SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

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 $886,980 and $837,468 of stock-based compensation for the years ended December 31, 2023 and 2022, 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 stock-based compensation of $2,118,926 and $1,385,208 at December 31, 2023 and 2022, 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 Vystar’s 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 warrant’s contractual term as the expected life.

For the year ended December 31, 2023, there were no share-based compensation expense related to employee and board members’ stock options. In total for the year ended December 31, 2022, Vystar recorded $11,072 of share-based compensation expense related to employee and board members’ stock options. There is no unrecognized compensation expense as of December 31, 2023 and 2022.

Options

During 2004, the Board of Directors of Vystar adopted a stock option plan (the “Plan”) and authorized up to 40,000 shares to be issued under the Plan. In April 2009, Vystar’s Board of Directors authorized an increase in the number of shares to be issued under the Plan to 100,000 shares and to include the independent Board Members in the Plan in lieu of continuing the previous practice of granting warrants each quarter to independent Board Members for services. At December 31, 2023, there are 22,518 shares of common stock available for issuance under the Plan. In 2014, the Board of Directors adopted an additional stock option plan which provides for an additional 50,000 shares, which are all available as of December 31, 2023. In 2019, the Board of Directors adopted an additional stock option plan which provides for an additional 500,000 shares, which are all available as of December 31, 2023. The Plan is intended to permit stock options granted to employees to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the Plan that are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options. Stock options are granted at an exercise price equal to the fair market value of Vystar’s common stock on the date of grant, typically vest over periods up to 4 years and are typically exercisable up to 10 years.

There were no options granted during the years ended December 31, 2023 and 2022, respectively. Forfeitures are recognized as they occur.

The following table summarizes all stock option activity of Vystar for the years ended December 31, 2023 and 2022:

						Weighted
				Weighted		Average
				Average		Remaining
	Number			Exercise		Contractual
	of Shares			Price		Life (Years)
Outstanding, December 31, 2021		271,750		$	19.45		1.53
Granted		-			-		-
Cancelled		(5,000	)	$	11.00		-
Forfeited		(1,483	)	$	41.40		-
Outstanding, December 31, 2022		265,267		$	19.54		0.51
Granted		-			-		-
Exercised		-			-		-
Forfeited		(223,267	)	$	21.87		-
Outstanding, December 31, 2023		42,000		$	7.17		2.15
Exercisable, December 31, 2023		42,000		$	7.17		2.15
Exercisable, December 31, 2022		265,267		$	19.54		0.51

As of December 31, 2023 and 2022, there was no aggregate intrinsic value on the outstanding options. The aggregate intrinsic value will change based on the fair market value of Vystar’s common stock.

Warrants

Warrants are issued to third parties as payment for services, debt financing compensation and conversion, 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 table represents Vystar’s warrant activity for the years ended December 31, 2023 and 2022:

								Weighted
								Average
				Weighted		Weighted		Remaining
	Number			Average		Average		Contractual
	of Shares			Fair Value		Exercise Price		Life (Years)
Outstanding, December 31, 2021		101,743			-	$	8.19		2.36
Granted		-			-		-		-
Cancelled		(52,033	)		-	$	10.96		-
Forfeited		(12,444	)		-	$	19.65		-
Expired		-			-		-		-
Outstanding, December 31, 2022		37,266			-	$	7.57		1.31
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(15,746	)		-	$	24.94		-
Expired		-			-		-		-
Outstanding, December 31, 2023		21,520			-	$	6.57		1.10
Exercisable, December 31, 2023		21,520			-	$	6.57		1.10
Exercisable, December 31, 2022		37,266			-	$	7.57		1.31