Current Report Filing (8-k)
05 June 2020 - 7:01AM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 29, 2020
VYSTAR
CORPORATION
(Exact
Name of Registrant as Specified in Charter)
Georgia
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000-53754
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20-2027731
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(State
or Other Jurisdiction
of
Incorporation
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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725
Southbridge St
Worcester,
MA
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01609
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (508) 791-9114
n/a
(Former
Name or Former Address, if Changed Since Last Report)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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NONE
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NONE
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NONE
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
[ ]
Emerging growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item
1.01
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Entry
into a Material Definitive Agreement
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Vystar
Libertas
Funding. On February 24, 2020, Vystar and Rotmans entered into an agreement with Libertas Funding LLC (“Libertas”)
to sell future receipts totaling $1,089,000 for a purchase price of $825,000. The sold amount of future receipts were to be delivered
weekly to Libertas at predetermined amounts over a period of nine months. At the time of the agreement, it was anticipated that
the payments would be made with retail sales from the Rotmans store, but the COVID-19 crisis has prevented the store from re-opening.
Vystar has made payments totaling approximately $300K to date. The agreement contains an early delivery discount fee for delivering
the future receivables before the end of the contract term and an origination fee. There are no convertible notes or warrants
attached to this agreement.
Rotmans
Vystar
owns 58% of the issued and outstanding shares of Rotmans.
Sales
Promotion Agreement and First Lien. As part of the loan payoff described in Item 1.02, Rotmans entered into a sale promotion
consulting agreement with a national furniture sales event company. Under the agreement, Rotmans appointed the third-party as
its exclusive agent to assist with a high-impact sale. The third party advanced funds for the agreement to pay off the bank loan
and to take a first position lien on Rotmans. Profits of the sale will be distributed according to the specific terms of the agreement.
The agreement will expire 240 days from the commencement date which is defined as the completion and signoff of the inventory
valuation. The commencement date of the sale will be dependent upon the re-opening of the state for retail sales due to the COVID-19
crisis. This new Sales Promotion Agreement loan removed a first lien position on approximately $16 million in Vystar’s assets
from the previous loan holder.
PPP
Loan. On April 16, 2020, Rotmans received $1,402,900 in loan funding from the Paycheck Protection Program (the “PPP”),
established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)
and administered by the U.S. Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”)
is evidenced by a promissory note of the Company dated April 16, 2020 (the “Note”) in the principal amount of $1,402,900
with United Community Bank (the “Bank”), the lender. Under the terms of the Note and the PPP Loan, interest accrues
on the outstanding principal at the rate of 1.0% per annum. The term of the Note is two years, though it may be payable sooner
in connection with an event of default under the Note. To the extent the loan amount is not forgiven under the PPP, Rotmans is
obligated to make equal monthly payments of principal and interest, beginning seven months from the date of the Note, until the
maturity date. The Note may be prepaid in part or in full, at any time, without penalty. The Note provides for certain customary
events of default.
Item
1.02
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Termination
of a Material Definitive Agreement
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Fidelity
Co-Operative Bank Loan Payoff. On May 29, 2020, Rotmans and Vystar paid off its loan to Fidelity Co-Operative Bank. To repay
the loan, Rotmans entered into a sale promotion consulting agreement with a national furniture sales event company, described
in Item 1.01.
Item
7.01.
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Regulation
FD Disclosure.
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Vystar
Corporation is providing the following update on the filing of its Form 10-K for the year ended December 31, 2019. As result
of the global outbreak of the COVID-19 virus and by state order, employees and agents are no longer permitted to be on Rotmans
retail store premises. As such, the 10-K audit was delayed. While the audit is now completed and a draft 10-K has been prepared,
the auditors require additional time for their review and some derivative work by a third party. We currently project that the
Annual Report on Form 10-K within the next week.
As
a result of the recent COVID-19 outbreak and associated quarantines, statewide stay at home orders, and government regulation
of “social distancing”, in store sales of the Company’s subsidiary, Rotmans Furniture, have ceased, and the
store is closed. In the upcoming weeks, the Company hopes to reopen, pending state allowances, and will continue to explore its
options as it seeks to mitigate loss in revenue and defaults on loan payments.
(d)
Exhibit
Number
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Description
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10.1
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Stock Purchase Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 22, 2019)
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10.2
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Master Credit Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K filed on July 22, 2019)
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10.3
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$3,000,000 Revolving Demand Line of Credit Note dated July 18, 2019 (incorporated by reference from Exhibit 10.3 of the Current Report on Form 8-K filed on July 22, 2019)
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10.4
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Master Security Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 22, 2019)
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10.5
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Libertas Agreement (attached hereto)
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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VYSTAR
CORPORATION
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Date:
June 4, 2020
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By:
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/s/
Steven Rotman
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Name:
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Steven
Rotman
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Title:
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President/Chief
Executive Officer
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EXHIBIT
INDEX
Exhibit
Number
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Description
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10.1
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Stock Purchase Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 22, 2019)
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10.2
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Master Credit Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K filed on July 22, 2019)
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10.3
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$3,000,000 Revolving Demand Line of Credit Note dated July 18, 2019 (incorporated by reference from Exhibit 10.3 of the Current Report on Form 8-K filed on July 22, 2019)
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10.4
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Master Security Agreement dated July 18, 2019 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 22, 2019)
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10.5
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Libertas Agreement (attached hereto)
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