OZSC.OIDOzop Energy Solutions, INC
10-K: Ozop Energy Reports Deepening Losses Amid Revenue Decline
Sentiment:
Annual Report
Ozop Energy Solutions, Inc. reported a significant increase in net loss and a sharp decline in revenue for fiscal year 2025, raising substantial doubt about its ability to continue as a going concern.
Capital raiseThe company has an Equity Financing Agreement with GHS Investments LLC, providing up to $10,000,000 in funding upon effectiveness of a registration statement on Form S-1.In 2025, the company sold GHS 272,919 post reverse split shares of common stock for proceeds of $295,965, net of offering costs.A new 2025 Financing Agreement with GHS was entered into on April 11, 2025, for up to an additional $10,000,000 in funding, with puts deliverable for 36 months.For the year ended December 31, 2025, the company sold GHS 223,244 post reverse split shares for proceeds of $96,203, net of offering costs.Subsequent to December 31, 2025, the company sold GHS 439,796 post reverse split shares for proceeds of $47,068, net of offering costs, and $5,000 of note payables paid.The company issued new promissory notes totaling $350,000 in 2025 and $290,000 subsequent to year-end.New convertible notes totaling $573,000 were issued in 2025 and $215,000 subsequent to year-end.
Worse than expectedNet loss increased significantly from $6.2 million in 2024 to $8.7 million in 2025.Revenue decreased by approximately 77% from $1.34 million in 2024 to $0.31 million in 2025.The company's accumulated deficit grew to over $233 million, and the working capital deficit worsened to nearly $40 million.The company is in default on over $18.7 million in debt instruments, indicating severe liquidity issues.Management concluded that internal controls over financial reporting were not effective, highlighting significant operational and financial risks.
Summary
- Net loss increased to $8,712,543 for the year ended December 31, 2025, compared to $6,198,161 in 2024.
- Revenue plummeted to $307,421 in 2025 from $1,342,653 in 2024, primarily due to lower solar product sales and a one-time large installation job in the prior year.
- The company faces a working capital deficit of $39,740,819 and an accumulated deficit of $233,581,184 as of December 31, 2025.
- Ozop Energy is in default on $18,714,423 plus accrued interest on various debt instruments due to non-payment.
- A 1-for-5,000 reverse stock split was effected on January 21, 2026, to adjust the number of outstanding common shares.
- Management concluded that internal control over financial reporting was not effective as of December 31, 2025, citing insufficient resources, inadequate segregation of duties, and lack of an audit committee.
- The company continues to raise capital through equity financing agreements with GHS Investments LLC, securing $392,168 in 2025 and an additional $47,068 post-year-end.
- Ozop Energy operates through subsidiaries Ozop Energy Systems (renewable energy, EV, energy storage), Ozop Plus (EV service contracts), Ozop Engineering and Design (lighting and solar design), and Automated Room Controls (advanced lighting controls systems).
Sentiment
Score: 2
Explanation: StockSavvy.ai views this filing with a highly negative sentiment due to significant financial deterioration, severe liquidity issues, and critical internal control deficiencies, all of which raise substantial doubt about the company's viability.
Positives
- Automated Room Controls (ARC) began generating revenue in 2025, contributing $93,613 to sales.
- Gross margin percentage improved to 28.2% in 2025 from 11.6% in 2024, partly due to the absence of a significant inventory write-down that occurred in 2024.
- A gain of $86,250 was recognized from the sale of a building to a related party in 2025.
- A litigation settlement in 2024 resulted in a gain of $271,360 and $1,125,000 in payments to the company.
Negatives
- Net loss significantly widened to $8,712,543 in 2025 from $6,198,161 in 2024.
- Total revenue decreased sharply from $1,342,653 in 2024 to $307,421 in 2025, a decline of approximately 77%.
- Sourced and distributed products revenue (primarily solar) was significantly lower in 2025 due to higher interest rates affecting residential solar installations and increased competitor pricing.
- The company has an accumulated deficit of $233,581,184 and a working capital deficit of $39,740,819 as of December 31, 2025.
- Ozop Energy is in default on $18,714,423 plus accrued interest on debt instruments due to non-payment upon maturity dates or failure to comply with contractual payment terms.
- Cash balance decreased from $797,139 at the end of 2024 to $266,431 at the end of 2025.
- Operating expenses decreased, but professional and consulting fees increased due to a prior year credit from a legal settlement.
- Interest expense increased to $4,205,938 in 2025 from $4,014,997 in 2024, primarily from new debt discounts.
- A loss on the change in fair value of derivatives of $1,621,028 was recognized in 2025, compared to a gain of $1,005,585 in 2024.
Risks
- Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses, significant accumulated deficit, working capital deficit, and debt defaults.
- Inability to obtain additional capital will negatively impact business development and financial results.
- The company's internal control over financial reporting was not effective as of December 31, 2025, due to insufficient personnel, inadequate segregation of duties, and lack of an audit committee, increasing the risk of material misstatements.
- Reliance on public equities market for fundraising may be challenging given current financial condition.
- Competition from larger, more established companies with substantial capabilities and financial resources poses a threat.
- Cybersecurity threats, while not currently material, could affect operations or financial condition, with identified areas for improvement including WiFi access points and cloud backup.
- The company is in default on multiple promissory notes and convertible notes, leading to potential acceleration of debt and legal actions.
Future Outlook
Management believes it will be able to access the public equities market for fundraising to support product development, sales and marketing, and inventory requirements as it expands its distribution in the U.S. market. The NeoVolt System is advancing to stage two for prototype construction, contingent on advancements in EV charging and discharging standardizations. The company also plans to enter into definitive agreements to acquire Bluezone Beverages and Varon Spirits within 120 days of January 21, 2026.
Management Comments
- Management believes the lower revenues in sourced and distributed products were due to higher interest rates affecting homeowners' ability and desire for residential rooftop solar installations, as well as competitors lowering selling prices.
- Management believes that the OZOP Plus marketed VSCs will give peace of mind to the EV buyer, addressing concerns like battery repair costs, range anxiety, and roadside assistance.
- Management believes that easy deployment and creative applications can transform lighting controls into essential tools for enhancing the utility and ambiance of any space.
- Management believes that the Company's mission is to deliver cutting-edge technology that simplifies complex control needs, ensuring seamless integration and exceptional performance.
Industry Context
StockSavvy.ai notes that Ozop Energy Solutions operates in dynamic sectors like renewable energy, electric vehicles (EVs), and smart lighting controls. The reported decline in solar product sales aligns with broader industry challenges, where rising interest rates can dampen consumer demand for large-ticket home improvements like solar installations. The company's focus on EV service contracts (VSCs) through OZOP Plus and advanced lighting controls via Automated Room Controls (ARC) positions it in growing markets, but execution and capital remain critical. The NeoVolt system's development for scalable battery storage addresses a key need for grid resiliency and EV infrastructure, a trend seen across the energy sector.
Comparison to Industry Standards
- The significant revenue decline and deepening net losses contrast sharply with the growth trends observed in many established renewable energy and EV-related sectors, where companies like Tesla (TSLA) and Enphase Energy (ENPH) have shown robust, albeit sometimes volatile, growth.
- The company's substantial accumulated deficit and working capital deficit are far below industry benchmarks for financial health, where profitable and well-capitalized firms typically maintain positive working capital and strong balance sheets.
- The ongoing reliance on dilutive equity financing and the high interest expenses on convertible and promissory notes indicate a higher cost of capital compared to more financially stable industry players.
- The ineffectiveness of internal controls over financial reporting is a serious governance issue, contrasting with the robust control environments expected of publicly traded companies, especially those seeking to attract institutional investment.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Authorized Capital Stock Increase | Board of Directors approved amendments to increase authorized capital stock multiple times: to 9 billion shares (July 2024), to 16 billion shares (April 2025), and to 26 billion shares (July 2025). | 2024-07-22 | Facilitates further equity dilution for capital raising, potentially impacting existing shareholder value. |
| Internal Control Deficiencies | Management concluded that internal control over financial reporting was not effective due to insufficient resources, inadequate segregation of duties, and lack of a functioning audit committee. | 2025-12-31 | Raises significant concerns about financial reporting reliability and oversight, increasing risk of fraud or error. |
| Board Committee Structure | The Board has not established an audit, compensation, or nominating committee, with functions undertaken by the full Board. No independent directors are on the Board. | Ongoing | Lack of independent oversight and specialized committee functions can lead to less effective governance and increased risk of conflicts of interest. |
| Section 16(a) Compliance | The company does not believe all directors, executive officers, and greater than 10% beneficial owners complied with all Section 16(a) filing requirements during 2025. | 2025-12-31 | Indicates potential non-compliance with SEC reporting requirements for insider transactions, raising regulatory scrutiny concerns. |
Legal Proceedings
- The company was involved as a plaintiff in a complaint filed in the SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO NORTH COUNTY on November 14, 2022, alleging former employees engaged in fraudulent product sales and false statements.
- On April 4, 2024, the company executed a Settlement Agreement with its former employees and Your Home Solutions Corp (YHS), receiving $1,125,000 and recording a gain on litigation settlement of $271,360.
Related Party Transactions
- Brian P. Conway, CEO and Interim CFO, received annual compensation of $960,000 in both 2025 and 2024.
- As of December 31, 2025, the company owes Mr. Conway $281,600 for unpaid management fees.
- During 2025, the company sold its building to an entity controlled by Mr. Conway for $600,000, receiving $100,000 in cash and forgiving $500,000 of related party accrued and unpaid management fees owed to Mr. Conway.
- After the sale, the company leased back the building from the same related party in September 2025 for a three-year lease with monthly payments of $5,000 beginning September 1, 2026.
- During 2025, the company loaned 14464664 Canada Inc. (Bluezone Beverages) $150,000 in exchange for a promissory note, with Bluezone Beverages being a related party due to a binding letter of intent for acquisition.
- Subsequent to December 31, 2025, the company issued two additional notes receivable to a related party for $75,000 and $100,000 respectively.
Stakeholder Impact
- Shareholders face significant dilution risk due to ongoing equity financing agreements and multiple increases in authorized common stock.
- Shareholders are exposed to substantial financial risk given the company's accumulated deficit, working capital deficit, and going concern doubt.
- Creditors face heightened risk of non-payment, as the company is in default on over $18.7 million in debt instruments.
- Employees may face uncertainty due to the company's financial instability and the identified internal control weaknesses.
- Customers and suppliers may experience operational disruptions or concerns regarding the company's long-term viability given its financial condition.
Next Steps
- Management plans to access public equities market for fundraising for product development, sales and marketing, and inventory requirements.
- Advance to stage two and construct the initial prototype or proof of concept (PoC) for the NeoVolt System.
- Consider using third-party specialists to address shortfalls in staffing and assist with accounting and finance responsibilities.
- Increase the frequency of independent reconciliations of significant accounts to mitigate lack of segregation of duties.
- May consider appointing additional outside directors and audit committee members in the future.
- Enter into definitive agreements to acquire 100% of Bluezone Beverages and 100% of Varon Spirits within 120 days of January 21, 2026.
Key Dates
| Date | Description |
|---|---|
| 2015-07-17 | Company originally incorporated as Newmarkt Corp. under Nevada laws. |
| 2020-07-07 | Company filed Amended and Restated Certificate of Designation for Series C Preferred Stock and Certificate of Designation for Series D and Series E Preferred Stock. |
| 2020-07-10 | Company acquired Power Conversion Technologies, Inc. (PCTI) and issued Series C, D, and E Preferred Stock to Catherine Chis. |
| 2020-08-28 | Company issued 1,333 shares of Series D Preferred Stock to Mr. Conway pursuant to his employment agreement. |
| 2020-09-02 | PCTI entered into an agreement with a third-party for a perpetual 3% payment of revenues. |
| 2020-11-03 | Merger Sub merged into the Company, changing the company's name to Ozop Energy Solutions, Inc. |
| 2020-11-06 | Company entered into a Settlement Agreement for convertible notes and promissory notes, issuing a new 12% Promissory Note with a face value of $389,423. |
| 2020-11-13 | Company entered into a 12%, $1,000,000 face value promissory note due November 13, 2021. |
| 2020-12-11 | Company formed Ozop Energy Systems, Inc. (OES). |
| 2021-02-09 | Company entered into a 12%, $2,200,000 face value promissory note due February 9, 2022. |
| 2021-02-26 | Agreement with third-party (from 2020-09-02) assigned to Ozop and amended to 1.8% royalty. |
| 2021-03-17 | Company entered into a 12%, $11,110,000 face value promissory note due March 17, 2022. |
| 2021-04-14 | Company entered into a five-year lease for office and warehouse space in Carlsbad, California, beginning June 1, 2021. |
| 2021-08-19 | Company formed Ozop Capital Partners, Inc. (Ozop Capital). |
| 2021-09-01 | Ozop Capital entered into an advisory agreement with Risk Management Advisors, Inc. (RMA). |
| 2021-10-29 | EV Insurance Company, Inc. (EVCO) was formed as a captive insurance company. |
| 2021-12-07 | Company entered into a 12%, $3,300,000 face value promissory note due December 7, 2022. |
| 2022-02-25 | Company formed Ozop Engineering and Design, Inc. (OED). |
| 2022-09-01 | Board of Directors authorized Chapter 7 proceeding for PCTI, classifying it as a discontinued operation. |
| 2022-11-11 | Company entered into a non-interest bearing, $3,020,000 face value promissory note due March 31, 2023. |
| 2023-05-02 | Company entered into an Equity Financing Agreement and Registration Rights Agreement with GHS Investments LLC for up to $10,000,000 in funding. |
| 2024-06-04 | Board of Directors approved to increase authorized capital stock to 9,000,000,000 shares. |
| 2024-06-11 | Company formed Automated Room Controls, Inc. (ARC). |
| 2024-07-22 | Company filed the 2024 Amendment to increase authorized capital stock with the State of Nevada. |
| 2024-09-27 | OED signed an agreement with Leviton Manufacturing Co, Inc. to serve as a field service technician. |
| 2024-10-23 | Ozop Capital Partners, Inc. entered into an agreement with Empire Auto Protect to white label VSCs. |
| 2025-03-04 | Board of Directors approved to increase authorized capital stock to 16,000,000,000 shares. |
| 2025-04-10 | Company filed the March 2025 Amendment to increase authorized capital stock with the State of Nevada. |
| 2025-04-11 | Company entered into a new Equity Financing Agreement and Registration Rights Agreement with GHS for up to $10,000,000 in funding. |
| 2025-05-07 | Company received Notice of Effectiveness for sale of up to 800,000 post reverse split shares to GHS under the April 11, 2025 agreement. |
| 2025-05-21 | Board of Directors approved to increase authorized capital stock to 26,000,000,000 shares. |
| 2025-05-28 | Company entered into a 12%, $200,000 face value promissory note with a third-party, due May 28, 2026. |
| 2025-07-01 | Company filed the May 2025 Amendment to increase authorized capital stock with the State of Nevada. |
| 2025-07-15 | Company entered into a 12%, $200,000 face value promissory note with a third-party, due July 14, 2026. |
| 2025-07-31 | Company entered into an Exchange Agreement to convert a promissory note into convertible notes and extend its maturity date to March 31, 2026. |
| 2025-08-13 | Company entered into a 15% Secured Promissory Note for $165,000 due August 13, 2026. |
| 2025-09-01 | Company leased back its previously sold building from a related party for a three-year term. |
| 2025-09-24 | Company entered into a 12%, $200,000 face value promissory note with a third-party, due September 23, 2026. |
| 2025-10-02 | Company issued 100,000 post reverse split shares to Growth Ventures for $50,000 principal on a convertible note. |
| 2025-10-14 | Company issued 119,225 post reverse split shares to Auctus for $23,095 accrued interest and $750 fees on a promissory note. |
| 2025-10-27 | Company sold 30,372 post reverse split shares to GHS for net proceeds of $10,406. |
| 2025-11-21 | Company entered into a 15% Secured Promissory Note for $250,000 due November 21, 2026. |
| 2025-11-28 | Company was in default of the May 28, 2025, promissory note due to violation of amortization payments. |
| 2025-12-02 | Company issued 126,689 post reverse split shares to Auctus for $24,588 accrued interest and $750 fees on a promissory note. |
| 2025-12-09 | Company loaned Bluezone Beverages $150,000 in exchange for a promissory note. |
| 2026-01-05 | Company entered into a 15% Secured Promissory Note for $100,000 due January 5, 2027, and issued a $75,000 note receivable to a related party. |
| 2026-01-16 | Company filed a Certificate of Amendment to effect a 1-for-5,000 reverse stock split. |
| 2026-01-21 | Effective date of the 1-for-5,000 reverse stock split; Company entered into a binding letter of intent to acquire Bluezone Beverages and Varon Spirits; Company entered into a 12%, $75,000 face value convertible promissory note due October 30, 2026; Company entered into a 12%, $147,000 face value convertible promissory note due October 30, 2026. |
| 2026-02-03 | Company entered into a 15% Secured Promissory Note for $110,000 due February 3, 2027. |
| 2026-02-04 | Company issued a $100,000 note receivable to a related party. |
| 2026-02-05 | Holder of promissory note dated August 24, 2020, converted $13,424 of accrued interest and fees into 142,500 shares of common stock. |
| 2026-02-21 | Company's Common Stock began trading on a reverse stock split-adjusted basis. |
| 2026-03-02 | Company issued 300,000 shares of restricted common stock for advisory services. |
| 2026-03-25 | Holder of promissory note dated August 24, 2020, converted $8,319 of accrued interest and fees into 179,900 shares of common stock. |
| 2026-04-14 | Holder of a convertible promissory note converted $12,950 of principal into 185,000 shares of common stock. |
| 2026-04-20 | Company issued 300,000 shares of restricted common stock for advisory services; Company entered into a 12%, $100,000 face value convertible promissory note due January 30, 2027. |
| 2026-05-08 | Holder of promissory note dated August 24, 2020, converted $23,023 of accrued interest and fees into 213,100 shares of common stock. |
| 2026-05-13 | Company entered into a 15% Secured Promissory Note for $110,000 due May 13, 2027. |
| 2026-05-14 | Date of filing of this annual report on Form 10-K. |
Recommendation
strong sellThe company's financial position is severely distressed, marked by a substantial increase in net losses, a dramatic decline in revenue, a massive accumulated deficit, and a significant working capital deficit. The auditor has raised 'substantial doubt' about the company's ability to continue as a going concern. Furthermore, the company is in default on over $18 million in debt, and management has declared internal controls over financial reporting ineffective. While there are ongoing capital raises, these appear to be highly dilutive and insufficient to address the fundamental financial instability. The recent reverse stock split is often a sign of a company struggling to maintain its listing or attract investment, and the related party transactions raise governance concerns. Given these critical issues, the stock presents an extremely high risk with little to no clear path to sustainable profitability or solvency, warranting a strong sell recommendation.
Keywords
renewable energy, EV charging, energy storage, lighting controls, vehicle service contracts, SEC filing, 10-K, financial results, going concern, debt default, capital raise, reverse stock split, corporate governance, cybersecurity
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.