What changed in this filing

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Item 3. Legal Proceedings

2025-04-15 compared with 2024-04-16 · 27 added, 26 removed, 3 unchanged (95% of the section changed)

LEGAL PROCEEDINGS.

November 14, 2022, Ozop Energy Systems, Inc.

filed a complaint in the Superior Court for County of San Diego, State of California, Ozop

Energy Systems, Inc.

Serna, et al ., Case No.

37-2022-00046102-CU-BT-NC, against five former employees, and a corporation owned

by two of those defendants, Your Home Solution Corp.

(“YHS”), which asserts claims for (1) fraud and deceit;

(2) breach of

duty of loyalty;

(3) intentional interference with prospective economic advantage;

(4) violation of Penal Code section 496;

(5) violation

of Business and Professions Code section 17200, et.

(6) and accounting.

The Complaint alleges that the individual defendants, while

working for Ozop Energy Systems, Inc., illegally diverted customers and profits that belonged to Ozop Energy Systems, Inc.

The Complaint

seeks damages in the form of past and future profits, restitution of compensation, and punitive damages.

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

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 (see Note 10) and Your Home Solutions Corp (“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 10 and Note 17).

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.

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.

MINE SAFETY DISCLOSURES.

Not applicable.

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

What changed 10-K

Item 3. Legal Proceedings