VYST 10-K & 10-Q changes, risk factors and insider trading

We source our products from non-exclusive, third-party producers, many of which are located in foreign countries. We depend upon the ability of third-party producers to secure a sufficient supply of raw materials, a skilled workforce, adequately finance the production of goods ordered and maintain sufficient manufacturing and shipping capacity. Tariffs by the U.S. government have impacted future production. We cannot be certain that we will not experience operational difficulties with our manufacturers, such as insufficient quality control, failures to meet production deadlines or increases in manufacturing costs.

Our ability to compete and grow depends in large part on the efforts and talents of our executive officersofficer orand our ability to attract highly qualified employees. We require the key employee(s) to enter into employment agreements, but in the U.S., employees are free to leave an employer at any time without penalties. The loss of our key employeesemployee or the inability to hire additional skilled employees as necessary could result in significant disruptions of our business, and the integration of replacement personnel could be time-consuming and expensive and cause us additional disruptions.

Because of net operating losses we have experienced for federal income tax purposes at December 31, 2024,2025, we had federal net operating loss (“NOL”) carry-forwards of approximately $39 million ($38 million for 2023) available to offset future taxable income. Our ability to utilize NOL carry-forwards to reduce future taxable income may be limited under Section 382 of the Internal Revenue Code if certain ownership changes in our Company occur during a rolling three-year period. These ownership changes include purchases of common stock under share repurchase programs, the offering of stock by us, the purchase or sale of our stock by 5% shareholders, as defined in the Treasury regulations, or the issuance or exercise of rights to acquire our stock. If such ownership changes by 5% shareholders result in aggregate increases that exceed 50 percentage points during the three-year period, then Section 382 imposes an annual limitation on the amount of our taxable income that may be offset by our NOL carry-forwards or tax credit carry-forwards at the time of ownership change. The limitation may affect the amount of our deferred income tax asset and, depending on the limitation, a significant portion of our NOL carry-forwards or tax credit carry-forwards could expire before we are able to use them. In such an event, our business, financial condition, results of operations or cash flows could be adversely affected. We believe we have not experienced an ownership change under Section 382 of the Internal Revenue Code as of December 31, 20242025; however, the amount by which our ownership may change in the future could be affected by purchases and sales of stock by 5% shareholders and new issuances of stock by us, should we choose to do so.

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 has assembled a distribution network for sales of RX400 and RX800, our newest unit to the healthcareRX400™ andFDA medicalcleared markets.Class II Filterless Air Purifier. Vystar also sells the ViraTecViraTech replacement cartridge cartridge for approximately 25,000 units that have been previously sold. The RX3000,RX3000™ Commercial FDA cleared Class II Air Purifier, our largest unit, hasis beencurrently reengineered and samples of those unitsnot in stock. We are not producing more of those at this time.production. We have engineeredproduced a sample size of the RX300RX800™ FDA cleared Class II Filterless Air Purifier and they are currently in the testing stage. We have a smallerprototype versionfor ofthe ourRX300, unit andwhich hope towill be inrenamed RX600, and are exploring production with that unit in late 2025. options. The companyCompany also hopes to have an even smaller unit designed during 2026 for automobiles and refrigerators that haswith USB charging. Tariffs by the U.S. government may impact future production.

Vytex researcher Dr. Ranjit Matthan and CMC Global Director John Heath presented at The International Latex Conference which was held virtually July 20 to 22, 2021 and offered a plenary session entitled “Innovations and Sustainability in Natural 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 theto new economic circumstances; including strategy and policy shifts in supply chain management and restoring greater geographic diversification of latex processing and product manufacturing. The R&D association with IRMRA promises quicker laboratory and field-based testing and evaluations downstream. At Vystar, the recalibrated 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 continue to face new penetration and high cost-benefit acceptance challenges in this decade. A PDF of the full presentation is available on vytex.com.

Consolidated revenues for the year ended December 31, 20242025 and 20232024 were $135,969$54,821 and $525,883,$135,969, respectively, for a decrease of $389,914$81,148 or 74.1%.59.7%. The Revenues from operationsdecrease in 2023revenues was increaseddue byin approximately $401,000 duepart to decreasedreduced allowancessales to a former major customer and shippinga tospecial distributors.bulk Withoutsale of Vytex products in 2024. The theseCompany modifications,will revenuesaggressively forreview 2024its pricing and 2023sales wouldstrategies bein consistent year over year.2026.

Consolidated gross profit for the year ended December 31, 20242025 and 20232024 was $69,641$31,815 and $384,583,$69,641, respectively, for a decrease of $314,942$37,826 or 81.9%.54.3%. Consolidated cost of revenue for year ended December 31, 20242025 and 20232024 was $66,328$23,006 and $141,300,$66,328, respectively, a decrease of $74,972$43,322 or or 53.1%.65.3%. The decrease in gross profit and decrease in cost of revenue was primarily due to inventorydecreased sales and salesincreased allowancechannel modifications in 2023. Our allowances are conservatively stated for our inventory valuation.costs.

The Company’s operating expenses consist primarily of share-based 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 such as advertisingrent and consulting. The Company’s consolidated operating expenses was $1,587,220$1,092,355 and $1,924,552 $1,587,220 for the year ended December 31, 20242025 and 2023,2024, respectively, for a decrease of $337,332$494,865 or 17.5%.31.2%. The decrease in operating expenses was due to reduceda operationstemporary suspension of consulting fees to Blue Oar Consulting, Inc. (“Blue Oar”), decrease in 2024.professional fees consistent with the winding down of litigation matters, and share-based compensation consistent with higher common stock prices.

Other income (expense), net for the year ended December 31, 20242025 and 20232024 was $(154,488470,854) and $543,252,$(154,488), respectively, for an decreaseincrease of $697,740$316,366 or 128.4%.204.8%. DecreasesThe increase in 2024other includedexpenses is primarily due to increases in interest expense of $156,818 and a gainchange in net loss on settlement of liabilities of $77,560 as compared to $596,670 in 2023, an increase in interest expense of $194,170. which was reduced by other income of $15,540 in 2024$144,008.

Income (loss) from discontinued operations for the year ended December 31, 20242025 and 20232024 was $4,192,379$(456) and $(7,322,678),$4,192,379, respectively, for a decrease an increase of $11,515,057$4,192,835 or 157.3%.100%. The increasedecrease was attributable to the derecognition of Rotmans facility lease inand 2024 as compared tothe winding down of operations in 2023.2024.

Net income (loss) for the year ended December 31, 20242025 and 20232024 was $2,520,312$(1,531,850) and $(8,319,395),$2,520,312, respectively. Net income in 2024 includes income from discontinued operations of $4,192,379 compared to a loss from discontinued operations of $7,322,678 in 2023.$4,192,379.

The Company’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, 2024,2025, the Company had cash of $7,712$4,454 and a deficit in working capital of $5,432,726.$6,614,169. For the year ended December 31, 2025, the Company had a net loss of $1,531,850 and an accumulated deficit of $61,384,883. For the year ended December 31, 2024, the Company had a net income of $2,520,312 and an accumulated deficit of $59,853,225. For the year ended December 31, 2023, the Company had a net loss of $8,319,395 and the accumulated deficit amounted to $60,612,738.$59,853,225. We use working capital to finance our ongoing operations, and since those operations do not currently cover all of our operating costs, managing working capital is essential to our Company’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.

The Company had no cash flows provided by investing activities during the year ended December 31, 2025. The Company had cash flows provided by investing activities from discontinued operations of $1,000 and $592,483 during the year ended December 31, 2024 and 2023, respectively, for sales of property and equipment.

During the year ended December 31, 2024,2025, the Company expensed approximately $440,000$375,000 related to this employment agreement. Vystar issued 1,300,000 shares of common stock on December 23, 2024 for share-based compensation totaling $76,112. As of December 31, 2024, 2025, the Company had a stock subscription payable balance of $363,853$738,684 or approximately 24,475,00028,072,000 shares of common stock to Ms. Rotman.

Blue Oar Consulting, Inc. (“Blue Oar”) provides business consulting services to the Company. This entity is owned by Gregory Rotman, who is the sisterbrother of the Company’s CEO, Jamie Rotman. Blue Oar provides business consulting services to the Company. In exchange for such services, the Company has entered into a consulting agreement with the related party entity. Per the consulting agreement, Blue Oar is to be paid $15,000 per month in cash for expenses, and $12,500 per month to be paid in shares based on a 20-day average at a 50% discount to market. The Company and Blue Oar mutually agreed to temporarily suspend the monthly payment for expenses beginning in January 2025. During the year ended December 31, 2024,2025, the Company expensed approximately $633,000$312,000 related to the consulting agreement. Vystar issued 1,509,6424,036,812 shares of common stock onduring December 23, 20242025 for prior accrued share-based compensation totaling $632,263. $63,806. As of December 31, 2024,2025, the Company had a stock subscription payable balance of $851,022,$1,099,573, or approximately 110,407,000109,368,000 shares to be issued in the future and $405,000 of consulting expenses in accounts payable to this entity.