Exhibit 99.1

TABLE OF CONTENTS

1

INDEPENDENT AUDITORS' REPORT

To the Owner of

Kiron Clinical Sleep Lab, LLC

Durham, North Carolina

We have audited the accompanying consolidated balance sheets of Kiron Clinical Sleep Lab, LLC (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations, changes in member’s equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements referred to above are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kiron Clinical Sleep Lab, LLC as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred historical losses and management expects the Company will continue to incur operating losses and negative cash flows. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Porter Keadle Moore, LLC

Atlanta, Georgia.

September 10, 2013

2

Kiron Clinical Sleep Lab, LLC

Consolidated Balance Sheets

December 31,

See the accompanying notes to the consolidated financial statements.

3

Kiron Clinical Sleep Lab, LLC

Consolidated Statements of Operations

For the Years Ended December 31,

See the accompanying notes to the consolidated financial statements.

4

Kiron Clinical Sleep Lab, LLC

Consolidated Statements of Cash Flows  

For the Years Ended December 31,

See the accompanying notes to the consolidated financial statements.  

5

Kiron Clinical Sleep Lab, LLC

Notes to Consolidated Financial Statements

(1)  NATURE OF BUSINESS

Kiron Clinical Sleep Lab, LLC (the “Company’) was founded in 1998, and operates as a limited liability company organized under the laws of the State of North Carolina.  The Company is located in Durham, North Carolina with additional offices / facilities in Chapel Hill.  Kiron provides diagnostic testing for sleep disorders including overnight polysomnogram studies, Continuous Positive Airway Pressure (CPAP) titrations, Maintenance of Wakefulness Tests (MWTs) and Multiple Sleep Latency Tests (MSLTs).  Kiron is also an in-network provider of CPAP equipment and supplies for Blue Cross Blue Shield, United Healthcare, Wellpath and Medcost.

On June 28, 2013, Vystar Corporation entered into an LLC Ownership Interest Purchase Agreement with Michael Soo,  M.D.,  the  sole  member  of  Kiron  Clinical  Sleep  Lab,  LLC,  to  purchase  all  outstanding  membership  and ownership interests of Kiron, and on July 1, 2013, completed such purchase.  

At closing, the Company and Seller entered into an agreement (“Contract”) pursuant to which the Seller through his medical practice, Durham Neurology, PLLC, a wholly owned professional limited liability company would provide ongoing clinical and medical services to the Company and Kiron as Medical Director.  The Seller subsequently dissolved Durham Neurology, PLLC leaving Kiron without a Medical Director.  On March 10, 2014, Vystar and Kiron filed Civil Suit 74A-07997-1 IN THE SUPERIOR COURT OF GWINNETT COUNTY, STATE OF GEORGIA against Michael Soo, MD and Durham Neurology, PLLC for multiple breaches of the Agreement and Contract.  Potential settlement discussions are currently taking place but there is no evidence that they will be successful.  As such, the two percent (2%) of gross receipts for five (5) years that was included in the original consideration has also been forfeited.  The Purchase Consideration was therefore adjusted to $140,000 and all initial Goodwill associated with the purchase was written-off.

On December 24, 2013, Vystar entered into an Independent Contractor Agreement with Jamila Randolph Battle, MD, a North Carolina physician and sleep specialist, to assume the role of Medical Director for Kiron on January 1, 2014.  Dr. Battle received her undergraduate degree from Duke University and her medical degree from the University of North Carolina at Chapel Hill School of Medicine. She completed her family medicine residency at the University of Michigan, Ann Arbor. Upon completion of her training she returned to North Carolina where she practiced family medicine and served as a consulting associate at Duke Family Medicine. In 2010 she began formal training and education with The School of Sleep Medicine in Palo Alto, California and the Mayo Clinic in Rochester, MN.  In 2012, she became Board Certified in Sleep Medicine.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The  Company  maintains  its  records  on  the  accrual  basis  of  accounting  in  conformity  with  accounting  principles generally accepted in the United States of America.   

Use of Estimates  

The  preparation  of  financial  statements  in  conformity  with  generally  accepted  accounting  principles  requires

management  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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less.

6

Accounts Receivable  

The  Company  extends  credit  to  its  customers  based  on  the  customer's  ability  to  pay.  An allowance for doubtful accounts is provided equal to the estimated losses that will be incurred in collection of all receivables. Estimated losses  are  based  on  a  review  of  the  current  status  of  the  receivables,  historical  collection  experience,  and management’s evaluation of the effect of existing economic conditions.  No allowance for doubtful accounts was recorded at December 31, 2012 or 2011.  The Company does not normally require collateral for trade receivables.  

Property and Equipment  

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided for using the straight-line method over the estimated lives of the related assets.  Leasehold improvements are depreciated over the estimated useful life.  Depreciation is based on the estimated useful lives as follows:  machinery and equipment, 5 to

7 years; office furniture and fixtures, 5 to 7 years; vehicles, 5 years; leasehold improvements, 15 years; software, 3 years.   

Fair Value of Financial Instruments  

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, and member advances. The carrying values of all the Company’s financial instruments approximate fair value because of their short maturities. The Company currently has no lines-of-credit or equipment loans outstanding.  

Sales Taxes

The Company collects sales taxes from customers on sales subject to the tax.  The Company’s accounting policy is to exclude the sales tax billed to and collected from customers from revenues and cost  of  sales and, instead, record the  sales tax charged to  customers as a liability, and remit those taxes to the appropriate state taxing authority when due.

Revenue Recognition  

Revenue  is  attributable  to  fees  for  providing  services,  primarily  sleep  disorder  testing,  therapeutic  titrations  and clinical management. Most agreements include a fee per patient and type of study performed. The agreements may also include a fixed monthly fee for equipment. Fees associated with services are recognized in the period services are rendered and earned under service arrangements with clients where service fees are fixed or determinable and collectability is reasonably assured.  Service  fees  are  determined  based  on  written  price  quotations  or  service agreements  having  stipulated  terms  and  conditions  that  do  not  require  management  to  make  any  significant judgments or assumptions regarding any potential uncertainties.  

Cost of Revenue  

Cost of revenue consists primarily of personnel and medical supplies costs incurred in the delivery of the service.

Advertising and Promotion Costs

The Company expenses advertising and promotion costs as incurred. Advertising and promotion expense was $521 and $970 for 2012 and 2011, respectively.

Income Taxes

The Company operates as a limited liability company (“LLC”). As such, the net income or loss from the Company

flows  through  to  the  members  and  they  are  taxed  on  their  proportionate  share  of  the  LLC’s  taxable  income.  Therefore, no provision or liability for federal or state income taxes related to the LLC is included in these financial statements.  

Tax benefits arising from an uncertain tax position can only be recognized for financial reporting purposes if, and to the extent that, the position is more likely than not to be sustained in an audit by the applicable taxing authority.

There were no material unrecognized tax benefits and related tax liabilities at December 31, 2012 and 2011. Penalties related to uncertain tax positions would be recorded as a component of general and administrative expenses. Interest relating to uncertain tax positions would be recorded as a component of interest expense. The Company is no longer subject to income tax examinations for calendar years prior to 2010.  

7

Recent Accounting Pronouncements

Accounting  standards  that  have  been  issued  or  proposed  by  the  Financial  Accounting  Standards  Board  and  other standard setting entities that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.  

(3)  CONCENTRATIONS OF CREDIT RISK

Financial  instruments  that  potentially  subject  the  Company  to  concentrations  of  credit  risk  consist principally of cash balances in financial institutions and accounts receivable.

Cash Balances

The Company maintains its cash balance in one financial institution.  The account at the institution is insured by the

Federal Deposit Insurance Corporation (FDIC) up to $250,000.  As of December 31, 2012 and 2011, the Company had no uninsured cash balances. The Company has not incurred any losses from these accounts, and management believes the Company is not exposed to any significant credit risk on its cash balances.

Major Suppliers

Purchases from the Company’s two largest vendors and suppliers accounted for approximately 91.5% of total purchases for the years ended December 31, 2012 and 2011. In the event of an interruption of supply from these suppliers, management believes that similar materials could be purchased with minimal lead time from a variety of different sources at similar trade terms.

(4)  PROPERTY AND EQUIPMENT  

The following is a summary of property and equipment, at cost less accumulated depreciation at December 31:

Depreciation expense was $6,220 and $6,259 for the years ended December 31, 2012 and 2011, respectively.

(5)  OPERATING LEASES

Commencing June 1, 2010, the Company entered into a non-cancelable operating lease for its Durham office and facilities. The lease was for a term of 38 months but was amended effective September 1, 2013 to extend the lease for another 61 months. Under the terms of the lease, the lessor and the Company acknowledge and agree that, provided no event of default occurs during the term of the lease, the monthly installment of rent due for the first two (2) months of the term of the lease shall be abated and shall not be payable to lessor.  Notwithstanding the foregoing, during such abatement period, the Company shall be liable for and shall pay all amounts due for any expenses, taxes, insurance costs, utilities and such other amounts due pursuant to the terms of the lease.

Commencing December 1, 2012, the Company entered into a non-cancelable operating lease for its Chapel Hill office and facilities. The lease expires on November 30, 2015.  

8

The Company leases certain of its office equipment and billing service software under non-cancelable operating leases expiring at varying dates through 2016.  

Future minimum lease payments under non-cancelable operating leases as of December 31, 2012 are as follows:

Rent expense charged to operations for the years ended December 31, 2012 and 2011 was $110,703 and $114,205 respectively.  

(6)  RELATED PARTY TRANSACTIONS

The Company rents its Chapel Hill facilities from Dream Bardo, LLC (a single-member LLC owned by Dr. Michael Soo, who is also the owner of Kiron Clinical Sleep Lab, LLC) on a month-to-month basis during 2012 and 2011. The total rent paid under this agreement for the years ended December 31, 2012 and 2011 was $10,000 and $17,658 respectively.

(7)  SUBSEQUENT EVENTS  

On June 28, 2013, Vystar Corporation entered into an LLC Ownership Interest Purchase Agreement with Michael Soo,  M.D.,  the  sole  member  of  Kiron  Clinical  Sleep  Lab,  LLC,  to  purchase  all  outstanding  membership  and ownership interests of Kiron, and on July 1, 2013, completed such purchase.  

Pursuant to the Agreement, the Company:

(a) Delivered $90,000 cash to Seller;

(b) Issued to Seller 727,434 shares of Vystar common stock, valued at $50,000 or $0.0688 per share; and

(c)  Two percent (2%) of the gross receipts received by Kiron for a period of five (5) years.

In addition, the Company agreed to pay an additional $60,000 (the “Adjustment Amount”), $10,000 in cash and $50,000 in shares of Vystar common stock, in the event the audited financial results of Kiron for the year-end 2011, 2012, and the first six (6) months of 2013 are within two percent (2%) variability of the Statement of Revenues and Expenses provided by the Seller at closing for the periods referenced above.  In the event the audited financial results are within three percent (3%) variability, fifty percent (50%) of the Adjustment Amount shall be paid to the Seller.  As this calculation is subject to audit, management’s current estimate is subject to change.

The completed audit of Kiron’s 2011 and 2012 financial statements showed financial results that exceeded the three percent (3%) variability allowed under the Agreement and thus the $60,000 Adjustment Amount was forfeited.  

9

At closing, the Company and Seller also entered into an agreement (“Contract”) pursuant to which the Seller through his medical practice, Durham Neurology, PLLC, a wholly owned professional limited liability company would provide ongoing clinical and medical services to the Company and Kiron as Medical Director.  The Seller subsequently dissolved Durham Neurology, PLLC leaving Kiron without a Medical Director.  On March 10, 2014, Vystar and Kiron filed Civil Suit 74A-07997-1 IN THE SUPERIOR COURT OF GWINNETT COUNTY, STATE OF GEORGIA against Michael Soo, MD and Durham Neurology, PLLC for multiple breaches of the Agreement and Contract.  Potential settlement discussions are currently taking place but there is no evidence that they will be successful.  As such, the two percent (2%) of gross receipts for five (5) years that was included in the original consideration has also been forfeited.  The Purchase Consideration was therefore adjusted to $140,000 and all initial Goodwill associated with the purchase was written-off.

On December 24, 2013, Vystar entered into an Independent Contractor Agreement with Jamila Randolph Battle, MD, a North Carolina physician and sleep specialist, to assume the role of Medical Director for Kiron on January 1, 2014.  Dr. Battle received her undergraduate degree from Duke University and her medical degree from the University of North Carolina at Chapel Hill School of Medicine. She completed her family medicine residency at the University of Michigan, Ann Arbor. Upon completion of her training she returned to North Carolina where she practiced family medicine and served as a consulting associate at Duke Family Medicine. In 2010 she began formal training and education with The School of Sleep Medicine in Palo Alto, California and the Mayo Clinic in Rochester, MN.  In 2012, she became Board Certified in Sleep Medicine.

10

Kiron Clinical Sleep Lab, LLC

Consolidated Balance Sheets

June 30,

(unaudited)

11

Kiron Clinical Sleep Lab, LLC

Consolidated Statements of Operations

(unaudited)

12

Kiron Clinical Sleep Lab, LLC

Consolidated Statements of Cash Flows

For the Six Months Ended June 30,

(unaudited)

See the accompanying notes to the consolidated financial statements.  

13

Kiron Clinical Sleep Lab, LLC

Notes to Consolidated Financial Statements

June 30, 2013 and 2012

(1)  NATURE OF BUSINESS

Kiron Clinical Sleep Lab, LLC (the “Company’) was founded in 1998, and operates as a limited liability company organized under the laws of the State of North Carolina.  The Company is located in Durham, North Carolina with additional offices / facilities in Chapel Hill.  Kiron provides diagnostic testing for sleep disorders including overnight polysomnogram studies, Continuous Positive Airway Pressure (CPAP) titrations, Maintenance of Wakefulness Tests (MWTs) and Multiple Sleep Latency Tests (MSLTs).  Kiron is also an in-network provider of CPAP equipment and supplies for Blue Cross Blue Shield, United Healthcare, Wellpath and Medcost.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The  Company maintains its records on the accrual basis of accounting in  conformity with accounting principles generally accepted in the United States of America.

Use of Estimates  

The  preparation  of  financial  statements  in  conformity  with  generally  accepted  accounting  principles  requires

management  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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less.

Accounts Receivable  

The  Company  extends  credit  to  its  customers  based  on  the  customer's  ability  to  pay.  An allowance for doubtful accounts is provided equal to the estimated losses that will be incurred in collection of all receivables. Estimated losses  are  based  on  a  review  of  the  current  status  of  the  receivables,  historical  collection  experience,  and management’s evaluation of the effect of existing economic conditions.  No allowance for doubtful accounts was recorded at December 31, 2012 or 2011.  The Company does not normally require collateral for trade receivables.  

Property and Equipment  

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided for using the straight-line method over the estimated lives of the related assets.  Leasehold improvements are depreciated over the estimated useful life.  Depreciation is based on the estimated useful lives as follows:  machinery and equipment, 5 to

7 years; office furniture and fixtures, 5 to 7 years; vehicles, 5 years; leasehold improvements, 15 years; software, 3 years.   

Fair Value of Financial Instruments  

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, and member advances. The carrying values of all the Company’s financial instruments approximate fair value because of their short maturities. The Company currently has no lines-of-credit or equipment loans outstanding.  

14

Sales Taxes

The Company collects sales taxes from customers on sales subject to the tax.  The Company’s accounting policy is to exclude the sales tax billed to and collected from customers from revenues and cost  of  sales and, instead, record the  sales tax charged to  customers as a liability, and remit those taxes to the appropriate state taxing authority when due.

Revenue Recognition  

Revenue  is  attributable  to  fees  for  providing  services,  primarily  sleep  disorder  testing,  therapeutic  titrations  and clinical management. Most agreements include a fee per patient and type of study performed. The agreements may also include a fixed monthly fee for equipment. Fees associated with services are recognized in the period services are rendered and earned under service arrangements with clients where service fees are fixed or determinable and collectability is reasonably assured.  Service  fees  are  determined  based  on  written  price  quotations  or  service agreements  having  stipulated  terms  and  conditions  that  do  not  require  management  to  make  any  significant judgments or assumptions regarding any potential uncertainties.  

Cost of Revenue  

Cost of revenue consists primarily of personnel and medical supplies costs incurred in the delivery of the service.

Income Taxes

The Company operates as a limited liability company (“LLC”). As such, the net income or loss from the Company

flows  through  to  the  members  and  they  are  taxed  on  their  proportionate  share  of  the  LLC’s  taxable  income.  Therefore, no provision or liability for federal or state income taxes related to the LLC is included in these financial statements.  

Tax benefits arising from an uncertain tax position can only be recognized for financial reporting purposes if, and to the extent that, the position is more likely than not to be sustained in an audit by the applicable taxing authority.

There were no material unrecognized tax benefits and related tax liabilities at December 31, 2012 and 2011. Penalties related to uncertain tax positions would be recorded as a component of general and administrative expenses. Interest relating to uncertain tax positions would be recorded as a component of interest expense. The Company is no longer subject to income tax examinations for calendar years prior to 2010.  

Recent Accounting Pronouncements

Accounting  standards  that  have  been  issued  or  proposed  by  the  Financial  Accounting  Standards  Board  and  other standard setting entities that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.  

 (3)  SUBSEQUENT EVENTS

On June 28, 2013, Vystar Corporation entered into an LLC Ownership Interest Purchase Agreement with Michael Soo,  M.D.,  the  sole  member  of  Kiron  Clinical  Sleep  Lab,  LLC,  to  purchase  all  outstanding  membership  and ownership interests of Kiron, and on July 1, 2013, completed such purchase.  

Pursuant to the Agreement, the Company:

(a) Delivered $90,000 cash to Seller;

(b) Issued to Seller 727,434 shares of Vystar common stock, valued at $50,000 or $0.0688 per share; and

(c)  Two percent (2%) of the gross receipts received by Kiron for a period of five (5) years.

In addition, the Company agreed to pay an additional $60,000 (the “Adjustment Amount”), $10,000 in cash and $50,000 in shares of Vystar common stock, in the event the audited financial results of Kiron for the year-end 2011, 2012, and the first six (6) months of 2013 are within two percent (2%) variability of the Statement of Revenues and Expenses provided by the Seller at closing for the periods referenced above.  In the event the audited financial results are within three percent (3%) variability, fifty percent (50%) of the Adjustment Amount shall be paid to the Seller.  As this calculation is subject to audit, management’s current estimate is subject to change.

15

The completed audit of Kiron’s 2011 and 2012 financial statements showed financial results that exceeded the three percent (3%) variability allowed under the Agreement and thus the $60,000 Adjustment Amount was forfeited.  

At closing, the Company and Seller also entered into an agreement (“Contract”) pursuant to which the Seller through his medical practice, Durham Neurology, PLLC, a wholly owned professional limited liability company would provide ongoing clinical and medical services to the Company and Kiron as Medical Director.  The Seller subsequently dissolved Durham Neurology, PLLC leaving Kiron without a Medical Director.  On March 10, 2014, Vystar and Kiron filed Civil Suit 74A-07997-1 IN THE SUPERIOR COURT OF GWINNETT COUNTY, STATE OF GEORGIA against Michael Soo, MD and Durham Neurology, PLLC for multiple breaches of the Agreement and Contract.  Potential settlement discussions are currently taking place but there is no evidence that they will be successful.  As such, the two percent (2%) of gross receipts for five (5) years that was included in the original consideration has also been forfeited.  The Purchase Consideration was therefore adjusted to $140,000 and all initial Goodwill associated with the purchase was written-off.

On December 24, 2013, Vystar entered into an Independent Contractor Agreement with Jamila Randolph Battle, MD, a North Carolina physician and sleep specialist, to assume the role of Medical Director for Kiron on January 1, 2014.  Dr. Battle received her undergraduate degree from Duke University and her medical degree from the University of North Carolina at Chapel Hill School of Medicine. She completed her family medicine residency at the University of Michigan, Ann Arbor. Upon completion of her training she returned to North Carolina where she practiced family medicine and served as a consulting associate at Duke Family Medicine. In 2010 she began formal training and education with The School of Sleep Medicine in Palo Alto, California and the Mayo Clinic in Rochester, MN.  In 2012, she became Board Certified in Sleep Medicine.

16