VYST Vystar Corporation (CE)

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.