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Item 5. Market for Registrant’s Common Equity

2022-04-15 compared with 2021-04-15 · 16 added, 445 removed, 10 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Company’s common stock began trading on May 8, 2017, and currently trades on the OTC Pink Market under the symbol “OZSC.”

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Company’s common stock began trading on May 8, 2017, and currently trades on the OTC Pink Market under the symbol “OZSC.”

The closing price of our common stock on April 8, 2022, was $0.0237.

2 unchanged sentences

following table are all shares issued during the quarter ended December 31, 2021:

November 4, 2020, the Company issued 7,142,857 shares of common stock to an accredited investor upon the conversion of $25,000

of principal of their convertible promissory note dated April 28, 2020.

November 4, 2020, the Company issued 8,908,571 shares of common stock to an accredited investor upon the conversion of $28,000

of principal and $3,180 of accrued interest of their convertible promissory note dated April 28, 2020.

November 10, 2020, the Company issued 59,706,711 shares of common stock to an accredited investor upon the conversion of $110,000

of principal and $22,549 of accrued interest of their convertible promissory note dated May 4, 2020.

November 16, 2020, the Company issued 47,599,845 shares of common stock to an accredited investor upon the conversion of $80,000

of principal and $24,720 of accrued interest of their convertible promissory note dated March 9, 2020.

November 27, 2020, the Company issued 27,683,884 shares of common stock to an accredited investor upon the cashless exercise of

their warrant dated May 4, 2020.

November 30, 2020, the Company issued 88,340,657 shares of common stock to an accredited investor upon the conversion of $162,000

of principal and $27,816 of accrued interest of their convertible promissory note dated May 14, 2020.

December 1, 2020, the Company issued 10,000,000 shares to its legal counsel for past legal services performed.

December 14, 2020, the Company issued 8,064,516 shares of common stock to an accredited investor upon the conversion of $25,000

of principal of their convertible promissory note dated June 11, 2020.

December 14, 2020, the Company issued 10,058,065 shares of common stock to an accredited investor upon the conversion of $28,000

of principal and $3,180 of accrued interest of their convertible promissory note dated June 11, 2020.

Company issued the foregoing securities in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities

Act of 1933, as amended, and/or Rule 506(b) promulgated thereunder, as there was no general solicitation to the investors and

the transactions did not involve a public offering.

have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the

foreseeable future.

Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors

and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed

relevant by the Board of Directors.

October 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), and $113,750 is included in stock-based compensation expense for

the year ended December 31, 2021.

October 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), and $113,750 is included in stock-based compensation expense for

the year ended December 31, 2021.

Company issued the foregoing securities in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act

of 1933, as amended, and/or Rule 506(b) promulgated thereunder, as there was no general solicitation to the investors and the transactions

did not involve a public offering.

have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable

Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend

on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of

There are no contractual restrictions on our ability to declare or pay dividends.

4 unchanged sentences

applicable to smaller reporting companies .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following is management’s discussion and analysis of certain significant factors that have affected our financial position

and operating results during the periods included in the accompanying consolidated financial statements, as well as information

relating 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-looking statements.

Such statements are subject to certain risks and uncertainties, including the

matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to

time, which could cause actual results or outcomes to differ materially from those projected.

Undue reliance should not be placed

on these forward-looking statements which speak only as of the date hereof.

We undertake no obligation to update these forward-looking

our financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets

and the satisfaction of liabilities in the normal course of business over a reasonable length of time, our auditors have raised

a substantial doubt about our ability to continue as a going concern.

Energy Solutions, Inc.

(the “Company,”

“we,”

“us”

or “our”) was originally incorporated

as Newmarkt Corp.

on July 17, 2015, under the laws of the State of Nevada.

October 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

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 filed Articles 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 purpose and effect of the filing of Articles of

Merger was to change the name of the Company from Ozop Surgical Corp.

to “Ozop Energy Solutions, Inc.”

Purchase Agreement

July 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 all of the outstanding shares of PCTI, from Chis in exchange for the issuance of 47,500 shares of the Company’s

Series C Preferred Stock, 18,667 shares of the Company’s Series D Preferred Stock, and 500 shares of the Company’s

Series E Preferred Stock to Chis.

The Acquisition is being accounted for as a business combination and was treated as a reverse

acquisition for accounting purposes with PCTI as the accounting acquirer in accordance with Financial Accounting Standards Board

Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”).

In accordance with the accounting

treatment for a reverse acquisition, the Company’s historical financial statements prior to the reverse merger were and

will be replaced with the historical financial statements of PCTI prior to the reverse merger, in all future filings with the

Securities and Exchange Commission (the “SEC”).

The consolidated financial statements after completion of the

reverse merger have and will include the assets, liabilities and results of operations of the combined company from and after

the closing date of the reverse merger.

designs, develops, manufactures and distributes standard and custom power electronic solutions.

PCTI serves clients in several

industries including energy storage, shore power, DEWs, microgrid, telecommunications, military, transportation, renewable energy,

aerospace and mission critical defense systems.

Customers include the United States military, other global military organizations

and many of the world’s largest industrial manufacturers.

All of its products are manufactured in the United States.

of the Company’s product scope and the high-power niche that their products occupy, the Company is aggressively targeting

the rapidly growing renewable and energy storage markets.

The Company’s mission is to be a global leader for high power

electronics with a standard of continued innovation.

Company utilized the Option Pricing Method (the “OPM”) to value the transaction.

The OPM method treats all equity

linked instruments as call options on the enterprise value, with exercise prices and liquidation preferences based on the terms

of the various common, preferred, options, warrants, and convertible debt.

Under this method, the common stock only has value

if the funds available for distribution to the shareholders exceed the liquidation preferences of the preferred stock and face

value of the convertible debt.

The timing of a liquidity event is required to utilize this method.

The OPM considers the various

terms of the stockholder agreements—including the level of seniority among the securities, dividend policy, conversion ratios,

and cash allocations—upon liquidation of the enterprise.

In addition, the method implicitly considers the effect of the

liquidation preference as of the future liquidation date, not as of the valuation date.

A feature of the OPM is that it explicitly

recognizes the option-like payoffs of the various share classes utilizing information in the underlying asset (that is, estimated

volatility) and the risk-free rate to adjust for risk by adjusting the probabilities of future payoffs.

The following table summarizes

the preliminary value of the consideration issued and the preliminary purchase price allocation of the fair value of assets acquired

and liabilities assumed in the transaction.

Purchase Price Allocation

Fair value of OZOP equity consideration issued

Assets acquired

Liabilities assumed

(11,612,618 )

Company reviews the goodwill allocated to each of our reporting units for possible impairment annually and whenever events or

changes in circumstances indicate the carrying amount may not be recoverable.

Pursuant to that review, management has determined

that the goodwill arising from the above transaction has been impaired and accordingly $11,201,145 has been recorded as an impairment

expense for the year ended December 31, 2020.

in the audited Consolidated Statements of Comprehensive Loss for the year ended December 31, 2020, are the results of Ozop, the

accounting acquiree, of revenues of $-0- and a loss before income taxes of $7,782,364.The following table provides unaudited pro

forma results of operations for the years ended December 31, 2020, and 2019, as if the acquisition had been consummated as of

the beginning of that period presented.

The pro forma results include the effect of certain purchase accounting adjustments, such

as the estimated changes in depreciation and amortization expense on the acquired intangible assets.

However, pro forma results

do not include any anticipated cost savings (if any) of the combined companies.

Accordingly, such amounts are not necessarily

indicative of the results if the acquisition has occurred on the date indicated, or which may occur in the future.

Unaudited pro forma results year ended December 31, 2020

Unaudited pro forma results year ended December 31, 2019

Loss before income taxes

(51,779,499 )

Basic and fully diluted loss per share

March 28, 2019, the Company filed a Certificate of Designation with the Secretary of State of Nevada to designate 1,000,000 shares

as Series B Preferred Stock.

The Series B Preferred Stock is not convertible into common stock, nor does the Series B Preferred

Stock have any right to dividends and any liquidation preference.

The Series B Preferred Stock entitles its holder to a number

of votes per share equal to 50 votes.

On April 1, 2019, the Company issued 1,000,000 shares of Series B Preferred Stock to the

Company’s former CEO and Director (resigned February 28, 2020).

The shares were valued at $68,000 of which $25,000 was applied

to accrued liabilities-related and $43,000 was recorded as stock-based compensation expense-related parties.

September 18, 2019, the Company filed a Certificate of Designation with the Secretary of State of Nevada to designate 50,000 shares

as Series C Preferred Stock.

Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof,

at any time after the date of issuance, into one share of fully paid and non-assessable share of common stock.

Each share of Series

C Preferred Stock shall entitle the holder thereof to ten thousand (10,000) votes on all matters submitted to a vote of the stockholders

of the Company.

September 19, 2019, the Company issued 50,000 shares of its Series C Preferred Stock to the Company’s former CEO (resigned

February 28, 2020) and Director, in consideration of the cancellation and return of 1,000,000 shares of the Company’s Series

B Preferred Stock.

On September 20, 2019, the Company filed a Certificate of Withdrawal

of Certificate of Designation (the “Certificate of Withdrawal”) for the Company’s Series B Preferred Stock,

pursuant to which the prior designation of the Company’s Series B Stock was cancelled.

October 29, 2019, the Company amended its’

Articles of Incorporation to increase the authorized shares of capital stock

to 2,500,000,000 shares, of which 2,490,000,000 have been designated as common stock, par value $0.001 and 10,000,000 shares have

been designated as Preferred Stock, par value $0.001.

The Preferred Stock shall be issuable in such series, and with such designations,

rights and preferences as the Board of Directors may determine from time to time.

December 26, 2019, the Company’s Board of Directors approved an amendment to the Company’s amended and restated certificate

of incorporation to effect a 1-for-1,000 reverse stock split of the Company’s common stock.

The reverse stock split became

effective on February 10, 2020.

The par values and the authorized shares of the Company’s common stock and convertible preferred

stock were not adjusted as a result of the reverse stock split.

All common stock, stock options and per share amounts in the financial

statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split.

December 30, 2019, the Company amended its’

Articles of Incorporation to increase the authorized shares of capital stock

to 5,000,000,000 shares, of which 4,990,000,000 have been designated as common stock, par value $0.001 and 10,000,000 shares have

been designated as Preferred Stock, par value $0.001.

The Preferred Stock shall be issuable in such series, and with such designations,

rights and preferences as the Board of Directors may determine from time to time.

July 7, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s

Series C Preferred Stock.

Under the terms of the Amendment to Certificate of Designation of Series C Preferred Stock, 50,000 shares

of the Company’s preferred remain designated as Series C Preferred Stock.

The holders of Series C Preferred Stock have no

conversion rights and no dividend rights.

For so long as any shares of the Series C Preferred Stock remain issued and outstanding,

the Holder thereof, voting separately as a class, shall have the right to vote on all shareholder matters equal to sixty-seven

(67%) percent of the total vote.

On July 10, 2020, pursuant to the SPA with PCTI, the Company issued 47,500 shares of Series C

preferred Stock to Chis.

As of December 31, 2020, there were 50,000 shares of Series C Preferred Stock issued and outstanding,

of which 2,500 are issued to Mr.

July 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series D Preferred

Under the terms of the Certificate of Designation of Series D Preferred Stock, 20,000 shares of the Company’s preferred

stock have been designated as Series D Convertible Preferred Stock.

The holders of the Series D Convertible Preferred Stock shall

not be entitled to receive dividends.

The holders as a group may, at any time convert all of the shares of Series D Convertible

Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued

and outstanding shares of common stock of the Company on the date of conversion, by 3.

Except as provided in the Certificate of

Designation or as otherwise required by law, no holder of the Series D Convertible Preferred Stock shall be entitled to vote on

any matter submitted to the shareholders of the Company for their vote, waiver, release or other action.

The Series D Convertible

Preferred Stock shall not bear any liquidation rights.

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 August 28, 2020.

Pursuant to Mr.

Conway’s employment agreement, the Company

issued 1,333 shares of Series D Preferred Stock to Mr.

As of December 31, 2020, there were 20,000 shares of Series D Preferred

Stock issued and outstanding.

July 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series E Preferred

Under the terms of the Certificate of Designation of Series E Preferred Stock, 3,000 shares of the Company’s preferred

stock have been designated as Series E Preferred Stock.

The holders of the Series E Convertible Preferred Stock shall not be entitled

to receive dividends.

No holder of the Series E Preferred Stock shall be entitled to vote on any matter submitted to the shareholders

of the Corporation for their vote, waiver, release or other action, except as may be otherwise expressly required by law.

time, the Corporation may redeem 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 Act of 1933 or the laws of any state of the United States and may not be transferred without

such registration or an exemption from registration.

On July 10, 2020, pursuant to the SPA with PCTI, the Company issued 500 shares

of Series E preferred Stock to Chis, and on August 28, 2020.

Pursuant to Mr.

Conway’s employment agreement, the Company

issued 500 shares of Series E Preferred Stock to Mr.

As of December 31, 2020, there were 1,000 shares of Series E Preferred

Stock issued and outstanding.

of Operations for the years ended December 31, 2020 and 2019:

following discussion relates to the historical financial statements of PCTI for 2019, and through July 10, 2020.

July 11, 2020 the consolidated financial statements include the assets, liabilities and results of operations of PCTI and Ozop,

(the combined company from and after the closing date of the reverse merger).

the year ended December 31, 2020, the Company generated revenue of $1,411,432, compared to $492,128 for the year ended December

The increase in revenues is a result of a delay in 2019, by a customer in making a substantial change to the specification

and issuing a modification after the purchase order was released for production.

The project with revenues of approximately $578,000

was subsequently shipped in 2020.

operating expenses for the years ended December 31, 2020, and 2019, were $17,585,427 and $552,381, respectively.

The operating

expenses were comprised of:

Year ended December 31,

Management fees, related parties

Stock-based compensation

Salaries, taxes and benefits

Professional and consulting fees

Advertising and marketing

Rent and office expenses

General and administrative.

of the above amounts include expenses incurred by PCTI for the years ended December 31, 2020, and 2019, respectively, and expenses

incurred by Ozop for the period July 11, 2020 through December 31, 2020.

and management fees- related parties, includes compensation paid to our CEO and to the President of PCTI, our wholly-owned subsidiary.

Beginning on July 10, 2020, the President of PCTI is compensated $13,000 per month and the Company’s CEO monthly base compensation

Both the CEO and President are eligible for additional bonuses as approved by the Board of Directors of the Company.

For the year ended December 31, 2020, the Company’s CEO’s total compensation was $377,804 and PCTI’s President

was compensated $83,500.

based compensation for the year ended December 31, 2020, of $4,286,648, is related to 1,333 shares of Series D Preferred Stock issued

Conway on August 28, 2020, pursuant to

his employment agreement.

The Series D Preferred Stock is convertible in the aggregate into three times the number of shares of common

stock outstanding at the time of conversion.

Conway owns 6.67% of the issued and outstanding Series D Preferred Stock, and based

on the 3,107,037,634 shares outstanding on August 28, 2020, Mr.

Conway’s Preferred Stock is convertible into 621,253,401 shares

of common stock.

Based on the share price of the common stock on that date of $0.0065, the shares were valued at $4,286,648.

taxes and benefits increased for the year ended December 31, 2020, compared to the same period in 2019.

The increase was a result

of increased sales and administrative personnel at PCTI, in support of the increased revenues as well as personnel hired for additional

customer recruitment.

and consulting increased for the year ended December 31, 2020, compared to December 31, 2019.

The increase was due to accounting

and auditing expenses of PCTI, necessary in preparation of the transaction with Ozop, as well as expenses incurred beginning July

11, 2020, by Ozop for their public company filing requirements.

and marketing expenses increased for the year ended December 31, 2020, compared to December

The increase was related to marketing programs during 2020, including brand awareness programs for both PCTI

and office expense (including supplies, utilities and internet costs) increased for the year ended December 31, 2010 compared

to the year ended December 31, 2019.

The increase was the result of including in the current year, rent and office expense of

approximately$44,000 for Ozop beginning in July 2020, and an increase of approximately $39,000 for PCTI for the year ended December

2020, compared to December 31, 2019.

the year ended December 31, 2020, the Company had the following expenses charged to impairment:

● $11,201,145

for the impairment of goodwill related to the transaction between PCTI and Ozop.

impairment was calculated based on the balance of the assets acquired and the liabilities

assumed as of December 31, 2020.

for the impairment of license rights as management

has decided not to go forward with the use of the license rights of Spinus.

for the impairment of goodwill related to the transaction between Ozop and Spinus.

Income (Expenses)

expenses, net, for the years ended December 31, 2020, and 2019, was $2,904,600 and $56,591, respectively, and were as follows.

Interest expense

Amortization of debt discount

Loss on change in fair value of derivatives

Loss (gain) on extinguishment of debt

Total other expense, net

increase in other expense is primarily a result of amortization of debt discounts and losses on changes in fair values of derivatives

and interest expense on the convertible notes assumed by PCTI on July 10, 2020.

net loss for the year ended December 31, 2020, was $20,482,953, compared to $571,595 for the year ended December 31, 2019.

increases were primarily a result of impairment expenses of $11,526,303, stock compensation expense of $4,286,648, an increase in other

expenses of $2,847,909 as well as the operating results discussed above.

and Capital Resources

Currently, we have limited operating capital.

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.

be unable to obtain the additional capital required.

Our inability to generate capital or raise additional funds when required

will have a negative impact on our business development and financial results.

These conditions raise substantial doubt about

our ability to continue as a going 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’s plans in regard to these factors are discussed below and also

in Note 2 to the consolidated financial statements filed herein.

the year ended December 31, 2020, we primarily funded our business operations with $750,000 of proceeds received pursuant to an

agreement to provide future perpetual payments of 1.8% (as amended) of revenues, $1,553,000 of proceeds from the issuances of

$1,750,000 of promissory notes, $489,000 of proceeds from the issuances of $723,175 of convertible notes, $100,400 from the PPP

loan, $400,000 advance from affiliate and $42,420 received from shareholders.

Of the proceeds, $101,864 was used for repayment

of convertible notes and notes payable and $74,470 was paid back to shareholders.

of December 31, 2020, we had cash of $1,808,476 as compared to $27,382 at December 31, 2019.

As of December 31, 2020, we had current

liabilities of $6,885,845 (including $1,283,378 of non-cash derivative liabilities), compared to current assets of $2,177,792,

which resulted in a working capital deficit of $4,708,053.

The current liabilities are comprised of accounts payable, accrued

expenses, convertible debt, derivative liabilities and notes payable.

December 2019, a novel strain of coronavirus (COVID-19) emerged.

Because COVID-19 infections have been reported throughout

the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or

directives aimed at minimizing the spread of COVID-19.

The ultimate impact of the COVID-19 pandemic on the Company’s

operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence,

including the duration of the COVID-19 outbreak , new information which may emerge concerning the severity of the COVID-19

pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result

in an extended period of continued business disruption, and reduced operations.

Any resulting financial impact cannot be reasonably

estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations.

Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak

on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

the year ended December 31, 2020, net cash used in operating activities was $1,811,816 compared to $94,084 for the year ended

December 31, 2019.

For the year ended December 31, 2020, our net cash used in operating activities was primarily attributable to the

net loss of $20,482,953, adjusted by impairment charges of $11,526,303, stock-based compensation of $4,286,648, the non-cash expenses

of interest and amortization and depreciation of $2,498,966 and losses on the fair value changes in derivatives of $176,050.

of $378,723 in operating assets and liabilities and a gain on extinguishment of debt of $195,553 reduced the cash used in operating activities.

the year ended December 31, 2019, net cash used in operating activities of $94,084 was primarily attributable to the net loss

of $571,595, adjusted non-cash expenses of depreciation of $7,259, and net changes of $470,252 in operating assets and liabilities

reduced the cash used in operating activities.

the year ended December 31, 2020, the net cash provided by investing activities was $1,574,431, compared to $-0- for the

year ended December 31, 2019.

For the year ended December 31, 2020, the Company received proceeds of $750,000 pursuant to an obligation

to pay a perpetual 1.8% (as amended) fee of revenues, acquired $470,849 cash and $400,000 advance from affiliate.

During the year

ended December 31, 2020, the Company purchased $46,418 of office furniture and equipment.

and repaid $74,470 to shareholders.

the year ended December 31, 2020, the net cash provided by financing activities was $2,018,486, compared to $73,912 for

the year ended December 31, 2019.

During the year ended December 31, 2020, we received $489,000 of proceeds from the issuances of convertible

note financings, $1,553,000 from the issuances of promissory notes, $100,400 from the Payroll Protection Program and $42,420

from shareholders.

During the year ended December 31, 2020, the Company repaid $101,864 of principal of convertible notes and notes

payable and $74,470 to shareholders.

the year ended December 31, 2019, the Company received $83,437 from shareholders and $1,409 from issuances of notes payable

and made payments on notes payable of $6,152 and paid $4,782 to shareholders.

Accounting Policies

significant accounting policies are described in more details in the notes to our financial statements appearing elsewhere in

this Annual Report on Form 10-K.

We believe the following accounting policies to be most critical to the judgement and estimates

used in the preparation of our financial statements:

of Presentation

accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the

United States of America (“US GAAP”).

The consolidated financial statements of the Company include

the consolidated accounts of the Company and its’

wholly owned subsidiaries;

PCTI, Ozop LLC, Ozop HK and Spinus.

All intercompany

accounts and transactions have been eliminated in consolidation.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures

of contingent assets 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.

assets primarily represent purchased patent and license rights.

The Company amortizes these costs over the shorter of the legal

life of the patent or its estimated economic life using the straight-line method.

The Company evaluates long-lived assets for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability

of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted cash flows

to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured as the

amount by which the carrying amount of the assets exceeds the fair value of the assets.

January 1, 2018, the Company adopted ASC 606 —

Revenue from Contracts with Customers.

Under ASC 606, the Company recognizes

revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following

(1) identify the contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the

transaction price;

(4) allocate the transaction price to each performance obligation in the contract;

and (5) recognize revenue

when each performance obligation is satisfied.

For the comparative periods, revenue has not been adjusted and continues to be

reported under ASC 605 —

Revenue Recognition.

Under ASC 605, revenue is recognized when the following criteria are met:

(1) persuasive evidence of an arrangement exists;

(2) the performance of service has been rendered to a customer or delivery has

(3) the amount of fee to be paid by a customer is fixed and determinable;

and (4) the collectability of the fee is reasonably

There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the years ended

December 31, 2020, and 2019.

(Loss) Per Share

Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.”

ASC 260 requires presentation

of both basic and diluted earnings per share (EPS) on the face of the statement of operations.

Basic EPS is computed by dividing

net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using

the treasury stock method, and convertible notes and stock warrants, using the if-converted method.

In computing diluted EPS,

the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of

stock options, warrants and conversion of convertible notes.

Diluted EPS excludes all dilutive potential common shares if their

effect is anti-dilutive.

BALANCE SHEET ARRANGEMENTS

have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk

support and credit risk support or other benefits.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

required for smaller reporting companies.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements and Financial Statement Schedules appearing on pages F1-F30 of this annual report on Form 10-K.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity