NHS deal would help Vystar's growth

WORCESTER, Mass.—Vystar Corp.'s letter of intent to acquire NHS Holdings L.L.C. is the first step in Vystar's plans for growth, according to Steve Rotman, founder of NHS and new CEO of Vystar.

Vystar's plans, according to Rotman, are to greatly expand the markets for the company's Vytex natural rubber latex, which is virtually allergen-, VOC- and odor-free.

"Our object is to bring in companies that have worked with us," Rotman said of the company's expansion plans. "We feel strongly they are companies that will work very well as part of Vystar."

Rotman did not say anything about further acquisition plans, mostly because the LOI for the purchase of assets of NHS, the exclusive distributor of Vytex in the U.S., had not yet been completed.

Vystar is working with major shareholders in completing the LOI, Rotman said in an interview. He said he expected the process to be completed by mid-February, he said.

Vystar announced the LOI on Jan. 9, about three weeks after the company revealed that Rotman had been appointed CEO and the company headquarters had moved from Atlanta to Worcester.

Besides founding NHS in 2015, Rotman also served more than 40 years as president and CEO of Rotmans, a major furniture and carpet retailer in New England. This gives him a strong background in marketing and product development, he said.

"What I did with NHS was create a synergy with Vystar," Rotman said. "I felt NHS would be an asset.

"NHS has tremendous connections in the world of foam and latex, and the board agrees," he said. "The push for the acquisition didn't come from my side so much as from the Vystar side."

NHS is valued at $5 million based on the last round of funding of $750,000 for 15 percent equity in NHS, according to a news release.

Vystar proposed to acquire NHS for $1.2 million in restricted stock, a discount of 85 percent from the valuation, the company said.

NHS's largest shareholders are major investors and registered insiders of Vystar, thus subject to insider trading restrictions, according to the news release.

"The proposed acquisition is contingent upon finalization of definitive transaction agreements and approvals, which are expected to proceed quickly given the makeup of NHS and Vystar's shareholders," the company said.

In the plans for Vystar's expansion, the emphasis is not so much on physical expansion of manufacturing facilities as on expanding Vytex's markets and product applications, according to Rotman.

"The first thing is that we think in terms of products that relate to latex, potentially involving millions of pounds of Vytex," he said. "There are many, many fields in which Vytex can potentially be used. We're developing a team to work on this issue."

Vystar doesn't need capital investments to grow, according to Rotman. Instead, its specialty is to go into their customers' facilities and show them how Vytex can improve their products and their operations.

"A lot of manufacturers are very excited about Vytex," Rotman said. Because Vytex is nearly free of proteins, odor and VOCs, the purity of any potential customer's operations is very important, and Vystar inspects facilities before it starts work in them, he said.

"Switching to Vytex creates a safer work environment as well as a safer product," he said.

When Rotman became Vystar CEO, William Doyle, the company's previous CEO and chairman, remained with Vystar as a product development consultant, according to a company statement.

"Bill has been involved with Vystar for many years," Rotman said of Doyle's new assignment. "He is an expert. On every market I'm looking at, Bill has input. That makes my job much easier when I go into any product area."

Although Vystar now is officially based in Worcester, the move involved very little if any physical displacement of personnel, according to Rotman.

"You have to realize we're very strong on technology," he said. "Even Rotmans is cloud-based. Everything related to Vystar is cloud-based, and everyone in the organization has access to the information immediately."

Vystar's warehouse and distribution center were already located in Worcester, and all latex manufacturing is overseas, so the transition from Atlanta to Worcester was seamless, according to the company.

Vystar is the sole distributor of Vytex, which potentially can be used in more than 40,000 products, the company claimed. Besides being virtually free of proteins, odor and VOCs, Vytex is 100 percent renewable, biodegradable, "green" and environmentally safe, it said.