Holders

These quotations do not reflect retail markup, markdown or commission and may not necessarily represent the prices of actual transactions during these quarterly periods.

Holders of Record

As of December 31, 2017,2022, there were 238209 holders of record of our common stock. stock. Because some of our shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of stockholders represented by these record holders.

DividendsDividend Policy

We have never paid or declared any cash dividends on our common stock and we do not intend to pay or declare dividends on our common stock in the near future. We presently expect to retain any future earnings to fund continuing development and growth of our business. Our payment of dividends is subject to the discretion of our board of directors and will depend on earnings, financial condition, capital requirements and other relevant factors.

Issuer Purchases of Equity Securities

We did not make any repurchases of our equity securities during the 2017 fiscal year.None.

Securities Authorized for Issuance Under Equity Compensation Plans

Information concerning our equity compensation plans is set forth in Item 12 of Part III of this Annual Report on Form 10-K.

Recent Sales of Unregistered Securities

Common Stock and Warrant Grants

From January 1, 20172022 through December 31, 2017, we issued 7,244,2252022, Vystar retired 200 shares of our common stock valued at $490,000 for services rendered to the Company in 2017 and 9,503,993 shares were issued in investments and cashless conversion of options and warrants valued at $384,500. During the period, 1,109,406 shares of common stock valued at $55,359 were issued upon the conversion of convertible notes.stock.

From January 1, 2017 through December 31, 2017, we issued 1,240,250 warrants to purchase shares of common stock for services rendered to the Company per the following:

Stock Option Grants

FromThere were no stock option grants issued from January 1, 20172022 through December 31, 2017, we issued 1,500,000 options to purchase common stock to Board members2022.

Proceeds from loans and employees per the following:shareholder, convertible and contingently convertible notes payable

There were no proceeds from October 1, 2022 through December 31, 2022.

Application of Securities Laws and Other Matters

No underwriters were involved in the foregoing sales of securities. The securities described above were issued to investors in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2)4 (2) under the Securities Act and Regulation D promulgated thereunder, as applicable, relative to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required.

The issuance of stock options as described above were issued pursuant to written compensatory plans or arrangements with our employees, directors and consultants, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of common stock, warrants and options described above included appropriate legends setting forth that the securities had not been registered and the applicable restrictions on transfer.

As a smaller reporting company, we are not required to provide the information required by this Item pursuant to 301(c) of Regulation S-K.

This analysis of our results of operations should be read in conjunction with the accompanying financial statements, including notes thereto, contained in Item 8 of this Report. This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Statements that are predictive in nature and that depend upon or refer to future events or conditions are forward-looking statements. Although we believe that these statements are based upon reasonable expectations, we can give no assurance that projections will be achieved. Please refer to the discussion of forward-looking statements included in Part I of this Report.

Overview

About RxAir

RxAir promotes a healthy lifestyle through the use of its innovative, patented ViraTech air purification technology, thereby improving the quality of life of each and every customer. Independently tested by EPA- and FDA-certified laboratories, the RxAir has been proven to destroy greater than 99% of bacteria and viruses and reduce concentrations of odors and VOCs. The RxAir uses high-intensity germicidal UV lamps that destroy bacteria and viruses instead of just trapping them, setting it apart from ordinary air filtration units. RxAir® and ViraTech® are registered trademarks of Vystar LLC,Corp. For more information, visit http://www.RxAir.com.

The Company’s RxAir product line use 48 inches of high-intensity germicidal UV lamps that destroy bacteria, viruses and other germs instead of just trapping them, setting it apart from ordinary air filtration units. RxAir is one of the predecessorfew UV air purifiers that have been proven in independent EPA- and FDA- certified testing laboratories to destroy on the first pass 99.6% of harmful airborne viruses and bacteria. In addition to inactivating airborne viruses that cause influenza (flu) and colds, RxAir’s device disarms the airborne pathogens that cause MRSA (staph), strep (whooping cough), tuberculosis (TB), measles, pneumonia and a myriad of other antibiotic-resistant and viral infections.

The RxAir product line includes:

Vystar produces the RxAir product line with a world-class manufacturer and an expert U.S. engineer with a full understanding of the RxAir technology. Vystar sells RxAir residential and commercial units via distributors, online and through retail channels. Vystar is assembling the distribution network to relaunch sales of RX400 and RX3000 units to the healthcare and medical markets, which UV Flu had ceased due to a lack of sales force, distribution and cash flow constraints. Once sales are firmly re-established, Vystar expects that the air purification products will produce margins of approximately 70%.

About Rotmans

Rotmans, formerly the largest furniture and flooring store in New England and one of the largest independent furniture retailers in the U.S., encompassed over 170,000 square feet in Worcester, Mass., employed approximately 50 people, was founded and had been under the leadership of the Rotman family for the past 50 years. Rotmans added approximately $20 million annually to Vystar’s top line revenue and enabled Vystar to capitalize on the infrastructure already in place for accounting, retail sales facilities and staff, customer service, warehousing, and delivery. Steven Rotman and a group of dedicated employees provided continuity of management and customer-focused values for the Company was formed February 2, 2000,until closure in late December 2022.

About Vytex

Vytex is a multi-patented latex raw material in which the allergy causing proteins are reduced to a level that falls at or below detection based on ASTM approved test methods. Vytex has been available as a Georgia limited liability companyraw material commercially for fourteen years and through that time has a group of manufacturers who use it in end products such as electrical gloves, condoms, adhesives, etc. Ironically, most use Vytex as it’s better for their manufacturing process as an easier to use raw material and not for protein properties. As of mid-2020 Vystar and the Indian Rubber Manufacturers Research Association’s (“IRMRA”) had been actively collaborating to develop viscoelastic deproteinized natural rubber (DPNR) variants having properties for expanding applications in specific new arenas such as green tires, biodegradable and other unique bioelastoplast product lines that desire a new approach. Additionally, this research, while slowed by Travis W. Honeycutt. Operations under the LLC entity were focused substantially onCOVID-19 pandemic, showed attributes with extra low ammonia offerings that are desired.

Towards the research, developmentend of 2020, Vystar entered into a Market Development and testing ofDistribution Agreement with Corrie MacColl, Ltd. (“CMC Global”) to produce, develop and manage the Vytex®Vytex product and supply lines. This agreement allows Vystar to expand the market for its Natural Rubber Latex (“NRL”) process,products and has garnered much attention across a broad range of industries including liquid Vytex as well as attaining intellectual property rights. In 2003, the Company reorganized as Vystar Corporation, a Georgia corporation, at which time all assets and liabilitiesnewly developed dry rubber Vytex. As of the limited liability company became assetsdate of this report, CMC Global has provided numerous opportunities that are in a trial basis or moving towards manufacturing trials in industries that use a significant amount of natural rubber latex, hence Vytex that now includes production size trial runs in a large dipped product consumer line starting late 2022. As of January 2023, Vytex is now in full R&D phase for a large corporation focused on replacing a petrochemical based binder with a water-based coating using Vytex. As the move to use sustainable materials grows so does interest in Vytex through Corrie MacColl. Additionally, Vystar now has a testing supply of Vytex dry rubber for larger trials. The success of early trials and liabilitiesthe shipping crisis has led to broader spectrum of manufacturers combining the potential of Cameroon production with strategically placed contract manufacturers based on geographical needs including the North American market. Also, Vystar Corporation, including all intellectual property rights,research has shown great strides in specializing liquid Vytex (ultra-low protein latex, ULPL) to meet the immediate needs of customers such as low or no nitrosamine and others (discussed in the presentation below available in the pdf) and additional patents have been proposed to cover these findings. Research into dry rubber continues at a moderate pace as tire companies seek out alternatives to synthetics.

In Halcyon Agri (owner of CMC Global), 2020 Corporate Report: “Our group-wide innovation capabilities have enabled us to engage in innovative commercial partnerships. Corrie MacColl is collaborating with Vystar to transform our Cameroon plantation output into ultra-pure latex with stronger molecular bond that offers enhanced strength, durability, and trademarks.

 We areflexibility in the creatorend products. This is achieved by removing non-rubber components and exclusive owner99.85% of the innovative technologyproteins.” CMC Global continues to work with the facility at Cameroon to produce Vytex NRL. This technology reduces antigenic protein in natural rubber latex products to virtually undetectable levels in both liquid NRLat their owned processing plant.

Vytex researcher Dr. Ranjit Matthan and finished latex products.CMC Global Director John Heath presented at The process also removes many of the naturally occurring non-rubber particles superfluous to end product function, resulting in a cleaner latex base material. We have introduced Vytex NRL, our “ultra-low protein” natural rubber latex, throughout the worldwide marketplace that uses NRL or latex substitutes as a component of manufactured products. Natural rubber latex is used in an extensive range of products including balloons, textiles, footwear and clothing (threads), adhesives, foams, furniture, carpet, paints, coatings, protective equipment, sporting equipment, and especially health care products such as condoms, surgical and exam gloves. We produce Vytex through licensing agreements and have introduced Vytex NRL into the supply channels with aggressive, targeted marketing campaigns directed to the end users.

We transitioned from a development stage company to the operating stage during the last quarter of 2009. During the period of 2010 to 2015, our financial condition and results of operations have experienced substantial fluctuations as we provided introductory pricing in 2010 and then began to switch to a licensing rather than a toll model in 2011. Our licensing model will continue in 2018 for the raw material business and we will focus on the licensing contracts associated with the foam and furniture offerings. Accordingly, the financial condition and results of operations reflected in our historical financial statements are not expected to be indicative of our future financial condition and results of operations.

We believe that the key for increased Vytex NRL product acceptance is to focus on companies seeking solutions to production challenges or ways to differentiate their product offering. Vystar’s technical team has been successful in developing customized formulations to meet specific manufacturer needs. Some of these formulations will become new line extensions. Vystar is becoming less of a raw material provider and more of a technology innovator through its technical consultation and formulation activities.

In addition to this technology focus, we are determined to have the “made with Vytex” claim added to products made using various forms of Vytex NRL. To help drive this effort we’re focusing on products that benefit from Vytex NRL low non-rubber features. As part of this effort, we are working with a licensee to launch a line of foam core products used in various bedding products including pillows, mattresses and mattress toppers.

In January 2015 Vystar announced that it had entered into an exclusive agreement with NHS to distribute mattresses, mattress toppers and pillows made with its multi-patented Vytex NRL raw material. NHS is a distribution company led by Steve Rotman of Rotman’s Furniture and as of December 18, 2017 is the CEO of Vystar and focuses on innovative, sustainably sourced, eco-friendly material and technologies for use in furnishings and other markets. Our Vytex NRL fits the needs of this unique new distributor which has already attracted such firms as mattress manufacturer Gold Bond that was formed in 1899 to manufacture and then distribute mattresses, toppers and pillows along with a plan to reach specific segments of the United States by targeting other manufacturers. Vystar has focused on these segments since 2015 and will continue into 2018 as we display at furniture and mattress conventions and attend and sell at sleep products meetings such as ISPA 2016 (International Sleep Products Association) held in Orlando, FL and ISPA 2017 in Tampa, FL and attending ISPA 2018 in Charlotte, NC. Vystar will also continue to develop specialty versions of Vytex NRL after presenting to the International Latex Conference which was held virtually July 20 to 22, 2021 and offered a plenary session entitled “Innovations and Sustainability in Akron OHNatural Rubber Latex - The New Paradigm.” The presentation discussed the dramatic effect the COVID-19 pandemic has had on the natural rubber supply chain, and how the industry is reacting the new economic circumstances; including strategy and policy shifts in July 2016supply chain management and 2017restoring greater geographic diversification of latex processing and sending out samples for lab trials.product manufacturing. The R&D association with IRMRA promises quicker laboratory and field-based testing and evaluations downstream. At Vystar, is currently producing Vytex thread samples for an entry into the thread marketplace. In September 2016, the Vystar Board of Directors votedrecalibrated sustainability programme (FSC, nitrosamines & ammonia free, ultralow proteins, no SVHC and green carbon neutrality) emphasize certifications with Corrie MacColl market reach facilitating faster rollouts. Nontraditional/non Hevea brasiliensis based production efforts are likely to end the January 2015 agreement with NHScontinue to face new penetration and replace it with a global exclusive for foam manufactured with Vytex and sold into the home furnishings industry. This change reflects the global naturehigh cost-benefit acceptance challenges in this decade. A PDF of the mattress, topperfull presentation is available on vytex.com.

Additionally, in August 2021, Dr. Matthan presented new data to the Automotive Tyre Manufacturers’ Association including Vytex dry rubber.

Management Objectives

The COVID-19 pandemic has raised awareness of airborne disease transmission and pillow businesses.consumers’ desire to reduce their risk of infection through the use of air purifiers. The Company has pivoted its resources to meeting the demand for air purifiers by adding additional distributors to the RxAir sales network and contracting the development of the next generation RxAir Ultraviolet-C light air purifiers.

Vystar and the Indian Rubber Manufacturers Research Association’s (“IRMRA”) are actively collaborating to develop viscoelastic deproteinized natural rubber (“DPNR”) variants having properties for expanding applications in specific new arenas such as green tires, biodegradable and other unique bioelastoplast product lines that desire a new approach.

Vystar entered into a Market Development and Distribution Agreement with Corrie MacColl to produce, develop and manage the Vytex product and supply lines. This agreement allows Vystar to expand the market for its Natural Rubber Latex products.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. As such, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. Our management reviews its estimates on an on-going basis. We base our estimates and assumptions on historical experience, knowledge of current conditions and our understanding of what we believe to be reasonable that might occur in the future considering available information. Actual results may differ from these estimates, and material effects on our operating results and financial position may result.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Fair Value Inputs Related to Share-based and Other Equity Compensation

Generally accepted accounting principles require all share-based payments, including grants of employee stock options, stock grants and warrants, to be recognized in the financial statements based on their fair values. We compute the value of option awards granted by utilizing the Black-Scholes valuation model based upon their expected lives, expected volatility, expected dividend yield, and the risk-free interest rate. The value of the awards is then straight-line expensed over the service period of the awards. Issuance in shares of common stock is valued using the closing market price on the measurement date.

Inventories

Inventories include those costs directly attributable to the product before sale. Inventories consist primarily of RxAir purifiers, foam toppers and pillows and are carried at net realizable value, which is defined as selling price less cost of completion, disposal and transportation. The Company evaluates the need to record write-downs for inventories on a regular basis. Approximate consideration is given to obsolescence, slow-moving and other factors in evaluating net realizable values. Inventories not expected to be sold within 12 months are classified as long-term.

Allowance for Doubtful Accounts

Revenue

We maintain allowances for doubtful accounts for estimated losses resultingrecognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when product is shipped based on fulfillment by the Company. The Company considers fulfillment when it passes all liability at the point of shipping through third party carriers. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers, which is typically within a 1 to 2 days or approximately 30 days from the inabilitytime control is transferred when sold to wholesalers, distributors and retailers. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenue. We assess our customers to make required payments. If theestimates of expected returns at each financial conditionreporting date.

Valuation and Impairment of our customers were to deteriorate, resulting inIntangible and Long-Lived Assets

We perform an impairment assessment of their ability to make payments, additional allowances may be required. Our allowances for doubtful accounts amounted to $0 for both December 31, 2017 and 2016. For the fiscal year 2017, the Company generated revenue from three customers and we have no history of not collecting from any of them. We therefore determined there was no need currently to carry an allowance for doubtful accounts.

Fixed Asset Lives

We estimate the useful life of equipment and other fixedintangible assets using judgment, conventionsincluding goodwill annually or more frequently as warranted by events or changes in the industries in which we operate, and research on resale values. The Company currently has no fixed assets on its balance sheet. If the Company were to acquire any fixed assets, we will review equipment and fixed asset lives annually in our impairment analyses.

Impairment Analyses

circumstances. We review long-lived assets such as property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. If the total of the estimated undiscounted future cash flows is less than the carrying value of the assets, an impairment loss is recognized for the excess of the carrying value over the fair value of the long-lived assets.

Income Taxes

We account for income taxes using the assets and liability method. This method requires that the deferred tax consequences of temporary differences between the amounts recorded in our financial statements and the amounts included in our federal and state income tax returns be recognized in the balance sheet. Estimates are often required with respect to, among other things, the potential utilization of any operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realizable in the future. We believe that it is more likely than not that the amounts recorded as deferred income tax assets will not be recoverable through future taxable income generated by us. As a result, the The Company recorded a 100% valuation allowance againstloss on impairment in 2022 of $297,723 related to our net deferred tax assets asreassessment of December 31, 2017 and 2016. We believe the procedures and estimates usedUV Flu intangible assets. The Company recorded a loss on impairment in our accounting for income taxes are reasonable and in accordance with established tax law. A tax benefit arising from an uncertain tax position can only be recognized for financial reporting purposes if, and2021 of $245,050 related to the extentdiscontinuation of NHS proprietary technology and customer relationships.

Accounting for Derivative Financial Instruments

The Company evaluates stock options, stock warrants, notes payable or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity. The result of this accounting treatment could be that the positionfair value of a financial instrument is more likely than not to be sustained in an audit by the applicable taxing authority. We had no material unrecognized tax benefitsclassified as a derivative instrument and related tax liabilitiesis marked-to-market at December 31, 2017each balance sheet date and 2016. Penalties related to uncertain tax positions would be recorded as a component of general and administrative expenses. Interest relating to uncertain tax positions would beliability. In the event that the fair value is recorded as a componentliability, the change in fair value is recorded in the statement of interestoperations as other income or other expense. We do not believe there will be any such uncertain tax position, costsUpon conversion or liabilities for anyexercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC 815-40 are reclassified to a liability account at the fair value of the years under auditinstrument on the reclassification date.

Leases

The Company has adopted and takeimplemented ASC 842, Leases, where Rotmans recognized right-of use assets and lease liabilities. For leases in which the acquiree is a conservative approachlessee, the Company measured the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease at the acquisition date. The Company measured the right-of-use asset at the same amount as the lease liability as adjusted to all tax matters.reflect favorable and unfavorable terms of the lease when compared with market terms.

RESULTS OF OPERATIONS

Year ended December 31, 20172022 compared to year ended December 31, 20162021

Revenues

Revenues

Consolidated revenues for the fiscal year ended December 31, 20172022 and 2016 from the Company2021 were $16,754$116,533 and $122,546,$1,669,002, respectively, for a decrease of $105,792$1,552,469 or 86.3%93.0%. The decrease in revenues from operations was principally due to an increased return allowance and reduced market demand for our products with the closing of the Kiron division. Revenueslessening COVID-19 pandemic.

Consolidated gross loss for the fiscal year ended December 31, 20172022 and 2016 from the Company’s continuing operations were $16,7542021 was $388,692 and $40,193,$241,900, respectively, for a decreasean increase of $23,439$146,792 or 58.3%60.7%. The decrease in revenues from continuing operations was due to fluctuations in latex prices and changes in customer product mix.

Consolidated gross profitcost of revenue for the fiscal year ended December 31, 20172022 and 2016 from the Company were $(4,744)2021 was $505,225 and $81,851,$1,910,902, respectively, for a decrease of $86,595$1,405,677 or 105.8%73.6%. Gross profit from continuing operations for the fiscal year ended December 31, 2017The increase in gross loss and 2016 was $(4,744) and $19,720, respectively, for a decrease of $24,464 or 124.1%. Costcost of revenue from continuing operations for fiscal year ended December 31, 2017 and 2016 was $21,498 and $20,473, respectively an increase of $1,025 or 5.0%.primarily due to decreased revenues.

Operating Expenses

The Company’s operating expenses consist of general and administrative expenses. General and administrative expenses consist primarily of compensation and support costs for management, sales and administrative staff, and for other general and administrative costs, including professional fees related to accounting, finance, and legal services as well as other operating expenses.expenses such as advertising and consulting. The Company’s consolidated operating expenses were $1,125,638was $2,558,708 and $1,120,399$3,553,662 for the fiscal year ended December 31, 20172022 and 2016,2021, respectively, for an increasea decrease of $5,239$994,954 or 0.5%28%. The Company’sdecrease in operating expenses from continuing operations for the fiscal year ended December 31, 2017was due to reduced professional fees, advertising and 2016 were $1,125,638 and $1,096,354, respectively, for an increase of $29,284 or 2.7%.other operating expenses in connection with reduced revenues.

Other Income (Expense)

Other income (expense) for the fiscal year ended December 31, 20172022 and 2016 were $120,5692021 was ($496,127) and ($17,157)360,950), respectively, for a net increase in expense of $135,177 or 37.5%. Increases in other income (expense) in 2022 included an increase in loss on settlement of $137,726 or 802.7%. This large fluctuation was due to the write-offdebt, net of $1,942,423, an increase in change in value of derivative liabilities of $1,778,100 and a reduction of interest expense of $82,746.

Discontinued Operations

Income (loss) from discontinued operations related accounts payable in the amount of $42,056 and the derecognition and write-off of disputed Vystar related accounts payables. Interest expense for the fiscal year ended December 31, 20172022 and 2016 were $174,6612021 was ($887,628) and $165,594, respectively for an increase of $9,067 or 5.5%. This was a primarily a result of an increase in the LIBOR index rate on the CMA Loan as well as additional Shareholder Notes in 2017.

Net Loss

Net loss for the fiscal year ended December 31, 2017 and 2016 were $1,184,474 and $1,221,298,$2,515,827, respectively, for a decrease of $36,824$3,403,455 or 3.0%135.3%. Income from discontinued operations in 2021 included forgiveness of Paycheck Protection Program loans of $2,805,800 and Employee Rentention Credits of $771,287.

Net Loss

Net loss for the year ended December 31, 2022 and 2021 was $4,331,155 and $1,640,685, respectively, for an increase in net loss of $2,690,470 or 164%. Net loss in 2022 and 2021 includes net (income) loss attributable to noncontrolling interest of $372,803 and ($1,056,647), respectively. The smaller net loss the Company experienced in the fiscal year ended December 31, 2017 versus the same period in 20162021 was primarily attributable to COVID-19 programs mainly the reduction in third-party contract services.Paycheck Protection Program loans forgiven of $2,805,800 and Employee Retention Credits of $771,287.

LIQUIDITY AND CAPITAL RESOURCES

The Company'sCompany’s financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. However, we have incurred significant losses and experienced negative cash flow since inception. At December 31, 2017,2022, the Company had cash of $13,502$12,274 and a deficit in working capital of $2,774,565.$3,069,379. For the year ended December 31, 2017,2022, the companyCompany had a net loss of $1,184,474$4,331,155 and an accumulated deficit of $27,999,123.$55,368,868. For the year ended December 31, 2016,2021, the companyCompany had a net loss of $1,221,298$1,640,685 and the accumulated deficit amounted to $26,814,649.$51,410,516. We use working capital to finance our ongoing operations, and since those operations do not currently cover all of our operating costs, and managing working capital is essential to our Company'sCompany’s future success. Because of this history of losses and financial condition, there is substantial doubt about the Company’s ability to continue as a going concern.

Net cash used in operating activities was $498,963$617,193 for the year ended December 31, 20172022 as compared to $907,441$2,499,954 for the year ended December 31, 2016.2021. During the year ended December 31, 2017,2022, cash used in operations was primarily due to the net loss for the year of $1,184,474$4,348,955 net of non-cash related add-back of share-based compensation, expensedepreciation, amortization, change in fair value of $710,348.derivative liabilities and loss on settlement of debt, net.

The Company had no net cash provided by investing activities during the year ended December 31, 2017. Net2022 as compared to $371,431 cash provided byused in investing activities for the year ended December 31, 2016 was $2,701 was a result of selling some equipment.2021.

Net cash provided by financing activities was $476,183$499,947 during the year ended December 31, 2017,2022, as compared to cash provided of $911,963$2,023,347 during the year ended December 31, 2016.2021. During 20172022, cash was provided from the proceeds from related party advances of $266,541 and issuance of commonpreferred stock of $85,000. During 2021, cash was provided from the proceeds in notes payable in the amount of $384,500$290,000 and $91,683 in proceeds from Shareholder Notes. In 2016, the cash provided by financing activities was provided from the issuancerelated party advances of common stock in the amount of $723,456, $53,500 from the exercise of common stock warrants and $135,000 in proceeds from Shareholder Notes.$533,039.

A successful transition to attaining profitable operations is dependent upon obtaining sufficient financing to fund the Company’s planned expenses and achieving a level of revenue adequate to support the Company’s cost structure. Management plans to finance future operations using cash on hand, as well as increased revenue from RxAir air purifier sales and Vytex license fees, that now also include the company’sCompany’s association with foam cores made from Vytex used in mattresses, mattress toppers and pillows, stock warrant exercises from existing shareholders, and raising capital through private placement memoranda (see Note 13, Subsequent Events). Because of this history of losses and financial condition, there is substantial doubt about the Company’s ability to continue as a going concern.pillows.

There can be no assurances that we will be able to achieve projected levels of revenue in 20182023 and beyond. If we are not able to achieve projected revenue and obtain alternate additional financing of equity or debt, we would need to significantly curtail or reorient operations during 2018,2023, which could have a material adverse effect on our ability to achieve our business objectives and as a result, may require the Company to file for bankruptcy or cease operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.

Our future expenditures will depend on numerous factors, including: the rate at which we can introduce RxAir products and license Vytex NRL raw material and the foam cores made from Vytex to manufacturers and subsequently retailers,retailers; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; andrights, along with market acceptance of our products, and services and competing technological developments. As we expand our activities and operations, our cash requirements are expected to increase at a rate consistent with revenue growth after we achieve sustained revenue generation.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Certain Relationships and Related Transactions

On April 29, 2011,Per Steven Rotman’s Employment agreement dated July 22, 2019, as amended, he is to be paid $125,000 per year in cash, $10,417 per month in shares based on a 20-day average price at a 50% discount to market, $5,000 per month in cash for expenses as well as access to a Company provided vehicle and health and life insurance. During the Company executed with CMA Investments, LLC, a Georgia limited liability company of which three of the directors of the Company (“CMA directors”) are the members (“CMA”), an unsecured line of credit bearing interest at LIBOR plus 5.25% per annum on amounts drawn and fees. The weighted average interest rate in effect on the borrowings for the yearsyear ended December 31, 20172022, the Company expensed approximately $417,000 related to this employment agreement. In addition, the Company issued 1,330,066 shares of Series C Preferred Stock for the settlement of debt totaling $3,552,321 in 2022. A loss of $1,900,950 was recognized on the issuance and 2016 was 6.37%is included in other expenses for the year. As of December 31, 2022, the Company had a stock subscription payable balance of $619,084, or approximately 920,000 shares to be issued in the future, $183,155 of reimbursable expenses payable and 5.75%, respectively.$116,403 of unpaid salary.

DuringBlue Oar Consulting, Inc. (“Blue Oar”) provides business consulting services to the tenureCompany. This entity is owned by Gregory Rotman, who is the son of the CMA Note Payable,Company’s CEO, Steven Rotman. Blue Oar provides business consulting services to the Company. In exchange for such services, the Company has increasedentered into a consulting agreement with the amount ofrelated party entity. Per the Noteconsulting agreement, Blue Oar is to be paid $15,000 per month in cash for expenses, and $12,500 per month to be paid in exchange provided benefitsshares based on a 20-day average at a 50% discount to market. During the year ended December 31, 2022, the Company expensed approximately $459,000 related to the CMA directors as follows:consulting agreement. In addition, the Company issued 221,385 shares of Series C Preferred Stock for the settlement of debt and payables totaling $702,161 in 2022. A loss of $313,340 was recognized on the issuance and is included in other expenses for the year. As of December 31, 2022, the Company had a stock subscription payable balance of $629,903, or approximately 1,049,000 shares.

The note is currently due on demand.

In January 2015, Vystar announced that it had entered into an exclusive agreement with NHS to distribute mattresses, mattress toppers and pillows made with its multi-patented Vytex NRL raw material. NHS is a distribution company led by Steve Rotman of Rotman’s Furniture and as of December 17, 2017 is the CEO of Vystar.

As a smaller reporting company, we are not required to provide the information required by this Item pursuant to 301(c) of Regulation S-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Vystar Corporation:

Vystar Corporation Opinion on the Consolidated Financial Statements

Atlanta, Georgia

We have audited the accompanying consolidated balance sheets of Vystar CorporationCorporation. (the Company)“Company”) as of December 31, 20172022 and 2016,2021, and the related consolidated statements of loss,operations, stockholders’ deficit,equity (deficit), and cash flows for the years then ended. ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred significant losses and experienced negative cash flow since inception. At December 31, 2022, the Company had cash of $12,274 and a deficit in working capital of approximately $3 million. Further, at December 31, 2022 the accumulated deficit amounted to approximately $55 million. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.

Basis for Opinion

These financial statements are the responsibility of the Company’sentity’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’sentity’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects, the financial position of Vystar Corporation as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Macias, Gini, and O’Connell LLP

Irvine, California

We have served as the Company’s recurring losses from operations, capital deficit, and limited capital resources raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 2 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.auditor since 2020

October 10, 2023

Atlanta, GeorgiaPCAOB ID: 324

March 29, 2018

VYSTAR CORPORATION

VYSTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

For the Years Ended December 31, 2017 and 2016