UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number 000-53754

VYSTAR CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Georgia	20-2027731
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

3235 Satellite Blvd.

Building 400, Suite 290

Duluth, GA 30096

(Address of Principal Executive Offices, Zip Code)

(770) 965-0383

(Registrant's telephone number including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES    x    NO    ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES   x      NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ¨	Accelerated filer   ¨	Non-accelerated filer   ¨	Smaller reporting company   x
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)   YES   ¨     NO   x

As of August 10, 2011, there were 15,566,391 shares of the Registrant’s common stock, par value $0.0001 per share, outstanding.

Vystar Corporation

Form 10-Q for the Quarter Ended June 30, 2011

Index

Part I.  Financial Information
Item 1.	Financial Statements	3
	Balance Sheets at June 30, 2011 (unaudited) and December 31, 2010	3
	Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010 (unaudited)	4
	Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (unaudited)	5
	Notes to Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
Part II.  Other Information
Item 1.	Legal Proceedings	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	21
Item 4.	[Removed and Reserved]	21
Item 5.	Other Information	21
Item 6.	Exhibits	21

2

Part I.       FINANCIAL INFORMATION

ITEM 1.    Financial Statements

VYSTAR CORPORATION

BALANCE SHEETS

	June 30, 2011			December 31, 2010
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	247,325		$	282,625
Accounts receivable		55,227			31,707
Inventory		44,234			189,268
Prepaid expenses		75,777			97,396
Other		45,442			54,898
TOTAL CURRENT ASSETS		468,005			655,894
PROPERTY AND EQUIPMENT, NET		1,558			2,622
OTHER ASSETS
Deferred financing costs, net		438,988			0
Patents and trademarks, net		155,489			125,260
Other		4,421			4,421
TOTAL ASSETS	$	1,068,461		$	788,197
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	254,679		$	210,106
Accrued compensation		91,632			205,395
Accrued expenses		163,734			250,656
TOTAL CURRENT LIABILITIES		510,045			666,157
NOTES PAYABLE AND ACCRUED INTEREST, net of debt discount of $50,600		495,775			0
RELATED PARTY LINE OF CREDIT		633,750			0
TOTAL LIABILITIES		1,639,570			666,157
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value, 15,000,000 shares authorized; none issued and outstanding		0			0
Common stock, $0.0001 par value, 50,000,000 shares authorized; 15,553,983 and 15,417,524 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		1,555			1,542
Additional paid-in capital		15,808,194			14,192,551
Deferred compensation		0			(11,836	)
Accumulated deficit		(16,380,858	)		(14,060,217	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(571,109	)		122,040
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	1,068,461		$	788,197

The accompanying notes are an integral part of these financial statements.

3

VYSTAR CORPORATION

STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
REVENUES	$	125,892		$	353,302		$	244,931		$	436,711
COST OF REVENUES		75,075			482,462			152,955			554,687
Gross Margin		50,817			(129,160	)		91,976			(117,976	)
OPERATING EXPENSES
Sales and marketing, including non-cash share-based compensation of $30,893 and $13,143 for the three months ended June 30, 2011 and 2010, respectively and $124,305 and $35,051 for the six months ended June 30, 2011 and 2010, respectively		178,301			196,606			428,913			385,085
General and administrative, including non-cash share-based compensation of $115,187 and $306,517 for the three months ended June 30, 2011 and 2010, respectively and $611,377 and $480,917 for the six months ended June 30, 2011 and 2010, respectively		356,307			614,741			1,146,478			1,081,329
Research and development		20,844			12,591			47,203			29,528
Total Operating Expenses		555,452			823,938			1,622,594			1,495,942
LOSS FROM OPERATIONS		(504,635	)		(953,098	)		(1,530,618	)		(1,613,918	)
OTHER INCOME (EXPENSE)
Interest income		273			863			471			2,046
Interest expense		(752,741	)		(331	)		(790,494	)		(959	)
NET LOSS	$	(1,257,103	)	$	(952,566	)	$	(2,320,641	)	$	(1,612,831	)
Basic and Diluted Loss per Share	$	(0.08	)	$	(0.07	)	$	(0.15	)	$	(0.12	)
Basic and Diluted Weighted Average Number of Common Shares Outstanding		15,511,776			14,342,238			15,464,993			13,861,871

The accompanying notes are an integral part of these financial statements.

4

VYSTAR CORPORATION

STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,320,641	)	$	(1,612,831	)
Adjustment to reconcile net loss to net cash used in operating activities
Share-based compensation expense		735,682			515,968
Depreciation		1,064			3,772
Amortization of patents and trademarks		5,320			4,160
Amortization of deferred financing costs		750,261			0
(Increase) decrease in assets
Accounts receivable		(23,520	)		(125,745	)
Inventory		145,034			(192,680	)
Prepaid expenses		21,619			15,577
Other		9,456			13,711
Increase (decrease) in liabilities
Accounts payable		44,573			94,998
Accrued compensation and expenses		(200,685	)		253,267
Interest payable		21,375			(27,087	)
Net cash used in operating activities		(810,462	)		(1,056,890	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from related party note receivable		0			137,949
Cost of patents		(35,549	)		(8,594	)
Net cash (used in) provided by investing activities		(35,549	)		129,355
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		525,000			0
Proceeds from related party line of credit		633,750			0
Deferred financing costs		(389,289	)		0
Issuance of common stock		41,250			959,750
Net cash provided by financing activities		810,711			959,750
NET (DECREASE) INCREASE IN CASH		(35,300	)		32,215
CASH - BEGINNING OF PERIOD		282,625			780,147
CASH - END OF PERIOD	$	247,325		$	812,362
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Stock purchase warrants issued in connection with line of credit and notes payable financings	$	797,409		$	0
Beneficial conversion feature associated with shareholder notes payable		29,287			0
CASH PAID DURING THE PERIOD FOR
Interest	$	1,117		$	959

The accompanying notes are an integral part of these financial statements.

5

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature 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"). This technology reduces antigenic protein in natural rubber latex products to virtually undetectable levels in both liquid NRL and finished latex products.  Vystar has introduced Vytex NRL, its “ultra low protein” natural rubber latex, throughout the worldwide marketplace that uses NRL or latex substitutes as a component of manufactured products.  Natural rubber latex or latex substitutes are used in an extensive range of products including balloons, textiles, footwear and clothing (threads), adhesives, foams, furniture, carpet, paints, coatings, protective equipment, sporting equipment, and, especially health care products such as condoms, surgical and exam gloves. The Company produces Vytex through toll manufacturing and licensing agreements and has introduced Vytex NRL into the supply channels with targeted marketing campaigns directed to the end users.  During 2008, the Company signed an agreement with Revertex (Malaysia) for the production of Vytex NRL.  Revertex is a non-exclusive, toll manufacturer for Vystar.  To implement our licensing model, we signed a licensing agreement with Pica de Hule Natural, a division of GrupoAgroindustrialOccidente (“Occidente”), located in Guatemala, in March 2010.  In October 2010, we signed a second licensing agreement with KA Prevulcanized Latex (KAPVL) to manufacture and sell Vytex NRL in the SAARC region which includes India, Pakistan, Sri Lanka, Bangladesh, Bhutan and Nepal.

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 Company's annual report on Form 10-K for the year ended December 31, 2010, 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 and six month periods ended June 30, 2011 and 2010.

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 management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates.

Concentration of Credit Risk

Certain financial instruments potentially subject the Company to concentrations of credit risk.  These financial instruments consist primarily of cash.  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.

Inventory

Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out (FIFO) method. The valuation of inventory requires the Company to estimate net realizable value. Inventory is written down for estimated obsolescence to the lesser of cost or market value.

Loss Per Share

Because the Company reported a net loss for the six month periods ended June 30, 2011 and 2010, 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 to purchase 4,373,333 shares and 3,695,000 shares of common stock for the six months ended June 30, 2011 and 2010, respectively, as their effect would be anti-dilutive.  Warrants to purchase 4,360,624 shares and 2,187,059 shares of common stock for the six months ended June 30, 2011 and 2010, respectively, were also excluded from the computation of diluted loss per share as their effect would be anti-dilutive.

6

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

Revenues

We derive our revenue from the sales of or license fees from our Vytex Natural Rubber Latex raw material to various manufacturers of rubber and rubber end products using NRL and/or their distributors.  The Company recognizes revenue when the following four criteria are met: (1) persuasive evidence of an arrangement exists; (2) shipment or delivery has occurred; (3) the price is fixed or determinable and (4) collectability is reasonably assured.    Revenue is recognized at the time product is shipped and title passes to the customer.

Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, accounts payable, and certain other financial instruments (such as accrued expenses and other current liabilities) included in the accompanying balance sheets approximates their fair value principally due to the short-term maturity of these instruments.   The carrying value of notes payable and the line of credit approximates their fair value based on the Company’s current borrowing availability.

Subsequent Events

The Company evaluated subsequent events through the date these financial statements were issued.  Other than as disclosed in Note 9, we are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our financial statements.

NOTE 2 – LIQUIDITY AND GOING CONCERN

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, the Company has incurred significant losses and experienced negative cash flow since its inception.  At June 30, 2011, the Company had cash of $247,325 and a deficit in working capital of $42,040.  Further, at June 30, 2011, the accumulated deficit amounted to $16,380,858.  As a result of the Company's 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 Company’s planned expenses and achieving a level of revenues adequate to support the Company’s cost structure.  Management plans to finance future operations through the use of cash on hand, increased revenues and attracting new sources of debt financing.   We may also consider raising additional capital through a private placement and expect to receive proceeds from stock warrant exercises from existing shareholders.  As the Company’s product continues to gain market acceptance, the Company expects sales in 2011 to continually increase.

There can be no assurances that the Company will be able to achieve its projected level of revenues in 2011 and beyond.  If the Company is unable to achieve its projected revenues and is not able to obtain alternate additional financing of equity or debt, the Company would need to significantly curtail or reorient its operations during 2011, which could have a material adverse effect on the Company’s 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.

7

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011			December 31, 2010
Furniture and fixtures	$	15,347		$	15,347
Equipment		23,431			23,431
		38,778			38,778
Accumulated depreciation		(37,220	)		(36,156	)
	$	1,558		$	2,622

Depreciation expense for the three months ended June 30, 2011 and 2010 was $508 and $1,886, respectively, and for the six months ended June 30, 2011 and 2010 was $1,064 and $3,772, respectively.

NOTE 4 – PATENTS AND TRADEMARKS

Patents represent legal and other fees associated with the registration of patents.  The Company has two patents and two provisional patent submissions with the United States Patent and Trade Office (USPTO), as well as an international PCT (Patent Cooperation Treaty) patent.

The Company has incurred legal and other fees associated with its application to the USPTO for trademark protection for “Vystar”, “Vytex”, and “Created by Nature. Recreated by Science.” during 2011 and 2010.

Patents and trademarks are as follows:

	June 30, 2011			December 31, 2010
Patents	$	171,891		$	136,342
Accumulated amortization		(25,474	)		(20,154	)
		146,417			116,188
Trademarks		9,072			9,072
	$	155,489		$	125,260

Amortization expense for of the three months ended June 30, 2011 and 2010 was $2,660 and $3,414, respectively, and for the six months ended June 30, 2011 and 2010 was $5,320 and $4,160, respectively.

NOTE 5 – INCOME TAXES

There is no income tax benefit recorded for the losses for the three and six months ended June 30, 2011 and 2010 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.

8

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

NOTE 6 – NOTES PAYABLE AND LOAN FACILITY

On March 11, 2011, the Company entered into a $3,000,000 credit facility with Topping Lift Capital LLC (the “Lender”) pursuant to a Loan and Security Agreement and accompanying Loan Documents (the “Loan Facility”).   On April 22, 2011, the Lender informed the Company of a default under the Company’s $3,000,000 Loan Facility as a result of noncompliance with certain financial covenants relating to gross profit margins and tangible net worth.  On April 28, 2011, Topping Lift and the Company entered into a forbearance agreement pursuant to which Topping Lift agreed to forbear from proceeding against the Company as a result of the defaults and to extend the period of time for the Company to raise $400,000 of additional capital from April 30, 2011, to May 30, 2011.   On May 20, 2011, Topping Lift and the Company entered into the Second Amendment to Loan and Security Agreement and Waiver to modify certain financial covenants prior to May 20, 2011 and permanently waive all such defaults. In connection with such agreement, the Company (1) issued warrants to purchase 195,925 shares of common stock at an exercise price of $0.01 per share which warrants vested upon issuance, and (2) modified the terms of the warrant issued to Topping Lift at the original closing of the TL Facility by immediately vesting such warrants.   On June 30, 2011, the Company terminated the Loan Facility and satisfied all its remaining obligations to the Lender.

Also on March 11, 2011, the Company issued to existing shareholders of the Company an aggregate of $400,000 of convertible promissory notes (the “Notes”) together with warrants to purchase an aggregate of 160,000 shares of the Company’s common stock at $0.68 per share for two years from the date of issuance.  Such Notes are (i) unsecured, (ii) bear interest at an annual rate of ten percent (10%) per annum from January 1, 2011, and (iii) are convertible into shares of the Company’s common stock at the conversion rate of $0.68 of principal and interest for each such share.  No payments of interest or principal are payable until March 11, 2013.  The Notes may be prepaid by the Company without penalty upon 15 days prior notice to the holders.

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 independent directors of the Company are the members.   Pursuant to the terms of the CMA Note, the Company may draw up to a maximum principal amount of $800,000.  Interest, which is computed at LIBOR plus 5.25%, on amounts drawn and fees will be paid by an affiliate of a director of the Company, to CMA.  Pursuant to an agreement between the Company and such affiliate, the Company will issue common stock to such affiliate with a value equal to such interest and fees paid based on the closing price of the common stock on the OTC Bulletin Board on the date of such payments.   As of June 30, 2011, the Company had borrowed $633,750 under the CMA note.

Other terms of the CMA Note include:

· The CMA 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 CMA note, the Company issued warrants to purchase 2,600,000 shares of the Company’s common stock to the directors at $0.45 per share, which was the closing price of the Company’s stock on April 29, 2011, which vest 20% immediately and 10% upon each draw by the Company of $100,000 under the CMA Note.

On May 31, 2011, the Company completed an offering to certain existing shareholders of the Company for an aggregate of $125,000 of Notes together with warrants to purchase an aggregate of 50,000 shares of the Company’s common stock at a weighted average of $0.49 per share for two years from the date of issuance. Such Notes are (i) unsecured, (ii) bear interest at an annual rate of ten percent (10%) per annum from date of issuance, and (iii) are convertible into shares of the Company’s common stock at a weighted average conversion rate of $0.49 of principal and interest for each such share. No payments of interest or principal are payable until two years from the date of each note. The Notes may be prepaid by the Company without penalty upon 15 days prior notice to the holders.

9

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

The computed value of the warrants issued in connection with the Notes issued in March and May 2011, $29,287, is reflected as a debt discount and netted against the notes payable on the balance sheet. Additionally, in conjunction with this transaction, the Company recorded a beneficial conversion feature, given the price allocated to the Notes was less than the market price on the date of issuance, creating an intrinsic value in the conversion option. An additional $29,287 was recorded as a reduction in the Notes and an increase in paid in capital for the intrinsic value of the conversion feature.  The debt discount and beneficial conversion feature amount will be amortized to interest expense over the life of the Notes under the effective interest method.

The Company incurred $701,080 of costs directly associated with the Loan Facility which closed in March 2011, $361,849 of which has been paid or is payable in cash and $339,230 in non-cash share-based compensation.   The costs were being amortized on a straight line basis over the term of the Loan Facility; however, as discussed above, the Loan Facility was terminated on June 30, 2011, and all remaining unamortized costs were charged to interest expense.  Amortization of these costs associated with the Loan Facility amounted to $675,455 for the three months ended June 30, 2011.  The Company incurred $480,195 of costs directly associated with CMA Note which closed in May 2011, $27,440 of which has been paid or is payable in cash and $452,755 is in non-cash share-based compensation.   The costs are being amortized on a straight line basis over the term of the CMA Note.  Amortization of these costs associated with the CMA Note amounted to $41,208 for the three months ended June 30, 2011.  Amortization of all deferred financing costs for the six months ended June 30, 2011 amounted to $750,261.

NOTE 7 – STOCKHOLDERS’ EQUITY

Common Stock and Warrants

In January 2010, the Company issued 20,000 shares of common stock valued at $40,598 under an agreement for professional services that were provided in the three month period ended March 31, 2010.  The value of the common stock was expensed and included in stock-based compensation expense in the three month period ended March 31, 2010.

In January 2010, the Company issued 100,000 shares of common stock valued at $185,000 under an agreement for professional services to be provided over a period of twelve months.  The amortization of deferred compensation expense for the year ended December 31, 2010 related to these shares was $173,164 with the balance of $11,836 of expense recorded in the three month period ended March 31, 2011.

In May and June 2010, the Company issued 220,000 shares of common stock valued at $293,500 under agreements for professional services to be provided over a period of four to six months.  The amortization of deferred compensation expense for the three month period ended June 30, 2010 related to these shares was $133,474.

Additionally, the Company recorded $40,750 and $84,427 in amortization of deferred compensation expense for the three and six month periods ended June 30, 2010, respectively, related to 2009 common stock and warrants issuances for services.

In the second quarter of 2011, the Company issued 53,959 shares valued at $24,282 for interest and fees for the related party CMA note.

 NOTE 8 – STOCK-BASED COMPENSATION

Generally accepted accounting principles requires share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures.

Options

The Company used the Black-Scholes option pricing model to estimate the grant-date fair value of awards granted during 2011 and 2010.  The following assumptions were used:

10

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

· Expected Dividend Yield – because the Company does not currently pay dividends, the expected dividend yield is zero;

· Expected Volatility in Stock Price – because trading in the Company’s stock began late in 2009, there was insufficient data to project the Company’s future volatility and instead the expected volatility of similar public entities (including companies engaged in the manufacture and/or distribution of medical, surgical and healthcare supplies) was considered with expected volatility ranging from 38% - 39%;

· Risk-free Interest Rate – reflects the average rate on a United States Treasury bond with maturity equal to the expected term of the option, ranging from 1.32 – 2.84%; and

· Expected Life of Awards – because the Company has had minimal experience with the exercise of options or warrants for use in determining the expected life for each award, the simplified method was used to calculate an expected life based on the midpoint between the vesting date and the end of the contractual term of the stock award.

On March 14, 2011, the Company’s Board of Directors approved modifying the exercise price for 5,787,500 compensatory stock options and 425,282 compensatory stock purchase warrants previously issued to the Company’s employees and directors to $0.68 per share, which was the closing price of the Company’s common stock on that date.   As a result of this modification, the Company recorded non-cash stock compensation expense on March 14, 2011 of $425,000.  Additionally on March 14, 2011, the Company’s Board of Directors approved the issuance of 1,150,000 stock options to certain employees.  These new options were issued at the closing market price of the Company’ s common stock on the date of issuance and have a 10 year term.  Vesting was immediate for 150,000 options and in equal increments on March 14, 2012, 2013 and 2014 for 1,000,000 of the options.

The Company recorded $146,080 and $319,660 for the three month periods ended June 30, 2011 and 2010, respectively, and $735,682 and $515,968 for the six month periods ended June 30, 2010 and 2009, respectively, of stock-based compensation expense related to employee and board member stock options and warrants issued to nonemployees.  As of June 30, 2011, $1,099,657 of unrecognized compensation expense related to non-vested share-based awards remains to be recognized over a weighted average period of approximately 2.5 years.

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 Company’s Board of Directors authorized an increase in the number of shares to be issued under the Plan to 10,000,000 shares, which was also approved by the Company’s shareholders, 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, 2011, there were 2,887,500 shares of common stock reserved for issuance under the Plan.  The Plan permits 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”), although to date no Incentive Stock Options have been granted.  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 typically granted at an exercise price equal to the fair market value of the Company’s common stock on the date of grant, typically vest over periods up to 3 years and are typically exercisable up to 10 years.    

The weighted-average assumptions used in the option pricing model for stock option grants were as follows for the six months ended June 30, 2011 and 2010:

	2011			2010
Expected Dividend Yield		0			0
Expected Volatility in Stock Price		39	%		39.27	%
Risk-Free Interest Rate		2.70	%		3.00	%
Expected Life of Stock Awards - Years		6			6
Weighted Average Fair Value at Grant Date	$	0.29		$	0.75

11

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

The following table summarizes all stock option activity of the Company for the six months ended June 30, 2011:

	Number of			Weighted Average
	Options			Exercise Price
Outstanding, December 31, 2010		5,987,500		$	1.33
Granted		1,200,000		$	0.67
Forfeited		(75,000	)	$	2.00
Outstanding, June 30, 2011		7,112,500		$	0.69
Exercisable, June 30, 2011		4,373,333		$	0.69

Warrants

Warrants are issued 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 following weighted average assumptions were used for warrants granted for the six months ended June 30:

	2011			2010
Expected Dividend Yield		0			0
Expected Volatility in Stock Price		39	%		38.68	%
Risk-Free Interest Rate		2.0	%		2.42	%
Expected Life of Awards, Years		5			5

The following table represents the Company’s warrant activity for the six months ended June 30, 2011:

				Weighted Average				Weighted Average
	Number of			Grant Date		Weighted Average		Remaining
	Warrants			Fair Value		Exercise Price		Contractual Life (Years)
Outstanding, December 31, 2010		1,727,920				$	1.64		3.86
Issued in financing transactions		3,556,425				$	0.39
Granted		17,921		$	0.20	$	0.56
Exercised		(82,500	)			$	0.50
Expired		(48,830	)			$	1.23
Outstanding, June 30, 2011		5,170,936				$	0.74		7.55
Exercisable, June 30, 2011		4,630,624				$	0.78		7.29

The Company issued 17,921 warrants for services during the six months ended June 30, 2011 at exercise prices ranging from $0.85 to $0.45 per share, exercisable over 10 years from the grant date.  All of the warrants vested immediately.  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 $3,656 and was recorded as stock based compensation expense when vesting occurred.

12

VYSTAR CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2011 (unaudited)

NOTE 8 – RELATED PARTY TRANSACTIONS

Climax Global Energy

During 2005 and 2006, the Company advanced cash and made payments on behalf of Climax Global Energy, Inc. (“Climax”), a development stage company controlled by the Company’s former CEO, resulting in a note.  On August 15, 2008, the Company entered into an agreement with Climax which specified the repayment terms of the note receivable.  The significant terms were established as follows:  (A) the note is non-interest bearing, (B) a $25,000 payment to be made on or before September 30, 2008, (C) equal monthly payments of $5,000 will commence in October 2008, and (D) the note shall be due and payable in full no later than January 31, 2010.  In 2009 all payments due under the agreement had been received by the Company and the note was paid in full in the first quarter of 2010.

Other

At December 31, 2009, the Company had accrued severance of $81,250 payable to the Company’s former CFO, Glenn Smotherman.  Mr. Smotherman agreed to payment of this liability beginning at the earlier of payment in full of the Climax receivable or the Company’s achievement of specific sales goals.  The payments on this liability began in January 2010 and will be satisfied in 24 equal monthly payments.   The balance of this accrued severance at June 30, 2011 was $20,313 and is recorded as part of accrued compensation.

See note 6 for discussion of related party line of credit established on April 29, 2011.

NOTE 9 – SUBSEQUENT EVENTS

The Company has signed a Letter of Intent (LOI) to merge with EcoGlove Asia Pacific Sdn Bhd, an innovator in sustainable, reusable exam gloves. The proposal is nonbinding and subject to the satisfactory completion of due diligence by both Vystar and EcoGlove, which is currently underway. All of the terms of the merger have not been finalized; however, both parties are working toward completion by September 30, 2011.   EcoGlove, headquartered in Sabah, Malaysia, is a specialty glove company engaged in bridging the gap between safety, quality, cost and environmental sustainability.  The company manufactures reusable medical "Tr@ce" gloves and provides innovative reprocessing technology to their clients that enables Tr@ce gloves to be used multiple times, surpassing safety compliance requirements. The first-ever Glove-Unique Reprocessing Unit, called "GURU," provides automated cleaning, decontamination, testing and re-packaging of Tr@ce gloves. The GURU reconditions the used Tr@ce gloves to be as new, tests for pinholes, visual and all other defects and automatically packs them by size. Tr@ce gloves are named for the tracing encoda software platform that is encrypted in each glove to manage every aspect of usage. EcoGlove is a current customer of Vystar and features gloves made with Vytex NRL in its product offerings.  The combined company would remain headquartered in Georgia and the Company’s CEO and CFO are expected to hold such positions with the combined company.

13

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Vystar LLC, the predecessor to the Company, was formed February 2, 2000, as a Georgia limited liability company by Travis W. Honeycutt. The Company’s operations under the LLC entity were focused substantially on the research, development and testing of the Vytex® Natural Rubber Latex ("NRL") process, as well as attaining intellectual property rights. In 2003, the Company reorganized as Vystar Corporation, a Georgia corporation, at which time all assets and liabilities of the limited liability company became assets and liabilities of Vystar Corporation, including all intellectual property rights, patents and trademarks.

We are the creator and exclusive owner of the innovative technology to produce Vytex NRL. This technology reduces antigenic protein in natural rubber latex products to virtually undetectable levels in both liquid NRL and finished latex products.  We have started to introduce Vytex NRL, our new “ultra low protein” natural rubber latex, throughout the worldwide marketplace that uses NRL or latex substitutes as a component of manufactured products.  Natural rubber latex is used in an extensive range of products including balloons, textiles, footwear and clothing (threads), adhesives, foams, furniture, carpet, paints, coatings, protective equipment, sporting equipment, and especially health care products such as condoms, surgical and exam gloves. We produce Vytex through toll manufacturing and licensing agreements and have started introducing Vytex NRL into the supply channels with aggressive, targeted marketing campaigns directed to the end users.

We are no longer a development stage company, having transitioned to the operating stage during the last quarter of 2009. Our primary focus now is increasing market-acceptance for Vytex NRL and, accordingly, increasing sales. With this change in our status, we expect that our financial condition and results of operations will undergo substantial change from what we experienced as a development stage company. In addition to recording both revenue and expense from product sales, we expect to incur increased costs for sales and marketing expenses. Accordingly, the financial condition and results of operations reflected in our historical financial statements are not expected to be indicative of our future financial condition and results of operations.

Pricing for natural rubber latex remains very high compared to historical pricing and several industry publications have indicated no declines are expected in the near term. The Company believes that this significant inflation in pricing of natural rubber latex has delayed customer acceptance and increases in revenues. As a result, the Company has recently completed an enhanced method of production for Vytex NRL which makes Vytex NRL more competitive with regard to pricing of natural rubber latex. Vytex NRL produced under the enhanced method of production is being rolled out now and should help alleviate many customers concerns over pricing of Vytex NRL compared to natural rubber latex. As the Company’s product continues to gain market acceptance, the Company expects sales in 2011and beyond to continually increase. Additionally, the Company is beginning to work with certain customers in bringing products to market which feature Vytex NRL. A production trial of pillows made with Vytex NRL is underway currently with support in certain areas provided by the Company.

The Company has signed a Letter of Intent (LOI) to merge with EcoGlove Asia Pacific Sdn Bhd, an innovator in sustainable, reusable exam gloves. The proposal is nonbinding and subject to the satisfactory completion of due diligence by both Vystar and EcoGlove, which is currently underway. All of the terms of the merger have not been finalized; however, both parties are working toward completion by September 30, 2011. EcoGlove, headquartered in Sabah, Malaysia, is a specialty glove company engaged in bridging the gap between safety, quality, cost and environmental sustainability. EcoGlove manufactures reusable medical "Tr@ce" gloves and provides innovative reprocessing technology to their clients that enables Tr@ce gloves to be used multiple times, surpassing safety compliance requirements. The first-ever Glove-Unique Reprocessing Unit, called "GURU," provides automated cleaning, decontamination, testing and re-packaging of Tr@ce gloves. The GURU reconditions the used Tr@ce gloves to be as new, tests for pinholes, visual and all other defects and automatically packs them by size. Tr@ce gloves are named for the tracing encoda software platform that is encrypted in each glove to manage every aspect of usage. EcoGlove is a current customer of Vystar and features gloves made with Vytex NRL in its product offerings. EcoGlove is expected to complete a significant trial of its technology with a major hospital system in the United States early in the fourth quarter of 2011.

Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. As such, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. Our management reviews its estimates on an on-going basis. We base our estimates and assumptions on historical experience, knowledge of current conditions and our understanding of what we believe to be reasonable that might occur in the future considering available information. Actual results may differ from these estimates, and material effects on our operating results and financial position may result.

14

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2011 with the Three Months Ended June 30, 2010

Revenues

Revenues for the three months ended June 30, 2011 and 2010 were $125,892 and $353,302, respectively. During the quarter ended June 30, 2010, we offered introductory pricing to customers to partially offset the costs they incurred in preparation and startup costs associated with introducing Vytex into their manufacturing processes which generated the negative gross margin in the quarter.   There were no such arrangements in 2011, and the Company generated a gross margin of 40.4% for the three months ended June 30, 2011.

Operating Expenses

	Three Months Ended
	June 30,				$			%
	2011		2010		Change			Change
OPERATING EXPENSES:
Sales and marketing	$	178,301	$	196,606	$	(18,305	)		-9.3	%
General and administrative		356,307		614,741		(258,434	)		-42.0	%
Research and development		20,844		12,591		8,253			65.5	%
	$	555,452	$	823,938	$	(268,486	)		-32.6	%

Our operating expenses were $555,452 and $823,938 for the three months ended June 30, 2011 and 2010, respectively, for a decrease of $(268,486) or (32.6)%.  The decrease in total operating expenses was primarily comprised of a decrease in non-cash stock-based compensation expense of $173,996, a decrease in salary expense of $28,121, and decreases in investor relations, legal and professional fees aggregating $58,988.

For the three months ended June 30, 2011 and 2010, sales and marketing expenses were $178,301 and $196,606, respectively.  The decrease of $18,305 is primarily due to the departure of the Company’s former Executive Vice President of Sales and Business development on March 31, 2011.   Sales and marketing expenses consist primarily of compensation and support costs for sales and marketing personnel, professional services, promotional, marketing and related activities.

For the three months ended June 30, 2011 and 2010, general and administrative expenses were $356,307 and $614,741, respectively.  The decrease of $258,434 is primarily comprised of a decrease in non-cash stock-based compensation costs of $191,741 and decreases totaling approximately $59,000 in investor relations, legal and professional fees.  General and administrative expenses consist primarily of compensation and support costs for management 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.

Included in our operating expenses for the three months ended June 30, 2011 was $20,844 for research and development expenses compared to $12,591 for the three months ended June 30, 2010, an increase of $8,253.   The increase is primarily due to activities focused on expanding our product portfolio and enhancing methods of production.   Research and development expenses consist primarily of compensation for employees and contractors engaged in internal research and product development activities, laboratory operations, and related expenses.

Other Income (Expense)

Other income for the three months ended June 30, 2011, consisted of $273 of interest income on cash deposits net of interest expense of $752,741.   The interest expense for the three months ended June 30, 2011 includes interest on the notes payable of $11,375, interest on the related party line of credit of $3,305, amortization of financing costs of $736,944, and miscellaneous interest of $1,117.  This compares to $863 of interest income for the three months ended June 30, 2010 net of $331 interest expense.

Net Loss

Net loss was $1,257,103 and $952,566 for the three months ended June 30, 2011 and 2010, respectively, an increase of $304,537 in the net loss.

15

Comparison of the Six Months Ended June 30, 2011 with the Six Months Ended June 30, 2010

Revenues

Revenues for the six months ended June 30, 2011 and 2010 were $244,931 and $436,711, respectively.     During the quarter ended June 30, 2010, we offered introductory pricing to customers to partially offset the costs they incurred in preparation and startup costs associated with introducing Vytex into their manufacturing processes which generated the negative gross margin in the quarter and also for the six months then ended.   There were no such arrangements in 2011, and the Company generated a gross margin of 37.6% for the six months ended June 30, 2011.

Operating Expenses

	Six Months Ended
	June 30,				$		%
	2011		2010		Change		Change
OPERATING EXPENSES:
Sales and marketing	$	428,913	$	385,085	$	43,828		11.4	%
General and administrative		1,146,478		1,081,329		65,149		6.0	%
Research and development		47,203		29,528		17,675		59.9	%
	$	1,622,594	$	1,495,942	$	126,652		8.5	%

Our operating expenses were $1,622,594 and $1,495,942 for the six months ended June 30, 2011 and 2010, respectively, for an increase of $126,652 or 8.5%.  The increase in total operating expenses was primarily comprised of an increase in non-cash stock-based compensation expense of $221,300 offset by decreases in legal and professional fees aggregating $98,068.

For the six months ended June 30, 2011 and 2010, sales and marketing expenses were $428,913 and $385,085, respectively.  The increase of $43,828 is primarily due an increase in non-cash stock-based compensation of $86,809 partially offset by a decrease in salaries and benefits due to the departure of the Company’s former Executive Vice President of Sales and Business development on March 31, 2011.   Sales and marketing expenses consist primarily of compensation and support costs for sales and marketing personnel, professional services, promotional, marketing and related activities.

For the six months ended June 30, 2011 and 2010, general and administrative expenses were $1,146,478 and $1,081,329, respectively.  The increase of $65,149 is primarily due to an increase in non-cash stock-based compensation of $130,460 partially offset by decreases in legal and professional fees.   General and administrative expenses consist primarily of compensation and support costs for management 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.

Included in our operating expenses for the six months ended June 30, 2011 was $47,203 for research and development expenses compared to $29,528 for the six months ended June 30, 2010, an increase of $17,675.   The increase is primarily due to activities focused on expanding our product portfolio and enhancing methods of production.    Research and development expenses consist primarily of compensation for employees and contractors engaged in internal research and product development activities, laboratory operations, and related expenses.

Other Income (Expense)

Other income for the six months ended June 30, 2011, consisted of $471 of interest income on cash deposits net of interest expense of $790,494.   The interest expense for the six months ended June 30, 2011 includes interest on the notes payable of $21,375, interest on the related party line of credit of $3,305, amortization of financing costs of $763,919, and miscellaneous interest of $1,895. This compares to $2,046 of interest income for the six months ended June 30, 2010 net of $959 interest expense.

Net Loss

Net loss was $2,320,641 and $1,612,831 for the six months ended June 30, 2011 and 2010, respectively, an increase of $707,810 in the net loss.

16

 LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2011, we had current assets of $468,005, including $247,325 in cash, and $510,045 of current liabilities, or working capital deficit of $42,040.  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.  As a result of the Company's 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 Company’s planned expenses and achieving a level of revenues adequate to support the Company’s cost structure.  Management plans to finance future operations through the use of cash on hand, increased revenues and attracting new sources of equity or debt financing.   We may also consider raising additional capital through a private placement and expect to receive proceeds from stock warrant exercises from existing shareholders.  While the Company has been successful in the past in obtaining the necessary capital to support its operations, there is no assurance that the Company will be able to raise additional equity capital or other financing under commercially reasonable terms and conditions, or at all. Furthermore, if the Company issues equity or debt securities to raise additional funds, existing shareholders may experience dilution and the new equity or debt securities it issues may have rights, preferences and privileges senior to those of existing shareholders. In addition, if the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to products or proprietary technologies, or grant licenses on terms that are not favorable.  As the Company’s product continues to gain market acceptance, the Company expects sales in 2011 to continually increase.

There can be no assurances that the Company will be able to achieve its projected level of revenues in 2011 and beyond.  If the Company is unable to achieve its projected revenues and is not able to obtain alternate additional financing of equity or debt, the Company would need to significantly curtail or reorient its operations during 2011, which could have a material adverse effect on the Company’s ability to achieve its business objectives and as a result may require the Company to file for bankruptcy or cease operations.  The Company’s financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts of liabilities that might result from the outcome of these uncertainties.

Sources and Uses of Cash

For the six months ended June 30, 2011 and 2010, net cash used by operations was $810,462 and $1,056,890, respectively.  The negative cash flow for the six months ended June 30, 2011 was primarily the result of the $2,320,641 net loss.  This was reduced by several non-cash charges, primarily the share-based compensation charges of $735,682 and $755,581 for amortization. The negative cash flow for the six months ended June 30, 2010 was primarily the result of the $1,612,831 net loss.  This was reduced by several non-cash charges, primarily the share-based compensation charges of $515,968.  

Net cash used by investing activities for the six months ended June 30, 2011 was $35,549 compared to net cash provided by investing activities for the same period of 2010 of $129,355.   The cash used in 2011 was due to legal and other costs associated with our patents and trademarks.   Cash provided in 2010 was related to the proceeds from a related party note receivable offset partially by legal and other costs associated with our patents and trademarks.   

Net cash provided by financing activities for the six months ended June 30, 2011 and 2010, was $810,711 and $959,750, respectively.  In 2011, the cash provided was from the issuance of notes payable of $525,000, proceeds from the related party line of credit of $633,750, and issuance of common stock from the exercise of warrants of $41,250 offset by financing costs incurred of $389,289.  The financing activities in 2010 represent proceeds from the sale of common stock and common stock purchase warrants and the exercise of common stock purchase warrants.

Our future expenditures and capital requirements will depend on numerous factors, including: the rate at which we can introduce and sell NRL to manufacturers; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; and market acceptance of our products and competing technological developments. We expect that we will incur in excess of $2 million of expenditures over the next 12 months including almost $800,000 in both personnel costs in general and administrative expenses, including professional fees.  As we expand our activities and operations, our cash requirements are expected to increase at a rate consistent with revenue growth after we have achieved sustained revenue generation.

17

We expect that our cash used in operations will continue to increase as a result of the following planned activities:

· The addition of staff to our workforce as needs arise;

· Increased spending for the expansion of our research and development efforts, including clinical trials, regulatory submissions, assistance with manufacturing trials and product enhancements;

· Increased spending in marketing as our products are introduced into the marketplace;

· Increases in our general and administrative activities related to our operations as a reporting public company and related corporate compliance requirements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that may be reasonably likely to have a current or future material effect on our financial condition, liquidity, or results of operations.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth;  product development, introduction and acceptance; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM  4. CONTROLS AND PROCEDURES

(A) Evaluation of disclosure controls and procedures

Our management, including our principal executive and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2011.  Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-Q has been appropriately recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure.  Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to the reasonable assurance level.

(B) Changes in internal control over financial reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment.  Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There were no changes in our internal control over financial reporting that occurred during the second quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(C) Limitations on the Effectiveness of Controls

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

19

PART II.  OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

 None.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Set forth below is information regarding shares of common stock, warrants and options to purchase common stock issued by the Company in the quarter ended June 30, 2011, that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Also included is the consideration, if any, received by the Company for such shares, warrants and options and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration was claimed.

(a)Common Stock and Warrant Financings

From April 1, 2011 through June 30, 2011, the Company issued 75,000 shares of its common stock upon the exercise of warrants at $0.50 per share.

From April 1, 2011 through June 30, 2011, the Company issued 53,959 shares of its common stock valued at $24,281 for fees and interest associated with the related party line of credit established during the quarter.

From April 1, 2011 through June 30, 2011, the Company issued 5,555 warrants to purchase one share of common stock at an exercise price of $0.45 per share and 3,061 warrants to purchase one share of common stock at an exercise price of $0.49 per share for services rendered to the Company.   The Company also issued warrants to purchase 2,600,000 shares of the Company’s common stock to certain directors at $.45 per share for providing the $800,000 related party line of credit.

(b)Stock Option Grants

None.

(c)Application of Securities Laws and Other Matters

No underwriters were involved in the foregoing sales of securities. The securities described in section (a) of this Item 2 were issued to investors in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2) under the Securities Act and Regulation D promulgated thereunder, as applicable, relative to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required.

All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of common stock, warrants and options described in this Item 2 included appropriate legends setting forth that the securities had not been registered and the applicable restrictions on transfer.

20

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 None

ITEM 4.  [REMOVED AND RESERVED]

ITEM 5.  OTHER INFORMATION

 None

ITEM 6.         EXHIBITS

Exhibit Index *

* Some Exhibits have certain confidential information redacted pursuant to a request for confidential treatment

Number	Description
3.1	Articles of Incorporation of Vystar Acquisition Corporation (now named Vystar Corporation) dated December 17, 2003 (as amended) (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
3.2	Bylaws of Vystar Corporation (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
4.1	Specimen Certificate evidencing shares of Vystar common stock (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.5	Addendum to Management Agreement dated February 29, 2008 between Universal Capital Management, Inc. and Vystar Corporation (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.6	Warrant Purchase Agreement dated January 31, 2008 between Universal Capital Management, Inc. and Vystar Corporation (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.7	Management Agreement dated April 30, 2008 between Universal Capital Management, Inc. and Vystar Corporation (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.8	Warrant Purchase Agreement dated April 30, 2008 between Universal Capital Management, Inc. and Vystar Corporation (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)

21

10.9	Vystar Corporation 2004 Long-Term Compensation Plan, as amended (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.10	Employment Agreement between Vystar Corporation and Sandra Parker dated April 1, 2008 (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.11	First Amendment to Employment Agreement dated July 1, 2009, between Vystar Corporation and Sandra Parker (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.12*	Distributor Agreement among Vystar Corporation, Centrotrade Minerals & Metals, Inc. and Centrotrade Deutschland, GmbH dated January 6, 2009 (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.13	Note agreement between Vystar Corporation and Climax Global Energy, Inc. dated August 15, 2008 (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.14	Lockup Agreement with Glen W. Smotherman dated July 30, 2009 (incorporated by reference to Vystar’s Registration Statement on Form S-1 originally filed on November 13, 2008, Registration Statement No. 333-155344)
10.15	$3,000,000 Loan and Security Agreement between Topping Lift Capital LLC dated March 11, 2011 (incorporated by reference to Vystar’s Current Report on Form 8-K dated March 11, 2011 and filed on March 15, 2011)
10.16	Validity and Fraud Guaranty from William R. Doyle, Jack W. Callicutt and Matthew P. Clark to Topping Lift Capital LLC dated March 11, 2011 (incorporated by reference to Vystar’s Current Report on Form 8-K dated March 11, 2011 and filed on March 15, 2011)
10.17	Intellectual Property Security Agreement between Topping Lift Capital LLC and Vystar Corporation dated March 11, 2011 (incorporated by reference to Vystar’s Current Report on Form 8-K dated March 11, 2011 and filed on March 15, 2011)
10.18	Form of Investor Note (incorporated by reference to Vystar’s Current Report on Form 8-K dated March 11, 2011 and filed on March 15, 2011)
10.19	Promissory Grid Note dated April 29, 2011, in a principal amount of $800,000 from Vystar Corporation to CMA Investments, LLC (incorporated by reference to Vystar’s Current Report on Form 8-K dated April 29, 2011 and filed on May 2, 2011)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

22

SIGNATURES

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, thereunto duly authorized.

	VYSTAR CORPORATION
Date:  August 12, 2011	By:	/s/ William R. Doyle
	William R. Doyle
	Chairman, President, Chief Executive Officer and
	Director (Principal Executive Officer)
Date: August 12, 2011	By:	/s/ Jack W. Callicutt
	Jack W. Callicutt
	Chief Financial Officer (Principal Financial and
	Accounting Officer)

23