Item 3. Legal Proceedings
ITEM
3. LEGAL PROCEEDINGS.
We
were 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 paid the Company $1,125,000 during the year ended December 31, 2024. In exchange, the
Company agreed to release all Defendants from the lawsuit and to deliver 11 containers of solar panels. Upon the receipt of the $1,125,000
and the delivery of the 11 containers, and pursuant to the Settlement, the Company recorded sales of $728,640, a credit of $125,000 to
legal expense and for the year ended December 31, 2024, recorded a gain on litigation settlement of $271,360.
Other
than the above, we know of no legal proceedings to which we are a party or to which any of our property is the subject, which are pending,
threatened or contemplated or any unsatisfied judgments against the Company.
ITEM
4. MINE SAFETY DISCLOSURES.
Not
applicable.
10
PART
II
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