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.
9
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.
PART II
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