OZOP ENERGY SOLUTIONS, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures A review and evaluation was performed by the Company’s management, including the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as of the end of the period covered by this annual report on Form 10-K, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report. Based on that review and evaluation, the CEO and CFO have concluded that as of December 31, 2023, disclosure controls and procedures were not effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required in the application of SEC rules and forms. 17 Management’s Report on Internal Controls over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of our assets; ● Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our CEO and CFO have evaluated the effectiveness of our internal control over financial reporting as described in Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report based upon criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). As a result of this evaluation, we concluded that our internal control over financial reporting was not effective as of December 31, 2023, as described below. We assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses: Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting. Inadequate Segregation of Duties : We have an inadequate number of personnel to properly implement control procedures. Lack of Audit Committee: We do not have a functioning audit committee, resulting in lack of independent oversight in the establishment and monitoring of required internal controls and procedures. We are committed to improving the internal controls and will (1) consider using third party specialists to address shortfalls in staffing and to assist us with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing additional outside directors and audit committee members in the future. We have discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of these material weaknesses, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report. 18 Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. ITEM 9B. OTHER INFORMATION None. OFF BALANCE SHEET ARRANGEMENTS PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Identification of directors and executive officers . The names and ages of our directors and executive officers are set forth below. Also included is their principal occupation(s). Our By-Laws provide for up to four directors. All directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders 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 Brian P. Conway, the Chief Executive Officer and Interim Chief Financial Officer brings 20 years of proven success in marketing and business development for both private and publicly traded companies. Starting off in database management and sales for Venture Direct on Madison Avenue, he crossed over to Wall Street as a co-founder of Waypoint Capital Partners. During this time, he was responsible for national sales, marketing, business and product development, national account customers, and new business relations with international and US companies 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.). His relationships and experience with investment bankers, non-dilutive financing, and public relations should be instrumental in moving the Company forward. Family Relationships None Involvement in Certain Legal Proceedings No director, executive officer, significant employee, or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years. Corporate Governance Our Board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our Board. Because we do not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and could be considered more form than substance. 19 Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees. As with 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 prospects to attract independent directors. When we are able to expand our Board to include one or more independent directors, we intend to establish an audit committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent, and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our Board. Code of Ethics We adopted a Code of Ethics for Senior Financial Management to promote honest and ethical conduct and to deter wrongdoing. This Code applies to our Chief Executive Officer and Chief Financial Officer and other employees performing similar functions. The obligations of the Code of Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally. Under the 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. Director Independence None of the members of our Board of Directors qualifies as an independent director in accordance with the published listing requirements of the 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 engaged in various types of business dealings with us. In addition, our Board has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. 20 In performing 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’s independent auditors; determines whether to retain or terminate the existing independent auditors; meets with the independent auditors and financial management of the Company to review the scope of the proposed audit and audit procedures on an annual basis; reviews and approves the retention of independent auditors for any non-audit services; reviews the independence of the independent auditors; reviews with the independent auditors and with the Company’s financial accounting personnel the adequacy and effectiveness of accounting and financial controls and considers recommendations for improvement of such controls; reviews the financial statements to be included in our annual and quarterly reports filed with the Securities and Exchange Commission; and discusses with the Company’s management and the independent auditors the results of the annual audit and the results of our quarterly financial statements. Our board 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 objectives relevant to the compensation of our executive officers, if any, and administers our equity incentive and stock option plans, if any. Each of our directors participates in the consideration of director nominees. In addition to nominees recommended by directors, our board will consider nominees recommended by shareholders if submitted in writing to our secretary. Our board believes that any candidate for director, whether recommended by shareholders or by the board, should be considered on the basis of all factors relevant to our needs and the credentials of the candidate at the time the candidate is proposed. Such factors include relevant business and industry experience and demonstrated character and judgment. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, persons who beneficially own more than 10% of a registered class of the Company’s equity securities, and certain other persons to file reports of ownership and 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 not believe that all of its directors, executive officers and greater than 10% beneficial owners complied with all such filing requirements during 2023. ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following 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. 21 Value of Initial Fixed $100 Investment Based on: Year Summary Compensation on Table Total for PEO Compensation Actually Paid to PEO Average Summary Compensation on Table Total for Non-PEO NEOs Average Compensation Actually Paid to Non-PEO NEOs Total Shareholder Return Total Shareholder Return of Peer Group Net Income (loss) 2023 $ 960,000 $ 960,000 $ - $ - -66.0 % N/A $ (7,369,681 ) 2022 $ 1,090,000 $ 1,090,000 $ - $ - -84.7 % N/A $ 6,025,812 2021 $ 3,662,099 $ 3,662,099 $ 141,666 $ 141,166 353.6 % N/A $ (195,047,946 ) 2023 OPTION GRANTS There were no options to purchase shares of our Common Stock issued and outstanding as of December 31, 2023, or December 31, 2022. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END There were no outstanding equity awards for the years ended December 31, 2023, and 2022. EXECUTIVE EMPLOYMENT AGREEMENTS On July 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, between the Company and Mr. Conway (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Conway received an initial annual salary of $120,000, for his position of CEO of the Company, payable monthly. Pursuant to the contract, Mr. Conway was issued 2,500 shares of Series C Preferred Stock, and on August 28, 2020, Mr. Conway was issued 1,333 shares of Series D Preferred stock and 500 shares of Series E Preferred Stock. Effective January 1, 2022, the Company entered into an employment agreement with Mr. Conway. Pursuant to the agreement, Mr. Conway received a $250,000 contract renewal bonus (included in the year ended December 31, 2022) and receives annual compensation of $240,000 from the Company and 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 compensation to $20,000 per month in January 2022, OES began compensating Mr. Conway $20,000 in March 2022, and OED began compensating Mr. Conway $20,000 per month beginning in April 2022. Other than the foregoing, currently, we do not have any written employment agreement or other formal compensation agreements with our officers and directors. Compensation arrangements are the subject of ongoing development, and we will make appropriate additional disclosures as they are further developed and formalized. DIRECTOR COMPENSATION Director Compensation Policies We have not compensated our directors for their service on our Board from our inception through December 31, 2023. There are no arrangements currently in place pursuant to which directors will be compensated in the future for any services provided as a director. 22 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows the beneficial ownership of the Company’s shares as of April 16, 2024, (unless otherwise noted) by (i) each person known by the Company to own beneficially more than 5% of the outstanding shares, (ii) each director and director nominee of the Company, (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 be acquired within 60 days of April 1, 2024, upon the exercise of stock options by employees or outside directors and shares of restricted stock. Unless otherwise indicated, each of the persons or entities listed below exercises sole voting and dispositive power over the shares that each of them beneficially owns. For the beneficial ownership of the stockholders owning 5% or more of the shares, the Company relied on publicly available filings and representations of 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 2,584,687,913 30.4 % Series C Preferred Stock 2,500 100.0 % Series D Preferred Stock 1,333 99.9 % (1) Percentages are based on 5,907,488,753 shares of the Company’s common stock, 2,500 shares of Series C Preferred Stock and 1,334 shares of Series D Preferred stock issued and outstanding as of April 16, 2024. The voting rights associated with the Series C Preferred Stock in the aggregate are equal to 67% of the total vote. Series C Preferred Stock has no conversion rights. Any holder may, at any time convert any number of shares of Series D Convertible Preferred Stock held by such holder 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 1.5 and dividing that number by the number of authorized shares of Series D Convertible Preferred Stock multiplied by 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 2,584,687,913 shares of common stock. Item 13. Certain Relationships and Related Transactions For the years ended December 31, 2023, and 2022, the Company recorded expenses to its officers of $960,000 and $1,090,000, respectively. Item 14. Principal Accountant Fees and Services The following is a summary of the fees billed to us by Prager Metis CPAs LLC, our independent registered public accounting firm, for professional services rendered for the fiscal years ended December 31, 2023, and 2022. 2023 2022 Audit Fees (1) $ 125,000 $ 87,500 Total Fees $ 125,000 $ 87,500 (1) Audit Fees are fees paid for professional services rendered for the audit of the Company’s annual consolidated financial statements, reviews of the Company’s interim consolidated financial statements and statutory audit requirements at certain non-U.S. locations. 23 PART IV Item 15. Exhibits, Financial Statement Schedules (a) 1. Financial Statements The financial statements and Reports of Independent Registered Public Accounting Firms are listed in the “Index to Financial Statements and Schedules” on page F-1 and included on pages F-2 to F-27. 2. Financial Statement Schedules All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein. 3. Exhibits (including those incorporated by reference). Exhibit No. Description 2.1 Share Exchange Agreement dated April 5, 2018 by and among Newmarkt Corp., the shareholders of Ozop Surgical, Inc., Ozop Surgical, Inc. and Denis Razvodovskij (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on April 19, 2018). 2.2 Stock Purchase Agreement dated June 26, 2020, by and among Ozop Surgical Corp., Power Conversion Technologies, Inc. and Catherine Chis (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 29, 2020). 2.3 Merger Agreement and Plan of Merger between Ozop Surgical Corp. and Ozop Surgical Name Change Subsidiary, Inc. (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on November 13, 2020). 3.1 Articles of Incorporation (Incorporated by reference to our General Form for Registration of Securities on Form S-1 filed on August 1, 2016) 3.2 Bylaws (Incorporated by reference to our General Form for Registration of Securities on Form S-1 filed on August 1, 2016) 3.3 Certificate of Amendment of Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on May 8, 2018 (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on May 14, 2018). 3.4 Certificate of Designations for Series B Preferred Stock. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on April 2, 2019). 3.5 Amended and Restated Bylaws of Ozop Surgical Corp. adopted on May 22, 2019. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on May 22, 2019). 3.6 Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on July 25, 2019. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on July 30, 2019). 3.7 Certificate of Designation of Series C Preferred Stock. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on September 24, 2019). 3.8 Certificate of Withdrawal of Series B Preferred Stock. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on September 24, 2019). 3.9 Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on October 29, 2019. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on October 31, 2019). 3.10 Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on December 30, 2020, (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on December 31, 2019) . 24 3.11 Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on January 21, 2020. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on February 7, 2020). 3.12 Amended and Restated Certificate of Designation of Series C Preferred Stock. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on February 5, 2020). 3.13 Amendment to Certificate of Designation of Series C Preferred Stock dated July 7, 2020 (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on July 10, 2020). 3.14 Certificate of Designation of Series D Preferred Stock dated July 7, 2020 (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on July 10, 2020). 3.15 Certificate of Designation of Series E Preferred Stock dated July 7, 2020 (Incorporated by reference to Exhibit 3.3 of the Current Report on Form 8-K filed on July 10, 2020). 3.16 Articles of Incorporation of Ozop Surgical Name Change Subsidiary, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on November 13, 2020). 3.17 Articles of Merger between Ozop Surgical Corp. and Ozop Surgical Name Change Subsidiary, Inc. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on November 13, 2020). 3.18 Amended and Restated Certificate of Designation Series D Preferred Stock dated July 27, 2021 (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on August 2, 2021). 3.19 Advisory agreement between Ozop Capital and RMA dated September 1, 2021 (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on September 2, 2021) 10.1 Binding Letter of Intent dated February 28, 2020, by and between Ozop Surgical Corp. and Power Conversion Technologies, Inc, and Catherine Chis, (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on February 28, 2020). 10.2+ Employment Agreement dated February 28, 2020, by and between Ozop Surgical Corp. and Brian Conway, (Incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on February 28, 2020). 31.1* Certification of Chief Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. + Management contract or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY Not applicable. 25 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Ozop Energy Solutions, Inc. By: /s/ Brian P. Conway Brian P. Conway Chief Executive Officer Date: April 12, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Brian P. Conway Brian P. Conway Chairman and Chief Executive Officer (principal executive officer) April 16, 2024 26 OZOP ENERGY SOLUTIONS, INC. COSOLIDATED FINANCIAL STATEMENTS Table of Contents Page Report of Independent Registered Public Accounting Firm (PCAOB ID # 237 ) F-2 Consolidated Balance Sheets as of December 31, 2023, and 2022 F-3 Consolidated Statements of Operations for the years ended December 31, 2023, and 2022 F-4 Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023, and 2022 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2023, and 2022 F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Ozop Energy Solutions, Inc. Opinion on the Consolidated Financial Statements We have 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 ended December 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 as of 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. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, as of December 31, 2023, the Company had an accumulated deficit of $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 Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ Prager Metis CPAs LLC We have served as the Company’s auditor since 2018 Hackensack, New Jersey April 16, 2024 F- 2 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 ) 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. F- 3 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. F- 4 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 ) OZOP ENERGY 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 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 OZOP ENERGY SOLUTIONS, INC. CONSOLIDATED STATEMENTS 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. F- 6 OZOP ENERGY SOLUTIONS, INC. Notes to Consolidated Financial Statements December 31, 2023 NOTE 1 - ORGANIZATION Business Ozop 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. On 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. On 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.” On December 11, 2020, the Company formed Ozop Energy Systems, Inc. (“OES”), a Nevada corporation and a wholly owned subsidiary of the Company. OES was formed to be a manufacturer and distributor of renewable energy products. On August 19, 2021, the Company formed Ozop Capital Partners, Inc. (“Ozop Capital”), a Delaware corporation and a wholly owned subsidiary of the Company. Brian Conway was appointed as the sole officer and director of Ozop Capital and has voting control of Ozop Capital. On October 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. On February 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiary of the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design support for lighting and solar projects 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 will provide customers systems to coordinate the understanding of electrical usage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs. We work with 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 shall be authorized as common shares and 10,000,000 shall be authorized as preferred shares. The Company filed the Amendment with the State of Nevada on June 23, 2023. NOTE 2 – GOING CONCERN AND MANAGEMENT’S PLANS The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2023, the Company had an accumulated deficit of $ 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 the issuance of these financial statements. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. F- 7 Management’s Plans As a 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. On April 4, 2022, the Company, and GHS Investments LLC (“GHS”). signed a Securities Purchase Agreement (the “1 st GHS Purchase Agreement”) for the sale of up to Two Hundred Million ( 200,000,000 ) shares of the Company’s common stock to 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’s notice to GHS for the sale of the Company’s common stock. On April 8, 2022, the Company filed a Prospectus Supplement to the Registration Statement dated October 14, 2021, regarding the GHS Purchase Agreement. On October 17, 2022, the Company and GHS extended the Maturity Date 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 shares of 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 common stock. On January 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 conditions of the 2 nd GHS Purchase Agreement are similar to the terms and conditions of the 1 st GHS Purchase Agreement. As of December 31, 2023, the Company has sold GHS 71,717,774 shares of common stock for proceeds of $ 392,777 , net of offering costs. On May 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 the Company with up to $ 10,000,000 of funding upon effectiveness of a registration statement on Form S-1. Pursuant to the effectiveness of the registration statement on July 19, 2023, the Company has the right to deliver puts 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 the put, so long as such amount does not exceed 4.99% of the outstanding shares of the Company. Pursuant to the Financing Agreement, GHS and its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s common stock to GHS that would result in GHS’s beneficial ownership equalling more than 4.99% of the Company’s outstanding common stock. The price of each put share shall be equal to eighty percent (80%) of the lowest daily volume weighted average price of the Company’s common stock for the ten (10) consecutive trading days preceding the date on which the applicable put is delivered to 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 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 587,432,649 shares of common stock and received $ 1,230,043 net of offering costs. From January 1, 2024, through April 16, 2024, the Company sold GHS 425,975,373 shares of common stock for proceeds of $ 416,696 net of offering costs. OES operates in the renewable, electric vehicle (“EV”), energy storage and energy resiliency sectors. We are engaged in multiple business lines that include project development as well as equipment distribution. Our solar and energy storage projects involve battery and solar photovoltaics (PV) installations. F- 8 Equipment Distributor: OES operates in the component supply/distribution side of the renewable, resiliency and energy storage industries distributing the core components associated with residential and commercial solar PV systems as well as onsite battery storage and power generation. 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 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 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 inventory in the facility. OES currently is focused on solar panel sales to other distributors and large installation companies. Modular Energy Distribution System: The Neo-Grid TM System comprises of the design engineering, installation, and operational methodologies as well as the financial arbitrage of how we produce, capture and distribute electrical energy for the EV markets. OES has acquired the license rights to the Neo-Grid TM System, a proprietary system (patent pending), for the capture and distribution of electrical energy for the EV market. The Neo-Grid TM System will serve both the private auto and the commercial sectors. The exponential growth of the EV industry has been accelerated by the recent major commitments of most of the major car manufacturers. Our Neo-Grid TM System leverages this accelerated growth by offering (1) charging locations that can be installed with reduced delays, restricted areas or load limits and (2) EV charger electricity that is produced from renewable sources claiming little to no carbon footprint. OES has developed a business plan for the Neo-Grid TM System for the distribution of electrical energy providing a solution to the inevitable stress to the existing grid infrastructure. The Company has completed its’ research and development of the Neo-Grid TM System as well as completed the first set of engineered technical drawings. This first stage of the engineered technical drawings 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 on auto manufacturers establishing standardizations of the actual charging/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. As the market growth rate of EV’s continues to rise, the stress on the existing grid-tied infrastructure shows the need for the continued development of our Neo-Grid TM System solution. Ozop Plus markets vehicle service contracts (“VSC’s”) for electric vehicles (EV’s) that offer consumers to be able to purchase additional months and miles above the manufacturer’s warranty and to also bring added value to EV owners by utilizing our partnerships and strengths in the energy 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 vehicles experience. Management believes that the Ozop Plus marketed VSC’s will give “peace of 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- 9 ● 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 On February 25, 2022, the Company formed Ozop Engineering and Design, Inc. (“OED”) a Nevada corporation, as a wholly owned subsidiary of the Company. OED was formed to become a premier engineering and lighting control design firm. OED offers product and design support for lighting and solar projects with a focus on fast lead times and technical support. OED and our partners offer the resources needed for lighting, solar and electrical design projects. OED will provide its’ customers systems to coordinate the understanding of electrical usage with the relationship between lighting design and lighting controls, by developing more efficient ecofriendly designs by working with architects, engineers, facility managers, electrical contractors, and engineers. OED is developing a product branded OZOP ARC. OZOP ARC is an advanced lighting controls system, intricately engineered to integrate sophisticated wired and wireless technologies. At its core, it employs a hybrid network topology that facilitates both resilient wired connections and flexible wireless communications, making it suitable for complex infrastructural environments. The system is equipped with an array of sensors and control nodes, enabling precise light management and energy usage monitoring. With support for protocols such as DALI and Zigbee, alongside the capability for seamless integration with IoT platforms, OZOP ARC offers a comprehensive solution for intricate lighting networks. This system is designed not just for control and efficiency, but also for adaptability to diverse architectural and electrical layouts, embodying a technical solution for advanced, energy-conscious lighting management. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The 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 include the accounts of the Company and the Company’s wholly owned subsidiaries Ozop Energy Systems, Inc., 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. Use of Estimates The 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. F- 10 Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits. The Company has no cash equivalents at December 31, 2023, and 2022. Sales Concentration and credit risk Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 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 % $ - Accounts Receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is 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 Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs consist of finished goods. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and other such issues. Based on current market conditions related to solar panels including but not limited to reduced selling prices in the industry and the abundance of inventory supply in the market, management determined that the net realizable value of certain of the Company’s inventory required a lower of cost or market adjustment of $ 1,495,978 to 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. Purchase concentration OES purchases finished renewable energy products from its’ suppliers. For the year ended December 31, 2023, there was one supplier that 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 vendors requires 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 cannot buy direct, it may have a material negative effect on our business. F- 11 Property, plant, and equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts 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 Revenue Recognition The Company recognizes revenue in accordance with ASC 606, from the commercial sales of products by: (1) identify the contract (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 performance obligation is 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 shipping terms. For 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. Any advance payments are recorded as current liability until revenue is recognized. For the 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. The following table disaggregates our revenue by major source for the years ended December 31, 2023, and 2022: SCHEDULE OF 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 Revenues from sourced and distributed products are purchased from suppliers as finished goods and the Company currently brings the finished goods into a third-party warehouse to fill orders as well as to build inventory for future sales orders. Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the years ended December 31, 2023, and 2022, the Company recorded advertising and marketing expenses of $ 64,616 and $ 51,441 , respectively. Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. For the years ended December 31, 2023, and 2022, the Company recorded $ 6,865 and $- 0 - of research and development expenses, respectively. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. F- 12 Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of this note transaction and the effective conversion price embedded in this note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. Discontinued Operations In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations , a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meet the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities 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 continuing operations. On September 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinued operation. Accordingly, the operating results of PCTI are reported as net income (loss) from discontinued operations in the accompanying consolidated financial statements for the years ended December 31, 2023, and 2022. For additional information, see Note 14- Discontinued Operations. Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company 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 of its equity shares. Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument 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 the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Our CEO and Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company, without the need to call a general meeting of common shareholders of the Company. F- 13 Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. Subsequent Measurement – Financial Instruments Classified as Liabilities The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses). Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: ● Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. ● Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. From time to time, certain of the Company’s embedded conversion features on debt and outstanding warrants have been treated as derivative liabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instruments if exercised. In this case, the Company utilized the latest inception date sequencing method to reclassify outstanding instruments as derivative instruments. These contracts were recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled. The carrying 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 values because of the short maturity of these instruments. The following table represents the Company’s derivative instruments that are measured at fair value on a recurring basis as of December 31, 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- 14 Leases The Company accounts for leases under ASU 2016-02 (see Note 13), applying the package of practical expedients to leases that commenced before the 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 contracts entered 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 obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Operating lease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company used an incremental borrowing rate of 7.5 %, for the existing lease, based on the information available at the adoption date in determining the present value of future payments. Operating lease expense is recognized pursuant to on a straight-line basis over the lease term and is included in rent in the consolidated statements of operations. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. Segment Policy The Company has no reportable segments as it operates in one segment; renewable energy. Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2023, and 2022, the Company’s dilutive securities are convertible into approximately 9,749,983,678 and 8,332,973,619 , respectively, shares of common stock. The following table represents 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 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- 15 Recent Accounting Pronouncements In August 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 Convertible Instruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in 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. Other than the above, there have been no recent accounting pronouncements or changes in accounting pronouncements during the period ended December 31, 2023, that are of significance or potential significance to the Company. NOTE 4 – PROPERTY AND EQUIPMENT The following 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 Depreciation expense was $ 94,878 and $ 66,027 for the years ended December 31, 2023, and 2022, respectively. NOTE 5 - CONVERTIBLE NOTES PAYABLE On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due 15% convertible note issued by the Company on September 13, 2017. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $ 25,000 . NOTE 6 – DERIVATIVE LIABILITIES The Company determined the conversion feature of the convertible notes, which all contain variable conversion rates, represented an embedded derivative since the notes were convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. At any given time, certain of the Company’s embedded conversion features on debt and outstanding warrants may be treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 815-15-25 which provides guidance for contracts that permit 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 upon the latest maturity date. F- 16 The Company valued the derivative liabilities at December 31, 2023, and 2022, at $ 1,216,078 and $ 4,314,270 , respectively. For the derivative liability associated with convertible notes, the Company used the Monte Carlo simulation valuation model with 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 60,000,000 warrants in conjunction with the extension of a note payable. The Company recorded a discount to notes payable of $ 113,921 with the offset to derivative liabilities for the initial fair value of the warrants based on the Black-Scholes option pricing model. The following assumptions were utilized in the initial 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 375,000,000 warrants in conjunction with the extension of certain notes payable. The Company recorded a discount to notes payable of $ 2,550,000 with the offset to derivative liabilities for the initial fair value of the warrants based on the Black-Scholes option pricing model. The following assumptions were utilized in the initial 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 . The following assumptions were utilized in the Black-Scholes valuation of outstanding warrants as of December 31, 2023, and 2022, risk free interest 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 exercise prices of $ 0.0019 to $ 0.15 . A summary 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 NOTE 7 – NOTES PAYABLE The Company 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- 17 On November 11, 2022, the Company entered into a non-interest bearing, $ 3,020,000 face value promissory note with a third-party lender with scheduled weekly payments and a maturity date of March 31, 2023 . In exchange for the issuance of the $ 3,020,000 note, inclusive of an original issue discount of $ 250,000 , and the reclass of $ 260,000 from accounts and accrued expenses the Company received proceeds of $ 2,510,000 on November 11, 2022, from the lender. For the year ended December 31, 2022, amortization of the original issue discount of $ 68,182 was charged to interest expense. During the year ended December 31, 2022, the Company repaid $ 250,000 of the principal of the note. During the year ended December 31, 2023, the Company paid an additional $ 950,000 of 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 1,820,000 and as of December 31, 2022, $ 2,770,000 with 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 of the maturity date. On December 7, 2021, the Company entered into a 12 %, $ 3,300,000 face value promissory note with a third- party lender with a maturity date of December 7, 2022 . In exchange for the issuance of the $ 3,300,000 note, inclusive of an original issue discount of $ 300,000 , the Company received proceeds of $ 3,000,000 on December 13, 2021, from the lender. In conjunction with the note, the Company issued a warrant to purchase 75,000,000 shares of common stock at $ 0.039 per share (subject to adjustments) with an expiry date on the three- year anniversary of the note. For the year ended December 31, 2022, amortization of the costs of $ 283,250 , was charged to interest expense. The fair value of the warrant calculated by the Black- Scholes option pricing method of $ 2,982,815 has been recorded as an initial debt discount and an 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 interest rate was increased to 15 % per annum. The Company issued 75,000,000 warrants at an exercise price of $ 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-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, $ 255,000 and $ 42,500 , respectively, was charged to interest expense. As of December 31, 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. On March 17, 2021, the Company entered into a 12 %, $ 11,110,000 face value promissory note with a third- party lender with a maturity date of 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 lender costs of $ 110,000 the Company received proceeds of $ 10,000,000 on March 23, 2021, from the lender. In conjunction with the note, the Company issued a warrant to purchase 250,000,000 shares of common stock at $ 0.13 per share (subject to adjustments) with an expiry date on the three- year anniversary of the note. For the year ended December 31, 2022, amortization of the costs of $ 232,250 was charged to interest expense. The fair value of the warrant calculated by the Black- Scholes option pricing method of $ 33,248,433 has been recorded as an initial debt discount of $ 10,000,000 , interest expense of $ 23,248,433 and initial derivative liability of $ 33,248,433 . For the year 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 issued 250,000,000 warrants at an exercise price of $ 0.0067 and with an expiration of October 31, 2025 , in exchange for the extension. The warrants were 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 balance of this note was $ 11,110,000 with a carrying value of $ 10,401,667 and $ 9,551,667 , respectively, net of unamortized discounts of $ 708,333 and $ 1,558,333 , respectively. F- 18 On February 9, 2021, the Company entered into a 12 %, $ 2,200,000 face value promissory note with a third- party lender with a maturity date of February 9, 2022 . In exchange for the issuance of the $ 2,200,000 note, inclusive of an original issue discount of $ 200,000 the Company received proceeds of $ 2,000,000 on February 16, 2021, from the lender. In conjunction with the note, the Company issued a warrant to purchase 50,000,000 shares of common stock at $ 0.15 per share (subject to adjustments) with an expiry date on the three- year anniversary of the note. For the year ended December 31, 2022, amortization of the costs of $ 22,167 was charged to interest expense. The fair value of 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, amortization of the warrant discount of $ 221,667 , 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 issued 50,000,000 warrants at an exercise price of $ 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-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, $ 170,000 and $ 28,333 , respectively, was charged to interest expense. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $ 2,200,000 with a carrying value of $ 2,058,333 and $ 1,888,333 , respectively, net of unamortized discounts of $ 141,667 and $ 311,667 , respectively. On November 13, 2020, the Company entered into a 12 %, $ 1,000,000 face value promissory note with a third-party due November 13, 2021 . Principal payments shall be made in six instalments of $166,667 commencing 180 days from the issue date and continuing each 30 days thereafter for 5 months and the final payment of principal and interest due on the maturity date. The Company received proceeds of $ 890,000 on November 20, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $ 110,000 . In conjunction with this note, the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 125,000,000 shares of common stock at an exercise price of $ 0.008 , subject to adjustments and expires on the five -year anniversary of the issue date. The warrants issued 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 permitted by law . As of December 31, 2023, and 2022, the accrued interest is $ 615,452 and $ 375,452 , respectively. The Company is in discussions with the lender regarding the extension of the maturity date of this note. On November 6, 2020, the Company entered into a Settlement Agreement with the holder of $ 120,000 of convertible notes with accrued and unpaid interest of $ 8,716 and a $ 210,000 Promissory Noted dated June 23, 2020, with accrued and unpaid interest of $ 15,707 . The Company issued a 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 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 and expires on the five-year anniversary of the issue date. The Company analyzed the transaction and concluded that this was a modification to the existing debt. The investor exercised the warrant on January 14, 2021. On November 6, 2023, the maturity date of the note was extended to November 6, 2025 , and the interest rate was increased to 15 % per annum. The Company issued 60,000,000 warrants at 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 determined that this transaction was a modification of the existing note. For the year ended December 31, 2023, $ 8,701 was charged to interest expense. As of December 31, 2023, and 2022, the outstanding principal balance of this note was $ 389,423 with a carrying value of $ 284,203 and $ 389,423 , respectively, net of unamortized discount of $ 105,220 for the year ended December 31, 2023. F- 19 On August 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 instalments of $125,000 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principal and 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 into fully 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 days ending on the day preceding the conversion date. The Company received proceeds of $ 663,000 on August 25, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $ 87,000 . In conjunction with this Note, the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 122,950,819 shares of common stock at an exercise price of $ 0.0061 , subject to adjustments and expires on the five-year anniversary of the Issue Date. As of December 31, 2023, and 2022, the outstanding principal balance 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 the highest amount permitted by law . As of December 31, 2023, and 2022, the accrued interest is $ 270,247 and $ 180,247 , respectively. The Company is in discussions with the lender regarding the extension of the maturity date of this note. NOTE 8 – DEFERRED LIABILITY On September 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 due ninety (90) days after each calendar quarter, with the first payment due on or before March 31, 2021, for revenues for the quarter ending December 31, 2020. On February 26, 2021, the agreement was assigned to Ozop and on March 4, 2021, the note was amended, whereby in exchange for 175,000,000 shares of common stock, the royalty percentage was amended to 1.8 %. No payments have been made and the Company is in default of the agreement. On November 11, 2022, the third-party and the Company agreed to reduce the liability by $ 260,000 and add $ 260,000 to the promissory note issued on November 11, 2022. The deferred liability as of December 31, 2023, and 2022, on the consolidated balance sheet is $ 490,495 and $ 490,000 , respectively. NOTE 9 – RELATED PARTY TRANSACTIONS Employment Agreement On July 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, between the 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 entered into a new employment agreement with Mr. Conway. Pursuant to the agreement, Mr. Conway received a $ 250,000 contract renewal bonus and will receive annual compensation of $ 240,000 from the Company and 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 compensation to $ 20,000 per month in January 2022, OES began compensating Mr. Conway $ 20,000 in March 2022, and OED began compensating Mr. Conway $ 20,000 per month beginning in April 2022. Management Fees and related party payables For the 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- 20 NOTE 10 – COMMITMENTS AND CONTINGENCIES Agreements On September 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 coordinating Ozop Capital’s participation in a captive insurance company. RMA will coordinate legal, accounting, tax, actuarial and other services necessary to implement the Company’s participation in a captive insurance company, including, but not limited to, the preparation of an actuarial feasibility study, filing of all required regulatory applications, domicile selection, structural selection, and coordination of 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 stock became due on October 29, 2021, upon the issuance of the captive insurance company’s certificate of authority from the state of Delaware. The Company has paid the $ 25,000 balance and recorded 637,755 shares of common stock to be issued. On April 13, 2021, the Company agreed to engage PJN Strategies, LLC (“PJN”) as a consultant. Pursuant to the agreement, the Company agreed to compensate PJN $ 20,000 per month. Effective September 1, 2021, a new agreement was entered into between PJN and Ozop Capital. Pursuant to the terms of the one-year agreement Ozop Capital agreed to compensate PJN $ 84,000 per month. For the years ended December 31, 2023, and 2022, the Company recorded $- 0 - and $ 756,000 , respectively, of consulting expenses. On March 30, 2021, OES hired 2 individuals as Co-Directors of Sales. Pursuant to their respective offers of employment, the Company agreed to 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 stock upon the execution of the agreements and every 90 days thereafter for the first year as long as the employee is still employed. The Company valued 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, the Company 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 of the Co-Directors the 2,500,000 shares due after the first one hundred eighty days of employment. The shares were valued at $ 0.0445 per share (the market price of the common stock on the date of the issuance). On January 14, 2022, the Company issued each of the Co-Directors their 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 the issuance), and $ 135,000 is included in stock-based compensation expense for the year ended December 31, 2022. One of the individuals resigned on January 24, 2022, and the other was terminated for cause on November 3, 2022. On March 15, 2021, the Company entered into a consulting agreement with Aurora Enterprises (“Aurora”). Mr. Steven Martello is a principal of Aurora. Pursuant to the agreement Mr. Martello will provide strategic analysis regarding existing markets and revenue streams 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 Aurora or their designee 5,000,000 shares of restricted common stock. The shares were issued in April 2021. Aurora designated the shares to be issued to Pegasus Partners, Inc. The Company valued the shares at $ 0.1392 per share (the market price of the common stock on the date of the agreement). Effective September 30, 2022, Mr. Martello was no longer providing consulting services to the Company. For the years ended December 31, 2023, and 2022, the Company has recorded $- 0 - and $ 90,000 , respectively. F- 21 On January 6, 2021, the Company entered into a consulting agreement with Ezra Green to begin on February 8, 2021. The Company agreed to issue 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 $ 0.0076 per 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. Effective June 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. On March 4, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with Salman J. Chaudhry, pursuant to which the Company agreed to pay Mr. Chaudry $ 227,200 (the “Outstanding Fees”) in certain increments as set forth in the Separation Agreement. As of December 31, 2023, and 2022, the balance owed Mr. Chaudhry is $ 162,085 . On September 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 common stock, 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. Legal matters We know of no material, existing or pending legal proceedings against our Company. We are involved as a plaintiff in a Complaint filed in the SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO NORTH COUNTY (the “Complaint”) on November 14, 2022 . The Complaint alleges that former employees would place an order from 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 from OZOP – to the benefit of Defendants and to the detriment of OZOP, their employer at the time. The Complaint further alleges that the former employees falsely represented that the price the customer was obtaining from other suppliers and therefore was willing to pay for OZOP product decreased, which allowed them to use the customer to then sell additional product to OZOP’s customers at increasingly larger margins, thus further wrongfully enriching themselves to the detriment of their employer, OZOP. The lawsuit also alleges that the employees were also making false statements to Ozop’s customers regarding the financial condition of Ozop and the lack of module inventory. On April 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees and Your Home Solutions Corp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in the Complaint. Pursuant to the terms of the Settlement, the Defendants are to pay the Company $ 500,000 within 2 days of the Settlement (which was received as of April 5, 2024) and $ 625,000 on or before sixty (60) days from the Settlement, In exchange, the Company agreed to release all Defendants from the lawsuit upon the final and full payment of $ 1,125,000 and to deliver 11 containers of solar panels (see Note 17). There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. NOTE 11– STOCKHOLDERS’ EQUITY Common stock During the year ended December 31, 2023, the Company issued 710,238,051 shares of common stock and received net proceeds of $ 1,828,263 after issuance costs of $ 58,230 . During the year ended December 31, 2022, the Company issued 148,912,372 shares of common stock and received net proceeds of $ 1,141,514 after issuance costs of $ 35,822 . The Company also issued 5,000,000 shares of restricted common stock in the aggregate for services. F- 22 Preferred stock As of 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 Directors may determine from time to time. Series C Preferred Stock On 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. As of December 31, 2023, and 2022, there were 2,500 shares of Series C Preferred Stock issued and outstanding and the shares are held by Mr. Conway. Series D Preferred Stock On July 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 August 28, 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. On July 27, 2021, the Company filed with the Secretary of State of the State of Nevada an Amended and Restated Certificate of Designation of Series D Preferred Stock (the “Series D Amendment”). Under the terms of the Series D Amendment, 4,570 shares of the Company’s preferred stock will be designated as Series D Convertible Preferred Stock. The holders of the Series D Convertible Preferred Stock shall not be entitled to receive dividends. Any holder may, at any time convert any number of shares of Series D Convertible Preferred Stock held by such holder 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 1.5 and dividing that number by the number of authorized shares of Series D Convertible Preferred Stock and multiply that result by the number of shares of Series D Convertible Preferred Stock being converted. Except as provided in the Series D Amendment 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 28, 2021, the Company closed on a Stock and Warrant Purchase Agreement (the “Series D SPA”). Pursuant to the terms of Series D SPA, an investor in exchange for $ 13,200,000 purchased one share of Series D Preferred Stock, and a warrant to acquire 3,236 shares of Series D Preferred Stock. As of December 31, 2023, and 2022, there were 1,334 shares, respectively, of Series D Preferred Stock issued and outstanding and a warrant to purchase 3,236 shares of Series D Preferred Stock are outstanding as of December 31, 2023, and 2022. The warrant has a 15 - year term and Partial Warrant Lock Up and Leak-Out Period. The Holder may only exercise the Warrant and purchase Warrant Shares 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 15 th 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- 23 Series E Preferred Stock On July 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 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. At any 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. As of December 31, 2023, and 2022, there were - 0 - shares of Series E Preferred Stock issued and outstanding, respectively. NOTE 12 – NONCONTROLLING INTEREST On August 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 presents interest held by noncontrolling interest holders within noncontrolling interest in the consolidated financial statements. On September 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. 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 December 31, 2023, and 2022, the accumulative noncontrolling interest is $ 784,777 , respectively. NOTE 13 - OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES On April 14, 2021, the Company entered into a five-year lease which began on June 1, 2021, for approximately 8,100 square feet of office and warehouse space in Carlsbad, California, expiring May 31, 2026. Initial lease payments of $ 13,148 begin on June 1, 2021, and increase by approximately 2.4 % annually thereafter. The interest rate used to determine the present value is our incremental borrowing rate, estimated to 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 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 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 inventory in the facility . In adopting Topic 842, the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect 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- 24 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 Operating lease 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 Maturity of 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 Company recorded $ 33,218 and $ 196,939 operating lease expense for the years ended December 31, 2023, and 2022, respectively. NOTE 14 – DISCONTINUED OPERATIONS On September 1, 2022, the BOD of the Company authorized the filing of a Chapter 7 proceeding which meets the definition of a discontinued operation. Accordingly, the operating results of PCTI are reported as a loss from discontinued operations in the accompanying consolidated financial statements for the years ended December 31, 2023, and 2022. On October 3, 2022, PCTI filed a Voluntary Petition for Non- Individuals Filing for Bankruptcy. On November 30, 2022, the Trustee filed a Notice of Abandonment of Estate Property, as it is over encumbered by the secured creditors. No objections were filed, and as such the inventory and equipment is now considered abandoned to the secured creditors to do with what they wish. In March 2023, the Trustee declared this a no-asset case and closed the bankruptcy. The results of operations of this component, for all periods, are separately reported as “discontinued operations”. A reconciliation of the major classes of line items constituting the income (loss) from discontinued operations, net of income taxes as is presented in the 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- 25 There are no assets as of December 31, 2023, and 2022, as the secured lender has taken possession. Liabilities of discontinued operations are separately reported as of December 31, 2023, and 2022. All liabilities are classified as current. The following tables present the reconciliation of carrying amounts of the major classes of liabilities of the Company classified as discontinued operations in the consolidated balance sheets at December 31, 2023, and 2022: Current liabilities 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 On May 16, 2022, Huntington National Bank (“Huntington”) filed a Complaint for Confession of Judgment (“COJ”) against Catherine 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 interest of $ 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, Huntington filed a COJ against Power Conversion Technologies, Inc (“PCTI”). The PCTI COJ for the LOC was for $ 354,774 and accrues per diem 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, Huntington assigned the PCTI judgment against PCTI to Meraki Advisors, LLC. (“Meraki”). The Company’s understanding is Meraki is a Pennsylvania limited liability company, controlled by Chis. The Company wrote off the book value of the inventory of $ 237,091 and fixed assets of $ 15,447 during the year ended December 31, 2022, with the offset to Loss on Disposal of Assets of Discontinued Operations. Included in the Current portion of notes payable are the principal balances of Huntington’s LOC of $ 344,166 and Term Loan of $ 134,681 . Accrued interest and fees on the LOC and Term Loan debt $ 54,256 is included in accounts payable and accrued liabilities. NOTE 15 - INCOME TAXES The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely- than not that some or all of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for the realization of deferred tax assets. Based upon the historical and anticipated future income, management has determined that the deferred tax assets do not meet the more-likely-than-not threshold for realizability. Accordingly, there is a full valuation allowance provided against the Company’s deferred tax assets as of December 31, 2023, and 2022. A reconciliation of the provision for income taxes determined at the U.S. statutory rate to the Company’s effective income tax rate is 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- 26 The Company 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 $ — $ — As of 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 income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the years ended December 31, 2023, and 2022, and no provision for interest and penalties is deemed necessary as of December 31, 2023, and 2022. NOTE 16 – LOSS ASSOCIATED WITH EARLY TERMINATION OF VENDOR AGREEMENT In November 2022, the Company issued a purchase order for 80 containers of solar panels to VSUN Solar USA, Inc. (“VSUN”), based solely on an order the Company received from a customer at that time. The Company had remitted a deposit to VSUN of $ 2,395,768 in November 2022. Because of market conditions that began to deteriorate in early 2023 in the residential solar PV market and VSUN’s refusal to negotiate a price that would enable Ozop to realize a profit on the order, the customer eventually cancelled the order in June 2023. VSUN had already shipped 40 containers out of total 80 containers to the US and the remaining 40 containers of products have not been produced by September 30, 2023. The general terms and conditions of the purchase order allowed Ozop 30 days free storage, and to be charged storage fees after the 30 days. On November 6, 2023, the Company and VSUN entered into a Termination Agreement (the “TA”) after negotiation. Pursuant to the TA, the parties agreed to cancel the remaining unpaid and/or not fully executed purchase orders the Company issued to VSUN, and to apply part of the vendor deposits (totaling $ 2,525,102 paid to VSUN) to unpaid storage fees of $ 556,884 and to a termination fee of $ 1,198,198 . The combined amount of storage fees and termination fee of $ 1,755,082 is classified separately as Loss associated with early termination of vendor agreement on the consolidated statements of operations for the year ended December 31, 2023. The remaining balance of the deposit of $ 770,020 is received on November 17, 2023. In addition, VSUN shall retain the above 40 containers of products in storage as a result of the early termination. The Company and VSUN shall not have any further obligations under the purchase orders which shall be terminated, and the Company shall have no liability to VSUN and VSUN shall have no liability to the Company as a result of or in connection with this termination. NOTE 17 – SUBSEQUENT EVENTS From January 1, 2024, through April 16, 2024, the Company sold GHS 425,975,373 shares of common stock for proceeds of $ 416,696 net of offering costs. On April 4, 2024, the Company executed a Settlement Agreement (the “Settlement”) with its former employees (see Note 10) and Your Home Solutions Corp (“YHS”). YHS and the former employees were all defendants (the “Defendants”) in the Complaint. Pursuant to the terms of the Settlement, the Defendants are to pay the Company $ 500,000 within 2 days of the Settlement (which was received as of April 5, 2024) and $ 625,000 on or before sixty (60) days from the Settlement, In exchange, the Company agreed to release all Defendants from the lawsuit upon the final and full payment of $ 1,125,000 and to deliver 11 containers of solar panels. The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements, except as stated herein. F- 27