OZOP ENERGY SOLUTIONS, INC. 10-K

ITEM 2. PROPERTIES. On January 2, 2021, the Company entered into a ten (10) year lease for a 6-bay garage storage facility of approximately 2,500 square feet. Pursuant to the lease the Company agreed to issue 20,000 post reverse split (100,000,000 prior to the reverse split) shares of restricted common stock. The shares were certificated on March 8, 2021, with an effective date of January 2, 2021. The Company valued the shares at $31.50 post reverse split ($0.0063 prior to the reverse split) per share (the market value of the common stock on the date of the agreement) and had initially recorded $630,000 as a prepaid expense. On September 6, 2022, the Company was assigned the title to a property located at 55 Ronald Reagan Blvd, Warwick, NY 10990, in exchange for the 20,000 post reverse split (100,000,000 prior to the reverse split) shares of common stock that were issued to the building owner in January 2021. The Company also entered into a free one-year Maintenance Agreement. The Company allocated $30,000 of the prepaid expense to the Maintenance Agreement and amortized the $30,000 over the one-year term. The Deed was recorded in the name of the Company on October 4, 2022. The Company reclassed the remaining $600,000 as a fixed asset and credited prepaid expense. During the year ended December 31, 2025, the Company sold its building to an entity controlled by the Company’s CEO. The sale price was $600,000 and the Company received $100,000 in cash and the buyer forgave $500,000 of related party accrued and unpaid management fees owed to the CEO (see Note 8). The Company recorded a gain on the sale of the building to a related party of $86,250, which is included in the Statement of Operations for the year ended December 31, 2025. After the building was sold to the related party, the Company leased back the building from the same related party in September 2025 for a three-year lease with a monthly lease payment of $5,000 beginning on September 1, 2026, which was accounted for as a sale and leaseback transaction (see Note 12). 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 began on June 1, 2021, and increase by approximately 2.4% annually thereafter. On February 22, 2023, with an effective date of March 1, 2023, the Company entered into a 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.