NOTE 2 – GOING CONCERN AND MANAGEMENT'S PLANS

The accompanying condensed 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 September
30, 2022, the Company had an accumulated deficit of $212,351,054 and a working
capital deficit of $23,000,162 (including derivative liabilities of $5,652,218).
As of September 30, 2022, the Company was in default of $15,369,247 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-6

In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because
COVID-19 infections have been reported throughout the United States, certain
federal, state and local governmental authorities have issued stay-at-home
orders, proclamations and/or directives aimed at minimizing the spread of
COVID-19. The ultimate impact of the COVID-19 pandemic on the Company's
operations is unknown and will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the duration of the
COVID-19 outbreak, new information which may emerge concerning the severity of
the COVID-19 pandemic, and any additional preventative and protective actions
that governments, or the Company, may direct, which may result in an extended
period of continued business disruption, and reduced operations. Any resulting
financial impact cannot be reasonably estimated at this time but it may have a
material adverse impact on our business, financial condition and results of
operations. Management expects that its business will be impacted to some
degree, but the significance of the impact of the COVID-19 outbreak on the
Company's business and the duration for which it may have an impact cannot

be
determined at this time.



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.

The Company is in negotiations with its' lenders related to the debt instruments
that are currently in default, to extend the maturity dates.

On October 14, 2021, the Company received a Notice of effectiveness related to
the Company's Form S-3 Registration Statement (the "Registration Statement").
Pursuant to the Registration Statement the Company may offer and sell from time
to time in one or more offerings of up to thirty million dollars ($30,000,000)
in aggregate offering price. We may offer these securities in amounts, at prices
and on terms determined at the time of offering.



On April 4, 2022, the Company and GHS Investments LLC ("GHS"). signed a
Securities Purchase Agreement (the "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. As of the date of this Report the Company has sold the
following securities pursuant to this Registration Statement:



On July 15, 2022, the Company sold 15,353,952 shares to GHS at $0.010285 and
received net proceeds of $152,732, after deducting transaction and broker fees
of $5,183.



On August 1, 2022, the Company sold 7,675,221 shares to GHS at $0.010965 and
received net proceeds of $81,451, after deducting transaction and broker fees of
$2,708.



On August 4, 2022, the Company sold 8,136,272 shares to GHS at $0.010965 and
received net proceeds of $86,405, after deducting transaction and broker fees of
$2,809.



On August 10, 2022, the Company sold 18,063,649 shares to GHS at $0.01088 and
received net proceeds of $191,577, after deducting transaction and broker fees
of $4,956.

On August 30, 2022, the Company sold 17,018,300 shares to GHS at $0.009435 and
received net proceeds of $156,331, after deducting transaction and broker fees
of $4,236.



F-7

On September 15, 2022, the Company sold 8,977,027 shares to GHS at $0.00918 and
received net proceeds of $79,736, after deducting transaction and broker fees of
$2,673.

On September 30, 2022, the Company sold 8,430,640 shares to GHS at $0.00816 and
received net proceeds of $66,393, after deducting transaction and broker fees of
$2,401.

On October 17, 2022, the Company sold 12,526,048 shares to GHS at $0.005865 and
received net proceeds of $70,971, after deducting transaction and broker fees of
$2,494.



OES is actively engaged 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 large-scale battery and solar photovoltaics
(PV) installations. Our utility-scale storage business model is based on an
arbitrage business model in which we install multiple 1+ megawatt batteries,
charge them with off-peak grid electricity under contract with the utility, then
sell the power back during peak load hours at a premium, as dictated by
prevailing electricity tariffs.



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 of 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. Royal's VSCs are now effective in 35 states and the others have

      various waiting times or approvals needed.




 ?    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




F-8

In April, 2022, OED began operations and has generated $38,100 of revenues and
currently has six employees in sales, marketing installation and services. OED
offers product and design support for lighting and solar projects with a focus
on fast lead times and technical support.



On September 1, 2022, the Board of Directors of the Company authorized PCTI to
file and prosecute to completion a Chapter 7 proceeding; that the best interest
of creditors and other interested parties will be served thereby. The President
of PCTI was authorized, empowered and directed, in the name of and on behalf of
PCTI to execute and verify the Petition for Relief under the Bankruptcy Code as
well as all other ancillary documents, and to cause the same to be filed in the
United States Bankruptcy Court for the Western District of Pennsylvania. The
Petition was filed on October 3, 2022; Case No. 22-21958-CMB.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial statements and with the
instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC.
Accordingly, they do not contain all information and footnotes required by
accounting principles generally accepted in the United States of America for
annual financial statements. In the opinion of the Company's management, the
accompanying unaudited condensed consolidated financial statements contain all
the adjustments necessary (consisting only of normal recurring accruals) to
present the financial position of the Company as of September 30, 2022, and the
results of operations and cash flows for the periods presented. The results of
operations for the three and nine months ended September 30, 2022, are not
necessarily indicative of the operating results for the full fiscal year or any
future period. These unaudited condensed consolidated financial statements
should be read in conjunction with the financial statements and related notes
thereto included in the Company's Current Report on Form 10-K/A filed on April
26, 2022.



The unaudited condensed consolidated financial statements include the accounts
of the Company and the Company's wholly owned subsidiaries; Ozop Energy Systems,
Inc. Ozop Engineering and Design, Inc., PCTI, Ozop Capital Partners, Inc., EV
Insurance Company, Inc., 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.



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 September 30, 2022, and December 31, 2021.

Sales Concentration and credit risk

Following is a summary of customer(s) who accounted for more than ten percent
(10%) of the Company's revenues for the three and nine months ended September
30, 2022, and 2021, and their accounts receivable balance as of September 30,
2022:

SCHEDULES OF CONCENTRATION OF RISK, BY RISK FACTOR

                                                                                                  Sales %
                                   Sales %              Sales %               Sales %              Nine             Accounts
                                    Three                 Nine                 Three              Months           receivable
                                    Months               Months               Months               Ended             balance
                               Ended September      Ended September       Ended September      September 30,      September 30,
                                   30, 2022             30, 2022             30, 2021              2021               2022
Customer A                                 77.5 %               44.5 %                 N/A               N/A     $       172,224




F-9






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 include finished
goods, material, labor and manufacturing overhead. 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. Finished goods inventories at September 30, 2022, and
December 31, 2021, were $1,197,883 and $788,110, respectively. As of September
30, 2022, the Company has on deposit with vendor(s) approximately $2,870,000 and
has a balance due of approximately $8,351,000. The remaining balance is
partially due when the vendor ships the product, with the final balance due

prior to delivery.



Purchase concentration



OES purchases finished renewable energy products from its' suppliers. For the
three months ended September 30, 2022, there was one supplier that accounted for
91.7%, and for the nine months ended September 30, 2022, there were four
suppliers that accounted for 34.9%, 27.2%, 11.3% and 11.2%, respectively. For
the three and nine months ended September 30, 2021, there were two suppliers
that accounted for 46.8% and 20.1% and 38 and 23.4%%, 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 30% balances due on shipment and 50% due prior to delivery, while other
vendors terms are due in full immediately prior to delivery. We also buy product
from other distributors, if we are not able to purchase direct from the
manufacturer. While management believes all of its relationships with its
vendors are good, 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

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 and building improvements 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.



F-10

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. Advance payments are typically required for commercial
customers and are recorded as current liability until revenue is recognized.
Advance payments are not required for government customers. The majority of
contracts typically require payment within 30 to 60 days after transfer of
ownership to the customer.

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 three and
nine months ended September 30, 2022 and 2021:

DISAGGREGATION OF REVENUE

                                      2022            2021             2022            2021
                                       Three months ended               Nine months ended
                                          September 30,                   September 30,
                                      2022            2021             2022            2021
Sourced and distributed products   $ 3,907,318     $ 4,716,607     $ 11,576,017     $ 5,971,589
OED Installations                       21,600               -           38,100               -
Total                              $ 3,928,918     $ 4,716,607     $ 11,614,117     $ 5,971,589

Revenues from sourced and distributed products are purchased from suppliers as
finished goods and the Company brings the finished goods into our California
warehouse to fill orders as well as to build inventory for future sales orders.
From time to time for some of our larger orders we may have our suppliers ship
directly to our customers to avoid extra shipping charges.

Advertising and Marketing Expenses

The Company expenses advertising and marketing costs as incurred. For the three
and nine months ended September 30, 2022, the Company recorded advertising and
marketing expenses of $8,045 and $13,233, respectively, and for the three and
nine months ended September 30, 2021, the Company recorded advertising and
marketing expenses of $9,487 and $20,263, respectively.



Research and Development

Costs and expenses that can be clearly identified as research and development
are charged to expense as incurred. For the three and nine months ended
September 30, 2022, and 2021, the Company did not record any research and
development expenses.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in
convertible instruments in accordance with ASC 815, Derivatives and Hedging
Activities.

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.



F-11






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 (see Note 2) 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 condensed consolidated
financial statements for the three and nine months ended September 30, 2022, and
2021. 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.



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).



F-12

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 the conversion features within the
instrument and that the company has 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, certain notes payable and notes payable - related party, 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 September 30, 2022, and
December 31, 2021, for each fair value hierarchy level:

SCHEDULE OF DERIVATIVE INSTRUMENTS

                      Derivative
September 30, 2022   Liabilities         Total
Level I              $          -     $         -
Level II             $          -     $         -
Level III            $  5,652,218     $ 5,652,218




                     Derivative
December 31, 2021   Liabilities         Total
Level I             $          -     $          -
Level II            $          -     $          -
Level III           $ 20,966,701     $ 20,966,701




Leases



The Company accounts for leases under ASU 2016-02 (see Note 14), 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.



F-13

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 condensed
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 September 30, 2022, and 2021, the Company's dilutive
securities are convertible into approximately 7,826,372,485 and 7,516,857,490,
respectively, shares of common stock. The following table represents the classes
of dilutive securities as of September 30, 2022, and 2021:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER
SHARE

                                                       September 30, 2022       September 30, 2021

Convertible preferred stock (1)                              7,059,027,462 

6,918,544,466

Unexercised common stock purchase warrants (1) (1) 672,024,518

            597,024,518
Convertible notes payable                                        6,529,409                1,288,506
Promissory note payable (1)                                     88,791,096                        -
 TOTAL                                                       7,826,372,485            7,516,857,490

(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.




F-14

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 no recent accounting pronouncements or changes
in accounting pronouncements during the period ended September 30, 2022, 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:

PROPERTY AND EQUIPMENT

                                      September 30, 2022       December 31, 2021
Office equipment                     $            214,454     $           157,370

Building and building improvements                771,278                  

-

Less: Accumulated Depreciation                    (84,361 )               (44,929 )
Property and Equipment, Net          $            901,371     $           112,441




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 1,000,000 shares of
common stock that were issued to the building owner in January 2021 (see Note
10). The Company valued the shares at $0.0063, (the market value of the common
stock on the date of the agreement) and initially recorded $630,000 as a prepaid
expense. The Deed was recorded in the name of the Company on October 4, 2022.
The Company recorded the $630,000 as fixed asset and credited the prepaid
expense. During the nine months ended September 30, 2022, the company expended
$141,278 in capital improvements.

Depreciation expense was $39,432 and $23,133 for the nine months ended September
30, 2022, and 2021, 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
September 30, 2022, and December 31, 2021, 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-15






The Company valued the derivative liabilities at September 30, 2022, and
December 31, 2021, at $5,652,218 and $20,966,701, respectively. For the
derivative liability associated with convertible notes, the Company used the
Monte Carlo simulation valuation model with the following assumptions as of
September 30, 2022, and December 31, 2021, risk free interest rates at 3.92% and
0.19%, respectively, and volatility of 70% and 92%, respectively. The following
assumptions were utilized in the Black-Scholes valuation of outstanding warrants
at September 30, 2022, and December 31, 2021, risk free interest rate of 4.11%
to 4.24%, and .48% to .99%, respectively, volatility of 109% to 310%, and 344%
to 366%, respectively, and exercise prices of $0.006 to $0.15.

A summary of the activity related to derivative liabilities for the nine months
ended September 30, 2022, is as follows:

SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE

                                                                  Derivative
                                                                  liabilities
                                               Derivative         associated
                                              liabilities            with               Total
                                            associated with       convertible        derivative
                                                warrants             notes           liabilities
Balance December 31, 2021                   $     20,938,755     $      27,946     $    20,966,701
Change in fair value                             (15,315,297 )             814         (15,314,483 )
Balance September 30, 2022                  $      5,623,458     $      28,760     $     5,652,218




NOTE 7 - NOTES PAYABLE

The Company has the following note payables outstanding:

SCHEDULE OF NOTES PAYABLE

                                                    September 30, 2022       December 31, 2021


Notes 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
18%, matures November 6, 2023                                   389,423                 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
12%, matures October 31, 2024, net of discount
of $243,833 (2021)                                            2,200,000    

1,956,167

Note payable $11,110,000 face value, interest at
12%, matures October 31, 2024 (as amended), net
of discount of $2,314,583 (2021)                             11,110,000    

8,795,417

Note payable $3,300,000 face value, interest at
12%, matures October 31, 2024, net of discount
of $637,412 (2022) and $3,099,524 (2021)                      2,662,588    

            200,476
Sub- total notes payable                                     17,832,011              12,811,483
Less long-term portion                                          389,423                 389,423
Current portion of notes payable, net of
discount                                           $         17,442,588     $        12,422,060

On December 7, 2021, the Company entered into a 12%, $3,300,000 face value
promissory note with a third- party lender with an initial maturity date of
December 7, 2022. On October 31, 2022, the lender agreed to extend the maturity
date to October 31, 2024. The Company agreed to increase the interest rate to
15% and to issue a warrant to purchase 75,000,000 shares of common stock at
$0.0067 per share with an expiry date of October 31, 2025. 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 nine months ended September 30, 2022, amortization of the costs of $225,000
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 and an initial derivative liability of $2,982,815. For the nine
months ended September 30, 2022, amortization of the warrant discount of
$2,337,111 was charged to interest expense. As of September 30, 2022, and
December 31, 2021, the outstanding principal balance of this note was $3,300,000
with a carrying value of $2,662,588 and $200,476, respectively, net of
unamortized discounts of $637,412 and $3,099,524, respectively.



F-16






On March 17, 2021, the Company entered into a 12%, $11,110,000face value
promissory note with a third- party lender with an initial maturity date of
March 17, 2022. On October 31, 2022, the lender agreed to extend the maturity
date to October 31, 2024. The Company agreed to increase the interest rate to
15% and to issue a warrant to purchase 250,000,000shares of common stock at
$0.0067per share with an expiry date of October 31, 2025. This note is now in
default. In exchange for the issuance of the $11,110,000note, inclusive of an
original issue discount of $1,000,000and lender costs of $110,000the Company
received proceeds of $10,000,000on March 23, 2021, from the lender. In
conjunction with the note, the Company issued a warrant to purchase
250,000,000shares of common stock at $0.13per share (subject to adjustments)
with an expiry date on the three- year anniversary of the note. For the nine
months ended September 30, 2022, amortization of the costs of $231,250was
charged to interest expense. The fair value of the warrant calculated by the
Black- Scholes option pricing method of $33,248,433has been recorded as an
initial debt discount of $10,000,000, interest expense of $23,248,433and initial
derivative liability of $32,248,433. For the nine months ended September 30,
2022, amortization of the warrant discount of $2,083,333was charged to interest
expense. As of September 30, 2022, and December 31, 2021, the outstanding
principal balance of this note was $11,110,000with a carrying value of
$11,100,000and $8,795,417, respectively, net of unamortized discounts of
$2,314,583as of December 31, 2021. As of September 30, 2022, and December 31,
2021, the accrued interest is $2,019,889and $1,033,687, respectively.



On February 9, 2021, the Company entered into a 12%, $2,200,000face value
promissory note with a third- party lender with an initial maturity date of
February 9, 2022. On October 31, 2022, the lender agreed to extend the maturity
date to October 31, 2024. The Company agreed to increase the interest rate to
15% and to issue a warrant to purchase 50,000,000shares of common stock at
$0.0067per share with an expiry date of October 31, 2025. This note is now in
default. In exchange for the issuance of the $2,200,000note, inclusive of an
original issue discount of $200,000the Company received proceeds of $2,000,000on
February 16, 2021, from the lender. In conjunction with the note, the Company
issued a warrant to purchase 50,000,000shares of common stock at $0.15per share
(subject to adjustments) with an expiry date on the three- year anniversary of
the note. For the nine months ended September 30, 2022, amortization of the
costs of $22,167was charged to interest expense. The fair value of the warrant
calculated by the Black- Scholes option pricing method of $17,659,506has been
recorded as an initial debt discount of $2,000,000, interest expense of
$15,659,506and initial derivative liability of $17,659,506. For the nine months
ended September 30, 2022, amortization of the warrant discount of $221,667was
charged to interest expense. As of September 30, 2022, and December 31, 2021,
the outstanding principal balance of this note was $2,200,000with a carrying
value as of December 31, 2021, of $1,956,167, net of unamortized discounts of
$243,833. As of September 30, 2022, and December 31, 2021, the accrued interest
is $426,016and $230,729, 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. As of September 30, 2022 and December
31, 2021, 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 September 30, 2022, and
December 31, 2021, the accrued interest is $312,986 and $135,452, respectively.
The Company is in discussions with the lender regarding the extension of the
maturity date of this note.



F-17






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. 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 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. For the year ended December 31, 2021,
amortization of the costs of $56,188 was charged to interest expense. 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. The warrants issued resulted in a debt
discount of $750,000. During the year ended December 31, 2021, the Company paid
$375,000 to the Holder. On May 3, 2021, the Company issued 75,000,000 shares of
common stock to the Holder, upon the cashless exercise of a portion of the
warrants. As of September 30, 2022, and December 31, 2021, 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 September 30, 2022, and December 31, 2021, the
accrued interest is $157,747 and $90,247, 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. For the nine months ended September
30, 2022, the Company reduced this deferred liability by $158,536 and that
amount is included in accounts payable and accrued expenses. The deferred
liability as of September 30, 2022, and December 31, 2021, on the condensed
consolidated balance sheet is $591,464 and $750,000, respectively. No payments
have been made and the Company is in default of the agreement with the total
amount of $399,779 included in accounts payable and accrued expenses as of
September 30, 2022. 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%. The Company
valued the shares at $0.094 per share (the market value of the common stock on
the date of the agreement) and recorded $16,450,000 as debt restructure expense
on the condensed consolidated statement of operations for the nine months ended
September 30, 2021.

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 receives
$10,000 per month from Ozop Capital.



F-18






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 an 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 compensation
Mr. Conway $20,000 per month beginning in April 2022.



Series E Preferred Stock



On March 21, 2021, the Company issued 2,000 shares of Series E Preferred Stock
(see Note 11), 1,800 of the shares were issued to Mr. Conway. On April 16, 2021,
the Board of Directors of the Company authorized the issuance 2,000 shares of
Series E Preferred stock, of which 1,050were issued to Mr. Conway. During the
nine months ended September 30, 2021, the Company redeemed 2,850 shares issued
to Mr. Conway, and pursuant to the terms and conditions of the Certificate of
Designation of the Series E Preferred Stock, including the redemption value of
$1,000 per share, recorded stock compensation expense to Mr. Conway of
$2,850,000 for the nine months ended September 30, 2021.

Management Fees and related party payables

For the three and nine months ended September 30, 2022, and 2021, the Company
recorded expenses to the CEO in the following amounts:

SCHEDULE OF EXPENSES TO OFFICERS

                                    2022          2021         2022           2021
                                   Three months ended            Nine months ended
                                      September 30,                September 30,
                                    2022          2021         2022           2021
CEO                              $  220,000     $ 70,000     $ 850,000     $   709,999

CEO - Series E Preferred Stock            -            -             -     

 2,850,000
Total                            $  220,000     $ 70,000     $ 850,000     $ 3,559,999

Redemption of Series C and Series D Preferred Stock

On July 13, 2021, the Company entered into a Definitive Agreement (the
"Agreement") with Chis to purchase the 47,500 shares of the Company's Series C
Preferred Stock held by Chis and the 18,667 shares of the Company's Series D
Preferred Stock held by Chis for the total purchase price of $11,250,000. In
conjunction with the Agreement, Chis resigned from any and all positions held in
the Company's wholly owned subsidiary, PCTI. Further, Chis agreed that upon her
resignation and for a period of five years thereafter (the "Restriction
Period"), she shall not, directly or indirectly, solicit the employment of,
assist in the soliciting of the employment of, or hire any employee or officer
of the Company, including those of any of its present or future subsidiaries, or
induce any person who is an employee, officer, agent, consultant or contractor
of the Company to terminate such relationship with the Company. Additionally,
Chis agreed that during the Restriction Period, she shall not compete with the
Company or PCTI anywhere worldwide or be employed by any competitor of the
Company.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Leases



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 from the property
owner. Pursuant to the lease the Company agreed to issue 100,000,000 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 $0.0063,
(the market value of the common stock on the date of the agreement) and recorded
$630,000 as a prepaid expense. The Company never took occupancy of the space. On
July 19, 2022, the property owner purchased a different property and on
September 6, 2022, assigned the title of such property to the Company in
consideration of the 100,000,000 shares received in January 2021. The Deed was
recorded in the name of Ozop Energy Solutions, Inc. on October 4, 2022. The
Company recorded the $630,000 as fixed asset and credited the prepaid expense.



F-19






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 new one- year
agreement Ozop Capital agreed to compensate PJN $84,000 per month. For the three
and nine months ended September 30, 2022, the Company recorded $252,000 and
$756,000, respectively, of consulting expenses.

On April 16, 2021, the Company signed a letter of agreement with Rubenstein
Public Relations, Inc. ("RPR"). Pursuant to the letter of agreement, the Company
agreed to engage RPR, effective May 1, 2021, on a month-to-month basis for
$17,000 per month.. The Company terminated the agreement in October 2021.

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), and $460,000 is included in
stock-based compensation expense for the six months ended June 30, 2021. 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 nine months ended September 30,
2022. One of the individuals resigned on January 24, 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), and $696,000 is
included in stock-based compensation expense for the nine months ended September
30, 2021. For the three and nine months ended September 30, 2022, the Company
has recorded $30,000 and $90,000, respectively, of consulting expenses, and for
the three and nine months ended September 30, 2021, the Company recorded
consulting expenses of $30,000 and $60,000, respectively.



On February 24, 2021, the Company entered into a consulting agreement with
Christopher Ruppel. Pursuant to the agreement Mr. Ruppel was to join the Ozop
Advisory Board. During the year ended December 31, 2021, the Company issued
10,000,000 shares of restricted common stock to Mr. Ruppel and agreed to a
monthly fee of $2,500. The Company valued the shares at $0.2386 per share (the
market price of the common stock on the date of the agreement), and $2,386,000
is included in stock-based compensation expense for the nine months ended
September 30, 2021. Effective April 1, 2021, the agreement was amended to
$10,000 per month. Effective May 1, 2021, the Company was no longer using the
services of Mr. Ruppel. For the nine months ended September 30, 2021, the
Company recorded $12,500 of consulting expenses.



F-20






On January 22, 2021, the Company issued 10,000,000 shares of restricted common
stock for legal services performed in 2020 and approved by the BOD of the
Company on December 1, 2020. The Company valued the shares at $0.0056 per share
(the market price of the common stock on the date of the agreement), and $56,000
is included in stock-based compensation expense for the nine months ended
September 30, 2021.



On January 14, 2021, the Company entered into a Consulting Agreement with Mr.
Allen Sosis. Pursuant to the agreement, Mr. Sosis will provide services as the
Director of Business Development for the Company's wholly owned subsidiary.
Pursuant to the agreement, as amended, the Company will pay Mr. Sosis a monthly
fee of $15,000 and an additional $1,000 in benefits. The Company also agreed to
issue Mr. Sosis 5,000,000 shares of restricted common stock. The shares were
issued in April 2021. The Company valued the shares at $0.20 per share (the
market price of the common stock on the date of the agreement), and $1,000,000
was recorded as deferred stock compensation, to be amortized over the one-year
term of the agreement. The Company terminated Mr. Sosis's employment in October
2021. For the nine months ended September 30, 2021, the Company recorded $75,500
of consulting expenses and effective June 1, 2021, Mr. Sosis became an employee
of the Company through his termination with a $15,000 per month salary.



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 $0.0076per 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. For the nine months ended September 30, 2022, and 2021, the Company
recorded $1,249 and $36,348 as stock-based compensation expense, respectively.
Effective April 1, 2021, the agreement was amended to $10,000 per month. For the
nine months ended September 30, 2022, the Company recorded $60,000 of consulting
expenses and for the three and nine months ended September 30, 2021, the Company
recorded $30,000 and $64,500 of consulting expenses, respectively. Effective
June 30, 2022, Mr. Green was no longer providing consulting services to the
Company.



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 September 30, 2022
and December 31, 2021, 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). The Company valued the shares at $0.094 per share (the market
value of the common stock on the date of the agreement) and recorded $16,450,000
as debt restructure expense on the condensed consolidated statement of
operations for the nine months ended September 30, 2021.



Legal matters

We know of no material, existing or pending legal proceedings against our
Company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. 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.

F-21






NOTE 11- STOCKHOLDERS' EQUITY



Common stock



During the nine months ended September 30, 2022, the Company issued 83,655,061
shares of common stock and received net proceeds of $814,625after issuance costs
of $24,966. The Company also issued 5,000,000 shares of restricted common stock
in the aggregate for services.



During the period from January 1, 2021, to September 30, 2021, holders of an
aggregate of $760,550 in principal and $201,905 of accrued interest and fees of
convertible and promissory notes, converted their debt into 483,154,618 shares
of our common stock at an average conversion price of $0.002 per share.

During the nine months ended September 30 2021, the Company also issued the
following shares of restricted common stock:

? 100,000,000 shares of restricted common stock pursuant to a lease agreement

(see Note 10).

? 175,000000 shares of restricted common stock pursuant to restructuring

agreement related to a deferred liability (see Note 9).

? 50,452,080 shares of restricted common stock in the aggregate for services and

    consulting agreements.

During the nine months ended September 30, 2021, the Company also issued
405,797,987 shares of common stock upon the cashless exercise of common stock
purchase warrants.

As of September 30, 2022, the Company has 4,990,000,000 shares of $0.001 par
value common stock authorized and there are 4,706,018,038 shares of common

stock
issued and outstanding.



On April 4th, 2022, the Company and GHS Investments LLC ("GHS"). signed a
Securities Purchase Agreement (the "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 (the "Maturity Date"), 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.



Preferred stock



As of September 30, 2022, and December 31, 2021, 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. On July 10, 2020,
pursuant to the SPA with PCTI, the Company issued 47,500 shares of Series C
preferred Stock to Chis. On July 13, 2021, the Company purchased 47,500 shares
of the Company's Series C Preferred Stock held by Chis (see Note 11). As of
September 30, 2022, and December 31, 2021, there were 2,500 shares of Series C
Preferred Stock issued and outstanding and the shares are held by Mr. Conway.



F-22






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 (see Note 10).



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 September 30, 2022, and
December 31, 2021, 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 September 30, 2022, and December 31, 2021.

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 15th 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. On July 10, 2020,
pursuant to the SPA with PCTI, the Company issued 500 shares of Series E
preferred Stock to Chis, and on August 28, 2020. Pursuant to Mr. Conway's
employment agreement, the Company issued 500 shares of Series E Preferred Stock
to Mr. Conway. On March 2, 2021, the BOD authorized the issuance of 1,800 shares
of Series E Preferred Stock to Mr. Conway and 200 shares of Series E Preferred
Stock to a third-party service provider. The issuances were for services
performed. Pursuant to the terms and conditions of the Certificate of
Designation of the Series E Preferred Stock, including the redemption value of
$1,000 per share, the Company recorded $2,000,000 as stock-based compensation
expense for expense for the nine months ended September 30, 2021. On March 24,
2021, the Company redeemed the 3,000 shares of Series E Preferred Stock
outstanding on that date. On April 16, 2021, the BOD authorized the issuance of
2,000 shares of Series E Preferred stock, of which 1,050 were granted to Mr.
Conway. The issuances were for services performed. Pursuant to the terms and
conditions of the Certificate of Designation of the Series E Preferred Stock,
including the redemption value of $1,000 per share, the Company recorded
$2,000,000 as stock-based compensation expense for the nine months ended
September 30, 2021. As of September 30, 2022, and December 31, 2021, 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 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 condensed 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 three and nine months ended
September 30, 2022, Ozop Capital incurred losses of $346,051 and $1,080,963,
respectively, of which $169,565 and $529,672, respectively, is the loss
attributed to the noncontrolling interest for the three- and nine- months ending
September 30, 2022. As of September 30, 2022, the accumulative noncontrolling
interest is $784,777.

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 began 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.



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.

Right-of- use assets are summarized below:

SCHEDULE OF RIGHT-OF-USE ASSETS

                                 September 30, 2022
Office and warehouse lease       $           702,888
Less: Accumulated Amortization              (162,883 )
Right-of-use asset, net          $           540,005




F-24

SCHEDULE OF OPERATING LEASE LIABILITIES

                       September 30, 2022
Lease liability        $           549,182
Less current portion              (130,070 )
Long term portion      $           419,112

Maturity of lease liabilities are as follows:

SCHEDULE OF MATURITY OF LEASE LIABILITIES

                                        Amount
For the year ended December 31, 2022   $  41,394
For the year ended December 31, 2023     167,858
For the year ended December 31, 2024     171,840
For the year ended December 31, 2025     175,942
For the year ended December 31, 2026      74,030
Total                                  $ 631,064
Less present value discount              (81,882 )
Lease liability                        $ 549,182

NOTE 14 - DISCONTINUED OPERATIONS

On September 1, 2022, the BOD of the Company authorized the filing of a Chapter
7 proceeding (see Note 2) 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 condensed consolidated
financial statements for the three and nine months ended September 30, 2022, and
2021.



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 loss from discontinued operations, net of income
taxes as is presented in the Condensed Consolidated Statements of Comprehensive
Loss for the three and nine months ended September 30, 2022, and 2021 are
summarized below:

SCHEDULE OF LOSS FROM DISCONTINUED OPERATIONS

                                      2022          2021          2022          2021
                                      Three months ended           Nine months ended
                                         September 30,               September 30,
                                      2022          2021          2022          2021
Revenues                            $   5,363     $  66,734     $ 281,038     $ 881,339
Cost of goods sold                      3,572       114,636       259,828       351,136
Gross profit                            1,791       (47,902 )      21,210       530,203
Operating expenses                     27,244       182,517       384,991       730,138
Interest expense                        8,517         7,450        23,011        33,546

Loss from discontinued operations $ 33,970 $ 237,869 $ 386,792

  $ 233,481




F-25






The assets and liabilities of discontinued operations are separately reported as
"assets and liabilities held for disposal" as of September 30, 2022, and
December 31, 2021. All asset and liabilities are classified as current, as the
Company expects the liquidation to occur in the short-term. The following tables
present the reconciliation of carrying amounts of major classes of assets and
liabilities of the Company classified as discontinued operations in the
condensed consolidated balance sheet at September 30, 2022, and December 31,
2021:



Current Assets



                                                      September
                                                       30, 2022        December 31, 2021
Cash                                               $           50     $           134,973
Accounts receivable                                             -                   6,534
Inventory                                                 237,091                 277,872
Vendor deposits                                                 -                  43,758

Prepaid expenses and other assets                           7,000          

       12,543
Right to use asset                                         13,870                  74,189
Fixed assets, net                                          15,477                  20,448

Total assets of discontinued operations            $      273,488     $    

      570,317




Current liabilities



                                                          September
                                                           30, 2022         December 31, 2021

Accounts payable and accrued liabilities               $      455,217     $

432,508

Current portion of notes payable                              589,246      

          589,246
Operating lease liability                                      13,870                  74,189
Deferred revenues                                              30,389                  46,477
Advances from customers                                             -                  96,428

Total current liabilities of discontinued operations $ 1,088,722 $

        1,238,848




NOTE 15 - SUBSEQUENT EVENTS

On October 17, 2022,the company and GHS extended the maturity date of the
Purchase Agreement to April 4, 2023.

On October 17, 2022, the Company sold 12,526,048 shares to GHS at $0.005865 and
received net proceeds of $70,971, after deducting transaction and broker fees of
$2,494.

On October 31, 2022, the Company and the lender of certain promissory notes
agreed to extend the maturity date of such notes to October 31, 2024. The
Company agreed to increase the interest rate to 15% per annum and to issue
warrants to purchase in the aggregate 375,000,000shares of common stock at an
exercise price of $0.0067 and an expiry date of October 31, 2025 (see Note 7).

On November 1, 2022, the Company sold 12,935,085 shares to GHS at $0.005525 and
received net proceeds of $69,012, after deducting transaction and broker fees of
$2,454.

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-26

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following is management's discussion and analysis of certain significant
factors that have affected our financial position and operating results during
the periods included in the accompanying condensed consolidated financial
statements, as well as information relating to the plans of our current
management. This report includes forward-looking statements. Generally, the
words "believes," "anticipates," "may," "will," "should," "expect," "intend,"
"estimate," "continue," and similar expressions or the negative thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this report or other reports or documents we file with the
Securities and Exchange Commission from time to time, which could cause actual
results or outcomes to differ materially from those projected. Undue reliance
should not be placed on these forward-looking statements which speak only as of
the date hereof. We undertake no obligation to update these forward-looking
statements.



Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to conform these
statements to actual results.



Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States ("GAAP"). These accounting principles
require us to make certain estimates, judgments, and assumptions. We believe
that the estimates, judgments, and assumptions upon which we rely are reasonable
based upon information available to us at the time that these estimates,
judgments, and assumptions are made. These estimates, judgments, and assumptions
can affect the reported amounts of assets and liabilities as of the date of the
financial statements as well as the reported amounts of revenues and expenses
during the periods presented. Our financial statements would be affected to the
extent there are material differences between these estimates.

The following discussion should be read in conjunction with our unaudited
financial statements and the related notes that appear elsewhere in this
Quarterly Report on Form 10-Q.

THE COMPANY



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 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 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 August 19, 2021, the Company formed Ozop Capital Partners, Inc. ("Ozop
Capital"), a Delaware corporation is a wholly owned subsidiary of the Company.
Ozop Capital was formed as a holding company to seek to develop a captive
insurance 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
insurer that reinsures 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.

3






OES is actively engaged 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 large-scale battery and solar photovoltaics
(PV) installations. Our utility-scale storage business model is based on an
arbitrage business model in which we install multiple 1+ megawatt batteries,
charge them with off-peak grid electricity under contract with the utility, then
sell the power back during peak load hours at a premium, as dictated by
prevailing electricity tariffs.



Equipment Distributor: OES has entered 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. The components we are distributing include PV
panels, solar inverters, solar mounting systems, stationary batteries, onsite
generators and other associated electrical equipment and components that are all
manufactured by multiple companies, both domestic and international. These core
products are sourced from management-developed relationships and are distributed
through our existing network and our in-house sales team.



Solar PV: Our PV business model involves the design and construction of
electrical generating PV systems that can sell power to the utilities or be used
for off grid use as part of our developing Neo-Grids solution. The Neo-GridTM
System, patent pending, was developed for the off-grid distribution of
electricity to remove or reduce the dependency on utilities that currently
burdens the EV Charging sectors. It will also reduce or eliminate the lengthy
permitting processes and streamline the installations of those EV chargers.



Modular Energy Distribution System: The Neo-GridTM System patent pending,
consists 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 through a license the
rights to a proprietary system, the Neo-GridsTM System(patent pending), for the
capture and distribution of electrical energy for the EV market. The
Neo-GridsTMSystem 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-GridsTM System
leverages this accelerated growth by offering (1) charging locations that can be
rapidly installed in restricted areas or load limits and (2) EV charger
electricity that is produced from renewable sources having little to no carbon
footprint.

OES has developed a business plan for the Neo GridTM distribution system, a
solution to alleviate the stress on the existing grid-tied infrastructure. The
Company has completed its' Neo GridTM research and development as well as the
first stage that includes the specifications and engineered technical drawings.
This completion of the first stage of 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-GridTM System as a
viable solution.



OES management has decades of experience in the renewable, storage and resilient
energy businesses and associated markets, which include but are not limited to
project finance, project development, equipment finance, construction, utility
protocol, regulatory policy and technology assessment.



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.

4

? 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 of 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.

    Royal's VSCs are now effective in 35 states and the others have various
    waiting times or approvals needed.

? 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 are able to 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.

Stock Purchase Agreement and Stock Redemption Agreement

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 July 13, 2021, the Company entered into a Definitive Agreement (the
"Agreement") with Chis to purchase the 47,500 shares of the Company's Series C
Preferred Stock held by Chis and the 18,667 shares of the Company's Series D
Preferred Stock held by Chis for the total purchase price of $11,250,000.The
Agreement was closed on July 27, 2021.



5

Results of Operations for the three and nine months ended September 30, 2022 and
2021:

Revenue



For the three and nine months ended September 30, 2022, the Company generated
revenue of $3,928,918 and $11,614,117, respectively, compared to $4,716,607 and
$5,971,589 for the three and nine months ended September 30, 2021, respectively.
Revenues from Ozop Energy Systems, Inc. ("OES") are classified as sourced and
distributed products. Ozop Engineering and design ("OED") operations began in
the quarter ended June 30, 2022, and are classified as design and installation.
Sales are summarized as follows:



                                       Three months ended               Nine months ended
                                          September 30,                   September 30,
                                      2022            2021             2022            2021
Sourced and distributed products   $ 3,907,318     $ 4,716,607     $ 11,576,017     $ 5,971,589
Design and installation                 21,600               -           38,100               -
Total                              $ 3,928,918     $ 4,716,607     $ 11,614,117     $ 5,971,589

As it did for most of the industry; OES's importing of solar panels issues that
began in the 4th quarter of 2021, continued 2022. Covid issues continued to be
disruptive to a continual source of product from foreign manufacturers as well
as ocean freight backlogs and covid issues that plagued the port of arrivals
related to the unloading of containers and the eventual customs clearance of the
imported goods. An announcement by the U.S. Department in March 2022 stated it
would investigate allegations that solar panel manufacturers in Southeast Asia
are using Chinese-made parts and evading U.S. tariffs has raised alarms
concerning both trade and environmental policy The department announced March 28
that it would investigate claims by California-based solar panel manufacturer
that solar energy equipment manufacturers in Cambodia, Malaysia, Thailand and
Vietnam have close business ties to companies in China that produce the raw
materials and some components of solar panel assemblies. On June 6, 2022,
President Biden waived tariffs on solar panels from there four Southeast Asian
nations for two years and invoked the Defense Production Act to spur domestic
solar panel manufacturing at home. The tariff exemption will serve as a "bridge"
while U.S. manufacturing ramps up.



Based on the above situation, the Company placed approximately $14,422,000 of
purchase orders for solar panels and as of the date of the filing of this report
has fully paid and received approximately $7,265,000 of this product.
Additionally, the Company has made approximately $1,499,000 of additional
deposits to vendors, resulting in a remaining balance of $5,658,000 of open
purchase orders to vendors, to assure product delivery of approximately $7.2
million with a forecasted delivery of $3.9 million in Q4 2022 and $3.3 million
in Q1 2023. The Company was expecting to receive additional product in Q3 2022,
that has been delayed until Q4 2022, which impacted revenues for the three and
nine months ended September 30, 2022. Based on the above and the Company's
current on-hand inventory, management anticipates the potential for a
significant increase in fourth quarter sales over Q3 2022 sales.



Cost of sales



For the three and nine months ended September 30, 2022, the Company recognized
$3,598,918 and $10,634,170, respectively of cost of sales, compared to
$4,370,680 and $5,575,557 for the three and nine months ended September 30,
2021, respectively.



                                       Three months ended               Nine months ended
                                          September 30,                   September 30,
                                      2022            2021             2022            2021
Sourced and distributed products   $ 3,598,918     $ 4,370,680     $ 10,634,170     $ 5,575,558

Total                              $ 3,598,918     $ 4,370,680     $ 10,634,170     $ 5,575,558




Based on the above cost of sales, gross margin was 8.4% for the three and nine
months ended September 30, 2022, compared to 7.3% and 6.6% for the three and
nine months ended September 30, 2021, respectively. The increase of gross margin
for the three and nine months is a result of the mix of customer sales.



6






Operating expenses

Total operating expenses for the three and nine months ended September 30, 2022,
were $1,514,524 and $4,648,920, compared to $1,708,102 and $11,309,256 for the
three and none months ended September 30, 2021, respectively. The operating

expenses were comprised of:



                                Three Months       Three Months       Nine Months           Nine
                                   Ended              Ended              Ended          Months Ended
                               September 30,      September 30,     

September 30, September 30,

                                    2022               2021               2022              2021
Wages and management fees,
related parties, including
stock-based compensation       $      220,000     $       70,000     $      850,000     $   3,559,999
Stock-based compensation,
other                                       -            668,711            136,249         5,784,656
Salaries, taxes and benefits          411,411            275,375            996,321           397,889
Professional and consulting
fees                                  495,820            292,278          1,674,319           830,365
Advertising and marketing               8,045              9,487             13,233            20,263
Rent and office expense                63,287             62,378            186,228           103,928
Insurance                              88,256             62,961            222,547            89,609
General and administrative            227,705            266,912            600,023           522,547
Total operating expenses       $    1,514,524     $    1,708,102     $    4,648,920     $  11,309,256

Wages and management fees- related parties, are amounts paid to our CEO. 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 began to receive $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 an 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 and OES began compensating Mr. Conway $20,000 in March
2022. Below is a summary of wages and management fees:



                                 Three months ended            Nine months ended
                                    September 30,                September 30,
                                  2022          2021         2022           2021
CEO management fees            $  220,000     $ 70,000     $ 850,000     $   709,999
Stock-based compensation                -            -             -       2,850,000
Total other (income) expense   $  220,000     $ 70,000     $ 850,000     $ 3,559,999

Stock based compensation for the nine months ended September 30, 2022, of
$136,429 is comprised of the following:

? 5,000,000 shares of common stock issued in the aggregate to two employees

pursuant to their offers of employment dated March 31, 2021. The shares were

valued at $0.027 per share. During the nine months ended September 30, 2022,

the Company included $135,000 in stock compensation expense.

? $1,249 of amortization of stock compensation for shares issued in April 2021.

Stock based compensation, other for the three and nine months ended September
30, 2021, of $668,711 and $5,784,656 is comprised of the following stock
issuances:

? 5,000,000 shares issued in April 2021 pursuant to a one-year consulting

agreement. The Company valued the shares at $0.20 per share (the market price

of the common stock on the date of the agreement), and $1,000,000 was recorded

as deferred stock compensation, to be amortized over the one-year term of the

agreement. For the three and nine months ended September 30, 2021, $250,000

and $583,562, respectively, is included in stock-based compensation expense.

7

? 10,000,000 shares issued in April 2021 pursuant to a one-year consulting

agreement. 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. For the three and nine months ended September

30, 2021, the Company recorded $21,211 and $55,595, respectively, as

stock-based compensation expense.

? 5,000,000 shares issued in April 2021 for services. The Company valued the

shares at $0.1392 per share (the market price of the common stock on the date

of the agreement), and $696,000 is included in stock-based compensation

expense for the nine months ended September 30, 2021.

? 10,000,000 shares issued for services. The shares were valued at $0.0056 per

share, the date the Company agreed to issue the shares. For the nine months

ended September 30, 2021, the Company included $56,000 in stock compensation

expense.

? 10,000,000 shares issued pursuant to a consulting agreement dated February

24, 2021 (see Note 12). The shares were valued at $0.2386 per share. For the

nine months ended September 30, 2021, the Company included $2,386,000 in stock

compensation expense.

? 5,000,000 shares of common stock to be issued in the aggregate to two new

employees pursuant to their offers of employment dated March 31, 2021. The

shares were valued at $0.23 per share. For the nine months ended September 30,

2021, the Company included $460,000 in stock compensation expense for the

5,000,000 shares of common stock.

? Issuance of 200 shares and 950 shares of Series E Preferred Stock, with a

redemption value of $1,000 per share, resulting in stock compensation expense

of $1,150,000 for the nine months ended September 30, 2021.

? 5,000,000 shares of common stock to be issued in the aggregate to two

employees pursuant to their offers of employment dated March 31, 2021. The

shares were valued at $0.0745 per share. For the three and nine months ended

    September 30, 2021, the Company included $372,500 in stock compensation
    expense for the 5,000,000 shares of common stock.




    ?   452,080 shares of common stock issued for services (see Note 12). The
        shares were valued at $0.0553 per share (the market price of the common
        stock on the date of the agreement), and $25,000 is included in
        stock-based compensation expense for the three and nine months ended
        September 30, 2021.

Salaries, taxes and benefits increased for the three and nine months ended
September 30, 2022, compared to the same periods in 2021. The increase was a
result of the current periods including $268,091 and $767,438, respectively,
compared to $275,375 and $397,889 for the three and nine months ended September
30, 2021, respectively, of expenses related to OES and $143,320 and $198,882 for
the three and nine months ended September 30, 2022, respectively, for OED. OES
now has annual gross payroll of approximately $512,000 and an additional
$351,000 on an annual basis of personnel focused on the Company's battery
storage vertical. OED currently has five employees with an aggregate annual
compensation of $457,000.



Professional and consulting fees increased for the three and nine months ended
September 30, 2022, compared to September 30, 2021. The increases are due to
increases in accounting expenses of Ozop and its' subsidiaries in the current
three- and nine-month periods and consultants engaged in the second quarter of
2021 by Ozop Capital Partners that have been engaged for the entire nine months
ended September 30, 2022, as Ozop Plus initiates its business plan regarding
vehicle service contracts on electric vehicles.



Advertising and marketing expenses decreased for the three and nine months ended
September 30, 2022, compared to September 30, 2021. The decreases were related
to marketing programs during 2021, including brand awareness programs for Ozop.



8

Rent and office expense (including supplies, utilities and internet costs)
remained the same for the three months ended September 30, 2022, compared to the
three months ended September 30, 2021, and increased for the nine months ended
September 30, 2022, compared to the none months ended September 30, 2021. The
increase is the result of including in the current period, rent and office
expense of approximately $147.916 for the nine months ended September 30, 2022,
compared to $69,221 for the nine months ended September 30, 2021, for OES. The
Company estimates that the monthly OES rent and office expense for the
California operation to be approximately $18,000 per month.



Insurance expense increased for the three and nine months ended September 30,
2022, compared to the three and nine months ended September 30, 2021. The
increase was the result of including in the current three- and nine-month
periods, insurance expense of approximately $68,465 and $201,413, respectively,
for the three and nine months ended September 30, 2022, compared to $62,961 and
$89,609 for the three and nine months ended September 30, 2021, for OES. OED's
insurance expense was $19,790 and $21,135 for the three and nine months ended
September 30, 2022. The Company estimates that the monthly OES and OED insurance
expense to be approximately $30,000 per month.



Other Income (Expenses)

Other income, net was $513,156 and $8,501,649 for the three and nine months
ended September 30, 2022, respectively, compared to other income, net of
$13,314,765 for the three months ended September 30, 2021, and other expenses of
$186,842,894 for the nine months ended September 30, 2021, and were comprised of
as follows:



                                     Three months ended                  Nine months ended
                                       September 30,                       September 30,
                                   2022             2021              2022              2021
Interest expense               $  1,424,554     $   4,123,535     $   6,812,834     $  49,062,523
(Gain) loss on change in
fair value of derivatives        (1,937,710 )     (17,483,300 )     (15,314,483 )      25,892,783
Loss on extinguishment of
debt                                      -                 -                 -        95,437,587
Debt restructure expense                  -                 -              

- 16,450,000
Total other (income) expense $ (513,156 ) $ (13,314,765 ) $ (8,501,649 ) $ 186,842,894

The decrease in other income, net, for the three months ended September 30,
2022, compared to the three months ended September 30, 2021, is primarily a
result of the reduced gain on the change in fair value of the derivatives and
the reduced interest expense related to the amortization of debt discounts
associated with the maturity dates of certain of the company's promissory notes.
Other expenses for the nine months ended September 30, 2021, includes the loss
on extinguishment of debt related to the market value of shares of common stock
issued in excess of the debt and accrued interest extinguished. The Company also
issued 175,000,000 shares of restricted common stock related to the restructure
of the deferred liability. The shares were valued at $0.094 per share and the
Company recognized $16,450,000 of restructuring costs. Also included in interest
expense for the nine months ended September 30, 2021, is the initial $38,907,939
of fair value related to the issuance of 300,000,000 warrants. In addition, the
amortization of debt discounts of $8,810,332 and losses on changes in fair
values of derivatives, related to convertible notes and warrants.



Net income (loss)



Net loss for the three months ended September 30, 2022, was $534,988 compared to
net income of $11,714,722 for the three months ended September 30, 2021. The
change was primarily a result of the reduced gain on the change in fair value of
derivatives in the current period compared to the three months ended September
30, 2021. For the nine months ended September 30, 2022, the Company had net
income $4,975,556 compares to a net loss of $197,989,599 for the nine months
ended September 30, 2021. The loss for the nine months ended September 30, 2021,
was primarily a result of the other expenses descried above as well as
$7,965,945 of stock- based compensation expenses included in the operating
expenses for the nine months ended September 30, 2021.



9

Liquidity and Capital Resources

The accompanying condensed 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 September
30, 2022, the Company had an accumulated deficit of $212,351,054 and a working
capital deficit of $23,000,162 (including derivative liabilities of $5,652,218).
As of September 30, 2022, the Company was in default of $14,142,588 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.



Currently, our current capital and our other existing resources will be
sufficient to provide the working capital needed for our current business,
however, additional capital will be required to meet our debt obligations, and
to further expand our business. We may be unable to obtain the additional
capital required. If we are unable to generate capital or raise additional funds
when required it will have a negative impact on our business development and
financial results. These conditions raise substantial doubt about our ability to
continue as a going concern as well as our recurring losses from operations,
deficit in equity, and the need to raise additional capital to fund operations.
This "going concern" could impair our ability to finance our operations through
the sale of debt or equity securities. Management's plans in regard to these
factors are discussed below and also in Note 2 to the condensed consolidated
financial statements filed herein.



As of September 30, 2022, we had cash of $2,063,235 as compared to $6,767,167 at
December 31, 2021. As of September 30, 2022, we had current liabilities of
$29,794,842 (including $5,652,218 of non-cash derivative liabilities), compared
to current assets of $6,794,680, which resulted in a working capital deficit of
$23,000,162. The current liabilities are comprised of accounts payable, accrued
expenses, convertible debt, derivative liabilities, customer deposits, lease
obligations, notes payable and liabilities of discontinued operations.



In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because
COVID-19 infections have been reported throughout the United States, certain
federal, state and local governmental authorities have issued stay-at-home
orders, proclamations and/or directives aimed at minimizing the spread of
COVID-19. The ultimate impact of the COVID-19 pandemic on the Company's
operations is unknown and will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the duration of the
COVID-19 outbreak, new information which may emerge concerning the severity of
the COVID-19 pandemic, and any additional preventative and protective actions
that governments, or the Company, may direct, which may result in an extended
period of continued business disruption, and reduced operations. Any resulting
financial impact cannot be reasonably estimated at this time but it may have a
material adverse impact on our business, financial condition and results of
operations. Management expects that its business will be impacted to some
degree, but the significance of the impact of the COVID-19 outbreak on the
Company's business and the duration for which it may have an impact cannot

be
determined at this time.



Operating Activities



For the nine months ended September 30, 2022, net cash used in operating
activities was $5,185,222 compared to $6,350,242 for the nine months ended
September 30, 2021. For the nine months ended September 30, 2022, our net cash
used in operating activities was primarily attributable to the net income of
$4,445,884, adjusted by non- cash interest expense of $5,020,528, stock-based
compensation of $136,249 and the non-cash expenses of amortization and
depreciation of $132,924. This was offset by the gain on the fair value changes
in derivatives related to warrants and convertible notes of $15,314,483. Net
changes of $246,943 in operating assets and liabilities decreased the cash

used
in operating activities.



For the nine months ended September 30, 2021, our net cash used in operating
activities was primarily attributable to the net loss of $197,989,599, adjusted
by loss on debt extinguishment of $95,437,589, non- cash interest expense of
$47,838,062 (including $38,907,939 for the initial fair value of the 300,000,000
warrants issued), losses on the fair value changes in derivatives related to
warrants and convertible notes of $25,892,783, debt restructuring costs of
$16,450,000, stock-based compensation of $8,634,656 and the non-cash expenses of
interest and amortization and depreciation of $62,438. Net changes of $2,241,716
in operating assets and liabilities increased the cash used in operating
activities, primarily as a result of the start-up of the Company's California
operations in the support of inventory and accounts receivable.



10






Investing Activities



For the nine months ended September 30, 2022, the net cash used in investing
activities was $198,632, compared to $109,769 for the nine months ended
September 30, 2021. The amounts for both periods were a result of the Company
purchasing office furniture and equipment.



Financing Activities



For the nine months ended September 30, 2022, the Company received shares
proceeds of $814,625, net of issuance costs. During the nine months ended
September 30, 2021, net cash provided by financing activities was $8,475,000. We
received $12,000,000 of proceeds from the issuances of $13,310,000 face value of
promissory notes, $13,100,000 (net of costs) from the Series D SPA. During the
nine months ended September 30, 2021, the Company acquired 47,500 shares of
Series C Preferred Stock and 18,667 shares of Series D Preferred Stock from Chis
for $11,250,000, redeemed 5,000 shares of the Series E Preferred Stock for
$5,000,000 and repaid $375,000 of notes payable.

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements including arrangements that would
affect our liquidity, capital resources, market risk support and credit risk
support or other benefits.

Critical Accounting Policies

Our significant accounting policies are described in more details in the notes
to our financial statements appearing elsewhere in this Quarterly Report on Form
10-Q.