Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 19, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Vystar Corp | |
Entity Central Index Key | 1,308,027 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 111,954,708 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
BALANCE SHEETS (unaudited)
BALANCE SHEETS (unaudited) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash | $ 279,790 | $ 29,059 |
Accounts receivable, net of allowance for uncollectible amount of $17,398 and $60,266 and $53,317 at June 30, 2016 and December 31, 2015, respectively | 47,678 | |
Prepaid expenses | 79,507 | 233,816 |
TOTAL CURRENT ASSETS | 406,975 | 262,875 |
PROPERTY AND EQUIPMENT, NET | 2,701 | 2,979 |
OTHER ASSETS | ||
Intangible assets, net | 147,583 | 155,423 |
TOTAL ASSETS | 557,259 | 421,277 |
CURRENT LIABILITIES | ||
Related party line of credit | 1,499,875 | 1,499,875 |
Accounts payable | 499,820 | 592,739 |
Accrued compensation | 31,347 | 40,137 |
Accrued expenses | 253,028 | 209,486 |
TOTAL CURRENT LIABILITIES | 2,284,070 | 2,342,237 |
Shareholders notes payable | 700,068 | 700,068 |
TOTAL LIABILITIES | 2,984,138 | 3,042,305 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock, $0.0001 par value, 15,000,000 shares authorized; 13,828 issued and outstanding at June 30, 2016 and December 31, 2015 respectively | 1 | 1 |
Common stock, $0.0001 par value, 150,000,000 shares authorized; 111,954,708 and 96,443,907 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 11,195 | 9,644 |
Additional paid-in capital | 23,818,591 | 22,962,678 |
Accumulated deficit | (26,256,666) | (25,593,351) |
TOTAL STOCKHOLDERS' DEFICIT | (2,426,879) | (2,621,028) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 557,259 | $ 421,277 |
BALANCE SHEETS (unaudited) (Par
BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowances, account receivable | $ 17,398 | $ 60,266 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock,, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock,, shares issued | 13,828 | 13,828 |
Preferred stock,, shares outstanding | 13,828 | 13,828 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 111,954,708 | 96,443,907 |
Common stock, shares outstanding | 111,954,708 | 96,443,907 |
STATEMENTS OF OPERATIONS (unaud
STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
REVENUE | $ 2,793 | $ 20,722 | $ 7,623 | $ 23,324 |
COST OF REVENUE | 6,305 | 7,210 | 12,973 | 13,475 |
Gross margin | (3,512) | 13,512 | (5,350) | 9,849 |
OPERATING EXPENSES | ||||
General and administrative, including non-cash share-based compensation of $79,613 and $200,655 in 2016 and 2015, respectively | 316,638 | 316,025 | 631,591 | 651,083 |
Total Operating Expenses | 316,638 | 316,025 | 631,591 | 651,083 |
LOSS FROM OPERATIONS | (320,150) | (302,513) | (636,941) | (641,234) |
OTHER INCOME (EXPENSE) | ||||
Interest income | 3 | 1 | 39 | |
Other income | (15,899) | 35 | (15,899) | |
Interest expense | (61,805) | (38,397) | (101,454) | (69,359) |
Total Other Income (Expense) | (61,805) | (54,293) | (101,418) | (85,219) |
LOSS FROM CONTINUING OPERATIONS | (381,955) | (356,806) | (738,359) | (726,453) |
DISCONTINUED OPERATIONS | 53,160 | 3,338 | 75,044 | (54,248) |
NET LOSS | $ (328,795) | $ (353,468) | $ (663,315) | $ (780,701) |
BASIC AND DILUTED LOSS PER SHARE: | ||||
Loss per share from continuing operations | $ 0 | $ 0 | $ (0.01) | $ (0.01) |
Loss per share from discontinued operations | 0 | 0 | 0 | 0 |
Net loss per share | $ 0 | $ 0 | $ (0.01) | $ (0.01) |
Basic and Diluted Weighted Average Number of Common Shares Outstanding (in shares) | 105,790,975 | 83,265,600 | 102,672,286 | 78,363,623 |
STATEMENTS OF OPERATIONS (Paren
STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Share-based compensation | $ 154,441 | $ 72,313 | $ 233,964 | $ 272,968 |
STATEMENTS OF CASH FLOWS (unaud
STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (663,315) | $ (780,701) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Share-based compensation | 233,964 | 272,968 |
Allowance for uncollectible accounts receivable | (42,868) | 29,753 |
Depreciation | 278 | 962 |
Amortization of intangible assets | 7,840 | 7,840 |
Increase (decrease) in assets | ||
Accounts receivable | (4,810) | 12,772 |
Prepaid expenses | 154,309 | 83,642 |
Increase (decrease) in liabilities | ||
Accounts payable | (92,919) | (100,519) |
Accrued compensation and expenses | 34,752 | 32,315 |
Net cash used in operating activities | (372,769) | (440,968) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of common stock, net of costs | 570,000 | 340,500 |
Exercise of warrants/options | 53,500 | 65,736 |
Net cash provided by financing activities | 623,500 | 406,236 |
NET INCREASE (DECREASE) IN CASH | 250,731 | (34,732) |
CASH - BEGINNING OF YEAR | 29,059 | 73,770 |
CASH - END OF YEAR | 279,790 | 39,038 |
CASH PAID DURING THE PERIOD FOR | ||
Interest | $ 44,905 | 43,710 |
Non-cash conversion of preferred stock | $ 192,100 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2016 | |
Description Of Business | |
DESCRIPTION OF BUSINESS | NOTE 1 DESCRIPTION OF BUSINESS Vystar Corporation (Vystar, the Company, we, us, or our) is the creator and exclusive owner of the innovative technology to produce Vytex® Natural Rubber Latex (NRL) and is focused on expanding the licensing and utilization of its proprietary source natural rubber latex technology. Vystar has expanded into the consumer arena with an introduction into the mattress, mattress topper and pillow arenas aligning with key foam manufacturers, mattress, mattress toppers and pillow producers, and furniture stores in specific areas of the Unites States. On January 22, 2015, Vystar announced the signing of an exclusive domestic distribution agreement with Worcester, MA based Natures Home Solutions (NHS) who sources eco-friendly materials and technologies for use in furnishings and other markets. Vystar has also completed several trials with Vietnamese, European and Indian makers of foam products to use its Vytex NRL raw material in their current offerings in their own areas as well as to supply added needs for foam cores in both the mattress and topper arenas. The current requests from major mattress manufactures trialing Vytex foam products involves different densities especially those used on the upper levels of mattresses. The samples have been presented to the manufacturers and feedback has been very positive A similar trial is planned for October 2016 in Thailand focusing on specific densities and pillows, and a meeting with a Belgian foam maker using a unique drying concept occurred in May 2016 with discussions ongoing. In addition, working with NHS and a large Vietnamese foam manufacturer, Lien A, the group attended the International Sleep Products Association (ISPA) in Orlando in March 2016. The significance of ISPA is the focus on components for use with major mattress and pillow manufacturers, which takes Vytex foam to an additional audience. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (GAAP) for interim financial information. Accordingly, certain information and footnotes required by GAAP for complete financial statements may be condensed or omitted. These interim financial statements should be read in conjunction with our audited financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (SEC). In the opinion of Vystar management, these financial statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the three month and six month periods ended June 30, 2016 and 2015. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates. Examples include valuation allowances for deferred tax assets, provisions for bad debts, and fair values of share-based compensation. Concentration of Credit Risk Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash and accounts receivable. Cash held in banks in many cases exceeds the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor our cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets. Loss Per Share Because the Company reported a net loss for the six month periods ended June 30, 2016 and 2015, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same. Excluded from the computation of diluted loss per share were options outstanding to purchase 9,218,271 shares and 8,444,906 shares of common stock for the six months ended June 30, 2016 and 2015, respectively, as their effect would be anti-dilutive. Warrants to purchase 18,014,582 shares and 21,240,616 shares of common stock for the six months ended June 30, 2016 and 2015, respectively, were also excluded from the computation of diluted loss per share as their effect would be anti-dilutive. Revenues The Vytex segment derives revenue from license fees of Vytex NRL raw material to manufacturers and distributors of rubber and rubber-end products such as the foam used in the pillows and mattresses. Revenue is recognized when the licensee confirms payment and pays Vystar. The Kiron segment bills insurance providers and patients directly and is dependent on the practices ability to collect from healthcare insurance providers and from its patients. The Kiron segment recognized revenue each month for sleep services as services were provided and continues to collect reimbursement and patient payments until all is received either via normal processes or collections. Fair Value of Financial Instruments The Companys financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, line of credit and shareholder notes payable. The carrying values of all the Companys financial instruments approximate fair value because of their short maturities. In addition to the short maturities, the carrying amounts of our line of credit and shareholder notes payable approximate fair value because the interest rates at June 30, 2016 approximate market interest rates for the respective borrowings. In specific circumstances, certain assets and liabilities are reported or disclosed at fair value. Fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the Companys principal market for such transactions. If there is not an established principal market, fair value is derived from the most advantageous market. Valuation inputs are classified in the following hierarchy: ● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are directly or indirectly observable valuation inputs for the asset or liability, excluding Level 1 inputs. ● Level 3 inputs are unobservable inputs for the asset or liability. Highest priority is given to Level 1 inputs and the lowest priority to Level 3 inputs. Acceptable valuation techniques include the market approach, income approach, and cost approach. In some cases, more than one valuation technique is used. |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
LIQUIDITY AND GOING CONCERN | NOTE 3 LIQUIDITY AND GOING CONCERN The Companys financial statements are prepared using the accrual method of accounting in accordance with GAAP 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, the Company has incurred significant losses and experienced negative cash flow since its inception. At June 30, 2016, the Company had cash of $279,790 and a deficit in working capital of $1,877,095. Further, at June 30, 2016, the accumulated deficit amounted to $26,256,666. As a result of the Companys history of losses and financial condition, there is substantial doubt about the ability of the Company to continue as a going concern. A successful transition to attaining profitable operations is dependent upon obtaining sufficient financing to fund the Companys planned expenses and achieving a level of revenue adequate to support the Companys cost structure. Management plans to finance future operations through the use of cash on hand, increased revenue from Vytex division license fees, our credit facility, stock warrant exercises from existing shareholders, raising capital through private placements of capital stock and debt. The Companys future expenditures will depend on numerous factors, including: the rate at which the Company can introduce and license Vytex NRL to manufacturers; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of the Companys products and services; and competing technological developments. As the Company expands its activities and operations, cash requirements are expected to increase at a rate consistent with revenue growth after the Company has achieved sustained revenue generation. There can be no assurances that the Company will be able to achieve its projected level of revenue in 2016 and beyond. If the Company is unable to achieve its projected revenue and is not able to obtain alternate additional financing of equity or debt, the Company would need to significantly reorient its operations during 2016, which could have a material adverse effect on the Companys ability to achieve its 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. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 4 DISCONTINUED OPERATIONS As part of the Companys strategy to focus on realizing the potential of the Vytex foam business in the pillow and mattress markets as well as part of the Companys cost reduction plan, the Company made the decision to discontinue the operations of the Kiron division acquired in June 2013. The Kiron division revenue was $26,957 and $101,972 for the three month period ended June 30, 2016 and 2015, respectively and $76,450 and $199,261 for the six month period ended June 30, 2016 and 2015, respectively. Gains (Losses) from discontinued operations were $53,160 and $3,338 for the three month period ended June 30, 2016 and 2015, respectively and $75,044 and ($54,248) for the six month period ended June 30, 2016 and 2015, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 PROPERTY AND EQUIPMENT Property and equipment consists of the following: June 30, December 31, Furniture, fixtures and equipment $ 150,119 $ 150,119 Accumulated depreciation (147,418 ) (147,140 ) $ 2,701 $ 2,979 Depreciation expense for the three months ended June 30, 2016 and 2015 was $278 and $379, respectively. Depreciation expense for the six months ended June 30, 2016 and 2015 was $278 and $962, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 6 INTANGIBLE ASSETS Patents represent legal and other fees associated with the registration of patents. The Company has four patents with the United States Patent and Trade Office (USPTO), as well as many international PCT (Patent Cooperation Treaty) patents. Intangible assets are as follows: June 30, December 31, Patents $ 238,551 $ 238,551 Trademarks & trade name 9,072 9,072 Subtotal 247,623 247,623 Accumulated amortization (100,040 ) (92,200 ) Intangible assets, net $ 147,583 $ 155,423 Amortization expense for the three months ended June 30, 2016 and 2015 was $3,920. Amortization expense for the six months ended June 30, 2016 and 2015 was $7,840. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 INCOME TAXES There is no income tax benefit recorded for the losses for the three and six months ended June 30, 2016 and 2015 since management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of the net deferred tax asset. |
NOTES PAYABLE AND LOAN FACILITY
NOTES PAYABLE AND LOAN FACILITY | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND LOAN FACILITY | NOTE 8 NOTES PAYABLE AND LOAN FACILITY Related Party Line of Credit (CMA Note Payable) On April 29, 2011, the Company executed with CMA Investments, LLC, a Georgia limited liability company (CMA), a line of credit with a principal amount of up to $800,000 (the CMA Note). CMA is a limited liability company of which three of the directors of the Company (CMA directors) were initially the members. Pursuant to the terms of the CMA Note, the Company may draw up to a maximum principal amount of $800,000. Interest, is computed at LIBOR plus 5.25% (5.72% at June 30, 2016), on amounts drawn and fees. The weighted average interest rate in effect on the borrowings for the six months ended June 30, 2016 was 5.69%. Other terms of the CMA Note include: ● The Note is unsecured; ● No payments of principal are due until the second anniversary of the Note, at which time all outstanding principal is due and payable; and ● As compensation to the directors for providing the Note, the Company issued warrants to purchase 2,600,000 shares of the Companys common stock to the CMA Directors at $0.45 per share, which was the closing price of the Companys stock on April 29, 2011, which vest 20% immediately and 10% upon each draw by the Company of $100,000 under the Note. Because the warrants were issued and valued prior to the receipt of funds under this loan, no discount could be recorded and, accordingly, the value of the warrants was capitalized as a financing cost. The costs are being amortized on a straight line basis over the term of the Note. On September 14, 2011, the Companys Board of Directors approved increasing the line of credit with CMA by $200,000 to a maximum principal amount of $1,000,000 and the Companys Chairman and Chief Executive Officer became a member of CMA. As compensation to the CMA Directors for increasing the amount available under the CMA Note, the Board of Directors approved modifying the exercise price for the 2,600,000 compensatory stock purchase warrants previously issued to the Directors from $0.45 to $0.27 per share, which was the closing price of the Companys common stock on that date and the Company also issued warrants to purchase an additional 1,600,000 shares of the Companys stock at $0.27 per share, which was the closing price of the Companys common stock on September 14, 2011, which vest upon the original terms of the CMA Note. The costs incurred in the modification of the exercise price of the 2,600,000 compensatory stock purchase warrants issued on April 29, 2011 and the additional 1,600,000 warrants issued on September 14, 2011 are being amortized on a straight line basis over the remaining term of the CMA Note. On November 2, 2012, the Board of Directors approved an increase in the CMA line of credit from $1,000,000 to $1,500,000. As compensation to the CMA Directors for increasing the amount available under the CMA Note, warrants to purchase an additional 2,100,000 shares of the Companys stock at $0.35 per share were issued and recorded as deferred financing cost to be amortized through interest expense over the remaining term of the CMA Note. There was no amortization of the financing costs associated with the CMA Note for the three and six months ended June 30, 2016 and June 30, 2015. On April 29, 2013, the maturity date of the CMA Note was extended to April 29, 2014. As compensation to the CMA Directors for extending the maturity date of the CMA Note, the Board of Directors approved modifying the exercise price for the 6,300,000 compensatory stock purchase warrants previously issued to the Directors to $0.10 per share and the CMA Directors forfeited 630,000 of the warrants. Amortization of the financing costs associated with extending the CMA Note was amortized through interest expense. On April 30, 2014 the maturity date of the CMA Note was extended to April 30, 2015. No consideration was awarded the CMA members based on this extension. On April 29, 2015 the maturity date of the CMA Note was extended to April 29, 2016. No consideration was awarded the CMA members based on this extension. On April 29, 2016, the maturity date for the CMA Note has been extended to April 29, 2017. No consideration was awarded to the CMA members based on this extension. Shareholder Notes Payable The following table summarizes the shareholder notes payable: June 30, December 31, Shareholder notes payable $ 700,068 $ 700,068 Accrued interest 248,574 213,667 Total Shareholder Notes Payable $ 948,642 $ 913,735 Such notes are (i) unsecured, (ii) bear interest at an annual rate of ten percent (10%) per annum, and (iii) are convertible into shares of common stock at a conversion rate ranging between $0.05 and $0.10 of principal and interest for each such share. The current average conversion price for the above referenced Shareholder and Promissory Notes with an outstanding balance as of June 30, 2016 of $948,642 including accrued interest, is approximately $0.055 per share or 17,122,537 shares of the Companys common stock. The face value of the Shareholder Notes at June 30, 2016 is $700,068. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 9 STOCKHOLDERS EQUITY Common Stock and Warrants As part of a September 2014 Private Placement Memorandum, updated in February 2015 and September 2015, the Company issued 12,480,000 shares of common stock to six (6) accredited investors during the six months ended June 30, 2016. Total gross proceeds of the issuances were $570,000. No commissions were paid. The shares of common stock were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. During the six months ended June 30, 2016, the Company had 1,783,335 common stock warrants exercised at $0.03 per share for $53,500. On June 30, 2016, the Company issued 997,466 common shares as compensation under the Companys Business Development Agreement with Blue Oar Consulting, Inc. executed in March 2013 as amended in August 2013 and amended February 2014 and 250,000 common shares as compensation under the Companys Business Development Agreement with Byron Novosad executed in February 26, 2014. Cumulative Convertible Preferred Stock On May 2, 2013, the Company began a private placement offering to sell up to 200,000 shares of the Companys 10% Series A Cumulative Convertible Preferred Stock. Under the terms of the offering, the Company offered to sell up to 200,000 shares of preferred stock at $10.00 per share for a value of $2,000,000. The preferred stock accumulates a 10% per annum dividend and was convertible at a conversion price of $0.075 per common share at the option of the holder after a six-month holding period. The conversion price was lowered to $0.05 per common share for those holders who invested an additional $25,000 or more in the Companys common stock in the aforementioned September 2014 Private Placement. The preferred shares have full voting rights as if converted and have a fully participating liquidation preference. At June 30, 2016, the 13,828 shares of outstanding preferred stock had accumulated undeclared dividends of approximately $42,820, and could be converted into 3,622,001 shares of common stock, at the option of the holder. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 10 SHARE-BASED COMPENSATION Generally accepted accounting principles require share-based payments to employees, including grants of employee stock options, warrants, and common stock to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures. In total, the Company recorded $154,441 and $72,313 of stock-based compensation expense for the three month period ended June 30, 2016 and 2015, respectively, and $233,964 and $272,968 of stock-based compensation expense for the six month period ended June 30, 2016, and 2015, respectively related to employee and board member stock options and common stock and warrants issued to nonemployees. As of June 30, 2016, $212,327 of unrecognized compensation expense related to non-vested share-based awards remains to be recognized over a period of approximately four years. Options and Warrants The Company used the Black-Scholes option pricing model to estimate the grant-date fair value of option and warrant awards granted. The following assumptions were used for warrant awards during the six months ended June 30, 2016: ● Expected Dividend Yield because we do not currently pay dividends, the expected dividend yield is zero; ● Expected Volatility in Stock Price volatility based on our own trading activity was used to determine expected volatility; ● Risk-free Interest Rate reflects the average rate on a United States Treasury Bond with a maturity equal to the expected term of the option; and ● Expected Life of Award because we have minimal experience with the exercise of options or warrants for use in determining the expected life of each award, we used the option or warrants contractual term as the expected life. Options During 2004, the Board of Directors of the Company adopted a stock option plan (the Plan) and authorized up to 4,000,000 shares to be issued under the Plan. In April 2009, the Companys Board of Directors authorized an increase in the number of shares to be issued under the Plan to 10,000,000 shares and to include the independent Board Members in the Plan in lieu of continuing the previous practice of granting warrants each quarter to independent Board Members for services. At June 30, 2016, there were 618,427 shares of common stock reserved for issuance under the Plan. In 2014, the Board adopted an additional stock option plan which provides for an additional 5,000,000 shares which are all available as of December 31, 2015. The Plan is intended to permit stock options granted to employees to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (Incentive Stock Options). All options granted under the Plan that are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options. Stock options are granted at an exercise price equal to the fair market value of the Companys common stock on the date of grant, typically vest over periods up to 4 years and are typically exercisable up to 10 years. There were no options granted during the six month period ended June 30, 2016. The following table summarizes all stock option activity of the Company for the period. Number of Shares Weighted Weighted Outstanding, December 31, 2015 9,381,573 $ 0.16 5.10 Granted Exercised Forfeited (163,302 ) Outstanding, June 30, 2016 9,218,271 $ 0.15 4.63 Exercisable, June 30, 2016 6,816,070 $ 0.20 6.09 Warrants Warrants are issued to employees for expenses and for compensation in lieu of cash as well as to third parties as payment for services and in conjunction with the issuance of common stock. The fair value of each common stock warrant issued for services is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average assumptions used in the option pricing model for stock warrant grants were as follows: 2016 Expected Dividend Yield 0.00 % Expected Volatility in Stock Price 119.46 % Risk-Free Interest Rate 2.21 % Expected Life of Stock Awards Years 10.0 The following table represents the Companys warrant activity for the six months ended June 30, 2016: Number Weighted Weighted Weighted Outstanding, December 31, 2015 18,178,158 $ 0.13 5.54 Granted 1,619,760 $ 0.07 $ 0.07 9.53 Exercised (1,783,336 ) $ 0.03 Forfeited Expired Outstanding, June 30, 2016 18,014,582 $ 0.13 5.96 Exercisable, June 30, 2016 17,606,016 $ 0.13 5.99 The Company issued 1,619,760 warrants for services during the six months ended June 30, 2016 at exercise prices from $0.05 to $0.08 per share, exercisable over a period of ten years from the grant date. All of the warrants with the exception of 745,664 vested immediately with the 745,664 warrants vesting one-twelfth per month over a one-year period. The fair value of the warrants was calculated as of the date of the grant utilizing the Black-Scholes option pricing model and assumptions as detailed above. The total amount of the fair value was $108,250 and is recorded as noncash share-based compensation expense as vesting occurs. |
BASIS OF PRESENTATION AND SUM17
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (GAAP) for interim financial information. Accordingly, certain information and footnotes required by GAAP for complete financial statements may be condensed or omitted. These interim financial statements should be read in conjunction with our audited financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (SEC). In the opinion of Vystar management, these financial statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the three month and six month periods ended June 30, 2016 and 2015. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on managements best knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates. Examples include valuation allowances for deferred tax assets, provisions for bad debts, and fair values of share-based compensation. |
Concentration of Credit Risk | Concentration of Credit Risk Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash and accounts receivable. Cash held in banks in many cases exceeds the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor our cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets. |
Loss Per Share | Loss Per Share Because the Company reported a net loss for the six month periods ended June 30, 2016 and 2015, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same. Excluded from the computation of diluted loss per share were options outstanding to purchase 9,218,271 shares and 8,444,906 shares of common stock for the six months ended June 30, 2016 and 2015, respectively, as their effect would be anti-dilutive. Warrants to purchase 18,014,582 shares and 21,240,616 shares of common stock for the six months ended June 30, 2016 and 2015, respectively, were also excluded from the computation of diluted loss per share as their effect would be anti-dilutive. |
Revenues | Revenues The Vytex segment derives revenue from license fees of Vytex NRL raw material to manufacturers and distributors of rubber and rubber-end products such as the foam used in the pillows and mattresses. Revenue is recognized when the licensee confirms payment and pays Vystar. The Kiron segment bills insurance providers and patients directly and is dependent on the practices ability to collect from healthcare insurance providers and from its patients. The Kiron segment recognized revenue each month for sleep services as services were provided and continues to collect reimbursement and patient payments until all is received either via normal processes or collections. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Companys financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, line of credit and shareholder notes payable. The carrying values of all the Companys financial instruments approximate fair value because of their short maturities. In addition to the short maturities, the carrying amounts of our line of credit and shareholder notes payable approximate fair value because the interest rates at June 30, 2016 approximate market interest rates for the respective borrowings. In specific circumstances, certain assets and liabilities are reported or disclosed at fair value. Fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the Companys principal market for such transactions. If there is not an established principal market, fair value is derived from the most advantageous market. Valuation inputs are classified in the following hierarchy: ● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are directly or indirectly observable valuation inputs for the asset or liability, excluding Level 1 inputs. ● Level 3 inputs are unobservable inputs for the asset or liability. Highest priority is given to Level 1 inputs and the lowest priority to Level 3 inputs. Acceptable valuation techniques include the market approach, income approach, and cost approach. In some cases, more than one valuation technique is used. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following: June 30, December 31, Furniture, fixtures and equipment $ 150,119 $ 150,119 Accumulated depreciation (147,418 ) (147,140 ) $ 2,701 $ 2,979 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets are as follows: June 30, December 31, Patents $ 238,551 $ 238,551 Trademarks & trade name 9,072 9,072 Subtotal 247,623 247,623 Accumulated amortization (100,040 ) (92,200 ) Intangible assets, net $ 147,583 $ 155,423 |
NOTES PAYABLE AND LOAN FACILI20
NOTES PAYABLE AND LOAN FACILITY (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Shareholder Notes Payable | The following table summarizes the shareholder notes payable: June 30, December 31, Shareholder notes payable $ 700,068 $ 700,068 Accrued interest 248,574 213,667 Total Shareholder Notes Payable $ 948,642 $ 913,735 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following table summarizes all stock option activity of the Company for the period. Number of Shares Weighted Weighted Outstanding, December 31, 2015 9,381,573 $ 0.16 5.10 Granted Exercised Forfeited (163,302 ) Outstanding, June 30, 2016 9,218,271 $ 0.15 4.63 Exercisable, June 30, 2016 6,816,070 $ 0.20 6.09 |
Schedule of weighted-average assumptions used in the option pricing model for stock warrant grants | The weighted-average assumptions used in the option pricing model for stock warrant grants were as follows: 2016 Expected Dividend Yield 0.00 % Expected Volatility in Stock Price 119.46 % Risk-Free Interest Rate 2.21 % Expected Life of Stock Awards Years 10.0 |
Schedule of warrant activity | The following table represents the Companys warrant activity for the six months ended June 30, 2016: Number Weighted Weighted Weighted Outstanding, December 31, 2015 18,178,158 $ 0.13 5.54 Granted 1,619,760 $ 0.07 $ 0.07 9.53 Exercised (1,783,336 ) $ 0.03 Forfeited Expired Outstanding, June 30, 2016 18,014,582 $ 0.13 5.96 Exercisable, June 30, 2016 17,606,016 $ 0.13 5.99 |
BASIS OF PRESENTATION AND SUM22
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 9,218,271 | 8,444,906 |
Warrant [Member] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 18,014,582 | 21,240,616 |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($) | 6 Months Ended | |||
Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash | $ 279,790 | $ 29,059 | $ 39,038 | $ 73,770 |
Working capital deficit | 1,877,095 | |||
Accumulated deficit | $ (26,256,666) | $ (25,593,351) |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | ||||
Revnue from discontinued operations | $ 26,957 | $ 101,972 | $ 76,450 | $ 199,261 |
Gains (losses) from discontinued operations | $ 53,160 | $ 3,338 | $ 75,044 | $ (54,248) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expenses | $ 278 | $ 379 | $ 278 | $ 962 |
PROPERTY AND EQUIPMENT (Detai26
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Furniture, fixtures and equipment, gross | $ 150,119 | $ 150,119 |
Accumulated depreciation | (147,418) | (147,140) |
Furniture, fixtures and equipment, net | $ 2,701 | $ 2,979 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 3,920 | $ 3,920 | $ 7,840 | $ 7,840 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 238,551 | $ 238,551 |
Trademarks & trade name | 9,072 | 9,072 |
Subtotal | 247,623 | 247,623 |
Accumulated amortization | (100,040) | (92,200) |
Intangible assets, net | $ 147,583 | $ 155,423 |
NOTES PAYABLE AND LOAN FACILI29
NOTES PAYABLE AND LOAN FACILITY (Details Narrative) - USD ($) | Apr. 29, 2013 | Nov. 02, 2012 | Sep. 14, 2011 | Apr. 29, 2011 | Jun. 30, 2016 | Dec. 31, 2015 |
Grant of warrants | 1,619,760 | |||||
Number of warrants outstanding | 18,014,582 | 18,178,158 | ||||
Warrant [Member] | ||||||
Number of warrants outstanding | 745,664 | |||||
Warrant [Member] | Maximum [Member] | ||||||
Warrant exercise price (per share) | $ 0.08 | |||||
Warrant [Member] | Minimum [Member] | ||||||
Warrant exercise price (per share) | $ 0.06 | |||||
CMA Note [Member] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,500,000 | $ 1,000,000 | $ 800,000 | |||
Interest rate, variable rate description | LIBOR plus 5.25% | |||||
Basis Spread on variable rate | 5.25% | |||||
Debt, Weighted Average Interest Rate | 5.69% | |||||
Effective interest rate during period | 5.72% | |||||
Increase in line of credit | $ 200,000 | |||||
CMA Note [Member] | Warrant [Member] | ||||||
Grant of warrants | 2,100,000 | 1,600,000 | 2,600,000 | |||
Warrant exercise price (per share) | $ 0.10 | $ 0.35 | $ 0.27 | $ 0.45 | ||
Percentage of Common Stock Shares Vested Immediately on Directors by Conversion of Warrants | 20.00% | |||||
Percentage of Common Stock Shares Vesting on Directors Upon Each Draw by Conversion of Warrants | 10.00% | |||||
Minimum Amount of Line of Credit Drawn For Vesting of Portion of Common Stock Granted to Directors As Compensation | $ 100,000 | |||||
Number of warrants outstanding | 6,300,000 | |||||
Number of warrants forfeited | 630,000 | |||||
Shareholder Notes Payable [Member] | ||||||
Debt instrument interest rate | 10.00% | |||||
Conversion price of debt (per share) | $ 0.055 | |||||
Conversion of debt equivalent shares | 17,122,537 | |||||
Shareholder Notes Payable [Member] | Maximum [Member] | ||||||
Conversion price of debt (per share) | $ 0.05 | |||||
Shareholder Notes Payable [Member] | Minimum [Member] | ||||||
Conversion price of debt (per share) | $ 0.10 |
NOTES PAYABLE AND LOAN FACILI30
NOTES PAYABLE AND LOAN FACILITY (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
Shareholder notes payable | $ 700,068 | $ 700,068 |
Accrued Interest | 248,574 | 213,667 |
Total Shareholder Notes Payable | $ 948,642 | $ 913,735 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) | Feb. 26, 2016shares | May 02, 2013USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2015shares |
Issuance of common stock | $ | $ 570,000 | |||
Shares of common stock issued | 12,480,000 | |||
Number of accredited investors | 6 | |||
Number of Warrants exercised | 1,783,335 | |||
Weighted Average Exercise Price of Warrant exercised | $ / shares | $ 0.03 | |||
Exercise of warrants/options | $ | $ 53,500 | |||
Issuance of commn stock for services, shares | 250,000 | 997,466 | ||
Preferred stock,, shares outstanding | 13,828 | 13,828 | ||
Undeclared dividends of preferred stock | $ | $ 42,820 | |||
Number of shares issuable upon conversion | 3,622,001 | |||
10% Series A Cumulative Convertible Preferred Stock [Member] | ||||
Preferred stock, shares in private placement offering | 200,000 | |||
Price per share | $ / shares | $ 10 | |||
Preferred stock value in private placement offering | $ | $ 2,000,000 | |||
Preferred stock, dividend rate | 10.00% | |||
Pereferred stock, stated conversion rate | $ / shares | $ 0.075 | |||
10% Series A Cumulative Convertible Preferred Stock [Member] | Additional Investment [Member] | ||||
Pereferred stock, stated conversion rate | $ / shares | $ .05 | |||
Additioanl investment lowering conversion price | $ | $ 25,000 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 30, 2009 | Jan. 01, 2004 | |
Share-based compensation | $ 154,441 | $ 72,313 | $ 233,964 | $ 272,968 | ||||
Unrecognized compensation cost for non-vested awards | $ 212,327 | $ 212,327 | ||||||
Period for recognizition of non-vested awards compensation cost | 4 years | |||||||
Non-vested warrants granted in 2016 | 18,014,582 | 18,014,582 | 18,178,158 | |||||
Fair value grant date of warrants | $ 108,250 | |||||||
Warrant [Member] | ||||||||
Unrecognized compensation cost for non-vested awards | $ 104,981 | $ 104,981 | ||||||
Term of the award | 10 years | |||||||
Non-vested warrants granted in 2016 | 745,664 | 745,664 | ||||||
Warrant [Member] | Minimum [Member] | ||||||||
Warrant exercise price | $ 0.06 | $ 0.06 | ||||||
Warrant [Member] | Maximum [Member] | ||||||||
Warrant exercise price | $ 0.08 | $ 0.08 | ||||||
Stock Option Plan [Member] | ||||||||
Number of shares authorized under stock option plan | 10,000,000 | 4,000,000 | ||||||
Number of shares reserved for issuance | 618,427 | 618,427 | ||||||
Vesting period of stock options | 4 years | |||||||
Term of the award | 10 years | |||||||
Additional Stock Option Plan [Member] | ||||||||
Number of shares authorized under stock option plan | 5,000,000 |
SHARE-BASED COMPENSATION (Det33
SHARE-BASED COMPENSATION (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Number of options: | ||
Number of Options outstanding, beginning | 9,381,573 | |
Number of Options forfeited | 163,302 | |
Number of Options outstanding, ending | 9,218,271 | 9,381,573 |
Number of Options exercisable | 6,816,070 | |
Weighted Average Exercise Price: | ||
Weighted Average Exercise Price of Options outstanding, beginning | $ .16 | |
Weighted Average Exercise Price of Options outstanding, ending | .15 | $ .16 |
Weighted Average Exercise Price of Options exercisable | $ .20 | |
Weighted Average Remaining Contractual Term: | ||
Weighted Average Remaining Contractual Term of Options outstanding | 4 years 7 months 17 days | 5 years 1 month 6 days |
Weighted Average Remaining Contractual Term of Options exercisable | 6 years 1 month 2 days |
SHARE-BASED COMPENSATION (Det34
SHARE-BASED COMPENSATION (Details 1) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2016 | |
Expected Dividend Rate | 0.00% |
Expected Volatility in Stock price | 119.46% |
Risk Free Interest Rate | 2.21% |
Expected Term | 10 years |
SHARE-BASED COMPENSATION (Det35
SHARE-BASED COMPENSATION (Details 2) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2013 | |
Number of Warrant: | ||
Number of Warrant outstanding, beginning | 18,178,158 | |
Number of Warrant granted | 1,619,760 | |
Number of Warrant exercised | (1,783,335) | |
Number of Warrant outstanding, ending | 18,014,582 | |
Number of Warrant exercisable | 17,606,016 | |
Warrant Weighted Average Exercise Price: | ||
Weighted Average Exercise Price of Warrant outstanding, beginning | $ .13 | |
Weighted Average Exercise Price of Warrant granted | 0.07 | |
Weighted Average Exercise Price of Warrant exercised | 0.03 | |
Weighted Average Exercise Price of Warrant outstanding, ending | 0.13 | |
Weighted Average Exercise Price of Warrant exercisable | $ 0.13 | |
Weighted Average Remaining Contractual Life | ||
Weighted Average Remaining Contractual Term of Warrant outstanding | 5 years 11 months 15 days | 5 years 6 months 14 days |
Weighted Average Remaining Contractual Term of Warrant granted | 9 years 6 months 10 days | |
Weighted Average Remaining Contractual Term of Warrant exercisable | 5 years 11 months 26 days | |
Weighted average grant date fair value | $ .07 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Events [Member] | Aug. 15, 2016USD ($) |
Face amount of debt | $ 100,000 |
Debt outstanding in default | $ 154,986 |