Financial Analysis

NOTE 7 - NOTES PAYABLE AND LOAN FACILITY Shareholder, Convertible and Contingently Convertible Notes Payable The following table summarizes shareholder, convertible and contingently convertible notes payable: SCHEDULE OF SHAREHOLDER, CONVERTIBLE AND CONTINGENTLY CONVERTIBLE NOTES PAYABLE 2025 2024 December 31, 2025 2024 Shareholder, convertible and contingently convertible notes $ 19,500 $ 309,500 Accrued interest 11,934 71,732 Total shareholder notes and accrued interest 31,434 381,232 Less: current maturities (31,434 ) (381,232 ) Total long-term debt $ - $ - Shareholder Convertible Notes Payable During the year ended December 31, 2018, the Vystar issued shareholder contingently convertible notes payable, some of which were for contract work performed by other entities in lieu of compensation and expense reimbursement, totaling approximately $ 338,000 . The notes are (i) unsecured, (ii) bear interest at an annual rate of five percent ( 5 %) from date of issuance, and (iii) are convertible at Vystars option post April 19, 2018. The notes mature one year from issuance but may be extended one (1) additional year by Vystar. If converted, the notes plus accrued interest are convertible into shares of Vystars common stock at the prior twenty (20) day average closing price with a 50% discount. The notes matured in January 2020 and continue to accrue interest at an annual rate of eight percent (8%) in arrears until settlement. All of these notes except one were settled in April 2022 …

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NOTE 11 - 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, Vystar recorded $ 687,188 and $ 893,138 of share-based compensation for the years ended December 31, 2025 and 2024, respectively, including shares to be issued related to consultants and board member stock options and common stock and warrants issued to non-employees. Included in stock subscription payable is accrued share-based compensation of $ 2,402,411 and $ 1,779,029 at December 31, 2025 and 2024, respectively. Vystar used the Black-Scholes option pricing model to estimate the grant-date fair value of option and warrant awards: Expected Dividend Yield - because Vystar does not currently pay dividends, the expected dividend yield is zero ; Expected Volatility in Stock Price - volatility based on Vystars 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. For the year ended December 3 …

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NOTE 15 - INCOME TAXES During the year ended December 31, 2025, the Company adopted ASU 2023-09 to enhance the income taxes disclosures. A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows: SCHEDULE OF RECONCILIATION FEDERAL STATUTORY AND EFFECTIVE INCOME TAX RATE AS PERCENTAGE OF INCOME BEFORE INCOME TAXES Year Ended December 31, 2025 2024 $ % $ % Loss before income taxes $ (1,531,394 ) $ (1,672,067 ) U.S. Federal Statutory Tax Rate (321,593 ) -21.0 % (351,134 ) -21.0 % Current State Income Taxes, Net of Federal Income Tax Effect (36,212 ) -2.4 % (127,940 ) -7.7 % Nontaxable or nondeductible Items Derivative debt discount 43,746 2.9 % 31,044 1.9 % Other 19,784 1.3 % - 0.0 % Other Adjustments Share-based compensation 130,910 8.6 % (71,378 ) -4.3 % Interest accrued to cash basis taxpayers 27,653 1.8 % 20,864 1.2 % Amortization and depreciation (21,331 ) -1.4 % (25,526 ) -1.5 % Change in reserves 420 0.0 % (29,075 ) -1.7 % Change in Valuation Allowance 156,623 10.2 % 553,145 33.1 % Total Income Tax Provision - 0.0 % - 0.0 % The Companys deferred tax assets as of December 31, 2025 and 2024 are as follows: SCHEDULE OF DEFERRED TAX ASSETS 2025 2024 Net operating loss carryforwards (Federal) $ 8,200,000 $ 8,100,000 Less valuation allowance (8,200,000 ) (8,100,000 ) Deferred tax assets $ - $ - Deferred taxes are caused by net operating loss carryforwards. U.S. Tax Legislation enacted …

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NOTE 6 - LEASES (DISCONTINUED OPERATIONS) Rotmans leased equipment, a showroom, offices and warehouse facilities. These leases expired at various dates through 2031 and had monthly base rents which ranged from $ 800 to $ 84,000 . With the winding up of operations in 2023, Rotmans terminated its delivery leases and returned the right-of-use assets to the lessor. A settlement liability of $ 25,000 was owed to a third-party at December 31, 2023. With the decision to forego future subleasing of the Rotmans facilities in December 2023, and departure from the facility in late January 2024, an impairment loss of $ 5,240,946 was recognized in 2023 for its right-of use asset. The leased facility was sold in January 2025 for approximately $ 8 million to a real estate development company. Rotmans recognized a gain on its lease obligation totaling approximately $ 4,216,000 as of December 31, 2024. There is one operating lease obligation remaining as of December 31, 2025 which is in arrears totaling $ 219,201 . As of December 31, 2025, Vystar and Rotmans does not have any operating and finance leases that have not yet commenced.

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Recent Accounting Pronouncements On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes paid and additional income tax related disclosures, and is effective for the Company for annual fiscal periods beginning after December 31, 2024. The Company has adopted ASU 2023-09 for the 2025 calendar year retrospectively. Because the ASU affects disclosures only, the adoption did not affect the Companys Consolidated Statements of Operations or Consolidated Balance Sheets. …

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s NOTE 12 - RELATED PARTY TRANSACTIONS Officers and Directors Jamie Rotman Jamie Rotman was appointed as President of the Company effective December 21, 2023. She is the daughter of the Companys former CEO, Steven Rotman. On July 22, 2024, the Company entered into an Employment Agreement (the Employment Agreement) with Ms. Jamie Rotman, under which Ms. Rotman receives annual compensation equal to $ 180,000 payable in Series C Preferred Stock or common stock, either at Ms. Rotmans discretion, discounted 50 % over the then market price (and payable in cash at Ms. Rotmans discretion), plus a signing bonus of $ 25,000 payable in shares of Series C Preferred Stock, vesting over 2024. The Employment Agreement was made retroactive to January 1, 2024. The Employment Agreement also provides for a 24-month severance payment upon termination without cause (as defined) and a 24 month change in control severance. During the year ended December 31, 2025 and 2024, the Company expensed approximately $ 375,000 and $ 440,000 , respectively, related to this employment agreement. As of December 31, 2025, the Company had a stock subscription payable balance of $ 738,684 or approximately 28,072,000 shares of common stock to Ms. Rotman. Previously, Ms. Rotman provided bookkeeping and management services to the Company through July 2019 through her entity, Designcenters.com (Design). In exchange for such services, the Company had entered into a consulting agreement with the related party entity. As …

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NOTE 10 - REVENUES The following table presents our revenues disaggregated by each major product category and service for the last two years: SCHEDULE OF REVENUES DISAGGREGATED BY EACH MAJOR PRODUCT CATEGORY AND SERVICE Net Sales Net Sales Net Sales Net Sales 2025 2024 % of % of Net Sales Net Sales Net Sales Net Sales Air Purification Units $ 46,542 84.9 $ 83,236 61.2 Mattresses and Toppers 2,367 4.3 48,944 36.0 Royalties and other 5,912 10.8 3,789 2.8 Net sales $ 54,821 100.0 $ 135,969 100.0

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NOTE 9 - STOCKHOLDERS DEFICIT Cumulative Convertible Preferred Stock Series A 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 per share for a value of $ 2,000,000 . The preferred stock was convertible at a conversion price of $ 7.50 per common share at the option of the holder after a nine-month holding period. The conversion price was lowered to $ 5.00 per common share for those holders who invested an additional $ 25,000 or more in Vystars 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. In the event of a liquidation, dissolution or winding up of the Company, the holders of Series A Preferred Stock shall be entitled to receive an amount equal to the dividends accumulated and unpaid thereon to the date of final distribution to such holders, whether or not declared, without interest, plus a sum equal to $ 10 per share. As of December 31, 2025 and 2024, the liquidation preference totals approximately $ 196,000 and $ 188,000 , respectively. As of December 31, 2025, the 8,698 shares of outstanding preferred stock had undeclared dividends of approximately $ 109,000 and could be converted into 38,399 shares of co …

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NOTE 17 - SUBSEQUENT EVENTS The Company received two payments totaling $ 40,000 from a private stock subscription raise with a current shareholder. Under the first agreement dated in February 2026, the Company will issue 750 shares of its preferred stock series class B stock for $ 15,000 . The Company will issue 1,000 shares of its preferred stock series class B stock under a second agreement dated in March 2026 for $ 25,000 . In April 2026, the Company received payments from two individual shareholders from a private stock subscription raise. Under the agreements, the Company will issue 1,000 and 400 shares of its preferred stock series class B stock for $ 25,000 and $ 10,000 , respectively. During 2026, Jamie Rotman advanced the Company $ 6,500 for working capital purposes. The advances are due on demand. On April 14, 2026, Vystar entered into a binding letter of intent (LOI) to acquire 50 % of Capital R3alm, Inc. which include ownership of a software ecosystem and a percentage of Capital R3alm R3EQ tokens. In exchange, Capital R3alm will own 34 % of Vystar by way of Series B preferred shares. The companies have agreed to equally manage the project. The companies have agreed to work jointly until the deal closing. Capital R3alm, Inc. is developing a compliance-oriented Web3 financial ecosystem designed to bridge traditional finance and decentralized technologies. The R3alm platform is intended to span capital formation, tokenized assets, governance, trading infrastructure, …

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