1,069,762 respectively. The operating expenseswere comprised of:

 

		Three months ended March 31,
		2024				2023
Management fees, related parties		$	240,000			$	240,000
Salaries, taxes, and benefits			193,494				266,804
Professional and consulting fees			254,827				281,008
Advertising and marketing			15,671				17,772
Rent and office expenses			83,604				55,116
Insurance			60,976				48,391
General and administrative, other			120,191				160,671
Total		$	968,763			$	1,069,762

 

 

OnJuly 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, betweenthe Company and Mr. Conway (the “Employment Agreement”). Mr. Conway’s compensation as adjusted was $20,000 per month.Effective January 1, 2022, the Company entered into a new employment agreement with Mr. Conway. Pursuant to the agreement, Mr. Conwaywill receive annual compensation of $240,000 from the Company and will also be eligible to receive bonuses and equity grants at the discretionof the BOD. The Company also agreed to compensate Mr. Conway for services provided directly to any of the Company’s subsidiaries.Currently, the subsidiaries of Ozop Capital, OES and OED, each compensates Mr. Conway $20,000 per month. For the three months ended March31, 2024, and 2023, the Company recorded expenses to Mr. Conway of $240,000 or each period.

 

Salaries,taxes, and benefits decreased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Ozop EnergySystems currently has 2 employees with an aggregate annual salary of $204,000 and focused on information technology and general and administrativefunctions. The solar distribution of this vertical is being managed by our financial consultant and the Company’s CEO. OED currentlyhas five employees with an aggregate annual compensation of $478,000 and a daily consultant when needed. OED has allocated $52,114 ofsalaries to cost of sales for the three months ended March 31, 2024. EV Insurance Company has one employee with annual compensation of$125,000. The expenses per subsidiary included in operating expenses for the three months ended March 31, 2024, and 2023, are as follows:

 

		Three months ended March 31,
		2024				2023
Ozop Energy Systems		$	55,637			$	79,701
Ozop Engineering and Design			103,716				152,852
EV Insurance Company			34,141				34,251
Total		$	193,494			$	266,804

 

Professionaland consulting fees decreased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The decreaseis due to the expiration of certain consulting contracts and legal fees related to the YHS litigation. These decreases were partiallyoffset by increases in general legal expenses and auditing fees.

 

Advertisingand marketing expenses decreased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

 

Rentand office expense (including storage, supplies, utilities, and internet costs) increased for the three months ended March 31, 2024,compared to the three months ended March 31, 2023. The increase is the result of $55,890 expenses incurred by OES for storage fees, partiallyoffset by decreased rent expense that on March 1, 2023, OES has subleased the Carlsbad office and warehouse to a third party.

 

Insuranceexpense increased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was theresult of increases in the Company’s general liability insurance. The Company estimates that the monthly insurance expense to beapproximately $20,000 per month.

 

Other(Income) Expenses

 

Otherexpense, net, for the three months ended March 31, 2024, was $594,882 compared to $1,859,651 for the three months ended March 31, 2023,and were as follows.

 

		Three months ended March 31,
		2024				2023
Interest expense		$	1,056,887			$	1,221,533
(Gain) loss on change in fair value of derivatives			(462,005	)			638,118
Total other (income) expense, net		$	594,882			$	1,859,651

 

 

Thedecrease in interest expense for the three months ended March 31, 2024, is primarily a result of the amortization period of certain notediscounts that were completed in 2023. Interest expense on the face value of the principal balances of the notes payable increased dueto the increased rate as a result of note defaults and extended maturity dates. For the three months ended March 31, 2024, the Companyrecognized a gain of $462,005 on the change in the fair value of derivatives compared to a loss of $638,118 for the three months endedMarch 31, 2023.

 

Netloss

 

Netloss attributable to the Company for the three months ended March 31, 2024, was $1,423,795 compared to $2,527,552 for the three monthsended March 31, 2023. The change was primarily a result of the gain of $462,005 on the change in fair value of derivatives for the threemonths ended March 31, 2024, compared to a loss of $638,115 for the three months ended March 31, 2023. The decrease in gross profit forthe three months ended March 31, 2024, compared to the three months ended March 31, 2023, partially offset the gain on the change inthe fair value of derivatives.

 

Liquidityand Capital Resources

 

Theaccompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realizationof assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2024, the Company had an accumulateddeficit of $220,094,725 and a working capital deficit of $28,047,674 (including derivative liabilities of $754,073). As of March 31,2024, the Company was in default of $3,315,000 plus accrued interest on debt instruments due to non-payment upon maturity dates. Thesefactors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for one year from thedate of the issuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect thepossible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that mayresult from the possible inability of the Company to continue as a going concern.

 

Currently,our current capital and our other existing resources will be sufficient to provide the working capital needed for our current business,however, additional capital will be required to meet our debt obligations, and to further expand our business. We may be unable to obtainthe additional capital required. If we are unable to generate capital or raise additional funds when required, it will have a negativeimpact on our business development and financial results. These conditions raise substantial doubt about our ability to continue as agoing concern as well as our recurring losses from operations, deficit in equity, and the need to raise additional capital to fund operations.This “going concern” could impair our ability to finance our operations through the sale of debt or equity securities. Management’splans in regard to these factors are discussed in Note 2 to the unaudited consolidated financial statements filed herein.

 

Forthe three months ended March 31, 2024, we primarily funded our business operations with the existing cash on hand as of January 1, 2024,cash received from accounts receivable, and $350,555 received from sales of common stock.

 

Asof March 31, 2024, we had cash of $1,154,964 as compared to $1,446,029 as of December 31, 2023. As of March 31, 2024, we had currentliabilities of $30,435,548 (including $754,073 of derivative liabilities), compared to current assets of $2,387,874, which resulted ina working capital deficit of $28,047,674. The current liabilities are comprised of accounts payable, accrued expenses, convertible debt,derivative liabilities, lease obligations, deferred liability, notes payable and liabilities of discontinued operations.

 

 

OperatingActivities

 

Forthe three months ended March 31, 2024, net cash used in operating activities was $641,620 compared to net cash provided by operatingactivities of $611,373 for the three months ended March 31, 2023.

 

Forthe three months ended March 31, 2024, our net cash used in operating activities was primarily attributable to the net loss of $1,423,795,the gain on the change in fair value of derivatives of $462,005, adjusted by non-cash items of interest expense of $332,990, and amortizationand depreciation of $52,870. Net changes of $861,893 in operating assets and liabilities reduced the cash used in operating activities.

 

Forthe three months ended March 31, 2023, our net cash provided by operating activities was primarily attributable to the net loss of $2,527,552,adjusted by non-cash items of the loss on the fair value change of derivatives of $638,118, interest expense of $500,568, and amortizationand depreciation of $55,912. Net changes of $1,949,690 in operating assets and liabilities added to the cash provided by operating activities.

 

InvestingActivities

 

Therewere no investing activities for the three months ended March 31, 2024. For the three months ended March 31, 2023, the net cash usedin investing activities was $2,162.

 

FinancingActivities

 

Forthe three months ended March 31, 2024, the net cash provided by financing activities was $350,555, net of issuance costs, from the salesof common stock to GHS.

 

Forthe three months ended March 31, 2023, the net cash used in financing activities was $23,607. During the three months ended March 31,2023, we received $526,393, net of issuance costs, from the sales of common stock to GHS. During the three months ended March 31, 2023,we made payments of $550,000 for notes payable.

 

CriticalAccounting Policies and Estimates

 

Oursignificant accounting policies are described in more details in the notes to our financial statements appearing elsewhere in this QuarterlyReport on Form 10-Q. We believe the following accounting policies to be most critical to the judgement and estimates used in the preparationof our financial statements:

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period.Actual results could differ from those estimates.

 

ConvertibleInstruments

 

TheCompany evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives andHedging Activities.

 

ApplicableGAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivativefinancial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics andrisks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the hostcontract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured atfair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the sameterms as the embedded derivative instrument would be considered a derivative instrument.

 

 

TheCompany accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcatedfrom their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic valueof conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock atthe commitment date of this note transaction and the effective conversion price embedded in this note. Debt discounts under these arrangementsare amortized over the term of the related debt to their stated date of redemption.

 

TheCompany accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishmentstandards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-currentfair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

OFFBALANCE SHEET ARRANGEMENTS

 

Wehave no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk supportand credit risk support or other benefits.

 

DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Identificationof directors and executive officers.

 

Thenames and ages of our directors and executive officers are set forth below. Also included is their principal occupation(s). Our By-Lawsprovide for up to four directors. All directors are elected annually by the stockholders to serve until the next annual meeting of thestockholders and until their successors are duly elected and qualified.

 

Name		Age		Position		Beginning
Brian Conway		53		Chief Executive Officer and Interim Chief Financial Officer		February 28, 2020

 

BrianP. Conway, the Chief Executive Officer and Interim Chief Financial Officer brings 20 years of proven success in marketing and businessdevelopment for both private and publicly traded companies. Starting off in database management and sales for Venture Direct on MadisonAvenue, he crossed over to Wall Street as a co-founder of Waypoint Capital Partners. During this time, he was responsible for nationalsales, marketing, business and product development, national account customers, and new business relations with international and UScompanies while creating awareness for public companies with many of the nation’s top public relations firms. From October 1, 2014,through August 31, 2019, Mr. Conway was the CEO, CFO and Director of Ngen Technologies, Inc. (f/k/a/ Liberated Solutions, Inc.). Hisrelationships and experience with investment bankers, non-dilutive financing, and public relations should be instrumental in moving theCompany forward.

 

FamilyRelationships

 

None

 

Involvementin Certain Legal Proceedings

 

Nodirector, executive officer, significant employee, or control person of the Company has been involved in any legal proceeding listedin Item 401(f) of Regulation S-K in the past 10 years.

 

 

CorporateGovernance

 

OurBoard has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committeeperforming a similar function. The functions of those committees are being undertaken by our Board. Because we do not have any independentdirectors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and couldbe considered more form than substance.

 

Givenour relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholderswill make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the eventsuch a proposal is made, all current members of our Board will participate in the consideration of director nominees.

 

Aswith most small, early-stage companies until such time as our Company further develops our business, achieves a greater revenue base,and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospectsto attract independent directors. When we are able to expand our Board to include one or more independent directors, we intend to establishan audit committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify asan audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Boardmembers be independent, and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion ofour Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee orother committee of our Board.

 

Codeof Ethics

 

Weadopted a Code of Ethics for Senior Financial Management to promote honest and ethical conduct and to deter wrongdoing. This Code appliesto our Chief Executive Officer and Chief Financial Officer and other employees performing similar functions. The obligations of the Codeof Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally.

 

Underthe Code of Ethics, all members of the senior financial management shall:

 

	●	Act honestly and ethically in the performance of their duties at our company,
	●	Avoid actual or apparent conflicts of interest between personal and professional relationships,
	●	Provide full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in other public communications by our company,
	●	Comply with rules and regulations of federal, state and local governments and other private and public regulatory agencies that effect the conduct of our business and our financial reporting,
	●	Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing the member’s independent judgment to be subordinated
	●	Respect the confidentiality of information in the course of work, except when authorized or legally obtained to disclosure such information,
	●	Share knowledge and maintain skills relevant to carrying out the member’s duties within our company,
	●	Proactively promote ethical behavior as a responsible partner among peers and colleagues in the work environment and community,
	●	Achieve responsible use of and control over all assets and resources of our company entrusted to the member, and
	●	Promptly bring to the attention of the Chief Executive Officer any information concerning (a) significant deficiencies in the design or operating of internal controls which could adversely affect to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in our financial reporting or internal controls.

 

DirectorIndependence

 

Noneof the members of our Board of Directors qualifies as an independent director in accordance with the published listing requirements ofthe NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not,and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engagedin various types of business dealings with us. In addition, our Board has not made a subjective determination as to each director thatno relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying outthe responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directorsmade these determinations, our Board would have reviewed and discussed information provided by the directors and us with regard to eachdirector’s business and personal activities and relationships as they may relate to us and our management.

 

Inperforming the functions of the audit committee, our board oversees our accounting and financial reporting process. In this function,our board performs several functions. Our board, among other duties, evaluates and assesses the qualifications of the Company’sindependent auditors; determines whether to retain or terminate the existing independent auditors; meets with the independent auditorsand financial management of the Company to review the scope of the proposed audit and audit procedures on an annual basis; reviews andapproves the retention of independent auditors for any non-audit services; reviews the independence of the independent auditors; reviewswith the independent auditors and with the Company’s financial accounting personnel the adequacy and effectiveness of accountingand financial controls and considers recommendations for improvement of such controls; reviews the financial statements to be includedin our annual and quarterly reports filed with the Securities and Exchange Commission; and discusses with the Company’s managementand the independent auditors the results of the annual audit and the results of our quarterly financial statements.

 

Ourboard as a whole will consider executive officer compensation, and our entire board participates in the consideration of director compensation.Our board as a whole oversees our compensation policies, plans and programs, reviews and approves corporate performance goals and objectivesrelevant to the compensation of our executive officers, if any, and administers our equity incentive and stock option plans, if any.

 

Eachof our directors participates in the consideration of director nominees. In addition to nominees recommended by directors, our boardwill consider nominees recommended by shareholders if submitted in writing to our secretary. Our board believes that any candidate fordirector, whether recommended by shareholders or by the board, should be considered on the basis of all factors relevant to our needsand the credentials of the candidate at the time the candidate is proposed. Such factors include relevant business and industry experienceand demonstrated character and judgment.

 

Compliancewith Section 16(a) of the Securities Exchange Act of 1934

 

Section16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, persons who beneficiallyown more than 10% of a registered class of the Company’s equity securities, and certain other persons to file reports of ownershipand changes in ownership on Forms 3, 4 and 5 with the SEC, and to furnish the Company with copies of the forms. The Company does notbelieve that all of its directors, executive officers and greater than 10% beneficial owners complied with all such filing requirementsduring 2023.

  

 

EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE

 

Thefollowing table sets forth information regarding compensation earned in or with respect to our fiscal years 2023 and 2022:

 

	(i)	our principal executive officer or other individual serving in a similar capacity during the fiscal years 2023, and 2022;
	(ii)	our two most highly compensated executive officers other than our principal executive officers who were serving as executive officers at December 31, 2023, and 2022, whose compensation exceed $100,000; and
	(iii)	up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2023. Compensation information is shown for the fiscal years ended December 31, 2023, and 2022:

 

Name and Principal Position		Year				Salary				Bonus				Stock Awards				Option Awards				All Other Compensation				Total
Brian P Conway (1)			2023			$	960,000			$	—			$	—			$	—			$	—			$	960,000
			2022			$	840,000			$	250,000			$	—			$	—			$	—			$	1,090,000

 

(1)On February 28, 2020, Mr. Conway was appointed as the Company’s Chief Executive Officer.

 

2023OPTION GRANTS

 

Therewere no options to purchase shares of our Common Stock issued and outstanding as of December 31, 2023, or December 31, 2022.

 

OUTSTANDINGEQUITY AWARDS AT 2023 FISCAL YEAR-END

 

Therewere no outstanding equity awards for the years ended December 31, 2023, and 2022.

 

EXECUTIVEEMPLOYMENT AGREEMENTS

 

OnJuly 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, betweenthe Company and Mr. Conway (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Conway receivedan initial annual salary of $120,000, for his position of CEO of the Company, payable monthly. Pursuant to the contract, Mr. Conway wasissued 2,500 shares of Series C Preferred Stock, and on August 28, 2020, Mr. Conway was issued 1,333 shares of Series D Preferred stockand 500 shares of series E Preferred Stock.

 

EffectiveJanuary 1, 2021, Mr. Conway’s compensation is $20,000 per month, and on September 1, 2021, Mr. Conway began receiving $10,000 permonth from Ozop Capital. Effective January 1, 2022, the Company entered into a new employment agreement with Mr. Conway. Pursuant tothe agreement, Mr. Conway received a $250,000 contract renewal bonus and will receive an annual compensation of $240,000 from the Companyand will also be eligible to receive bonuses and equity grants at the discretion of the BOD. The Company also agreed to compensate Mr.Conway for services provided directly to any of the Company’s subsidiaries. Ozop Capital increased Mr. Conway’s compensationto $20,000 per month in January 2022 and OES and OED began compensating Mr. Conway $20,000 in April 2022.

 

Otherthan the foregoing, currently, we do not have any written employment agreement or other formal compensation agreements with our officersand directors. Compensation arrangements are the subject of ongoing development, and we will make appropriate additional disclosuresas they are further developed and formalized.

 

DIRECTORCOMPENSATION

 

DirectorCompensation Policies

 

Wehave not compensated our directors for their service on our Board from our inception through fiscal 2023. There are no arrangements currentlyin place pursuant to which directors will be compensated in the future for any services provided as a director.

  

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Thefollowing table shows the beneficial ownership of the Company’s shares as of July 8, 2024, (unless otherwise noted) by (i) eachperson known by the Company to own beneficially more than 5% of the outstanding shares, (ii) each director and director nominee of theCompany, (iii) each executive officer of the Company named in the Summary Compensation Table (the “Named Executive Officers”or “NEOs”), and (iv) all executive officers and directors of the Company as a group. The table includes shares that may beacquired within 60 days of July 8, 2024, upon the exercise of stock options by employees or outside directors and shares of restrictedstock.

 

Unlessotherwise indicated, each of the persons or entities listed below exercises sole voting and dispositive power over the shares that eachof them beneficially owns.

 

Forthe beneficial ownership of the stockholders owning 5% or more of the shares, the Company relied on publicly available filings and representationsof the stockholders.

 

Name and Title:		Class of Security		Amount of beneficial ownership				Percent of Class (1)
Executive Officers and Directors:
Brian P Conway, CEO and Director (2)		Common Stock			2,899,944,895				30.44	%
		Series C Preferred Stock			2,500				100.0	%
		Series D Preferred Stock			1,333				99.9	%

 

(1)Percentages are based on 6,628,031,093shares of the Company’s common stock, 2,500 shares of Series C Preferred Stock and 1,334shares of Series D Preferred stock issued and outstanding as of July 8, 2024. The voting rights associated with the Series C PreferredStock in the aggregate are equal to 67% of the total vote. Series C Preferred Stock has no conversion rights. Any holder may, at anytime convert any number of shares of Series D Convertible Preferred Stock held by such holder into a number of fully paid and nonassessableshares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the dateof conversion, by 1.5 and dividing that number by the number of authorized shares of Series D Convertible Preferred Stock multipliedby the number of Series D shares being converted. Series D Preferred Stock has no voting rights.

 

(2)Includes 1,333 shares of Series D Preferred Stock convertible into 2,899,944,895 shares of common stock.

 

CertainRelationships and Related Transactions

 

Forthe years ended December 31, 2023, and 2022, the Company recorded expenses to its officers in the following amounts:

 

		Year ended December 31,
		2023				2022
CEO, parent		$	960,000			$	840,000
CEO, parent- bonus			-				250,000
Total		$	960,000			$	1,090,000

 

RELATEDPARTY TRANSACTIONS

 

N/A

 

Item11A. MATERIAL CHANGES

 

Therehave been no material changes in the registrant’s affairs since the end of the latest fiscal year for which audited financial statementswere included in the latest Form 10-K and that have not been described in a Form 10-Q of Form 8-K filed under the Exchange Act.

 

Item12. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.

 

N/A

 

 

PARTII - INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

 

Thefollowing table is an itemization of all expenses, without consideration to future contingencies, incurred or expected to be incurredby our Corporation in connection with the issuance and distribution of the common shares being offered by this Prospectus. Items markedwith an asterisk (*) represent estimated expenses. We have agreed to pay all the costs and expenses of this offering.

 

Item		Amount
SEC Registration Fee		$	201
Legal Fees and Expenses*		$	30,000
Accounting Fees and Expenses*		$	87,500
Miscellaneous*		$	-
Total*		$	117,701

 

Item14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

 

Pursuantto Section 607.0850 of the Nevada Revised Statutes, we have the power to indemnify any person made a party to any lawsuit by reason ofbeing a director or officer of the Registrant, or serving at the request of the corporation as a director, officer, employee or agentof another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments,fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if heacted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, withrespect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our Bylaws provide that theRegistrant shall indemnify its directors and officers to the fullest extent permitted by Nevada law.

 

Withregard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission,such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid bya director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is assertedby such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinionof our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question ofwhether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governedby the final adjudication of such case.

 

Item15. RECENT SALES OF UNREGISTERED SECURITIES

 

OnJuly 1, 2021, the Company issued 2,500,000 shares pursuant to an employment agreement. The shares were valued at $0.0745 per share (themarket price of the common stock on the date of the issuance).

 

OnJuly 1, 2021, the Company issued 2,500,000 shares pursuant to an employment agreement. The shares were valued at $0.0745 per share (themarket price of the common stock on the date of the issuance).

 

OnSeptember 3, 2021, the Company issued 452,080 shares of common stock pursuant to a consulting agreement. The shares were valued at $0.0553per share (the market price of the common stock on the date of the agreement).

 

OnOctober 8, 2021, the Company issued 2,500,000 shares pursuant to an employment agreement. The shares were valued at $0.0445 per share(the market price of the common stock on the date of the issuance).

 

OnOctober 8, 2021, the Company issued 2,500,000 shares pursuant to an employment agreement. The shares were valued at $0.0445 per share(the market price of the common stock on the date of the issuance).

 

OnJanuary 14, 2022, the Company issued 2,500,000 shares pursuant to an employment agreement. Theshares were valued at $0.23 per share (the market price of the common stock on the date of the issuance).

 

OnJanuary 14, 2022, the Company issued 2,500,000 shares pursuant to an employment agreement. Theshares were valued at $0.23 per share (the market price of the common stock on the date of the issuance).

 

TheCompany issued the foregoing securities in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Actof 1933, as amended, and/or Rule 506(b) promulgated thereunder, as there was no general solicitation to the investors and the transactionsdid not involve a public offering.

 

 

Tableof Contents

 

	Page
Consolidated Balance Sheets as of March 31, 2024, and December 31, 2023 (Unaudited)	F-2
Consolidated Statements of Operations for the three months ended March 31, 2024, and 2023 (Unaudited)	F-3
Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2024, and 2023 (Unaudited)	F-4
Consolidated Statements of Cash Flows for the three months ended March 31, 2024, and 2023 (Unaudited)	F-6
Notes to Consolidated Financial Statements (unaudited)	F-7

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDBALANCE SHEETS

(Unaudited)

 

		March 31, 2024				December 31, 2023
ASSETS
Current Assets
Cash		$	1,154,964			$	1,446,029
Prepaid expenses			80,043				75,103
Accounts receivable			125,569				168,770
Inventory			1,027,298				1,089,979
Vendor deposits
Total Current Assets			2,387,874				2,779,881
Operating lease right-of-use asset, net			337,036				372,451
Property and equipment, net			601,443				618,899
Other assets			13,408				13,408
TOTAL ASSETS		$	3,339,761			$	3,784,639
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities
Current Liabilities
Accounts payable and accrued expenses		$	8,822,759			$	8,026,784
Convertible notes payable			25,000				25,000
Current portion of notes payable, net of discounts			19,156,250				18,837,500
Customer deposits
Derivative liabilities			754,073				1,216,078
Operating lease liability, current portion			151,800				147,993
Deferred liability			490,855				490,495
Liabilities of discontinued operations			1,034,811				1,038,384
Total Current Liabilities			30,435,548				29,782,234
Long Term Liabilities
Notes payable, net of discount			298,443				284,203
Operating lease liability, net of current portion			197,197				236,389
TOTAL LIABILITIES			30,931,188				30,302,826
COMMITMENTS AND CONTINGENCIES			-				-
Stockholders’ Deficit
Preferred stock (10,000,000 shares authorized, par value $0.001) Series C Preferred Stock (50,000 shares authorized and 2,500 shares issued and outstanding, par value $0.001)			3				3
Series D Preferred Stock (4,570 shares authorized and 1,334 shares issued and outstanding, par value $0.001)			1				1
Series E Preferred Stock (3,000 shares authorized, -0- issued and outstanding, par value $0.001)			-				-
Preferred stock, value			-				-
Common stock (6,990,000,000 shares authorized, par value $0.001; 5,821,817,128 and 5,481,513,400 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively)			5,821,817				5,481,513
Treasury stock, at cost, 47,500 shares of Series C Preferred Stock and 18,667 shares of Series D Preferred Stock			(11,249,934	)			(11,249,934	)
Common stock to be issued; 637,755 shares			638				638
Additional paid in capital			198,715,100				198,704,849
Accumulated deficit			(220,094,275	)			(218,670,480	)
Total Ozop Energy Solutions, Inc. stockholders’ deficit			(26,806,650	)			(25,733,410	)
Noncontrolling interest			(784,777	)			(784,777	)
TOTAL STOCKHOLDERS’ DEFICIT			(27,591,427	)			(26,518,187	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	3,339,761			$	3,784,639

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDSTATEMENTS OF OPERATIONS

(Unaudited)

 

		For the Three Months Ended March 31,
		2024				2023
Revenue		$	251,722			$	2,791,198
Cost of goods sold
Cost of revenue			115,445				2,394,700
Gross profit			136,277				396,498
Operating expenses:
General and administrative, related parties			240,000				240,000
Loss associated with early termination of vendor agreement
General and administrative, other			728,763				829,762
Total operating expenses			968,763				1,069,762
Loss from continuing operations			(832,486	)			(673,264	)
Other (income) expenses:
Interest expense			1,056,887				1,221,533
Loss (gain) on change in fair value of derivatives			(462,005	)			638,118
Total Other (Income) Expenses			594,882				1,859,651
Loss from continuing operations before income taxes			(1,427,368	)			(2,532,915	)
Income tax provision			-				-
Net loss from continuing operations			(1,427,368	)			(2,532,915	)
Discontinued Operations:
Loss on disposal of assets
Income (loss) from discontinued operations, net of tax
Income from discontinued operations			3,573				5,363
Net loss		$	(1,423,795	)		$	(2,527,552	)
Less: net loss attributable to noncontrolling interest
Net income (loss) attributable to Ozop Energy Solutions, Inc.
Loss from contuining operations per share of common stock basic and fully diluted		$	(0.00	)		$	(0.00	)
Income from discontinued operations per share of common stock basic and fully diluted		$	0.00			$	0.00
Loss per share basic and fully diluted		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding
Basic and diluted			5,670,128,359				4,834,943,957

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDSTATEMENT OF STOCKHOLDERS’ DEFICIT

FORTHE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited)

 

		Common stock to be issued								Series C Preferred Stock								Series D Preferred Stock								Common Stock								Treasury				Additional Paid-in				Accumulated				Noncontrolling				Total Stockholders’ Equity
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Stock				Capital				Deficit				Interest				(Deficit)
Balances January 1, 2024			637,755			$	638				2,500			$	3				1,334			$	1				5,481,513,400			$	5,481,513			$	(11,249,934	)		$	198,704,849			$	(218,670,480	)		$	(784,777	)		$	(26,518,187	)
Issuance of shares of common stock sold, net of issuance costs of $12,384			-				-				-				-				-				-				340,303,728				340,304				-				10,251				-				-				350,555
Issuanceof shares of common stock sold, net of issuance costs			-				-				-				-				-				-				340,303,728				340,304				-				10,251				-				-				350,555
Net loss			-				-				-				-				-				-				-				-				-				-				(1,423,795	)			-				(1,423,795	)
Balances March 31, 2024			637,755			$	638				2,500			$	3				1,334			$	1				5,821,817,128			$	5,821,817			$	(11,249,934	)		$	198,715,100			$	(220,094,275	)		$	(784,777	)		$	(27,591,427	)

 

Theaccompanying notes are an integral part of these consolidated financial statements

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDSTATEMENT OF STOCKHOLDERS’ DEFICIT

FORTHE THREE MONTHS ENDED MARCH 31, 2023

(Unaudited)

 

		Common stock to be issued								Series C Preferred Stock								Series D Preferred Stock								Common Stock								Treasury				Additional Paid-in				Accumulated				Noncontrolling				Total Stockholders’ Equity
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Stock				Capital				Deficit				Interest				(Deficit)
Balances January 1, 2023			637,755			$	638				2,500			$	3				1,334			$	1				4,771,275,349			$	4,771,275			$	(11,249,934	)		$	197,586,824			$	(211,300,799	)		$	(784,777	)		$	(20,976,769	)
Balance			637,755			$	638				2,500			$	3				1,334			$	1				4,771,275,349			$	4,771,275			$	(11,249,934	)		$	197,586,824			$	(211,300,799	)		$	(784,777	)		$	(20,976,769	)
Issuance of shares of common stock sold, net of issuance costs of $19,110			-				-				-				-				-				-				107,756,783				107,757				-				418,636				-				-				526,393
Issuanceof shares of common stock sold, net of issuance costs			-				-				-				-				-				-				107,756,783				107,757				-				418,636				-				-				526,393
Net income			-				-				-				-				-				-				-				-				-				-				(2,527,552	)			-				(2,527,552	)
Net income (loss)			-				-				-				-				-				-				-				-				-				-				(2,527,552	)			-				(2,527,552	)
Balances March 31, 2023			637,755			$	638				2,500			$	3				1,334			$	1				4,879,032,132			$	4,879,032			$	(11,249,934	)		$	198,005,460			$	(213,828,351	)		$	(784,777	)		$	(22,977,928	)
Balance			637,755			$	638				2,500			$	3				1,334			$	1				4,879,032,132			$	4,879,032			$	(11,249,934	)		$	198,005,460			$	(213,828,351	)		$	(784,777	)		$	(22,977,928	)

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the Three Months Ended March 31,
		2024				2023
Cash flows from operating activities:
Net loss from continuing operations		$	(1,427,368	)		$	(2,532,915	)
Net income from discontinued operations			3,573				5,363
Net loss			(1,423,795	)			(2,527,552	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Non-cash interest expense			332,990				500,568
Amortization and depreciation			52,870				55,912
Inventory write-down
Stock compensation expense
Termination costs of vendor agreements
Income on forfeited customer deposit
(Gain) loss on fair value change of derivatives			(462,005	)			638,118
Changes in operating assets and liabilities:
Accounts receivable			43,201				(36,270	)
Inventory			62,681				1,952,844
Prepaid expenses			(4,941	)			(9,915	)
Vendor deposits			-				(633,445	)
Accounts payable and accrued expenses			795,977				708,358
Deferred revenue			360				-
Operating lease liabilities			(35,385	)			(31,882	)
Customer deposits
Net cash provided by (used in) continuing operations			(638,047	)			616,736
Net cash used in discontinued operations			(3,573	)			(5,363	)
Net cash provided by (used in) operating activities			(641,620	)			611,373
Cash flows from investing activities:
Purchase of office and computer equipment			-				(2,162	)
Net cash used in investing activities			-				(2,162	)
Cash flows from financing activities:
Proceeds from sale of common stock, net of costs			350,555				526,393
Proceeds from issuances of notes payable
Payments of principal of notes payable			-				(550,000	)
Net cash provided by (used in) financing activities			350,555				(23,607	)
Net increase (decrease) in cash			(291,065	)			585,604
Cash, Beginning of period			1,446,029				1,369,210
Cash, End of period		$	1,154,964			$	1,954,814
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

OZOPENERGY SOLUTIONS, INC.

Notesto Consolidated Financial Statements

March31, 2024

(Unaudited)

 

NOTE1 - ORGANIZATION

 

Business

 

OzopEnergy Solutions, Inc. (the” Company,” “we,” “us” or “our”) was originally incorporatedas Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada.

 

OnOctober 29, 2020, the Company formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation(“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the sole purpose and effect of changing theCompany’s name to “Ozop Energy Solutions, Inc.” That same day the Company entered into an Agreement and Plan of Merger(the “Merger Agreement”) with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with theNevada Secretary of State, merging the Merger Sub into the Company, which were stamped effective as of November 3, 2020. As permittedby the Section 92.A.180 of the Nevada Revised Statutes, the sole purpose and effect of the filing of Articles of Merger was to changethe name of the Company from Ozop Surgical Corp to “Ozop Energy Solutions, Inc.”

 

OnDecember 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiaryof the Company. OES was formed to be a manufacturer and distributor of renewable energy products.

 

OnAugust 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly ownedsubsidiary of the Company. Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of OzopCapital.

 

OnOctober 29, 2021, EV Insurance Company, Inc. (“EVCO”) was formed as a captive insurance company in the State of Delaware.EVCO is a wholly owned subsidiary of Ozop Capital. On January 7, 2022, EVCO filed with New Castle County, Delaware DBA OZOP Plus.

 

OnFebruary 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiaryof the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design supportfor lighting and solar projects with a focus on fast lead times and technical support. OED and our partners are able to offer the resourcesneeded for lighting, solar and electrical design projects. OED will provide customers systems to coordinate the understanding of electricalusage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs. We workwith architects, engineers, facility managers, electrical contractors and engineers.

 

OnMay 5, 2023, the Board of Directors of the Company approved to amend the Company’s Articles of Incorporation (the “Amendment”)to increase the authorized capital stock of the Company to 7,000,000,000 shares, of which 6,990,000,000 shall be authorized as commonshares and 10,000,000 shall be authorized as preferred shares. The Company filed the Amendment with the State of Nevada on June 23, 2023.

 

NOTE2 – GOING CONCERN AND MANAGEMENT’S PLANS

 

Theaccompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realizationof assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2024, the Company had an accumulateddeficit of $220,094,275 and a working capital deficit of $28,047,674 (including derivative liabilities of $754,073). As of March 31,2024, the Company was in default of $3,315,000 plus accrued interest on debt instruments due to non-payment upon maturity dates. Thesefactors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for one year from thedate of the issuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect thepossible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that mayresult from the possible inability of the Company to continue as a going concern.

 

F-7

 

Management’sPlans

 

Asa public company, Management believes it will be able to access the public equities market for fund raising for product development,sales and marketing and inventory requirements as we expand our distribution in the U.S. market.

 

OnMay 2, 2023, the Company entered into an Equity Financing Agreement (the “Financing Agreement”) and Registration Rights Agreement(the “Registration Rights Agreement”) with GHS. Under the terms of the Financing Agreement, GHS has agreed to provide theCompany with up to $10,000,000of funding upon effectiveness of a registrationstatement on Form S-1. Pursuant to the effectiveness of the registration statement on July 19, 2023, the Company has the right to deliverputs to GHS and GHS will be obligated to purchase shares of our common stock based on the investment amount specified in each put notice.The maximum amount that the Company shall be entitled to put to GHS in each put notice will not exceed two hundred fifty percent (250%)of the average of the daily trading dollar volume of the Company’s common stock during the ten (10) trading days preceding theput, so long as such amount does not exceed 4.99% of the outstanding shares of the Company. Pursuant to the Financing Agreement, GHSand its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s common stock to GHS thatwould result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding common stock. The priceof each put share shall be equal to eighty percent (80%) of the lowest daily volume weighted average price of the Company’s commonstock for the ten (10) consecutive trading days preceding the date on which the applicable put is delivered to GHS. No put will be madein an amount equaling less than $10,000 or greater than $750,000. Puts may be delivered by the Company to GHS until the earlier of twenty-four(24) months after the effectiveness of the registration statement on Form S-1 or the date on which GHS has purchased an aggregate of$10,000,000 worth of put shares. During the year ended December 31, 2023, the Company sold to GHS 587,432,649shares of common stock and received $1,230,043net of offering costs. During the three monthsended March 31, 2024, the Companysold to GHS 146,517,693shares of common stock for proceeds of $172,117net of offering costs.

 

OnJanuary 26, 2024, the Company receive a Notice of Effectiveness for the sale of up to One Billion (1,000,000,000) shares of the Company’scommon stock to GHS, pursuant to the May 2, 2023, Financing Agreement and Registration Rights Agreement. The terms and conditions aresimilar to the terms and conditions of the July 19, 2023, registration statement. During the quarter ended March 31, 2024, the Companysold to GHS 193,786,035 shares of common stock and received $178,438, net of offering costs. Subsequent to March 31, 2024, the Companyhas sold to GHS 298,285,992 shares of common stock for proceeds of $187,995, net of offering costs.

 

OESoperates in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. We are engaged in multiplebusiness lines that include project development as well as equipment distribution.

 

EquipmentDistributor: In April 2021, the Company signed a five-year lease (beginning June 1, 2021) of approximately 8,100 SF in California,for office and warehouse space to support the sales and distribution of our west coast operations. On February 22, 2023, with an effectivedate of March 1, 2023, the Company entered into a Sublease for a Single Subleasee Agreement (the “Sublease”) with the landlordand a third party for the office and warehouse in Carlsbad California. Pursuant to the Sublease agreement, the third party will be responsiblefor all of the Company’s lease obligations through May 31, 2026, the lease termination date. The Company and the subleasee haveagreed to work together regarding any existing Company inventory in the facility. OES currently is focused on solar panel sales to otherdistributors and large installation companies.

 

ModularEnergy Distribution System: The Neo-Grid^TM System comprises of the design engineering, installation, and operationalmethodologies as well as the financial arbitrage of how we produce, capture and distribute electrical energy for the EV markets. TheCompany has acquired the license rights to the Neo-Grid^TM System, a proprietary system (patent pending), for the captureand distribution of electrical energy for the EV market. The Neo-Grid^TM System will serve both the private auto andthe commercial sectors. Our Neo-Grid^TM System offers (1) charging locationsthat can be installed with reduced delays, restricted areas or load limits and (2) EV charger electricity that is produced from renewablesources claiming little to no carbon footprint.

 

F-8

 

TheCompany has developed a business plan for the Neo-Grid^TM System for the distribution of electrical energy providinga solution to the inevitable stress to the existing grid infrastructure. The Company has completed its’ research and developmentof the Neo-Grid^TM System as well as completed the first set of engineered technical drawings. This first stage of theengineered technical drawings allows us to move forward with stage two, as well as to begin to construct the first prototype or proofof concept, (“PoC”). Our PoC design is partially reliant on auto manufacturers establishing standardizations of the actualcharging/discharging protocols of the batteries such as on-board inverters as well as bi-directional capabilities in electric vehicles,which have only recently been established.

 

OzopPlus markets vehicle service contracts (“VSC’s”) for electric vehicles (EV’s) that offer consumers to be ableto purchase additional months and miles above the manufacturer’s warranty and to also bring added value to EV owners by utilizingour partnerships and strengths in the energy market to offer unique and innovative services. Among EV owners’ concerns are theEV battery repair and replacement costs, range anxiety, environmental responsibilities, roadside assistance, and the accelerated wearon additional components that EV vehicles experience. Management believes that the Ozop Plus marketed VSC’s will give “peaceof mind” to the EV buyer.

 

OEDis developing a product branded OZOP ARC. OZOP ARC is an advanced lighting controls system, intricately engineered to integrate sophisticatedwired and wireless technologies. At its core, it employs a hybrid network topology that facilitates both resilient wired connectionsand flexible wireless communications, making it suitable for complex infrastructural environments. The system is equipped with an arrayof sensors and control nodes, enabling precise light management and energy usage monitoring. With support for protocols such as DALIand Zigbee, alongside the capability for seamless integration with IoT platforms, OZOP ARC offers a comprehensive solution for intricatelighting networks. This system is designed not just for control and efficiency, but also for adaptability to diverse architectural andelectrical layouts, embodying a technical solution for advanced, energy-conscious lighting management.

 

NOTE3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basisof Presentation

 

Theaccompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally acceptedin the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-Xof the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in theUnited States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unauditedconsolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present thefinancial position of the Company as of March 31, 2024, and the results of operations and cash flows for the periods presented. The resultsof operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results for the full fiscalyear or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statementsand related notes thereto included in the Company’s Current Report on Form 10-K filed on April 16, 2024.

 

Theunaudited consolidated financial statements include the accounts of the Company and Ozop Energy Systems, Inc. and the Company’sother wholly owned subsidiaries Ozop Capital Partners, Inc., Ozop Engineering and Design, Inc., Power Conversion Technologies, Inc. (“PCTI”),Ozop LLC, Ozop HK and Spinus, LLC (“Spinus”). All intercompany accounts and transactions have been eliminated in consolidation.The accompanying unaudited consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principlesin the United States of America (“US GAAP”).

 

F-9

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period.Actual results could differ from those estimates.

 

Cashand Cash Equivalents

 

TheCompany considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investmentsare carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insuredlimits. The Company has no cash equivalents at March 31, 2024, and December 31, 2023.

 

SalesConcentration and credit risk

 

Followingis a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the three months ended March31, 2024, and 2023, and their accounts receivable balance as of March 31, 2024:

 SCHEDULES OF CONCENTRATION OF RISK, BY RISK FACTOR

		Sales % Three Months Ended March 31, 2024				Sales % Three Months Ended March 31, 2023				Accounts receivable balance March 31, 2024
Customer A			67	%			-			$	39,800
Customer B			10	%			-			$	39,679
Customer C			-				97	%		$	-

 

AccountsReceivable

 

TheCompany records accounts receivable at the time products and services are delivered. An allowance for losses is established through aprovision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectabilityis unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables,based on evaluation of the collectability of the accounts and prior loss experience.

 

Inventory

 

Inventoriesare valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs consistof finished goods. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, includingknown trends, market conditions, currency exchange rates and other such issues. Finished goods inventories as of March 31, 2024, andDecember 31, 2023, were $1,027,298 and $1,089,979, respectively. Based on current market conditions related to solar panels includingbut not limited to reduced selling prices in the industry and the abundance of inventory supply in the market, management determinedthat the net realizable value of certain of the Company’s inventory required a lower of cost or market adjustment of $1,495,978to the historical cost of inventory purchases for the year ended December 31, 2023. There are no inventory markdowns for the three monthsended March 31, 2024, and 2023.

 

Purchaseconcentration

 

OESpurchases finished renewable energy products from its suppliers. For the three months ended March 31, 2023, there was one supplier thataccounted for 100%. For the three months ended March 31, 2024, the Company made no purchases.

 

F-10

 

Property,plant, and equipment

 

Propertyand equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of theassets.

 

TheCompany reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carryingamounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:

 SCHEDULE OF USEFUL LIFE OF PROPERTY AND EQUIPMENT ASSETS

	Building	10-25 years
	Office furniture and equipment	3-5 years
	Warehouse equipment	7 years

 

RevenueRecognition

 

TheCompany recognizes revenue in accordance with ASC 606, from the commercial sales of products or providing services by: (1) identify thecontract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price;(4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performanceobligation is satisfied. The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue whentitle, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based onthe applicable shipping terms for product sales or upon delivery of service to the customer for installation services. Any advance paymentsare recorded as current liability until revenue is recognized.

 

Forproduct sales contracts with customers, ownership of the goods and associated revenue are transferred to customers at a point in time,generally upon shipment of a product to the customer or receipt of the product by the customer and without significant judgments. Forthe periods covered herein, we did not have post shipment obligations such as training or installation, customer acceptance provisions,credits and discounts, rebates and price protection, or other similar privileges.

 

Forinstallation services contracts with customers, the Company invoices the customer upon completion of the job and recognizes revenue basedon the invoiced amount.

 

Thefollowing table disaggregates our revenue by major source for the three months ended March 31, 2024, and 2023:

 SCHEDULEOF DISAGGREGATION OF REVENUE

		2024				2023
		Three months ended March 31,
		2024				2023
Sourced and distributed products		$	75,222			$	2,758,798
OED Installations			176,500				32,400
Total		$	251,722			$	2,791,198

 

Revenuesfrom sourced and distributed products were previously purchased from suppliers as finished goods and were either in the Carlsbad warehouseor in a third-party warehouse.

 

Advertisingand Marketing Expenses

 

TheCompany expenses advertising and marketing costs as incurred. For the three months ended March 31, 2024, and 2023, the Company recordedadvertising and marketing expenses of $15,671 and $17,772, respectively.

 

ConvertibleInstruments

 

TheCompany evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives andHedging Activities.

 

ApplicableGAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivativefinancial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics andrisks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the hostcontract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured atfair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the sameterms as the embedded derivative instrument would be considered a derivative instrument.

 

F-11

 

TheCompany accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcatedfrom their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic valueof conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock atthe commitment date of this note transaction and the effective conversion price embedded in this note. Debt discounts under these arrangementsare amortized over the term of the related debt to their stated date of redemption.

 

TheCompany accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishmentstandards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-currentfair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

DiscontinuedOperations

 

Inaccordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entityor a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shiftthat has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meet thecriteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria themajor current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets andliabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations,less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuingoperations.

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinuedoperation. Accordingly, the operating results of PCTI are reported as income from discontinued operations in the accompanying unauditedconsolidated financial statements for the three months ended March 31, 2024, and 2023. For additional information, see Note 14- DiscontinuedOperations.

 

DistinguishingLiabilities from Equity

 

TheCompany relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemableand/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. TheCompany will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument,other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number ofits equity shares.

 

Oncethe Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financialinstrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”).The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of theCompany (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

 

OurCEO and Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articlesof incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number ofauthorized shares of common stock of the Company, without the need to call a general meeting of common shareholders of the Company.

 

F-12

 

InitialMeasurement

 

TheCompany records its financial instruments classified as liability, temporary equity, or permanent equity at issuance at the fair value,or cash received.

 

SubsequentMeasurement – Financial Instruments Classified as Liabilities

 

TheCompany records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changesin the fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

 

FairValue of Financial Instruments

 

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

 

Thefollowing 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.

 

Fromtime to time, certain of the Company’s embedded conversion features on debt and outstanding warrants have been treated as derivativeliabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instrumentsif exercised. In this case, the Company utilized the latest inception date sequencing method to reclassify outstanding instruments asderivative instruments. These contracts were recognized at fair value with changes in fair value recognized in earnings until such timeas the conditions giving rise to such derivative liability classification were settled.

 

Thecarrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accountspayable and accrued expenses and certain notes payable, approximate their fair values because of the short maturity of these instruments.

 

Thefollowing table represents the Company’s derivative instruments that are measured at fair value on a recurring basis as of March31, 2024, and December 31, 2023, for each fair value hierarchy level:

SCHEDULE OF DERIVATIVE INSTRUMENTS 

March 31, 2024		Derivative Liabilities				Total
Level I		$	-			$	-
Level II		$	-			$	-
Level III		$	754,073			$	754,073

 

December 31, 2023		Derivative Liabilities				Total
Level I		$	-			$	-
Level II		$	-			$	-
Level III		$	1,216,078			$	1,216,078

 

F-13

 

Leases

 

TheCompany accounts for leases under ASU 2016-02 (see Note 13), applying the package of practical expedients to leases that commenced beforethe effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases;(ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. For contractsentered into on or after the effective date, at the inception of a contract the Company assess whether the contract is, or contains,a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtainthe right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the rightto direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-aloneprice to determine the lease payments.

 

Operatinglease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized basedon the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide animplicit rate, the Company used an incremental borrowing rate of 7.5%, for the existing lease, based on the information available atthe adoption date in determining the present value of future payments. Operating lease expense is recognized pursuant to on a straight-linebasis over the lease term and is included in rent in the unaudited consolidated statements of operations.

 

IncomeTaxes

 

Incometaxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respectivetax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferredtax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuationallowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of thedeferred tax assets will not be realized.

 

Taxbenefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained onexamination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statementsfrom such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized uponultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income taxexpense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

 

SegmentPolicy

 

TheCompany has no reportable segments as it operates in one segment: renewable energy.

 

Earnings(Loss) Per Share

 

TheCompany reports earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) per shareis computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Dilutedearnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalentsand other potentially dilutive securities outstanding during the period. As of March 31, 2024, and 2023, the Company’s dilutivesecurities are convertible into approximately 10,280,235,000 and 8,471,310,904 shares of common stock respectively. The following tablerepresents the classes of dilutive securities as of March 31, 2024, and 2023:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 

		March 31, 2024				March 31, 2023
Convertible preferred stock (1)			8,732,725,692				7,318,548,198
Unexercised common stock purchase warrants (1)			807,024,518				1,047,024,518
Convertible notes payable (1)			72,738,215				11,025,635
Promissory notes payable (1)			667,746,575				94,712,553
Total			10,280,235,000				8,471,310,904

 

(1)

The potentially dilutive shares included in the above table are limited whereby the conversion or exercise cannot result in the beneficial owner holding more than 4.99% of the then outstanding shares of common stock subsequent to any conversion or exercise. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was anti-dilutive due to the Company’s net loss position.

 

F-14

 

RecentAccounting Pronouncements

 

InAugust 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options(Subtopic 470-20) and Derivatives and Hedging —Contracts in Entity’ Own Equity (Subtopic 815-40): Accounting for ConvertibleInstruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instrumentsby removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are requiredfor equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculationin certain areas. The Company does not believe the adoption of the ASU will have a material impact on the Company’s financial position,results of operations or cash flows.

 

Otherthan the above, there have been no recent accounting pronouncements or changes in accounting pronouncements during the period ended March31, 2024, that are of significance or potential significance to the Company.

 

NOTE4 – PROPERTY AND EQUIPMENT

 

Thefollowing table summarizes the Company’s property and equipment:

 SCHEDULE OF PROPERTY AND EQUIPMENT

		March 31, 2024				December 31, 2023
Office equipment		$	224,733			$	224,733
Building and building improvements			600,000				600,000
Less: Accumulated Depreciation			(223,290	)			(205,834	)
Property and Equipment, Net		$	601,443			$	618,899

 

Depreciationexpenses were $17,456 and $23,022 for the three months ended March 31, 2024, and 2023, respectively.

 

NOTE5 - CONVERTIBLE NOTES PAYABLE

 

OnJuly 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due 15% convertible note issued by the Company on September13, 2017. As of March 31, 2024, and December 31, 2023, the outstanding principal balance of this note was $25,000.

 

NOTE6 – DERIVATIVE LIABILITIES

 

TheCompany determined the conversion feature of the convertible notes, which all contain variable conversion rates, represented an embeddedderivative since the notes were convertible into a variable number of shares upon conversion. Accordingly, the notes are not consideredto be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivativeliability.

 

Atany given time, certain of the Company’s embedded conversion features on debt and outstanding warrants may be treated as derivativeliabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuantto SEC staff guidance that permits a sequencing approach based on the use of ASC 815-15-25 which provides guidance for contracts thatpermit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1)earliest issuance date or (2) latest maturity date. Pursuant to the sequencing approach, the Company evaluates its contracts based uponthe latest maturity date.

 

TheCompany valued the derivative liabilities as of March 31, 2024, and December 31, 2023, at $754,073 and $1,216,078 respectively. For thederivative liability associated with convertible notes, the Company used the Monte Carlo simulation valuation model with the followingassumptions as of March 31, 2024 and December 31, 2023, risk free interest rates at 5.38% and 5.26%, respectively, and volatility of88% and 48%, respectively.

 

F-15

 

Thefollowing assumptions were utilized in the Black-Scholes valuation of outstanding warrants as of March 31, 2024, and December 31, 2023,risk free interest rates of 4.48% to 5.38%, and 4.3% to 5.26%, respectively, volatility of 85% to 115%, and 48% to 99%, respectively,and exercise prices of $0.0019 to $0.15.

 

Asummary of the activity related to derivative liabilities for the three months ended March 31, 2024, is as follows:

 SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE

		Derivative liabilities associated with warrants				Derivative liabilities associated with convertible notes				Total derivative liabilities
Balance January 1, 2024		$	1,187,076			$	29,002			$	1,216,078
Change in fair value			(465,157	)			3,152				(462,005	)
Balance March 31, 2024		$	721,919			$	32,154			$	754,073

 

NOTE7 – NOTES PAYABLE

 

TheCompany has the following notes payable outstanding:

 SCHEDULE OF NOTES PAYABLE

		March 31, 2024				December 31, 2023
Note payable, interest at 8%, matured January 5, 2020, in default		$	45,000			$	45,000
Other, due on demand, interest at 6%, currently in default			50,000				50,000
Note payable $750,000 face value, interest at 12%, matured August 24, 2021, in default			375,000				375,000
Note payable $389,423 face value, interest at 15%, matures November 6, 2025, net of discount of $90,980 (2024) and $105,220 (2023)			298,443				284,203
Note payable $1,000,000 face value, interest at 12%, matured November 13, 2021, in default			1,000,000				1,000,000
Note payable $2,200,000 face value, interest at 15%, matures October 31, 2024, net of discount of $99,167 (2024) and $141,667 (2023)			2,100,833				2,058,333
Note payable $11,110,000 face value, interest at 15%, matures October 31, 2024, net of discount of $495,833 (2024) and $708,333 (2023)			10,614,167				10,401,667
Note payable $3,300,000 face value, interest at 15%, matures October 31, 2024, net of discount of $148,750 (2024) and $212,500 (2023)			3,151,250				3,087,500
Note payable $3,020,000 face value, matured March 31, 2023, in default			1,820,000				1,820,000
Sub- total notes payable, net of discount			19,454,693				19,121,703
Less long-term portion, net of discount			298,443				284,203
Current portion of notes payable, net of discount		$	19,156,250			$	18,837,500

 

F-16

 

OnNovember 11, 2022, the Company entered into a non-interest bearing, $3,020,000 face value promissory note with a third-party lender withscheduled weekly payments and a maturity date of March 31, 2023. In exchange for the issuance of the $3,020,000 note, inclusive of anoriginal issue discount of $250,000, and the reclass of $260,000 from accounts payable and accrued expenses the Company received proceedsof $2,510,000 on November 11, 2022, from the lender. For the three months ended March 31, 2023, amortization of the original issue discountof $181,818 was charged to interest expense. The original issue discount of $250,000 has been fully amortized as of March 31, 2023. TheCompany has repaid total $1,200,000 of the principal of the note through March 31, 2024, including $250,000 during the year ended December31, 2022, and $950,000 during the year ended December 31, 2023 (among which, $550,000 was repaid during the three months ended March31, 2023). As of March 31, 2024, and December 31, 2023, the outstanding principal balance of this note was $1,820,000 and $1,820,000,respectively. The Company is in default on the weekly payments. The Company is currently in discussions with the lender regarding anextension of the maturity date.

 

OnDecember 7, 2021, the Company entered into a 12%, $3,300,000 face value promissory note with a third- party lender with a maturity dateof December 7, 2022. In exchange for the issuance of the $3,300,000 note, inclusive of an original issue discount of $300,000, the Companyreceived proceeds of $3,000,000 on December 13, 2021, from the lender. On October 31, 2022, the maturity date of the note was extendedto October 31, 2024, and the interest rate was increased to 15% per annum. The Company issued 75,000,000 warrants at an exercise priceof $0.0067 and with an expiration of October 31, 2025, in exchange for the extension. The warrants were valued at $510,000 by the Black-Scholesoption pricing method and will be amortized through the new maturity date of the note. The Company determined that this transaction wasa modification of the existing note. For the three months ended March 31, 2024, and 2023, $63,750 and $63,750 was charged to interestexpense. As of March 31, 2024, and December 31, 2023, the outstanding principal balance of this note was $3,300,000 with carrying valuesof $3,151,250 and $3,087,500, respectively, net of unamortized discounts of $148,750 and $212,500 as of March 31, 2024, and December31, 2023, respectively.

 

OnMarch 17, 2021, the Company entered into a 12%, $11,110,000 face value promissory note with a third- party lender with a maturity dateof March 17, 2022. In exchange for the issuance of the $11,110,000 note, inclusive of an original issue discount of $1,000,000 and lendercosts of $110,000 the Company received proceeds of $10,000,000 on March 23, 2021, from the lender. On October 31, 2022, the maturitydate of the note was extended to October 31, 2024, and the interest rate was increased to 15% per annum. The Company issued 250,000,000warrants at an exercise price of $0.0067 and with an expiration of October 31, 2025, in exchange for the extension. The warrants werevalued at $1,700,000 by the Black-Scholes option pricing method and will be amortized through the new maturity date of the note. TheCompany determined that this transaction was a modification of the existing note. For the three months ended March 31, 2024, and 2023,$212,500 and $212,500 was charged to interest expense. As of March 31, 2024, and December 31, 2023, the outstanding principal balanceof this note was $11,110,000 with a carrying value of $10,614,167 and $10,401,667, respectively, net of unamortized discounts of $495,833and $708,333, respectively.

 

OnFebruary 9, 2021, the Company entered into a 12%, $2,200,000 face value promissory note with a third- party lender with a maturity dateof February 9, 2022. In exchange for the issuance of the $2,200,000 note, inclusive of an original issue discount of $200,000 the Companyreceived proceeds of $2,000,000 on February 16, 2021, from the lender. On October 31, 2022, the maturity date of the note was extendedto October 31, 2024, and the interest rate was increased to 15% per annum. The Company issued 50,000,000 warrants at an exercise priceof $0.0067 and with an expiration of October 31, 2025, in exchange for the extension. The warrants were valued at $340,000 by the Black-Scholesoption pricing method and will be amortized through the new maturity date of the note. The Company determined that this transaction wasa modification of the existing note. For the three months ended March 31, 2024, and 2023, $42,500 and $42,500 was charged to interestexpense. As of March 31, 2024, and December 31, 2023, the outstanding principal balance of this note was $2,200,000 with a carrying valueof $2,100,833 and $2,058,333, respectively, net of unamortized discounts of $99,167 and $141,667, respectively.

 

OnNovember 13, 2020, the Company entered into a 12%, $1,000,000 face value promissory note with a third-party due November 13, 2021. Principalpayments shall be made in six instalments of $166,667 commencing 180 days from the issue date and continuing each 30 days thereafterfor 5 months and the final payment of principal and interest due on the maturity date. The Company received proceeds of $890,000 on November20, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $110,000. In conjunction with thisnote, the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 125,000,000 shares of commonstock at an exercise price of $0.008, subject to adjustments and expires on the five-year anniversary of the issue date. As of March31, 2024, and December 31, 2023, the outstanding principal balance of this note was $1,000,000. This note is in default and the interestrate from the date of default is the lesser of 24% or the highest amount permitted by law. As of March 31, 2024, and December 31, 2023,the accrued interest is $675,452 and $615,452, respectively. The Company is in discussions with the lender regarding the extension ofthe maturity date of this note.

 

F-17

 

OnNovember 6, 2020, the Company entered into a Settlement Agreement with the holder of $120,000 of convertible notes with accrued and unpaidinterest of $8,716 and a $210,000 Promissory Note dated June 23, 2020, with accrued and unpaid interest of $15,707. The Company issueda new 12% Promissory Note with a face value of $389,423 and a maturity date of November 6, 2023. In conjunction with this settlement,the Company issued a warrant to purchase 60,000,000 shares of common stock at an exercise price of $0.0075, subject to adjustments andexpires on the five-year anniversary of the issue date. The Company analyzed the transaction and concluded that this was a modificationto the existing debt. The investor exercised the warrant on January 14, 2021. On November 6, 2023, the maturity date of the note wasextended to November 6, 2025, and the interest rate was increased to 15% per annum. The Company issued 60,000,000 warrants at an exerciseprice of $0.0019 and with an expiration of November 6, 2026, in exchange for the extension. The warrants were valued at $113,921 by theBlack-Scholes option pricing method and will be amortized through the new maturity date of the note. The Company determined that thistransaction was a modification of the existing note. For the three months ended March 31, 2024, $14,240 was charged to interest expense.As of March 31, 2024, and December 31, 2023, the outstanding principal balance of this note was $389,423 with a carrying value of $298,443and $284,203, respectively, net of unamortized discounts of $90,980 and $105,220, respectively.

 

OnAugust 24, 2020 (the “Issue Date”), the Company entered into a 12%, $750,000 face value promissory note with a third-party(the “Holder”) due August 24, 2021 (the “Maturity Date”). Principal payments shall be made in six instalmentsof $125,000 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principaland interest due on the Maturity Date. The Holder shall have the right from time to time, and at any time following an event of default,as defined on the agreement, to convert all or any part of the outstanding and unpaid principal, interest and any other amounts due intofully paid and non-assessable shares of common stock of the Company, at the lower of i) the Trading Price (as defined in the agreement)during the previous five trading days prior to the Issuance Date or ii) the volume weighted average price during the five trading daysending on the day preceding the conversion date. The Company received proceeds of $663,000 on August 25, 2020, and the Company reimbursedthe investor for expenses for legal fees and due diligence of $87,000. In conjunction with this Note, the Company issued 2 common stockpurchase warrants; each warrant entitles the Holder to purchase 122,950,819 shares of common stock at an exercise price of $0.0061, subjectto adjustments and expires on the five-year anniversary of the Issue Date. As of March 31, 2024, and December 31, 2023, the outstandingprincipal balance of this note was $375,000. This note is in default and the interest rate from the date of default is the lesser of24% or the highest amount permitted by law. As of March 31, 2024, and December 31, 2023, the accrued interest is $292,747 and $270,247,respectively. The Company is in discussions with the lender regarding the extension of the maturity date of this note.

 

NOTE8 – DEFERRED LIABILITY

 

OnSeptember 2, 2020, PCTI entered into an agreement with a third- party. Pursuant to the terms of the agreement, in exchange for $750,000,PCTI agreed to pay the third-party a perpetual three percent (3%) payment of revenues, as defined in the agreement. Payments are dueninety (90) days after each calendar quarter, with the first payment due on or before March 31, 2021, for revenues for the quarter endingDecember 31, 2020. On February 26, 2021, the agreement was assigned to Ozop and on March 4, 2021, the note was amended, whereby in exchangefor 175,000,000 shares of common stock, the royalty percentage was amended to 1.8%.

 

Nopayments have been made and the Company is in default of the agreement. On November 11, 2022, the third-party and the Company agreedto reduce the liability by $260,000 and add $260,000 to the promissory note issued on November 11, 2022.

 

EVInsurance Company records premiums received from the issuance of Vehicle Service Contracts (“VSC’s”) as a deferredliability. The Company will analyze the deferred liability to determine if any amounts can be recorded as income with the balance remainingin deferred liabilities or potential future claims. As of March 31, 2024, and December 31, 2023, the Company has recorded $855 and $495as deferred liabilities related to VSC’s.

 

Thedeferred liability as of March 31, 2024, and December 31, 2023, on the consolidated balance sheets is $490,855 and $490,495, respectively.

 

F-18

 

NOTE9 – RELATED PARTY TRANSACTIONS

 

EmploymentAgreement

 

OnJuly 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, betweenthe Company and Mr. Conway (the “Employment Agreement”). Mr. Conway’s compensation as adjusted was $20,000 per month.Effective January 1, 2022, the Company entered into a new employment agreement with Mr. Conway. Pursuant to the agreement, Mr. Conwaywill receive annual compensation of $240,000 from the Company and will also be eligible to receive bonuses and equity grants at the discretionof the BOD. The Company also agreed to compensate Mr. Conway for services provided directly to any of the Company’s subsidiaries.Currently, the subsidiaries of Ozop Capital, OES and OED, each compensates Mr. Conway $20,000 per month. For the three months ended March31, 2024, and 2023, the Company recorded expenses to Mr. Conway of $240,000 for each period.

 

NOTE10 – COMMITMENTS AND CONTINGENCIES

 

Agreements

 

OnSeptember 1, 2021, Ozop Capital entered into an advisory agreement (the “RMA Agreement”) with Risk Management Advisors, Inc.(“RMA”). Pursuant to the terms of the RMA Agreement, RMA will assist Ozop Capital in analyzing, structuring, and coordinatingOzop Capital’s participation in a captive insurance company. RMA will coordinate legal, accounting, tax, actuarial and other servicesnecessary to implement the Company’s participation in a captive insurance company, including, but not limited to, the preparationof an actuarial feasibility study, filing of all required regulatory applications, domicile selection, structural selection, and coordinationof the preparation of legal documentation. The fee for these services was $100,000. Ozop Capital agreed to pay $50,000 and to issue $50,000of shares of restricted common stock. The parties agreed to a reduced fee of $48,000 for the year ended December 31, 2023, which hasbeen accrued as of March 31, 2024, and December 31, 2023, and is included in accounts payable and accrued expenses on the consolidatedbalance sheets presented herein. As of March 31, 2024, and December 31, 2023, the Company has recorded 637,755 shares of common stockto be issued for the balance owed, in addition to the $48,000.

 

OnMarch 4, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with Salman J. Chaudhry, pursuantto which the Company agreed to pay Mr. Chaudry $227,200 (the “Outstanding Fees”) in certain increments as set forth in theSeparation Agreement. As of March 31, 2024, and December 31, 2023, the balance owed Mr. Chaudhry is $162,085.

 

OnSeptember 2, 2020, PCTI entered into an Agreement with a third-party. Pursuant to the terms of the agreement, in exchange for $750,000,PCTI agreed to pay the third-party a perpetual three percent (3%) payment of revenues, as defined in the agreement. On February 26, 2021,the agreement was assigned to Ozop and on March 4, 2021, the agreement was amended, whereby in exchange for 175,000,000 shares of commonstock, the royalty percentage was amended to 1.8% (see Note 8). As of March 31, 2024, and December 31, 2023, the Company has recorded$243,272, respectively, and is included in accounts payable and accrued expenses on the consolidated balance sheets presented herein.

 

F-19

 

Legalmatters

 

Weknow of no material, existing or pending legal proceedings against our Company.

 

Weare involved as a plaintiff in a Complaint filed in the SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO NORTHCOUNTY (the “Complaint”) on November 14, 2022. The Complaint alleges that former employees would place an orderfrom a customer for purchase of product from OZOP with funds the exact source of which is presently unknown. OZOP alleges that next,the customer would sell that product to OZOP’s customers at a price marked up from the price for which the customer purchased fromOZOP – to the benefit of Defendants and to the detriment of OZOP, their employer at the time. The Complaint further alleges thatthe former employees falsely represented that the price the customer was obtaining from other suppliers and therefore was willing topay for OZOP product decreased, which allowed them to use the customer to then sell additional product to OZOP’s customers at increasinglylarger margins, thus further wrongfully enriching themselves to the detriment of their employer, OZOP. The lawsuit also alleges thatthe employees were also making false statements to Ozop’s customers regarding the financial condition of Ozop and the lack of moduleinventory.

 

OnApril 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees and Your Home SolutionsCorp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in the Complaint. Pursuantto the terms of the Settlement, the Defendants are to pay the Company $500,000 within 2 days of the Settlement and $625,000 on or beforesixty (60) days from the Settlement. In exchange, the Company agreed to release all Defendants from the lawsuit upon the final and fullpayment of $1,125,000 and to deliver 11 containers of solar panels. As of May 2, 2024, the Company received the $1,125,000, and the Companyhas released the 11 containers by May 6, 2024 (see Note 16).

 

Thereare no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverseparty or has a material interest adverse to our interest.

 

NOTE11– STOCKHOLDERS’ EQUITY

 

Commonstock

 

Duringthe three months ended March 31, 2024, the Company issued 340,303,728 shares of common stock and received net proceeds of $350,555 afterissuance costs of $12,384, as follows:

 

OnJanuary 8, 2024, the Company sold 85,134,032 shares to GHS at $0.00128 and received net proceeds of $105,767, after deducting transactionand broker fees of $3,204.

 

OnJanuary 25, 2024, the Company sold 61,383,661 shares to GHS at $0.00112 and received net proceeds of $66,350, after deducting transactionand broker fees of $2,400.

 

OnFebruary 12, 2024, the Company sold 60,722,962 shares to GHS at $0.00104 and received net proceeds of $60,864, after deducting transactionand broker fees of $2,288.

 

OnFebruary 28, 2024, the Company sold 62,124,323 shares to GHS at $0.00096 and received net proceeds of $57,422, after deducting transactionand broker fees of $2,218.

 

OnMarch 14, 2024, the Company sold 70,938,750 shares to GHS at $0.00088 and received net proceeds of $60,152, after deducting transactionand broker fees of $2,274.

 

Duringthe three months ended March 31, 2023, the Company issued 107,756,783 shares of common stock and received net proceeds of $526,393 afterissuance costs of $19,110.

 

Asof March 31, 2024, the Company has 6,990,000,000 shares of $0.001 par value common stock authorized and there are 5,821,817,128 sharesof common stock issued and outstanding.

 

Preferredstock

 

Asof March 31, 2024, 10,000,000 shares have been authorized as preferred stock, par value $0.001 (the “Preferred Stock”), whichsuch Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directors maydetermine from time to time.

 

F-20

 

SeriesC Preferred Stock

 

OnJuly 7, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s SeriesC Preferred Stock. Under the terms of the Amendment to Certificate of Designation of Series C Preferred Stock, 50,000 shares of the Company’spreferred remain designated as Series C Preferred Stock. The holders of Series C Preferred Stock have no conversion rights and no dividendrights. For so long as any shares of the Series C Preferred Stock remain issued and outstanding, the Holder thereof, voting separatelyas a class, shall have the right to vote on all shareholder matters equal to sixty-seven (67%) percent of the total vote. As of March31, 2024, and December 31, 2023, there were 2,500 shares of Series C Preferred Stock issued and outstanding and the shares are held byMr. Conway.

 

SeriesD Preferred Stock

 

OnJuly 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series D Preferred Stock.On July 10, 2020, pursuant to the SPA with PCTI, the Company issued 18,667 shares of Series D preferred Stock to Chis, and on August28, 2020, pursuant to Mr. Conway’s employment agreement, the Company issued 1,333 shares of Series D Preferred Stock to Mr. Conway.On July 13, 2021, the Company purchased 18,667 shares of the Company’s Series D Preferred Stock held by Chis.

 

OnJuly 27, 2021, the Company filed with the Secretary of State of the State of Nevada an Amended and Restated Certificate of Designationof Series D Preferred Stock (the “Series D Amendment”). Under the terms of the Series D Amendment, 4,570 shares of the Company’spreferred stock will be designated as Series D Convertible Preferred Stock. The holders of the Series D Convertible Preferred Stock shallnot be entitled to receive dividends. Any holder may, at any time convert any number of shares of Series D Convertible Preferred Stockheld by such holder into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issuedand outstanding shares of common stock of the Company on the date of conversion, by 1.5 and dividing that number by the number of authorizedshares of Series D Convertible Preferred Stock and multiply that result by the number of shares of Series D Convertible Preferred Stockbeing converted. Except as provided in the Series D Amendment or as otherwise required by law, no holder of the Series D ConvertiblePreferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, releaseor other action. The Series D Convertible Preferred Stock shall not bear any liquidation rights. On July 28, 2021, the Company closedon a Stock and Warrant Purchase Agreement (the “Series D SPA”). Pursuant to the terms of Series D SPA, an investor in exchangefor $13,200,000 purchased one share of Series D Preferred Stock, and a warrant to acquire 3,236 shares of Series D Preferred Stock. Asof March 31, 2024, and December 31, 2023, there were 1,334 shares, respectively, of Series D Preferred Stock issued and outstanding anda warrant to purchase 3,236 shares of Series D Preferred Stock are outstanding as of March 31, 2024, and December 31, 2023.

 

Thewarrant has a 15- year term and Partial Warrant Lock Up and Leak-Out Period. The Holder may only exercise the Warrant and purchase WarrantShares as follows:

 

	i.	Up to 162 (one hundred and sixty-two) Warrant Shares, at any time or times on or after five (5) business days from the closing of the Series D SPA (“the Initial Exercise Date”) subject to up to a maximum number of Warrant Shares that, if converted, would be equal to no more than a maximum of 4.99% of the total number of outstanding shares of Common Stock of the Company and no later than on or before the 15th year anniversary of the Initial Exercise Date (“the Termination Date”); and
	ii.	The Remainder of the Warrant representing up to 3,074 (three thousand and seventy-four) Warrant Shares (“Remaining Warrant Shares”) shall be locked up for a period of 36 (thirty-six) months from the Initial Exercise Date (“Lock Up Period”) and shall become exercisable at any time or times from the date that is the 36 (thirty-six) month anniversary of the Initial Exercise Date (“Lock Up Period Termination Date”) and no later than on or before the Termination Date, as follows:

 

a.

During every 1 (one) year period, starting on the day that is the Lock Up Period Termination Date, the Holder shall have the right to exercise the Remainder of the Warrant up to a maximum number of Remaining Warrant Shares that, if converted, would be equal to no more than a maximum of 4.99% of the total number of outstanding shares of Common Stock of the Company during such given year (“Leak-Out Period”). The Leak-Out Period shall come into effect on the day that is the Lock Up Period Termination Date and remain effective on a yearly basis, for a period of 10 (ten) years thereafter, after which the Leak-Out Period will automatically terminate and become null and void. For clarity purposes the Remainder of the Warrant shall become freely exercisable at any time or times beginning on June 29, 2034, and until the Termination Date.

 

F-21

 

SeriesE Preferred Stock

 

OnJuly 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series E Preferred Stock.Under the terms of the Certificate of Designation of Series E Preferred Stock, 3,000 shares of the Company’s preferred stock havebeen designated as Series E Preferred Stock. The holders of the Series E Convertible Preferred Stock shall not be entitled to receivedividends. No holder of the Series E Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Corporationfor their vote, waiver, release or other action, except as may be otherwise expressly required by law. At any time, the Corporation mayredeem for cash out of funds legally available therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”)at $1,000 (one thousand dollars) per share. The shares of Series E Preferred Stock have not been registered under the Securities Actof 1933 or the laws of any state of the United States and may not be transferred without such registration or an exemption from registration.As of March 31, 2024, and December 31, 2023, there were -0- shares of Series E Preferred Stock issued and outstanding, respectively.

 

NOTE12 – NONCONTROLLING INTEREST

 

OnAugust 19, 2021, the Company formed Ozop Capital. The Company initially owned 51% with PJN Holdings, LLC (“PJN”) owning 49%.Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of Ozop Capital. The Company presentsinterest held by noncontrolling interest holders within noncontrolling interest in the unaudited consolidated financial statements. OnSeptember 13, 2022, there was a change in the ownership percentages, as PJN returned 490,000 shares, representing their 49% ownership.As of that date, Ozop Capital is a wholly owned subsidiary of the Company. As of March 31, 2024, and December 31, 2023, the accumulativenoncontrolling interest is $784,777.

 

NOTE13 - OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

 

OnApril 14, 2021, the Company entered into a five-year lease which began on June 1, 2021, for approximately 8,100 square feet of officeand warehouse space in Carlsbad, California, expiring May 31, 2026. Initial lease payments of $13,148 begin on June 1, 2021, and increaseby approximately 2.4% annually thereafter. The interest rate used to determine the present value is our incremental borrowing rate, estimatedto be 7.5%, as the interest rate implicit in most of our leases is not readily determinable. During the year ended December 31, 2021,upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $702,888 for this lease. On February22, 2023, with an effective date of March 1, 2023, the Company entered into a Sublease for a Single Subleasee Agreement (the “Sublease”)with the landlord and a third party for the office and warehouse in Carlsbad California. Pursuant to the Sublease agreement, the thirdparty will be responsible for all of the Company’s lease obligations through May 31, 2026, the lease termination date. The Companyand the subleasee have agreed to work together regarding any existing Company inventory in the facility.

 

Inadopting Topic 842, the Company has elected the ‘package of practical expedients’, which permit it not to reassess underthe new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did notelect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition,the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less.

 

F-22

 

Right-of-useassets are summarized below:

SCHEDULE OF RIGHT-OF-USE ASSETS

		March 31, 2024				December 31, 2023
Office and warehouse lease		$	702,888			$	702,888
Less: Accumulated amortization			(365,852	)			(330,437	)
Right-of-use assets, net		$	337,036			$	372,451

 

Operatinglease liabilities are summarized as follows:

SCHEDULE OF OPERATING LEASE LIABILITIES

		March 31, 2024				December 31, 2023
Lease liability		$	348,997			$	384,382
Less current portion			(151,800	)			(147,993	)
Long term portion		$	197,197			$	236,389

 

Maturityof lease liabilities are as follows:

SCHEDULE OF MATURITY OF LEASE LIABILITIES

		Amount
For the year ending December 31, 2024 (remaining period)		$	129,468
For the year ending December 31, 2025			175,942
For the year ended December 31, 2026			74,030
Total		$	379,440
Less: present value discount			(30,443	)
Lease liability		$	348,997

 

TheCompany recorded $29 and $28,701 operating lease expense (after netting off the sublease income) for the three months ended March 31,2024, and 2023, respectively.

 

NOTE14 – DISCONTINUED OPERATIONS

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinuedoperation. Accordingly, the operating results of PCTI are reported as income from discontinued operations in the accompanying unauditedconsolidated financial statements for the three months ended March 31, 2024, and 2023. On October 3, 2022, PCTI filed a Voluntary Petitionfor Non- Individuals Filing for Bankruptcy. On November 30, 2022, the Trustee filed a Notice of Abandonment of Estate Property, as itis over encumbered by the secured creditors. No objections were filed, and as such the inventory and equipment is now considered abandonedto the secured creditors to do with what they wish. In March 2023, the Trustee declared this a no-asset case and closed the bankruptcy.

 

Theresults of operations of this component, for all periods, are separately reported as “discontinued operations”. A reconciliationof the major classes of line items constituting the income (loss) from discontinued operations, net of income taxes as is presented inthe unaudited Consolidated Statements of Operations for the three months ended March 31, 2024, and 2023, are summarized below:

 

SCHEDULE OF LOSS FROM DISCONTINUED OPERATIONS

		2024				2023
		Three months ended March 31,
		2024				2023
Revenues		$	3,573			$	5,363
Cost of goods sold			-				-
Gross profit			3,573				5,363
Operating expenses			-				-
Interest expense			-				-
Income from discontinued operations		$	3,573			$	5,363

 

F-23

 

Thereare no assets as of March 31, 2024, and December 31, 2023, as the secured lender has taken possession. Liabilities of discontinued operationsare separately reported as of March 31, 2024, and December 31, 2023. All liabilities are classified as current. The following tablespresent the reconciliation of carrying amounts of the major classes of liabilities of the Company classified as discontinued operationsin the consolidated balance sheets at March 31, 2024, and December 31, 2023:

 

Currentliabilities

 

		March 31, 2024				December 31, 2023
Accounts payable and accrued liabilities		$	445,565			$	445,565
Current portion of notes payable			589,246				589,246
Deferred revenues			-				3,573
Total current liabilities of discontinued operations		$	1,034,811			$	1,038,384

 

OnMay 16, 2022, Huntington National Bank (“Huntington”) filed a Complaint for Confession of Judgment (“COJ”) againstCatherine Chis (“Chis”). Chis was the former CEO of PCTI and a Guarantor on Huntington’s Letter of Credit financing(“LOC”) and a Term Loan (“Term Loan”). The Chis COJ for the LOC was $352,415 and accrues per diem interest of$63.65, and the Chis COJ for the Term Loan was $141,415 and accrues per diem interest of $28.60. On June 24, 2022, Huntington filed aCOJ against Power Conversion Technologies, Inc (“PCTI”). The PCTI COJ for the LOC was for $354,774 and accrues per diem interestof $63.65 and the PCTI COJ for the LOC was for $142,473 and accrues per diem interest of $28.60. On July 20, 2022, Huntington assignedthe PCTI judgment against PCTI to Meraki Advisors, LLC. (“Meraki”). The Company’s understanding is Meraki is a Pennsylvanialimited liability company, controlled by Chis.

 

Includedin the Current portion of notes payable are the principal balances of Huntington’s LOC of $344,166 and Term Loan of $134,681. Accruedinterest and fees on the LOC and Term Loan debt $54,256 is included in accounts payable and accrued liabilities.

 

NOTE15 - INCOME TAXES

 

TheCompany provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approachin accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statementand tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requiresthe reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely- thannot that some or all of the deferred tax assets will not be realized.

 

Inassessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for therealization of deferred tax assets. Based upon the historical and anticipated future income, management has determined that the deferredtax assets do not meet the more-likely-than-not threshold for realizability. Accordingly, there is a full valuation allowance providedagainst the Company’s deferred tax assets as of March 31, 2024, and December 31, 2023.

 

NOTE16 – SUBSEQUENT EVENTS

 

FromApril 1, 2024, through the filing of this report, the Company sold to GHS 298,285,992 shares of common stock for proceeds of $187,995net of offering costs.

 

OnApril 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees (see Note 10) andYour Home Solutions Corp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in theComplaint. Pursuant to the terms of the Settlement, the Defendants are to pay the Company $500,000 within 2 days of the Settlement and$625,000 on or before sixty (60) days from the Settlement. In exchange, the Company agreed to release all Defendants from the lawsuitupon the final and full payment of $1,125,000 and to deliver 11 containers of solar panels. As of May 2, 2024, the Company has receivedthe $1,125,000, and the Company has released the 11 containers by May 6, 2024.

 

TheCompany has evaluated subsequent events through the date the financial statements were issued. The Company has determined that thereare no other such events that warrant disclosure or recognition in the financial statements, except as stated herein.

 

 

OZOPENERGY SOLUTIONS, INC.

 

COSOLIDATEDFINANCIAL STATEMENTS

 

Tableof Contents

 

	Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID # 237)	F-26
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-27
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022	F-28
Consolidated Statements of Stockholders’ Deficit as of December 31, 2023 and 2022	F-29
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-31
Notes to Consolidated Financial Statements	F-32

 

 

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Tothe Board of Directors and Stockholders of

OzopEnergy Solutions, Inc.

 

Opinionon the Consolidated Financial Statements

 

Wehave audited the accompanying consolidated balance sheets of Ozop Energy Solutions, Inc. (the “Company”) as of December 31,2023, and 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years endedDecember 31, 2023 and 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion,the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company asof December 31, 2023, and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022,in conformity with accounting principles generally accepted in the United States of America.

 

GoingConcern

 

Theaccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note2 to the consolidated financial statements, as of December 31, 2023, the Company had an accumulated deficit of $218,670,480 and a workingcapital deficit of $27,002,353 (including derivative liabilities of $1,216,078). As of December 31, 2023, the Company was in defaultof $3,315,000 plus accrued interest on debt instruments due to non-payment upon maturity dates. These factors, among others, raise substantialdoubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are alsodescribed in Note 2 to the accompanying consolidated financial statements. The accompanying consolidated financial statements do notinclude any adjustments that might result from the outcome of this uncertainty.

 

Basisfor Opinion

 

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

 

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

 

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

 

CriticalAudit Matter

 

Criticalaudit matters are matters arising from the current period audit of the financial statements that were communicated or required to becommunicated 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. We determined that there were no critical audit matters.

 

/s/Prager Metis CPAs LLC

 

Wehave served as the Company’s auditor since 2018

 

Hackensack,New Jersey

April16, 2024

 

 

OZOP ENERGY SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

 

		2023				2022
		December 31,
		2023				2022
ASSETS
Current Assets
Cash		$	1,446,029			$	1,369,210
Prepaid expenses			75,103				59,405
Accounts receivable			168,770				173,151
Inventory			1,089,979				3,601,026
Vendor deposits			-				3,053,821
Total Current Assets			2,779,881				8,256,613
Operating lease right-of-use asset, net			372,451				507,706
Property and equipment, net			618,899				711,615
Other assets			13,408				13,408
TOTAL ASSETS		$	3,784,639			$	9,489,342
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities
Current Liabilities
Accounts payable and accrued expenses		$	8,026,784			$	5,089,009
Convertible notes payable			25,000				25,000
Current portion of notes payable, net of discounts			18,837,500				4,447,605
Customer deposits			-				250,000
Derivative liabilities			1,216,078				4,314,270
Operating lease liability, current portion			147,993				133,508
Deferred liability			490,495				490,000
Liabilities of discontinued operations			1,038,384				1,059,837
Total Current Liabilities			29,782,234				15,809,229
Long Term Liabilities
Notes payable, net of discount			284,203				14,272,500
Operating lease liability, net of current portion			236,389				384,382
TOTAL LIABILITIES			30,302,826				30,466,111
COMMITMENTS AND CONTINGENCIES			-				-
Stockholders’ Deficit
Preferred stock (10,000,000 shares authorized, par value $0.001)			3				3
Series C Preferred Stock (50,000 shares authorized and 2,500 shares issued and outstanding, par value $0.001)			3				3
Series D Preferred Stock (4,570 shares authorized and 1,334 shares issued and outstanding, par value $0.001)			1				1
Series E Preferred Stock (3,000 shares authorized, -0- issued and outstanding, par value $0.001)			-				-
Preferred stock, value			-				-
Common stock (6,990,000,000 shares authorized, par value $0.001; 5,481,513,400 and 4,771,275,349 shares issued and outstanding as of December 31, 2023, and 2022, respectively)			5,481,513				4,771,275
Treasury stock, at cost, 47,500 shares of Series C Preferred Stock and 18,667 shares of Series D Preferred Stock			(11,249,934	)			(11,249,934	)
Common stock to be issued; 637,755 shares			638				638
Additional paid in capital			198,704,849				197,586,824
Accumulated deficit			(218,670,480	)			(211,300,799	)
Total Ozop Energy Solutions, Inc. stockholders’ deficit			(25,733,410	)			(20,191,992	)
Noncontrolling interest			(784,777	)			(784,777	)
TOTAL STOCKHOLDERS’ DEFICIT			(26,518,187	)			(20,976,769	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	3,784,639			$	9,489,342

 

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

 

 

OZOP ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		2023				2022
		For the Year Ended December 31,
		2023				2022
Revenue		$	4,760,705			$	16,629,450
Cost of goods sold			5,367,636				15,281,791
Gross profit (loss)			(606,931	)			1,347,659
Operating expenses:
General and administrative, related parties			960,000				1,090,000
Loss associated with early termination of vendor agreement			1,755,082				-
General and administrative, other			2,929,899				4,869,344
Total operating expenses			5,644,981				5,959,344
Loss from continuing operations			(6,251,912	)			(4,611,685	)
Other (income) expenses:
Interest expense			4,351,333				8,438,861
Gain on change in fair value of derivatives			(3,212,113	)			(19,202,431	)
Total Other (Income) Expenses			1,139,220				(10,763,570	)
Income (loss) from continuing operations before income taxes			(7,391,132	)			6,151,885
Income tax provision			-				-
Net income (loss) from continuing operations			(7,391,132	)			6,151,885
Discontinued Operations:
Loss on disposal of assets			-				(252,538	)
Income (loss) from discontinued operations, net of tax			21,451				(403,207	)
Income (loss) from discontinued operations			21,451				(655,745	)
Net income (loss)			(7,369,681	)			5,496,140
Less: net loss attributable to noncontrolling interest			-				(529,672	)
Net income (loss) attributable to Ozop Energy Solutions, Inc.		$	(7,369,681	)		$	6,025,812
Income (loss) from continuing operations per share of common stock basic and fully diluted		$	(0.00	)		$	0.00
Income (loss) from discontinued operations per share of common stock basic and fully diluted		$	0.00			$	(0.00	)
Income (loss) per share basic and fully diluted		$	(0.00	)		$	0.00
Weighted average shares outstanding
Basic and diluted			4,980,801,687				4,661,316,460

 

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

 

 

OZOP ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 2023

 

																																																		Total
		Common stock to be issued								Series C Preferred Stock								Series D Preferred Stock								Common Stock								Treasury				Additional Paid-in				Accumulated				Noncontrolling				Stockholders’ Equity
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Stock				Capital				Deficit				Interest				(Deficit)
Balances January 1, 2023			637,755			$	638				2,500			$	3				1,334			$	1				4,771,275,349			$	4,771,275			$	(11,249,934	)		$	197,586,824			$	(211,300,799	)		$	(784,777	)		$	(20,976,769	)
Issuance of shares of common stock sold, net of issuance costs of $58,230			-				-				-				-				-				-				710,238,051				710,238				-				1,118,025				-				-				1,828,263
Net loss			-				-				-				-				-				-				-				-				-				-				(7,369,681	)			-				(7,369,681	)
Balances December 31, 2023			637,755			$	638				2,500			$	3				1,334			$	1				5,481,513,400			$	5,481,513			$	(11,249,934	)		$	198,704,849			$	(218,670,480	)		$	(784,777	)		$	(26,518,187	)

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 2022

 

		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Stock				Capital				Deficit				Interest				(Deficit)
		Common stock to be issued								Series C Preferred Stock								Series D Preferred Stock								Common Stock								Treasury				Additional Paid-in				Accumulated				Noncontrolling				Total Stockholders’ Equity
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Stock				Capital				Deficit				Interest				(Deficit)
Balances January 1, 2022			637,755			$	638				2,500			$	3				1,334			$	1				4,617,362,977			$	4,617,363			$	(11,249,934	)		$	196,464,222			$	(217,326,611	)		$	(255,105	)		$	(27,749,423	)
Balance			637,755			$	638				2,500			$	3				1,334			$	1				4,617,362,977			$	4,617,363			$	(11,249,934	)		$	196,464,222			$	(217,326,611	)		$	(255,105	)		$	(27,749,423	)
Issuance of common stock for services			-				-				-				-				-				-				5,000,000				5,000				-				130,000				-				-				135,000
Issuance of shares of common stock sold, net of issuance costs of $35,822			-				-				-				-				-				-				148,912,372				148,912				-				992,602				-				-				1,141,514
Net income (loss)			-				-				-				-				-				-				-				-				-				-				6,025,812				(529,672	)			5,496,140
Net income(loss)			-				-				-				-				-				-				-				-				-				-				6,025,812				(529,672	)			5,496,140
Balances December 31, 2022			637,755			$	638				2,500			$	3				1,334			$	1				4,771,275,349			$	4,771,275			$	(11,249,934	)		$	197,586,824			$	(211,300,799	)		$	(784,777	)		$	(20,976,769	)
Balance			637,755			$	638				2,500			$	3				1,334			$	1				4,771,275,349			$	4,771,275			$	(11,249,934	)		$	197,586,824			$	(211,300,799	)		$	(784,777	)		$	(20,976,769	)

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

OZOPENERGY SOLUTIONS, INC.

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

 

		2023				2022
		For the Year Ended December 31,
		2023				2022
Cash flows from operating activities:
Net income (loss) from continuing operations		$	(7,391,132	)		$	6,151,885
Net income (loss) from discontinued operations			21,451				(655,745	)
Net income (loss)			(7,369,681	)			5,496,140
Adjustments to reconcile net income (loss) to net cash used in operating activities
Non-cash interest expense			1,465,518				5,938,622
Amortization and depreciation			230,134				191,818
Gain on fair value change of derivatives			(3,212,113	)			(19,202,431	)
Inventory write-down			1,495,978				-
Stock compensation expense			-				136,249
Termination costs of vendor agreements			1,755,082				-
Income on forfeited customer deposit			(250,000	)			-
Changes in operating assets and liabilities:
Accounts receivable			4,381				1,119,649
Inventory			1,015,069				(2,812,916	)
Prepaid expenses			(15,699	)			33,641
Vendor deposits			1,298,739				(2,222,952	)
Accounts payable and accrued expenses			2,937,774				2,275,175
Deferred revenue			495				-
Operating lease liabilities			(133,508	)			(120,177	)
Customer deposits			-				176,580
Net cash used in continuing operations			(777,831	)			(8,990,602	)
Net cash provided by (used in) discontinued operations			(21,451	)			391,306
Net cash used in operating activities			(799,282	)			(8,599,296	)
Cash flows from investing activities:
Purchase of office and computer equipment			(2,162	)			(65,202	)
Net cash used in investing activities			(2,162	)			(65,202	)
Cash flows from financing activities:
Proceeds from sale of common stock, net of costs			1,828,263				1,141,514
Proceeds from issuances of notes payable			-				2,510,000
Payments of principal of convertible note payable and notes payable			(950,000	)			(250,000	)
Net cash provided by financing activities			878,263				3,401,514
Net increase (decrease) in cash			76,819				(5,262,984	)
Cash, Beginning of year			1,369,210				6,632,194
Cash, End of year		$	1,446,029			$	1,369,210
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	245,565
Cash paid for income taxes		$	-			$	-
Schedule of non-cash Investing or Financing Activity:
Original issue discount included in notes payable		$	-			$	250,000
Reclass from prepaid expenses to fixed assets		$	-			$	600,000
Issuance of common stock and preferred stock for consulting fees and compensation		$	-			$	136,249

 

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

 

 

OZOPENERGY SOLUTIONS, INC.

Notesto Consolidated Financial Statements

December31, 2023

 

NOTE1 - ORGANIZATION

 

Business

 

OzopEnergy Solutions, Inc. (the” Company,” “we,” “us” or “our”) was originally incorporatedas Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada.

 

OnJuly 10, 2020, the Company entered into a Stock Purchase Agreement (the “SPA”) with Power Conversion Technologies, Inc.,a Pennsylvania corporation (“PCTI”), and Catherine Chis (“Chis”), PCTI’s Chief Executive Officer (“CEO”)and its sole shareholder. Under the terms of the SPA, the Company acquired one thousand (1,000) shares of PCTI, which represents allof the outstanding shares of PCTI, from Chis in exchange for the issuance of 47,500 shares of the Company’s Series C PreferredStock, 18,667 shares of the Company’s Series D Preferred Stock, and 500 shares of the Company’s Series E Preferred Stockto Chis.

 

OnOctober 29, 2020, the Company formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation(“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the sole purpose and effect of changing theCompany’s name to “Ozop Energy Solutions, Inc.” That same day the Company entered into an Agreement and Plan of Merger(the “Merger Agreement”) with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with theNevada Secretary of State, merging the Merger Sub into the Company, which were stamped effective as of November 3, 2020. As permittedby the Section 92.A.180 of the Nevada Revised Statutes, the sole purpose and effect of the filing of Articles of Merger was to changethe name of the Company from Ozop Surgical Corp to “Ozop Energy Solutions, Inc.”

 

OnDecember 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiaryof the Company. OES was formed to be a manufacturer and distributor of renewable energy products.

 

OnAugust 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly ownedsubsidiary of the Company. Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of OzopCapital.

 

OnOctober 29, 2021, EV Insurance Company, Inc. (“EVCO”) was formed as a captive insurance company in the State of Delaware.EVCO is a wholly owned subsidiary of Ozop Capital. On January 7, 2022, EVCO filed with New Castle County, Delaware DBA OZOP Plus.

 

OnFebruary 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiaryof the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design supportfor lighting and solar projects with a focus on fast lead times and technical support. OED and our partners are able to offer the resourcesneeded for lighting, solar and electrical design projects. OED will provide customers systems to coordinate the understanding of electricalusage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs. We workwith architects, engineers, facility managers, electrical contractors and engineers.

 

On May 5, 2023, the Board of Directors of the Company approved to amend the Company’s Articles of Incorporation(the “Amendment”) to increase the authorized capital stock of the Company to 7,000,000,000 shares, of which 6,990,000,000 shallbe authorized as common shares and 10,000,000 shall be authorized as preferred shares. The Company filed the Amendment withthe State of Nevada on June 23, 2023.

 

NOTE2 – GOING CONCERN AND MANAGEMENT’S PLANS

 

Theaccompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. As of December 31, 2023, the Company had an accumulated deficitof $218,670,480 and a working capital deficit of $27,002,353 (including derivative liabilities of $1,216,078). As of December 31, 2023,the Company was in default of $3,315,000 plus accrued interest on debt instruments due to non-payment upon maturity dates. These factors,among others, raise substantial doubt about the ability of the Company to continue as a going concern for one year from the date of theissuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect the possiblefuture effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result fromthe possible inability of the Company to continue as a going concern.

 

F-32

 

Management’sPlans

 

Asa public company, Management believes it will be able to access the public equities market for fund raising for product development,sales and marketing and inventory requirements as we expand our distribution in the U.S. market.

 

OnApril 4, 2022, the Company, and GHS Investments LLC (“GHS”). signed a Securities Purchase Agreement (the “1^stGHS Purchase Agreement”) for the sale of up to Two Hundred Million (200,000,000) shares of the Company’s common stockto GHS. We may sell shares of our common stock from time to time over a six (6)- month period ending October 4, 2022, at our sole discretion,to GHS under the GHS Purchase Agreement. The purchase price shall be 85% of lowest VWAP for the ten (10) days preceding the Company’snotice to GHS for the sale of the Company’s common stock. On April 8, 2022, the Company filed a Prospectus Supplement to the RegistrationStatement dated October 14, 2021, regarding the GHS Purchase Agreement. On October 17, 2022, the Company and GHS extended the MaturityDate to April 4, 2023. During the year ended December 31, 2022, the Company sold to GHS 148,912,372 shares of common stock and received$1,141,514, net of offering costs. Subsequent to December 31, 2022, through January 23, 2023, the Company sold GHS 51,087,628 sharesof common stock for proceeds of $205,443, net of offering costs. As of January 23, 2023, the Company sold GHS 200,000,000 shares of commonstock.

 

OnJanuary 18, 2023, the Company and GHS. signed a Securities Purchase Agreement (the “2^nd GHS Purchase Agreement”)for the sale of up to One Hundred Fifty Million (150,000,000) shares of the Company’s common stock to GHS. The terms and conditionsof the 2^nd GHS Purchase Agreement are similar to the terms and conditions of the 1^st GHS Purchase Agreement. Asof December 31, 2023, the Company has sold GHS 71,717,774 shares of common stock for proceeds of $392,777, net of offering costs.

 

OnMay 2, 2023, the Company entered into an Equity Financing Agreement (the “Financing Agreement”) and Registration RightsAgreement (the “Registration Rights Agreement”) with GHS. Under the terms of the Financing Agreement, GHS has agreed toprovide the Company with up to $10,000,000of funding upon effectiveness of a registration statement on Form S-1. Pursuant to the effectiveness of the registration statementon July 19, 2023, the Company has the right to deliver puts to GHS and GHS will be obligated to purchase shares of our common stockbased on the investment amount specified in each put notice. Themaximum amount that the Company shall be entitled to put to GHS in each put notice will not exceed two hundred fifty percent (250%)of the average of the daily trading dollar volume of the Company’s common stock during the ten (10) trading days preceding theput, so long as such amount does not exceed 4.99% of the outstanding shares of the Company. Pursuant to the Financing Agreement, GHSand its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s common stock to GHSthat would result in GHS’s beneficial ownership equalling more than 4.99% of the Company’s outstanding common stock. Theprice of each put share shall be equal to eighty percent (80%) of the lowest daily volume weighted average price of theCompany’s common stock for the ten (10) consecutive trading days preceding the date on which the applicable put is deliveredto GHS. No put will be made in an amount equalling less than $10,000 or greater than $750,000. Puts may be delivered by the Companyto GHS until the earlier of twenty-four (24) months after the effectiveness of the registration statement on Form S-1 or the date onwhich GHS has purchased an aggregate of $10,000,000worth of put shares. During the year ended December 31, 2023, the Company sold to GHS 587,432,649shares of common stock and received $1,230,043net of offering costs. From January 1, 2024, through April 16, 2024, the Company sold GHS 425,975,373 shares of common stock for proceedsof $416,696 net of offering costs.

 

OESoperates in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. We are engaged in multiplebusiness lines that include project development as well as equipment distribution. Our solar and energy storage projects involve batteryand solar photovoltaics (PV) installations.

 

F-33

 

EquipmentDistributor: OES operates in the component supply/distribution side of the renewable, resiliency and energy storage industriesdistributing the core components associated with residential and commercial solar PV systems as well as onsite battery storage and powergeneration. In April 2021, the Company signed a five- year lease (beginning June 1, 2021) of approximately 8,100 SF in California, foroffice and warehouse space to support the sales and distribution of our west coast operations. On February 22, 2023, with an effectivedate of March 1, 2023, the Company entered into a Sublease for a Single Subleasee Agreement (the “Sublease”) with the landlordand a third party for the office and warehouse in Carlsbad California. Pursuant to the Sublease agreement, the third party will be responsiblefor all of the Company’s lease obligations through May 31, 2026, the lease termination date. The Company and the subleasee haveagreed to work together regarding any existing Company inventory in the facility. OES currently is focused on solar panel sales to otherdistributors and large installation companies.

 

ModularEnergy Distribution System: The Neo-Grid^TM System comprises of the design engineering, installation, and operationalmethodologies as well as the financial arbitrage of how we produce, capture and distribute electrical energy for the EV markets. OEShas acquired the license rights to the Neo-Grid^TM System, a proprietary system (patent pending), for the capture anddistribution of electrical energy for the EV market. The Neo-Grid^TM System will serve both the private auto and thecommercial sectors. The exponential growth of the EV industry has been accelerated by the recent major commitments of most of the majorcar manufacturers. Our Neo-Grid^TM System leverages this accelerated growth by offering (1) charging locations thatcan be installed with reduced delays, restricted areas or load limits and (2) EV charger electricity that is produced from renewablesources claiming little to no carbon footprint.

 

OEShas developed a business plan for the Neo-Grid^TM System for the distribution of electrical energy providing a solutionto the inevitable stress to the existing grid infrastructure. The Company has completed its’ research and development of the Neo-Grid^TMSystem as well as completed the first set of engineered technical drawings. This first stage of the engineered technical drawingsallows us to move forward with stage two, as well as to begin to construct the first prototype or proof of concept, (“PoC”).Our PoC design is partially reliant on auto manufacturers establishing standardizations of the actual charging/discharging protocolsof the batteries such as on-board inverters as well as bi-directional capabilities in electric vehicles, which have only recently beenestablished. As the market growth rate of EV’s continues to rise, the stress on the existing grid-tied infrastructure shows theneed for the continued development of our Neo-Grid^TM System solution.

 

OzopPlus markets vehicle service contracts (“VSC’s”) for electric vehicles (EV’s) that offer consumers to be ableto purchase additional months and miles above the manufacturer’s warranty and to also bring added value to EV owners by utilizingour partnerships and strengths in the energy market to offer unique and innovative services. Among EV owners’ concerns are theEV battery repair and replacement costs, range anxiety, environmental responsibilities, roadside assistance, and the accelerated wearon additional components that EV vehicles experience. Management believes that the Ozop Plus marketed VSC’s will give “peaceof mind” to the EV buyer.

 

	●	In May 2022, the Company entered into an agreement with GS Administrators, Inc., a member of Houston-based GSFSGroup. Under the agreement, the Company will market GSFSGroup’s EV VSC’s in all states (except, California, Florida, Massachusetts, and Washington) to Ozop’s network of new and used franchised dealerships and other eligible entities. In addition to acting as an agent for the marketing, Ozop also has the right to white label the product under its’ Ozop Plus brand. Ozop’s role won’t be limited to marketing the product. GSFSGroup plans to tap into Ozop’s experience relative to battery collection and disposal and has agreed to insurance risk sharing in connection with the insurance policies that back the VSC’s. GSFSGroup is working on getting the approvals needed for the above four (4) states.
	●	On June 22, 2022, the Company entered into an Agent Agreement with Royal Administration Services, Inc. (“Royal”). Under the agreement, the Company will market Royal’s EV VSC’s and has the right to white label it under Ozop Plus. Royal has agreed to allow Ozop Plus on all VSC’s, marketed by Royal and the Company, to assume all the risk related to the electric battery at an agreed upon premium. The battery premium is dependent on the consumer’s selection of the duration of the VSC, the miles selected for coverage and the type of vehicle that the consumer has purchased, with a key component being the kWh size of the battery. These VSC’s have a maximum of 10 years and 150,000 miles and cover new and used cars from model year 2017 and newer, and incudes hybrids from model year 2012 to new. Royal’s VSCs are now effective in all 50 states.

 

F-34

 

●

On October 13, 2022, EVCO entered into a Reinsurance Contract (the “Contract”) with American Bankers Insurance Company of Florida (“ABIC” or the “Ceding Company”). Royal is the Administrator of the Contract. Pursuant to the terms of the Contract, ABIC will cede 100% of the battery coverage portion of all electric vehicle service contracts to EVCO. On the same date ABIC and EVCO also entered into a Trust Agreement, whereas EVCO as the reinsurer agrees to deposit an amount equal to unearned premium reserves, plus losses reported but unpaid, plus the estimated amount of losses incurred but not reported to the trust account. Permissible investments (with a maturity of no more than five (5) years) of the assets of the Trust account include:

 

	○	U.S. Treasury Securities
	○	Cash or cash instruments
	○	U.S agency issues
	○	Other investments as Ceding Company approves

 

OnFebruary 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiaryof the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design supportfor lighting and solar projects with a focus on fast lead times and technical support. OED and our partners offer the resources neededfor lighting, solar and electrical design projects. OED will provide its’ customers systems to coordinate the understanding ofelectrical usage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designsby working with architects, engineers, facility managers, electrical contractors, and engineers.

 

OEDis developing a product branded OZOP ARC. OZOP ARC is an advanced lighting controls system, intricately engineered to integrate sophisticatedwired and wireless technologies. At its core, it employs a hybrid network topology that facilitates both resilient wired connectionsand flexible wireless communications, making it suitable for complex infrastructural environments. The system is equipped with an arrayof sensors and control nodes, enabling precise light management and energy usage monitoring. With support for protocols such as DALIand Zigbee, alongside the capability for seamless integration with IoT platforms, OZOP ARC offers a comprehensive solution for intricatelighting networks. This system is designed not just for control and efficiency, but also for adaptability to diverse architectural andelectrical layouts, embodying a technical solution for advanced, energy-conscious lighting management.

 

NOTE3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basisof Presentation

 

Theaccompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the UnitedStates of America (“US GAAP”). The consolidated financial statements include the accounts of the Company and the Company’swholly owned subsidiaries Ozop Energy Systems, Inc., Ozop Capital Partners, Inc., Ozop Engineering and Design, Inc., Power ConversionTechnologies, Inc. (“PCTI”), Ozop LLC, Ozop HK and Spinus, LLC (“Spinus”). All intercompany accounts and transactionshave been eliminated in consolidation.

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period.Actual results could differ from those estimates.

 

F-35

 

Cashand Cash Equivalents

 

TheCompany considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investmentsare carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insuredlimits. The Company has no cash equivalents at December 31, 2023, and 2022.

 

SalesConcentration and credit risk

 

Followingis a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December31, 2023, and 2022, and their accounts receivable balance as of December 31, 2023:

 SCHEDULES OF CONCENTRATION OF RISK, BY RISK FACTOR

		Sales % Year Ended December 31, 2023				Sales % Year Ended December 31, 2022				Accounts receivable balance December 31, 2023
Customer A			-				38	%		$	-
Customer B			87	%			22	%		$	-

 

AccountsReceivable

 

TheCompany records accounts receivable at the time products and services are delivered. An allowance for losses is established through aprovision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectabilityis unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables,based on evaluation of the collectability of the accounts and prior loss experience.

 

Inventory

 

Inventoriesare valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs consistof finished goods. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, includingknown trends, market conditions, currency exchange rates and other such issues. Based on current market conditions related to solar panelsincluding but not limited to reduced selling prices in the industry and the abundance of inventory supply in the market, management determinedthat the net realizable value of certain of the Company’s inventory required a lower of cost or market adjustment of $1,495,978to the historical cost of inventory purchases for the year ended December 31, 2023. Finished goods inventories as of December 31, 2023,and 2022, were $1,089,979 and $3,601,026, respectively.

 

Purchaseconcentration

 

OESpurchases finished renewable energy products from its’ suppliers. For the year ended December 31, 2023, there was one supplierthat accounted for 100%. For the year ended December 31, 2022, there were two suppliers that accounted for 61% and 16.3%, respectively.There are only a handful of major suppliers, and we currently have supply arrangements with some of those vendors. One of these vendorsrequires a 20% down payment with the balances due on shipment and delivery, while other vendors terms are due immediately prior to delivery.We also buy product from other distributors if we are not able to purchase direct from the manufacturer. If we are unable to continue to use and/or find alternative suppliers, when we cannotbuy direct, it may have a material negative effect on our business.

 

F-36

 

Property,plant, and equipment

 

Propertyand equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of theassets.

 

TheCompany reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carryingamounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:

 SCHEDULE OF USEFUL LIFE OF PROPERTY AND EQUIPMENT ASSETS

	Building	10-25 years
	Office furniture and equipment	3-5 years
	Warehouse equipment	7 years

 

RevenueRecognition

 

TheCompany recognizes revenue in accordance with ASC 606, from the commercial sales of products by: (1) identify the contract (if any) witha customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate thetransaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligationis satisfied. The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue when title, ownership,and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shippingterms.

 

Forcontracts with customers, ownership of the goods and associated revenue are transferred to customers at a point in time, generally uponshipment of a product to the customer or receipt of the product by the customer and without significant judgments. Any advance paymentsare recorded as current liability until revenue is recognized.

 

Forthe periods covered herein, we did not have post shipment obligations such as training or installation, customer acceptance provisions,credits and discounts, rebates and price protection, or other similar privileges.

 

Thefollowing table disaggregates our revenue by major source for the years ended December 31, 2023, and 2022:

 SCHEDULEOF DISAGGREGATION OF REVENUE

		2023				2022
		Years ended December 31,
		2023				2022
Sourced and distributed products		$	4,544,855			$	16,537,350
OED Installations			215,850				92,100
Total		$	4,760,705			$	16,629,450

 

Revenuesfrom sourced and distributed products are purchased from suppliers as finished goods and the Company currently brings the finished goodsinto a third-party warehouse to fill orders as well as to build inventory for future sales orders.

 

Advertisingand Marketing Expenses

 

TheCompany expenses advertising and marketing costs as incurred. For the years ended December 31, 2023, and 2022, the Company recorded advertisingand marketing expenses of $64,616 and $51,441, respectively.

 

Researchand Development

 

Costsand expenses that can be clearly identified as research and development are charged to expense as incurred. For the years ended December31, 2023, and 2022, the Company recorded $6,865 and $-0- of research and development expenses, respectively.

 

ConvertibleInstruments

 

TheCompany evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives andHedging Activities.

 

F-37

 

ApplicableGAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivativefinancial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics andrisks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the hostcontract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured atfair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the sameterms as the embedded derivative instrument would be considered a derivative instrument.

 

TheCompany accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcatedfrom their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic valueof conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock atthe commitment date of this note transaction and the effective conversion price embedded in this note. Debt discounts under these arrangementsare amortized over the term of the related debt to their stated date of redemption.

 

TheCompany accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishmentstandards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-currentfair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

DiscontinuedOperations

 

Inaccordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entityor a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shiftthat has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meet thecriteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria themajor current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets andliabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations,less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuingoperations.

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition ofa discontinued operation. Accordingly, the operating results of PCTI are reported as net income (loss) from discontinued operations inthe accompanying consolidated financial statements for the years ended December 31, 2023, and 2022. For additional information, see Note14- Discontinued Operations.

 

DistinguishingLiabilities from Equity

 

TheCompany relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemableand/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. TheCompany will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument,other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number ofits equity shares.

 

Oncethe Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financialinstrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”).The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of theCompany (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

 

OurCEO and Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articlesof incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number ofauthorized shares of common stock of the Company, without the need to call a general meeting of common shareholders of the Company.

 

F-38

 

InitialMeasurement

 

TheCompany records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value,or cash received.

 

SubsequentMeasurement – Financial Instruments Classified as Liabilities

 

TheCompany records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changesin fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

 

FairValue of Financial Instruments

 

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

 

Thefollowing 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.

 

Fromtime to time, certain of the Company’s embedded conversion features on debt and outstanding warrants have been treated as derivativeliabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instrumentsif exercised. In this case, the Company utilized the latest inception date sequencing method to reclassify outstanding instruments asderivative instruments. These contracts were recognized at fair value with changes in fair value recognized in earnings until such timeas the conditions giving rise to such derivative liability classification were settled.

 

Thecarrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets,accounts payable and accrued expenses and certain notes payable approximate their fair valuesbecause of the short maturity of these instruments.

 

Thefollowing table represents the Company’s derivative instruments that are measured at fair value on a recurring basis as of December31, 2023, and 2022, for each fair value hierarchy level:

SCHEDULE OF DERIVATIVE INSTRUMENTS 

December 31, 2023		Derivative Liabilities				Total
Level I		$	-			$	-
Level II		$	-			$	-
Level III		$	1,216,078			$	1,216,078

 

December 31, 2022		Derivative Liabilities				Total
Level I		$	-			$	-
Level II		$	-			$	-
Level III		$	4,314,270			$	4,314,270

 

F-39

 

Leases

 

TheCompany accounts for leases under ASU 2016-02 (see Note 13), applying the package of practical expedients to leases that commenced beforethe effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases;(ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. For contractsentered into on or after the effective date, at the inception of a contract the Company assess whether the contract is, or contains,a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtainthe right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the rightto direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-aloneprice to determine the lease payments.

 

Operatinglease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized basedon the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide animplicit rate, the Company used an incremental borrowing rate of 7.5%, for the existing lease, based on the information available atthe adoption date in determining the present value of future payments. Operating lease expense is recognized pursuant to on a straight-linebasis over the lease term and is included in rent in the consolidated statements of operations.

 

IncomeTaxes

 

Incometaxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respectivetax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferredtax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuationallowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of thedeferred tax assets will not be realized.

 

Taxbenefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained onexamination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statementsfrom such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized uponultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income taxexpense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

 

SegmentPolicy

 

TheCompany has no reportable segments as it operates in one segment; renewable energy.

 

Earnings(Loss) Per Share

 

TheCompany reports earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) per shareis computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Dilutedearnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalentsand other potentially dilutive securities outstanding during the period. As of December 31, 2023, and 2022, the Company’s dilutivesecurities are convertible into approximately 9,749,983,678 and 8,332,973,619, respectively, shares of common stock. The following tablerepresents the classes of dilutive securities as of December 31, 2023, and 2022:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 

		December 31, 2023				December 31, 2022
Convertible preferred stock(1)			8,222,270,100				7,156,913,024
Unexercised common stock purchase warrants(1)			1,107,024,518				1,047,024,518
Convertible notes payable(1)			41,132,251				13,359,707
Promissory notes payable (1)			379,556,809				115,676,370
Total			9,749,983,678				8,332,973,619

 

(1)

The potentially dilutive shares included in the above table are limited whereby the conversion or exercise cannot result in the beneficial owner holding more than 4.99% of the then outstanding shares of common stock subsequent to any conversion or exercise. These shares wereexcluded from the diluted per share calculation because the effect of including these potential shares was anti-dilutive due to the Company’snet loss position.

 

F-40

 

RecentAccounting Pronouncements

 

InAugust 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options(Subtopic 470-20) and Derivatives and Hedging —Contracts in Entity’ Own Equity (Subtopic 815-40): Accounting for ConvertibleInstruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instrumentsby removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are requiredfor equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculationin certain areas. The Company does not believe the adoption of the ASU will have a material impact on the Company’s financial position,results of operations or cash flows.

 

Otherthan the above, there have been no recent accounting pronouncements or changes in accounting pronouncements during the period ended December31, 2023, that are of significance or potential significance to the Company.

 

NOTE4 – PROPERTY AND EQUIPMENT

 

Thefollowing table summarizes the Company’s property and equipment:

 SCHEDULE OF PROPERTY AND EQUIPMENT

		December 31, 2023				December 31, 2022
Office equipment		$	224,733			$	222,571
Building and building improvements			600,000				600,000
Less: Accumulated Depreciation			(205,834	)			(110,956	)
Property and Equipment, Net		$	618,899			$	711,615

 

Depreciationexpense was $94,878 and $66,027 for the years ended December 31, 2023, and 2022, respectively.

 

NOTE5 - CONVERTIBLE NOTES PAYABLE

 

OnJuly 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due 15% convertible note issued by the Company on September13, 2017. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $25,000.

 

NOTE6 – DERIVATIVE LIABILITIES

 

TheCompany determined the conversion feature of the convertible notes, which all contain variable conversion rates, represented an embeddedderivative since the notes were convertible into a variable number of shares upon conversion. Accordingly, the notes are not consideredto be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivativeliability.

 

Atany given time, certain of the Company’s embedded conversion features on debt and outstanding warrants may be treated as derivativeliabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuantto SEC staff guidance that permits a sequencing approach based on the use of ASC 815-15-25 which provides guidance for contracts thatpermit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1)earliest issuance date or (2) latest maturity date. Pursuant to the sequencing approach, the Company evaluates its contracts based uponthe latest maturity date.

 

F-41

 

TheCompany valued the derivative liabilities at December 31, 2023, and 2022, at $1,216,078and $4,314,270,respectively. For the derivative liability associated with convertible notes, the Company used the Monte Carlo simulation valuation modelwith the following assumptions as of December 31, 2023, and 2022, risk free interest rates at 5.26%and 4.76%,respectively, and volatility of 48%and 71%,respectively. During the year ended December 31, 2023, the Company issued 60,000,000warrants in conjunction with the extension ofa note payable. The Company recorded a discount to notes payable of $113,921with the offset to derivative liabilities forthe initial fair value of the warrants based on the Black-Scholes option pricing model. The following assumptions were utilized in theinitial Black-Scholes valuation of issued warrants during the year ended December 31, 2023, risk free interest rate of 4.72%,volatility of 72%,and an exercise price of $0.0019.During the year ended December 31, 2022, the Company issued 375,000,000warrants in conjunction with the extension ofcertain notes payable. The Company recorded a discount to notes payable of $2,550,000with the offset to derivative liabilities forthe initial fair value of the warrants based on the Black-Scholes option pricing model. The following assumptions were utilized in theinitial Black-Scholes valuation of issued warrants during the year ended December 31, 2022, risk free interest rate of 4.45%,volatility of 509%,and an exercise price of $0.0067.

 

Thefollowing assumptions were utilized in the Black-Scholes valuation of outstanding warrants as of December 31, 2023, and 2022, risk freeinterest rate of 4.3% to 5.26%, and 4.39% to 4.73%, respectively, volatility of 48% to 99%, and 109% to 272%, respectively, and exerciseprices of $0.0019 to $0.15.

 

Asummary of the activity related to derivative liabilities for the years ended December 31, 2023, and 2022, is as follows:

 SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE

		Derivative liabilities associated with warrants				Derivative liabilities associated with convertible notes				Total derivative liabilities
Balance January 1, 2022		$	20,938,755			$	27,946			$	20,966,701
Fair value of issuances during the year			2,550,000				-				2,550,000
Change in fair value			(19,203,355	)			924				(19,202,431	)
Balance December 31, 2022			4,285,400				28,870				4,314,270
Fair value of issuances during the year			113,921				-				113,921
Change in fair value			(3,212,245	)			132				(3,212,113	)
Balance December 31, 2023		$	1,187,076			$	29,002			$	1,216,078

 

NOTE7 – NOTES PAYABLE

 

TheCompany has the following note payables outstanding:

 SCHEDULE OF NOTES PAYABLE

		December 31, 2023				December 31, 2022
Note payable, interest at 8%, matured January 5, 2020, in default		$	45,000			$	45,000
Other, due on demand, interest at 6%, currently in default			50,000				50,000
Note payable $750,000 face value, interest at 12%, matured August 24, 2021, in default			375,000				375,000
Note payable $389,423 face value, interest at 15%, matures November 6, 2025, net of discount of $105,220 (2023)			284,203				389,423
Note payable $1,000,000 face value, interest at 12%, matured November 13, 2021, in default			1,000,000				1,000,000
Note payable $2,200,000 face value, interest at 15%, matures October 31, 2024, net of discount of $141,667 (2023) and $311,667 (2022)			2,058,333				1,888,333
Note payable $11,110,000 face value, interest at 15%, matures October 31, 2024, net of discount of $708,333 (2023) and $1,558,333 (2022)			10,401,667				9,551,667
Note payable $3,300,000 face value, interest at 15%, matures October 31, 2024, net of discount of $212,500 (2023) and $467,500 (2022)			3,087,500				2,832,500
Note payable $3,020,000 face value, matured March 31, 2023, net of discount of $-0- (2023) and $181,818 (2022), in default			1,820,000				2,588,182
Sub- total notes payable, net of discount			19,121,703				18,720,105
Less long-term portion, net of discount			284,203				14,272,500
Current portion of notes payable, net of discount		$	18,837,500			$	4,447,605

 

F-42

 

OnNovember 11, 2022, the Company entered into a non-interest bearing, $3,020,000face value promissory note with a third-party lender with scheduled weekly payments and a maturity date of March31, 2023. In exchange for the issuance of the $3,020,000note, inclusive of an original issue discount of $250,000,and the reclass of $260,000from accounts and accrued expenses the Company received proceeds of $2,510,000on November 11, 2022, from the lender. For the year ended December 31, 2022, amortization of the original issue discount of $68,182was charged to interest expense. During the year ended December 31, 2022, the Company repaid $250,000of the principal of the note. During the year ended December 31, 2023, the Company paid an additional $950,000of principal and amortization of the original issue discount of $181,818 was charged to interest expense. As of December 31, 2023, and 2022 the outstanding principal balance of this note was 1,820,000and as of December 31, 2022, $2,770,000with a carrying value of $2,588,182,net of unamortized discounts of $181,818.The Company is in default on the weekly payments. The Company is currently in discussions with the lender regarding an extension ofthe maturity date.

 

OnDecember 7, 2021, the Company entered into a 12%, $3,300,000 face value promissory note with a third- party lender with a maturity dateof December 7, 2022. In exchange for the issuance of the $3,300,000 note, inclusive of an original issue discount of $300,000, the Companyreceived proceeds of $3,000,000 on December 13, 2021, from the lender. In conjunction with the note, the Company issued a warrant topurchase 75,000,000 shares of common stock at $0.039 per share (subject to adjustments) with an expiry date on the three- year anniversaryof the note. For the year ended December 31, 2022, amortization of the costs of $283,250, was charged to interest expense. The fair valueof the warrant calculated by the Black- Scholes option pricing method of $2,982,815 has been recorded as an initial debt discount andan initial derivative liability of $2,982,815. For the year ended December 31, 2022, amortization of the warrant discount of $2,816,275,was charged to interest expense. On October 31, 2022, the maturity date of the note was extended to October 31, 2024, and the interestrate was increased to 15% per annum. The Company issued 75,000,000 warrants at an exercise price of $0.0067 and with an expiration ofOctober 31, 2025, in exchange for the extension. The warrants were valued at $510,000 by the Black-Scholes option pricing method andwill be amortized through the new maturity date of the note. The Company determined that this transaction was a modification of the existingnote. For the years ended December 31, 2023, and 2022, $255,000 and $42,500, respectively, was charged to interest expense. As of December31, 2023, and 2022, the outstanding principal balance of this note was $3,300,000 with carrying values of $3,087,500 and $2,832,500,respectively, net of unamortized discounts of $212,500 and $467,500, respectively.

 

OnMarch 17, 2021, the Company entered into a 12%, $11,110,000 face value promissory note with a third- party lender with a maturity dateof March 17, 2022. In exchange for the issuance of the $11,110,000 note, inclusive of an original issue discount of $1,000,000 and lendercosts of $110,000 the Company received proceeds of $10,000,000 on March 23, 2021, from the lender. In conjunction with the note, theCompany issued a warrant to purchase 250,000,000 shares of common stock at $0.13 per share (subject to adjustments) with an expiry dateon the three- year anniversary of the note. For the year ended December 31, 2022, amortization of the costs of $232,250 was charged tointerest expense. The fair value of the warrant calculated by the Black- Scholes option pricing method of $33,248,433 has been recordedas an initial debt discount of $10,000,000, interest expense of $23,248,433 and initial derivative liability of $33,248,433. For theyear ended December 31, 2022, amortization of the warrant discount of $2,083,333 was charged to interest expense. On October 31, 2022,the maturity date of the note was extended to October 31, 2024, and the interest rate was increased to 15% per annum. The Company issued250,000,000 warrants at an exercise price of $0.0067 and with an expiration of October 31, 2025, in exchange for the extension. The warrantswere valued at $1,700,000 by the Black-Scholes option pricing method and will be amortized through the new maturity date of the note.The Company determined that this transaction was a modification of the existing note. For the years ended December 31, 2023, and 2022,$850,000 and $141,667, respectively, was charged to interest expense. As of December 31, 2023, and 2022, the outstanding principal balanceof this note was $11,110,000 with a carrying value of $10,401,667 and $9,551,667, respectively, net of unamortized discounts of $708,333and $1,558,333, respectively.

 

F-43

 

OnFebruary 9, 2021, the Company entered into a 12%, $2,200,000 face value promissory note with a third- party lender with a maturity dateof February 9, 2022. In exchange for the issuance of the $2,200,000 note, inclusive of an original issue discount of $200,000 the Companyreceived proceeds of $2,000,000 on February 16, 2021, from the lender. In conjunction with the note, the Company issued a warrant topurchase 50,000,000 shares of common stock at $0.15 per share (subject to adjustments) with an expiry date on the three- year anniversaryof the note. For the year ended December 31, 2022, amortization of the costs of $22,167 was charged to interest expense. The fair valueof the warrant calculated by the Black- Scholes option pricing method of $17,659,506 has been recorded as an initial debt discount of$2,000,000, interest expense of $15,659,506 and initial derivative liability of $17,659,506. For the year ended December 31, 2022, amortizationof the warrant discount of $221,667, was charged to interest expense. On October 31, 2022, the maturity date of the note was extendedto October 31, 2024, and the interest rate was increased to 15% per annum. The Company issued 50,000,000 warrants at an exercise priceof $0.0067 and with an expiration of October 31, 2025, in exchange for the extension. The warrants were valued at $340,000 by the Black-Scholesoption pricing method and will be amortized through the new maturity date of the note. The Company determined that this transaction wasa modification of the existing note. For the years ended December 31, 2023, and 2022, $170,000 and $28,333, respectively, was chargedto interest expense. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $2,200,000 with a carryingvalue of $2,058,333 and $1,888,333, respectively, net of unamortized discounts of $141,667 and $311,667, respectively.

 

OnNovember 13, 2020, the Company entered into a 12%, $1,000,000 face value promissory note with a third-party due November 13, 2021. Principalpayments shall be made in six instalments of $166,667 commencing 180 days from the issue date and continuing each 30 days thereafterfor 5 months and the final payment of principal and interest due on the maturity date. The Company received proceeds of $890,000 on November20, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $110,000. In conjunction with thisnote, the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 125,000,000 shares of commonstock at an exercise price of $0.008, subject to adjustments and expires on the five-year anniversary of the issue date. The warrantsissued resulted in a debt discount of $1,000,000. As of December 31, 2023, and 2022, the outstanding principal balance of this note was$1,000,000. This note is in default and the interest rate from the date of default is the lesser of 24% or the highest amount permittedby law. As of December 31, 2023, and 2022, the accrued interest is $615,452 and $375,452, respectively. The Company is in discussionswith the lender regarding the extension of the maturity date of this note.

 

OnNovember 6, 2020, the Company entered into a Settlement Agreement with the holder of $120,000 of convertible notes with accrued and unpaidinterest of $8,716 and a $210,000 Promissory Noted dated June 23, 2020, with accrued and unpaid interest of $15,707. The Company issueda new 12% Promissory Note with a face value of $389,423 and a maturity date of November 6, 2023, and is in default. In conjunction withthis settlement, the Company issued a warrant to purchase 60,000,000 shares of common stock at an exercise price of $0.0075, subjectto adjustments and expires on the five-year anniversary of the issue date. The Company analyzed the transaction and concluded that thiswas a modification to the existing debt. The investor exercised the warrant on January 14, 2021. On November 6, 2023, the maturity dateof the note was extended to November 6, 2025, and the interest rate was increased to 15% per annum. The Company issued 60,000,000 warrantsat an exercise price of $0.0019 and with an expiration of November 6, 2026, in exchange for the extension. The warrants were valued at$113,921 by the Black-Scholes option pricing method and will be amortized through the new maturity date of the note. The Company determinedthat this transaction was a modification of the existing note. For the year ended December 31, 2023, $8,701 was charged to interestexpense. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $389,423 with a carrying value of $284,203and $389,423, respectively, net of unamortized discount of $105,220 for the year ended December 31, 2023.

 

F-44

 

OnAugust 24, 2020 (the “Issue Date”), the Company entered into a 12%, $750,000 face value promissory note with a third-party(the “Holder”) due August 24, 2021 (the “Maturity Date”). Principal payments shall be made in six instalmentsof $125,000 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principaland interest due on the Maturity Date. The Holder shall have the right from time to time, and at any time following an event of default,as defined on the agreement, to convert all or any part of the outstanding and unpaid principal, interest and any other amounts due intofully paid and non-assessable shares of common stock of the Company, at the lower of i) the Trading Price (as defined in the agreement)during the previous five trading days prior to the Issuance Date or ii) the volume weighted average price during the five trading daysending on the day preceding the conversion date. The Company received proceeds of $663,000 on August 25, 2020, and the Company reimbursedthe investor for expenses for legal fees and due diligence of $87,000. In conjunction with this Note, the Company issued 2 common stockpurchase warrants; each warrant entitles the Holder to purchase 122,950,819 shares of common stock at an exercise price of $0.0061, subjectto adjustments and expires on the five-year anniversary of the Issue Date. As of December 31, 2023, and 2022, the outstanding principalbalance of this note was $375,000. This note is in default and the interest rate from the date of default is the lesser of 24% or thehighest amount permitted by law. As of December 31, 2023, and 2022, the accrued interest is $270,247 and $180,247, respectively. TheCompany is in discussions with the lender regarding the extension of the maturity date of this note.

 

NOTE8 – DEFERRED LIABILITY

 

OnSeptember 2, 2020, PCTI entered into an agreement with a third- party. Pursuant to the terms of the agreement, in exchange for $750,000,PCTI agreed to pay the third-party a perpetual three percent (3%) payment of revenues, as defined in the agreement. Payments are dueninety (90) days after each calendar quarter, with the first payment due on or before March 31, 2021, for revenues for the quarter endingDecember 31, 2020. On February 26, 2021, the agreement was assigned to Ozop and on March 4, 2021, the note was amended, whereby in exchangefor 175,000,000 shares of common stock, the royalty percentage was amended to 1.8%.

 

Nopayments have been made and the Company is in default of the agreement. On November 11, 2022, the third-party and the Company agreedto reduce the liability by $260,000and add $260,000to the promissory note issued on November 11, 2022. The deferred liability as of December 31, 2023, and 2022, on the consolidatedbalance sheet is $490,495 and $490,000,respectively.

 

NOTE9 – RELATED PARTY TRANSACTIONS

 

EmploymentAgreement

 

OnJuly 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, betweenthe Company and Mr. Conway (the “Employment Agreement”). Mr. Conway’s compensation as adjusted was $20,000 per month,and effective September 1, 2021, Mr. Conway received $10,000 per month from Ozop Capital. Effective January 1, 2022, the Company enteredinto a new employment agreement with Mr. Conway. Pursuant to the agreement, Mr. Conway received a $250,000 contract renewal bonus andwill receive annual compensation of $240,000 from the Company and will also be eligible to receive bonuses and equity grants at the discretionof the BOD. The Company also agreed to compensate Mr. Conway for services provided directly to any of the Company’s subsidiaries.Ozop Capital increased Mr. Conway’s compensation to $20,000 per month in January 2022, OES began compensating Mr. Conway $20,000in March 2022, and OED began compensating Mr. Conway $20,000 per month beginning in April 2022.

 

ManagementFees and related party payables

 

Forthe years ended December 31, 2023, and 2022, the Company recorded expenses to its officers in the following amounts:

 SCHEDULE OF EXPENSES TO OFFICERS

		2023				2022
		Year ended December 31,
		2023				2022
CEO, parent		$	960,000			$	840,000
CEO, parent-bonus			-				250,000
Total		$	960,000			$	1,090,000

 

F-45

 

NOTE10 – COMMITMENTS AND CONTINGENCIES

 

Agreements

 

OnSeptember 1, 2021, Ozop Capital entered into an advisory agreement (the “RMA Agreement”) with Risk Management Advisors, Inc.(“RMA”). Pursuant to the terms of the RMA Agreement, RMA will assist Ozop Capital in analyzing, structuring, and coordinatingOzop Capital’s participation in a captive insurance company. RMA will coordinate legal, accounting, tax, actuarial and other servicesnecessary to implement the Company’s participation in a captive insurance company, including, but not limited to, the preparationof an actuarial feasibility study, filing of all required regulatory applications, domicile selection, structural selection, and coordinationof the preparation of legal documentation. In connection with the services listed above, Ozop Capital agreed to pay $50,000 and to issue$50,000 of shares of restricted common stock. One-half of the cash and stock were due upon the signing of the RMA Agreement. Accordingly,RMA received $25,000 and 452,080 shares of restricted common stock of the Company in September 2021. The balance of the cash and stockbecame due on October 29, 2021, upon the issuance of the captive insurance company’s certificate of authority from the state ofDelaware. The Company has paid the $25,000 balance and recorded 637,755 shares of common stock to be issued.

 

OnApril 13, 2021, the Company agreed to engage PJN Strategies, LLC (“PJN”) as a consultant. Pursuant to the agreement, theCompany agreed to compensate PJN $20,000 per month. Effective September 1, 2021, a new agreement was entered into between PJN and OzopCapital. Pursuant to the terms of the one-year agreement Ozop Capital agreed to compensate PJN $84,000 per month. For the years endedDecember 31, 2023, and 2022, the Company recorded $-0- and $756,000, respectively, of consulting expenses.

 

OnMarch 30, 2021, OES hired 2 individuals as Co-Directors of Sales. Pursuant to their respective offers of employment, the Company agreedto an annual salary of $130,000 with a signing bonus of $20,000 for each and to issue each 2,500,000 shares of restricted common stockupon the execution of the agreements and every 90 days thereafter for the first year as long as the employee is still employed. The Companyvalued the initial shares at $0.092 per share (the market price of the common stock on the date of the agreement). On July 1, 2021, theCompany issued each of the Co-Directors the 2,500,000 shares due after the first ninety days of employment. The shares were valued at$0.0745 per share (the market price of the common stock on the date of the issuance). On October 1, 2021, the Company issued each ofthe Co-Directors the 2,500,000 shares due after the first one hundred eighty days of employment. The shares were valued at $0.0445 pershare (the market price of the common stock on the date of the issuance). On January 14, 2022, the Company issued each of the Co-Directorstheir final 2,500,000 shares due. The shares were valued at $0.027 per share (the market price of the common stock on the date of theissuance), and $135,000 is included in stock-based compensation expense for the year ended December 31, 2022. One of the individualsresigned on January 24, 2022, and the other was terminated for cause on November 3, 2022.

 

OnMarch 15, 2021, the Company entered into a consulting agreement with Aurora Enterprises (“Aurora”). Mr. Steven Martello isa principal of Aurora. Pursuant to the agreement Mr. Martello will provide strategic analysis regarding existing markets and revenuestreams as well as the development of new lines of revenue. The Company agreed to a monthly retainer fee of $10,000 and to issue to Auroraor their designee 5,000,000 shares of restricted common stock. The shares were issued in April 2021. Aurora designated the shares tobe issued to Pegasus Partners, Inc. The Company valued the shares at $0.1392 per share (the market price of the common stock on the dateof the agreement). Effective September 30, 2022, Mr. Martello was no longer providing consulting services to the Company. For the yearsended December 31, 2023, and 2022, the Company has recorded $-0- and $90,000, respectively.

 

F-46

 

OnJanuary 6, 2021, the Company entered into a consulting agreement with Ezra Green to begin on February 8, 2021. The Company agreed toissue 10,000,000 shares of restricted common stock to Mr. Green and to a monthly fee of $2,500. The Company valued the shares at $0.0076per share (the market price of the common stock on the date of the agreement), and $76,000 was recorded as deferred stock-based compensation,to be amortized over the one-year term of the agreement. Effective April 1, 2021, the agreement was amended to $10,000 per month. EffectiveJune 30, 2022, Mr. Green was no longer providing consulting services to the Company. For the years ended December 31, 2023, and 2022,the Company recorded consulting expenses of $-0- and $60,000, respectively.

 

OnMarch 4, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with Salman J. Chaudhry, pursuantto which the Company agreed to pay Mr. Chaudry $227,200 (the “Outstanding Fees”) in certain increments as set forth in theSeparation Agreement. As of December 31, 2023, and 2022, the balance owed Mr. Chaudhry is $162,085.

 

OnSeptember 2, 2020, PCTI entered into an Agreement with a third-party. Pursuant to the terms of the agreement, in exchange for $750,000,PCTI agreed to pay the third-party a perpetual three percent (3%) payment of revenues, as defined in the agreement. On February 26, 2021,the agreement was assigned to Ozop and on March 4, 2021, the agreement was amended, whereby in exchange for 175,000,000 shares of commonstock, the royalty percentage was amended to 1.8% (see Note 8). As of December 31, 2023, and 2022, the Company has recorded $243,272,respectively, and is included in accounts payable and accrued expenses on the consolidated balance sheet presented herein.

 

Legalmatters

 

Weknow of no material, existing or pending legal proceedings against our Company.

 

Weare involved as a plaintiff in a Complaint filed in the SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO NORTHCOUNTY (the “Complaint”) on November 14, 2022. The Complaint alleges that former employees would place an orderfrom a customer for purchase of product from OZOP with funds the exact source of which is presently unknown. OZOP alleges that next,the customer would sell that product to OZOP’s customers at a price marked up from the price for which the customer purchased fromOZOP – to the benefit of Defendants and to the detriment of OZOP, their employer at the time. The Complaint further alleges thatthe former employees falsely represented that the price the customer was obtaining from other suppliers and therefore was willing topay for OZOP product decreased, which allowed them to use the customer to then sell additional product to OZOP’s customers at increasinglylarger margins, thus further wrongfully enriching themselves to the detriment of their employer, OZOP. The lawsuit also alleges thatthe employees were also making false statements to Ozop’s customers regarding the financial condition of Ozop and the lack of moduleinventory.

 

OnApril 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees and Your Home SolutionsCorp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in the Complaint. Pursuantto the terms of the Settlement, the Defendants are to pay the Company $500,000 within 2 days of the Settlement (which was received asof April 5, 2024) and $625,000 on or before sixty (60) days from the Settlement, In exchange, the Company agreed to release all Defendantsfrom the lawsuit upon the final and full payment of $1,125,000 and to deliver 11 containers of solar panels (see Note 17).

 

Thereare no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverseparty or has a material interest adverse to our interest.

 

NOTE11– STOCKHOLDERS’ EQUITY

 

Commonstock

 

Duringthe year ended December 31, 2023, the Company issued 710,238,051 shares of common stock and received net proceeds of $1,828,263 afterissuance costs of $58,230.

 

Duringthe year ended December 31, 2022, the Company issued 148,912,372 shares of common stock and received net proceeds of $1,141,514 afterissuance costs of $35,822. The Company also issued 5,000,000 shares of restricted common stock in the aggregate for services.

 

F-47

 

Preferredstock

 

Asof December 31, 2023, 10,000,000 shares have been authorized as preferred stock, par value $0.001 (the “Preferred Stock”),which such Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directorsmay determine from time to time.

 

SeriesC Preferred Stock

 

OnJuly 7, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s SeriesC Preferred Stock. Under the terms of the Amendment to Certificate of Designation of Series C Preferred Stock, 50,000 shares of the Company’spreferred remain designated as Series C Preferred Stock. The holders of Series C Preferred Stock have no conversion rights and no dividendrights. For so long as any shares of the Series C Preferred Stock remain issued and outstanding, the Holder thereof, voting separatelyas a class, shall have the right to vote on all shareholder matters equal to sixty-seven (67%) percent of the total vote. As of December31, 2023, and 2022, there were 2,500 shares of Series C Preferred Stock issued and outstanding and the shares are held by Mr. Conway.

 

SeriesD Preferred Stock

 

OnJuly 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series D Preferred Stock.On July 10, 2020, pursuant to the SPA with PCTI, the Company issued 18,667 shares of Series D preferred Stock to Chis, and on August28, 2020, pursuant to Mr. Conway’s employment agreement, the Company issued 1,333 shares of Series D Preferred Stock to Mr. Conway.On July 13, 2021, the Company purchased 18,667 shares of the Company’s Series D Preferred Stock held by Chis.

 

OnJuly 27, 2021, the Company filed with the Secretary of State of the State of Nevada an Amended and Restated Certificate of Designationof Series D Preferred Stock (the “Series D Amendment”). Under the terms of the Series D Amendment, 4,570 shares of the Company’spreferred stock will be designated as Series D Convertible Preferred Stock. The holders of the Series D Convertible Preferred Stock shallnot be entitled to receive dividends. Any holder may, at any time convert any number of shares of Series D Convertible Preferred Stockheld by such holder into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issuedand outstanding shares of common stock of the Company on the date of conversion, by 1.5 and dividing that number by the number of authorizedshares of Series D Convertible Preferred Stock and multiply that result by the number of shares of Series D Convertible Preferred Stockbeing converted. Except as provided in the Series D Amendment or as otherwise required by law, no holder of the Series D ConvertiblePreferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, releaseor other action. The Series D Convertible Preferred Stock shall not bear any liquidation rights. On July 28, 2021, the Company closedon a Stock and Warrant Purchase Agreement (the “Series D SPA”). Pursuant to the terms of Series D SPA, an investor in exchangefor $13,200,000 purchased one share of Series D Preferred Stock, and a warrant to acquire 3,236 shares of Series D Preferred Stock. Asof December 31, 2023, and 2022, there were 1,334 shares, respectively, of Series D Preferred Stock issued and outstanding and a warrantto purchase 3,236 shares of Series D Preferred Stock are outstanding as of December 31, 2023, and 2022.

 

Thewarrant has a 15- year term and Partial Warrant Lock Up and Leak-Out Period. The Holder may only exercise the Warrant and purchase WarrantShares as follows:

 

	i.	Up to 162 (one hundred and sixty-two) Warrant Shares, at any time or times on or after five (5) business days from the closing of the Series D SPA (“the Initial Exercise Date”) subject to up to a maximum number of Warrant Shares that, if converted, would be equal to no more than a maximum of 4.99% of the total number of outstanding shares of Common Stock of the Company and no later than on or before the 15th year anniversary of the Initial Exercise Date (“the Termination Date”); and
	ii.	The Remainder of the Warrant representing up to 3,074 (three thousand and seventy-four) Warrant Shares (“Remaining Warrant Shares”) shall be locked up for a period of 36 (thirty-six) months from the Initial Exercise Date (“Lock Up Period”) and shall become exercisable at any time or times from the date that is the 36 (thirty-six) month anniversary of the Initial Exercise Date (“Lock Up Period Termination Date”) and no later than on or before the Termination Date, as follows:

 

a.

During every 1 (one) year period, starting on the day that is the Lock Up Period Termination Date, the Holder shall have the right to exercise the Remainder of the Warrant up to a maximum number of Remaining Warrant Shares that, if converted, would be equal to no more than a maximum of 4.99% of the total number of outstanding shares of Common Stock of the Company during such given year (“Leak-Out Period”). The Leak-Out Period shall come into effect on the day that is the Lock Up Period Termination Date and remain effective on a yearly basis, for a period of 10 (ten) years thereafter, after which the Leak-Out Period will automatically terminate and become null and void. For clarity purposes the Remainder of the Warrant shall become freely exercisable at any time or times beginning on June 29, 2034, and until the Termination Date.

 

F-48

 

SeriesE Preferred Stock

 

OnJuly 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series E Preferred Stock.Under the terms of the Certificate of Designation of Series E Preferred Stock, 3,000 shares of the Company’s preferred stock havebeen designated as Series E Preferred Stock. The holders of the Series E Convertible Preferred Stock shall not be entitled to receivedividends. No holder of the Series E Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Corporationfor their vote, waiver, release or other action, except as may be otherwise expressly required by law. At any time, the Corporation mayredeem for cash out of funds legally available therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”)at $1,000 (one thousand dollars) per share. The shares of Series E Preferred Stock have not been registered under the Securities Actof 1933 or the laws of any state of the United States and may not be transferred without such registration or an exemption from registration.As of December 31, 2023, and 2022, there were -0- shares of Series E Preferred Stock issued and outstanding, respectively.

 

NOTE12 – NONCONTROLLING INTEREST

 

OnAugust 19, 2021, the Company formed Ozop Capital. The Company initially owned 51% with PJN Holdings, LLC (“PJN”) owning 49%.Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of Ozop Capital. The Company presentsinterest held by noncontrolling interest holders within noncontrolling interest in the consolidated financial statements. On September13, 2022, there was a change in the ownership percentages, as PJN returned 490,000 shares, representing their 49% ownership. As of thatdate, Ozop Capital is a wholly owned subsidiary of the Company. For the year ended December 31, 2022, Ozop Capital incurred losses of$1,217,911, of which $529,672, is the loss attributed to the noncontrolling interest for the year ending December 31, 2022. As of December31, 2023, and 2022, the accumulative noncontrolling interest is $784,777, respectively.

 

NOTE13 - OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

 

OnApril 14, 2021, the Company entered into a five-year lease which began on June 1, 2021, for approximately 8,100 square feet of officeand warehouse space in Carlsbad, California, expiring May 31, 2026. Initial lease payments of $13,148 begin on June 1, 2021, and increaseby approximately 2.4% annually thereafter. The interest rate used to determine the present value is our incremental borrowing rate, estimatedto be 7.5%, as the interest rate implicit in most of our leases is not readily determinable. During the year ended December 31, 2021,upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $702,888 for this lease. On February 22, 2023, with an effective date of March 1, 2023, the Company entered into a Sublease for a SingleSubleasee Agreement (the “Sublease”) with the landlord and a third party for the office and warehouse in Carlsbad California.Pursuant to the Sublease agreement, the third party will be responsible for all of the Company’s lease obligations through May 31,2026, the lease termination date. The Company and the subleasee have agreed to work together regarding any existing Company inventoryin the facility.

 

Inadopting Topic 842, the Company has elected the ‘package of practical expedients’, which permit it not to reassess underthe new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did notelect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition,the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less.

 

F-49

 

Right-of-use assets are summarized below:

 SCHEDULE OF RIGHT-OF-USE ASSETS

		December 31, 2023				December 31, 2022
Office and warehouse lease		$	702,888			$	702,888
Less: Accumulated amortization			(330,437	)			(195,182	)
Right-of-use assets, net		$	372,451			$	507,706

 

Operatinglease liabilities are summarized as follows:

SCHEDULE OF OPERATING LEASE LIABILITIES 

		December 31, 2023				December 31, 2022
Lease liability		$	384,382			$	517,890
Less current portion			(147,993	)			(133,508	)
Long term portion		$	236,389			$	384,382

 

Maturityof lease liabilities are as follows:

 SCHEDULE OF MATURITY OF LEASE LIABILITIES

		Amount
For the year ending December 31, 2024		$	171,840
For the year ending December 31, 2025			175,942
For the year ended December 31, 2026			74,030
Total		$	421,812
Less: present value discount			(37,430	)
Lease liability		$	384,382

 

The Companyrecorded $33,218 and $196,939 operating lease expense for the years ended December 31, 2023, and 2022, respectively.

 

NOTE14 – DISCONTINUED OPERATIONS

 

OnSeptember 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition ofa discontinued operation. Accordingly, the operating results of PCTI are reported as a loss from discontinued operations in the accompanyingconsolidated financial statements for the years ended December 31, 2023, and 2022. On October 3, 2022, PCTI filed a Voluntary Petitionfor Non- Individuals Filing for Bankruptcy. On November 30, 2022, the Trustee filed a Notice of Abandonment of Estate Property, as itis over encumbered by the secured creditors. No objections were filed, and as such the inventory and equipment is now considered abandonedto the secured creditors to do with what they wish. In March 2023, the Trustee declared this a no-asset case and closed the bankruptcy.

 

Theresults of operations of this component, for all periods, are separately reported as “discontinued operations”. A reconciliationof the major classes of line items constituting the income (loss) from discontinued operations, net of income taxes as is presented inthe Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, and 2022 are summarized below:

SCHEDULE OF LOSS FROM DISCONTINUED OPERATIONS 

		Year ended December 31,
		2023				2022
Revenues		$	21,451			$	286,401
Cost of goods sold			-				259,828
Gross profit			21,451				26,573
Operating expenses			-				406,518
Loss on disposal of assets			-				252,538
Interest expense			-				23,262
Income (loss) from discontinued operations		$	21,451			$	(655,745	)

 

F-50

 

Thereare no assets as of December 31, 2023, and 2022, as the secured lender has taken possession. Liabilities of discontinued operations areseparately reported as of December 31, 2023, and 2022. All liabilities are classifiedas current. The following tables present the reconciliation of carrying amounts of the major classes of liabilities of the Company classifiedas discontinued operations in the consolidated balance sheets at December 31, 2023, and 2022:

 

Currentliabilities

 

		Year ended December 31,
		2023				2022
Accounts payable and accrued liabilities		$	445,565			$	445,565
Current portion of notes payable			589,246				589,246
Operating lease liability			-				3,575
Deferred revenues			3,573				21,451
Total current liabilities of discontinued operations		$	1,038,384			$	1,059,837

 

OnMay 16, 2022, Huntington National Bank (“Huntington”) filed a Complaint for Confession of Judgment (“COJ”) againstCatherine Chis (“Chis”). Chis was the former CEO of PCTI and a Guarantor on Huntington’s Letter of Credit financing(“LOC”) and a Term Loan (“Term Loan”). The Chis COJ for the LOC was for $352,415 and accrues per diem interestof $63.65, and the Chis COJ for the Term Loan was for $141,415 and accrues per diem interest of $28.60. On June 24, 2022, Huntingtonfiled a COJ against Power Conversion Technologies, Inc (“PCTI”). The PCTI COJ for the LOC was for $354,774 and accrues perdiem interest of $63.65 and the PCTI COJ for the LOC was for $142,473 and accrues per diem interest of $28.60. On July 20, 2022, Huntingtonassigned the PCTI judgment against PCTI to Meraki Advisors, LLC. (“Meraki”). The Company’s understanding is Merakiis a Pennsylvania limited liability company, controlled by Chis.

 

TheCompany wrote off the book value of the inventory of $237,091 and fixed assets of $15,447 during the year ended December 31, 2022, withthe offset to Loss on Disposal of Assets of Discontinued Operations. Included in the Current portion of notes payable are the principalbalances of Huntington’s LOC of $344,166 and Term Loan of $134,681. Accrued interest and fees on the LOC and Term Loan debt $54,256is included in accounts payable and accrued liabilities.

 

NOTE15 - INCOME TAXES

 

TheCompany provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approachin accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statementand tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requiresthe reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely- thannot that some or all of the deferred tax assets will not be realized.

 

Inassessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for therealization of deferred tax assets. Based upon the historical and anticipated future income, management has determined that the deferredtax assets do not meet the more-likely-than-not threshold for realizability. Accordingly, there is a full valuation allowance providedagainst the Company’s deferred tax assets as of December 31, 2023, and 2022.

 

Areconciliation of the provision for income taxes determined at the U.S. statutory rate to the Company’s effective income tax rateis as follows:

SCHEDULE OF PROVISION FOR INCOME TAXES 

		Year Ended December 31,
		2023				2022
Pre-tax income (loss)		$	(7,369,681	)		$	6,025,812
U.S. federal corporate income tax rate			21	%			21	%
Expected U.S. income tax (credit)			(1,547,633	)			1,265,421
Permanent differences			315,938				(2,756,788	)
Change of valuation allowance			1,231,695				1,491,367
Effective tax expense		$	—			$	—

 

F-51

 

TheCompany had deferred tax assets as follows:

SCHEDULE OF DEFERRED TAX ASSETS 

		December 31, 2023				December 31, 2022
Net operating losses carried forward		$	4,932,713			$	3,701,018
Less: Valuation allowance			(4,932,713	)			(3,701,018	)
Net deferred tax assets		$	—			$	—

 

Asof December 31, 2023, the Company has approximately $23,489,000 net operating loss carryforwards available to reduce future taxable income.As of December 31, 2023, and 2022, the Company has no material unrecognized tax benefits which would favourably affect the effective incometax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefitswithin the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the yearsended December 31, 2023, and 2022, and no provision for interest and penalties is deemed necessary as of December 31, 2023, and 2022.

 

NOTE16 – LOSS ASSOCIATED WITH EARLY TERMINATION OF VENDOR AGREEMENT

 

InNovember 2022, the Company issued a purchase order for 80 containers of solar panels to VSUN Solar USA, Inc. (“VSUN”), basedsolely on an order the Company received from a customer at that time. The Company had remitted a deposit to VSUN of $2,395,768 inNovember 2022. Because of market conditions that began to deteriorate in early 2023 in the residential solar PV market and VSUN’srefusal to negotiate a price that would enable Ozop to realize a profit on the order, the customer eventually cancelled the order inJune 2023. VSUN had already shipped 40 containers out of total 80 containers to the US and the remaining 40 containers of products havenot been produced by September 30, 2023. The general terms and conditions of the purchase order allowed Ozop 30 days free storage, andto be charged storage fees after the 30 days.

 

OnNovember 6, 2023, the Company and VSUN entered into a Termination Agreement (the “TA”) after negotiation. Pursuant to theTA, the parties agreed to cancel the remaining unpaid and/or not fully executed purchase orders the Company issued to VSUN, and to applypart of the vendor deposits (totaling $2,525,102 paid to VSUN) to unpaid storage fees of $556,884 and to a termination feeof $1,198,198. The combined amount of storage fees and termination fee of $1,755,082 is classified separately as Loss associatedwith early termination of vendor agreement on the consolidated statements of operations for the year ended December 31, 2023. The remainingbalance of the deposit of $770,020 is received on November 17, 2023. In addition, VSUN shall retain the above 40 containers of productsin storage as a result of the early termination. The Company and VSUN shall not have any further obligations under the purchase orderswhich shall be terminated, and the Company shall have no liability to VSUN and VSUN shall have no liability to the Company as a resultof or in connection with this termination.

 

NOTE17 – SUBSEQUENT EVENTS

 

FromJanuary 1, 2024, through April 16, 2024, the Company sold GHS 425,975,373 shares of common stock for proceeds of $416,696 net of offeringcosts.

 

OnApril 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees (see Note 10) andYour Home Solutions Corp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in theComplaint. Pursuant to the terms of the Settlement, the Defendants are to pay the Company $500,000 within 2 days of the Settlement (whichwas received as of April 5, 2024) and $625,000 on or before sixty (60) days from the Settlement, In exchange, the Company agreed to releaseall Defendants from the lawsuit upon the final and full payment of $1,125,000 and to deliver 11 containers of solar panels.

 

TheCompany has evaluated subsequent events through the date the financial statements were issued. The Company has determined that thereare no other such events that warrant disclosure or recognition in the financial statements, except as stated herein.

 

 

Item16. Exhibits and Financial Statement Schedules.

 

Thefollowing exhibits are included as part of this Form S-1.

 

Exhibit No.		Description
3.1		Articles of Incorporation (1)
3.2		Bylaws (1)
5.1		Opinion of Counsel on legality of securities being registered
10.1		Equity Financing Agreement with GHS Investments, LLC dated May 2, 2023 (2)
23.1		Consent of Prager Metis CPAs LLC
107		Filing Fee Table

 

	(1)	Incorporated by reference to Registration Statement on Form S-1 filed on August 1, 2016
	(2)	Incorporated by reference to Form 8-K filed on May 8, 2023

 

Item17. Undertakings

 

Theundersigned registrant hereby undertakes to:

 

(1)	File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

 

	(i)	Include any prospectus required by Section 10(a)(3) of the Securities Act;
	(ii)	Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii)	Include any additional or changed material information on the plan of distribution.

 

(2)	For determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering.
(3)	File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
(4)	For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

 

	(ii)	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
	(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
	(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

Insofaras indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officersand controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that inthe opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,unenforceable.

 

Inthe event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred orpaid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is assertedby such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in theopinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the questionwhether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudicationof such issue.

 

That,for the purpose of determining liability under the Securities Act to any purchaser:

 

Eachprospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statementsrelying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registrationstatement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statementor prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference intothe registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract ofsale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was partof the registration statement or made in any such document immediately prior to such date of first use.

 

 

SIGNATURES

 

Pursuantto the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalfby the undersigned, thereunto duly authorized on July 22, 2024.

 

	Ozop Energy Solutions, Inc.
		/s/ Brian Conway
	By:	Brian Conway
	Its:	Principal Executive Officer, Principal Accounting Officer, Secretary and Director

 

Inaccordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in thecapacities and on the dates stated:

 

Name		Title		Date
/s/ Brian Conway		Principal Executive Officer, Principal Accounting Officer, Secretary and Director		July 22, 2024