Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~123,366,102~~123,552,213 shares of common stock outstanding at ~~August~~May 16, ~~2021.~~2022.

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements	4

ITEM 1.

Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)	6
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	7
Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)	8
Condensed Consolidated Statements of Cash Flows (Unaudited)	9
Notes to Condensed Consolidated Financial Statements (Unaudited)	10

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	24
ITEM 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	26
ITEM 1A.	Risk Factors	26
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
ITEM 3.	Defaults Upon Senior Securities	26
ITEM 4.	Mine Safety Disclosures	26
ITEM 5.	Other Information	26
ITEM 6.	Exhibits	26
SIGNATURES		27

~~Table of Contents~~

PART I - FINANCIAL INFORMATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” “believes,” “contemplates,” “targets,” “could,” “would” or “should” or the negative thereof or any variation thereon or similar terminology or expressions. Management cautions readers not to place undue reliance on any of the Company’s forward-looking statements, which speak only as of the date made.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: our ability to raise additional capital, the absence of any material operating history or revenue, our ability to attract and retain qualified personnel, our ability to develop and introduce a new service and products to the market in a timely manner, market acceptance of our services and products, our limited experience in the industry, the ability to successfully develop licensing programs and generate business, rapid technological change in relevant markets, unexpected network interruptions or security breaches, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments, intense competition with larger companies, general economic conditions, the impact of the current COVID-19 pandemic, and other risks discussed in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the Securities and Exchange Commission (the “SEC”), and the Company’s other subsequent filings with the SEC.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the ~~foregoing.~~foREGOing. The Company has no obligation to and does not undertake to update, revise, or correct any of these forward-looking statements after the date of this report.

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ITEM 1. FINANCIAL STATEMENTS

~~Rego~~REGO Payment Architectures, Inc.

CONTENTS

	PAGE

CONDENSED CONSOLIDATED BALANCE SHEETS	6


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	7


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT	8


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	9


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	10 to 23 19

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~~Rego~~REGO Payment Architectures, Inc.

Condensed Consolidated Balance Sheets

~~June 30, 2021 and December 31, 2020~~

	June 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
ASSETS	(Unaudited)			(Audited)			(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	2,658,122		$	273,176		$	2,564,955		$	553,131
Prepaid expenses		14,283			162,840			22,005			108,131
Deposits		341			341			341			341

TOTAL CURRENT ASSETS		2,672,746			436,357			2,587,301			661,603

OTHER ASSETS
Patents and trademarks, net of accumulated amortization of $236,703 and $221,925		315,839			328,486
Patents and trademarks, net of accumulated
amortization of $263,971 and $253,262								470,138			379,401
		315,839			328,486			470,138			379,401

TOTAL ASSETS	$	2,988,585		$	764,843		$	3,057,439		$	1,041,004


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	5,754,930		$	5,631,518		$	6,367,629		$	6,108,019
Accounts payable and accrued expenses - related parties		205,368			289,704			9,808			141,522
Embedded derivative liability		0-			10,987,578
Paycheck protection program loan payable		0-			81,500
Loans payable		42,600			42,600			42,600			42,600
Deferred revenue		0-			200,000
10% secured convertible notes payable - stockholders		3,316,357			3,116,357			3,316,357			3,316,357
Notes payable - stockholders, net of discount of $0 and $40,031		595,000			1,095,000
Notes payable - stockholders								595,000			595,000
4% secured convertible notes payable - stockholders		14,781,250			9,494,250			14,981,250			14,781,250
Preferred stock dividend liability		7,729,471			7,195,243			8,215,549			7,928,199

TOTAL CURRENT LIABILITIES		32,424,976			38,133,750			33,528,193			32,912,947

CONTINGENCIES

STOCKHOLDERS' DEFICIT

Preferred stock, $.0001 par value; 2,000,000 preferred shares authorized; 195,500 preferred shares Series A authorized; 102,350 shares issued and outstanding at June 30, 2021 and 107,850 issued and outstanding at December 31, 2020		10			11
Preferred stock, $.0001 par value; 2,000,000 preferred shares
authorized; 195,500 preferred shares Series A authorized; 101,350 shares
issued and outstanding at March 31, 2022 and 102,350 shares issued and outstanding at December 31, 2021								10			10

Preferred stock, $.0001 par value; 2,000,000 preferred shares authorized; 222,222 preferred shares Series B authorized; 28,378 shares issued and outstanding at June 30, 2021 and December 31, 2020		3			3
Preferred stock, $.0001 par value; 2,000,000 preferred shares
authorized; 222,222 preferred shares Series B authorized; 75,478 shares
issued and outstanding at March 31, 2022 and 35,879 issued and
outstanding at December 31, 2021								8			4

Preferred stock, $.0001 par value; 2,000,000 preferred shares authorized; 150,000 preferred shares Series C authorized; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020		0-			0-
Preferred stock, $.0001 par value; 2,000,000 preferred shares
authorized; 300,000 preferred shares Series C authorized; 0 shares
issued and outstanding at March 31, 2022 and December 31, 2021								-			-

Common stock, $ .0001 par value; 230,000,000 shares authorized; 123,366,102 shares issued and outstanding at June 30, 2021 and 120,096,866 shares issued and outstanding at December 31, 2020		12,337			12,010
Common stock, $ .0001 par value; 230,000,000 shares authorized;
123,552,213 shares issued and outstanding at March 31, 2022 and
123,441,102 shares issued and outstanding at December 31, 2021								12,355			12,344

Additional paid in capital		66,843,437			61,447,232			71,707,683			67,740,012

Accumulated deficit		(96,224,575	)		(98,770,661	)		(102,108,106	)		(99,546,710	)

Noncontrolling interests		(67,603	)		(57,502	)		(82,704	)		(77,603	)

STOCKHOLDERS' DEFICIT		(29,436,391	)		(37,368,907	)		(30,470,754	)		(31,871,943	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	2,988,585		$	764,843		$	3,057,439		$	1,041,004

See the accompanying notes to the condensed consolidated financial statements.

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REGO Payment Architectures, Inc.

Condensed Consolidated Statements of Comprehensive Loss

~~For the Three and Six Months Ended June 30, 2021 and 2020~~

(Unaudited)

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021

NET REVENUE	$	740		$	0-		$	1,273		$	0-		$	1,397		$	533

OPERATING EXPENSES
Transaction expense		38,745			0-			76,059			0-			62,531			37,314
Sales and marketing		166,597			11,506			623,613			18,339			636,608			457,016
Product development		817,558			119,833			1,647,916			193,453			435,366			830,358
General and administrative		2,021,831			218,639			5,090,788			677,354			893,554			3,068,957
Total operating expenses		3,044,731			349,978			7,438,376			889,146			2,028,059			4,393,645

NET OPERATING LOSS		(3,043,991	)		(349,978	)		(7,437,103	)		(889,146	)		(2,026,662	)		(4,393,112	)

OTHER INCOME (EXPENSE)
Interest income		8			0-			259			0-			38			251
Forgiveness of debt		13,925			0-			95,425			0-			-			81,500
Interest expense		(241,507	)		(172,723	)		(575,947	)		(380,347	)		(252,523	)		(334,440	)
		(227,574	)		(172,723	)		(480,263	)		(380,347	)		(252,485	)		(252,689	)

NET LOSS		(3,271,565	)		(522,701	)		(7,917,366	)		(1,269,493	)		(2,279,147	)		(4,645,801	)

LESS: Accrued preferred dividends		(267,113	)		(271,781	)		(534,227	)		(543,561	)		(287,350	)		(267,114	)
Net loss attributable to noncontrolling interests		0-			469			101			726			101			101

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(3,538,678	)	$	(794,013	)	$	(8,451,492	)	$	(1,812,328	)	$	(2,566,396	)	$	(4,912,814	)

BASIC AND DILUTED NET LOSS PER COMMON SHARE	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
BASIC AND DILUTED NET LOSS PER
COMMON SHARE													$	(0.02	)	$	(0.04	)

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		123,102,040			119,596,866			122,178,595			119,596,866
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING														123,444,806			121,255,150

See the accompanying notes to the condensed consolidated financial statements.

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REGO Payment Architectures, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

For the Three ~~and Six Month Periods~~Months Ended ~~June 30, 2021 and 2020~~

March 31, 2022

Preferred
Preferred
Preferred
Common
Stock Series A
Stock Series B
Stock Series C
Stock
Number
Number
Number
Number
Additional
of
of
of
of
Paid-In
Accumulated
Noncontrolling
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Interests
Total

Balance, December 31, 2020, as previously reported
107,850
$
11
28,378
$
3
0-
$
0-
120,096,866
$
12,010
$
61,447,232
$
(98,770,661
)
$
(57,502
)
$
(37,368,907
)

Adoption of new accounting principle for embedded derivative liabilities
-
-
-
-
-
-
-
-
-
10,987,578
-
10,987,578

Balance, December 31, 2020, as adjusted
107,850
11
28,378
3
0-
0-
120,096,866
12,010
61,447,232
(87,783,083
)
(57,502
)
(26,381,329
)

Conversion of Series A Preferred shares into common stock
(5,500
)
(1
)
-
-
-
-
611,111
61
$
(60
)
-
-
0-
Issuance of common stock to board members and employees
-
-
-
-
-
-
1,800,000
180
1,929,820
-
-
1,930,000
Issuance of common stock for accounts payable
-
-
-
-
-
-
150,000
15
134,985
-
-
135,000
Exercise of options
-
-
-
-
-
-
80,000
8
19,992
-
-
20,000
Fair value of options for software
-
-
-
-
-
-
-
-
111,817
-
-
111,817
Fair value of options for services
-
-
-
-
-
-
-
-
1,417,625
-
-
1,417,625
Accrued preferred dividends
-
-
-
-
-
-
-
-
-
(262,114
)
(5,000
)
(267,114
)
Net loss
-
-
-
-
-
-
-
-
-
(4,645,700
)
(101
)
(4,645,801
)

Balance, March 31, 2021 (Unaudited)
102,350
$
10
28,378
$
3
0-
$
0-
122,737,977
$
12,274
$
65,061,411
$
(92,690,897
)
$
(62,603
)
$
(27,679,802
)

Issuance of common stock to board members and employees
-
-
-
-
-
-
600,000
60
620,940
-
-
621,000
Cashless exercise of options
-
-
-
-
-
-
28,125
3
(3
)
-
-
-
Fair value of options for services
-
-
-
-
-
-
-
-
1,161,089
-
-
1,161,089
Accrued preferred dividends
-
-
-
-
-
-
-
-
-
(262,113
)
(5,000
)
(267,113
)
Net loss
-
-
-
-
-
-
-
-
-
(3,271,565
)
0-
(3,271,565
)

Balance, June 30, 2021 (Unaudited)
102,350
$
10
28,378
$
3
0-
$
0-
123,366,102
$
12,337
$
66,843,437
$
(96,224,575
)
$
(67,603
)
$
(29,436,391
)

	Preferred					Preferred				Preferred				Common
	Stock Series A					Stock Series B				Stock Series C				Stock				Additional
	Number of					Number of				Number of				Number of				Paid-In			Accumulated			Noncontrolling
	Shares			Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Interests			Total

Balance, December 31, 2021		102,350		$	10		35,879	$	4		-	$	-		123,441,102	$	12,344	$	67,740,012		$	(99,546,710	)	$	(77,603	)	$	(31,871,943	)

Conversion of Series A Preferred stock into common stock		(1,000	)		-		-		-		-		-		111,111		11		(11	)		-			-			-
Sale of Series B Preferred stock		-			-		39,599		4		-		-		-		-		3,563,996			-			-			3,564,000
Fair value of options for services		-			-		-		-		-		-		-		-		403,686			-			-			403,686
Accrued preferred dividends		-			-		-		-		-		-		-		-		-			(282,350	)		(5,000	)		(287,350	)
Net loss		-			-		-		-		-		-		-		-		-			(2,279,046	)		(101	)		(2,279,147	)

Balance, March 31, 2022 (Unaudited)		101,350		$	10		75,478	$	8		-	$	-		123,552,213	$	12,355	$	71,707,683		$	(102,108,106	)	$	(82,704	)	$	(30,470,754	)

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

For the Three Months Ended March 31, 2021

	Preferred						Preferred				Preferred				Common
	Stock Series A						Stock Series B				Stock Series C				Stock				Additional
	Number of						Number of				Number of				Number of				Paid-In			Accumulated			Noncontrolling
	Shares			Amount			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Interests			Total

Balance, December 31, 2020, as adjusted		107,850			11			28,378		3		-		-		120,096,866		12,010		61,447,232			(87,783,083	)		(57,502	)		(26,381,329	)

Conversion of Series A Preferred stock into common stock		(5,500	)		(1	)		-		-		-		-		611,111		61	$	(60	)		-			-			-
Issuance of common stock to board members and employees		-			-			-		-		-		-		1,800,000		180		1,929,820			-			-			1,930,000
Issuance of common stock for accounts payable		-			-			-		-		-		-		150,000		15		134,985			-			-			135,000
Exercise of options		-			-			-		-		-		-		80,000		8		19,992			-			-			20,000
Fair value of options for software		-			-			-		-		-		-		-		-		111,817			-			-			111,817
Fair value of options for services		-			-			-		-		-		-		-		-		1,417,625			-			-			1,417,625
Accrued preferred dividends		-			-			-		-		-		-		-		-		-			(262,114	)		(5,000	)		(267,114	)
Net loss		-			-			-		-		-		-		-		-		-			(4,645,700	)		(101	)		(4,645,801	)

Balance, March 31, 2021 (Unaudited)		102,350		$	10			28,378	$	3		-	$	-		122,737,977	$	12,274	$	65,061,411		$	(92,690,897	)	$	(62,603	)	$	(27,679,802	)

See the accompanying notes to the condensed consolidated financial statements.

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REGO Payment Architectures, Inc.

Condensed Consolidated Statements of Cash Flows

~~For the Six Months Ended June 30, 2021 and 2020~~

(Unaudited)

	For the Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,279,147	)	$	(4,645,801	)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of common stock issued in exchange for services		-			1,930,000
Fair value of options issued in exchange for services		403,686			1,417,626
Impairment loss		-			111,817
Depreciation and amortization		10,709			7,381
Forgiveness of debt		-			(81,500	)
Decrease in assets
Prepaid expenses		86,126			147,245
Increase (decrease) in liabilities
Accounts payable and accrued expenses		259,610			314,067
Accounts payable and accrued expenses - related parties		(131,714	)		(60,324	)

Net cash used in operating activities		(1,650,730	)		(859,489	)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in patents		(101,446	)		-
Net cash used in investing activities		(101,446	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of options		-			20,000
Proceeds from sale of Series B Preferred stock		3,564,000			-
Proceeds from 4% secured notes payable - stockholders		200,000			-
Proceeds from convertible notes payable - stockholders		-			2,425,000

Net cash provided by financing activities		3,764,000			2,445,000

NET INCREASE IN CASH AND CASH EQUIVALENTS		2,011,824			1,585,511

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		553,131			273,176

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	2,564,955		$	1,858,687


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during year for:
Interest	$	-		$	576
Income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

Accrued preferred dividends	$	287,350		$	267,114
Options issued for software	$	-		$	111,817
Issuance of common stock for accounts payable	$	-		$	135,000
Conversion of Series A Preferred stock to common stock	$	11		$	61
Adoption of new accounting principle for embedded derivative liabilities
affecting accumulated deficit	$	-		$	10,987,578

For the Six Months Ended June 30,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(7,917,366
)
$
(1,269,493
)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of options issued for interest on notes payable
0-
4,470
Fair value of common stock issued in exchange for services
2,551,000
0-
Fair value of options and warrants issued in exchange for services
2,578,715
171,463
Accretion of discount on notes payable
0-
40,031
Impairment loss
111,817
0-
Depreciation and amortization
12,647
14,658
Forgiveness of debt
(95,425
)
0-
Decrease in assets
Prepaid expenses
148,557
0-
Increase (decrease) in liabilities
Accounts payable and accrued expenses
339,337
600,633
Accounts payable and accrued expenses - related parties
(84,336
)
(212,840
)

Net cash used in operating activities
(2,355,054
)
(651,078
)

CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of options
20,000
0-
Proceeds from notes payable - stockholders
0-
15,000
Repayment of notes payable - stockholders
(50,000
)
(15,000
)
Proceeds from convertible notes payable - stockholders
4,770,000
160,000
Proceeds from paycheck protection program loan
0-
81,500

Net cash provided by financing activities
4,740,000
241,500

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
2,384,946
(409,578
)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
273,176
430,076

CASH AND CASH EQUIVALENTS - END OF PERIOD
$
2,658,122
$
20,498

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during year for:
Interest
$
576
$
0-

Income taxes
$
0-
$
0-

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

Accrued preferred dividends
$
534,227
$
543,561

Options issued for software
$
111,817
$
0-

Issuance of common stock for accounts payable
$
135,000
$
0-

Conversion of Series A Preferred stock to common stock
$
61
$
0-

Adoption of new accounting principle for embedded derivative liabilities affecting accumulated deficit
$
10,987,578
$
0-

Exchange of deferred revenue for 10% convertible notes payable
$
200,000
$
0-

Cashless conversion of options into common stock
$
3
$
0-

Exchange of note payable - stockholder and accrued interest for 4% convertible note payable
$
517,000
$
0-

See the accompanying notes to the condensed consolidated financial statements.

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~~Rego~~

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REGO Payment Architectures, Inc.

Notes to Condensed Consolidated Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

REGO Payment Architectures, Inc. (“REGO”) was incorporated in the state of Delaware on February 11, 2008.

REGO Payment Architectures, Inc. and its subsidiaries (collectively, except where the context requires, the “Company”) is a provider of consumer software that delivers a mobile payment platform solution—~~Mazoola~~Mazoola®^SM- a family focused mobile banking ~~solution (the “Platform”).~~solution. Headquartered in Blue Bell, Pennsylvania, the Company maintains a portfolio of trade secrets and four US patent awards. REGO offers an all-digital financial payments platform to enable minors, particularly under 13 years old, to purchase goods and services, complete chores and learn in a secure online environment guided by parental permission, oversight, and control, while remaining Children’s Online Privacy Protection Act (“COPPA”) and General Data Protection Regulation (“GDPR”) compliant.

Management believes that building on its COPPA advantage the future of REGO Payment Architectures, Inc. will be based on the foundational architecture of ~~the Platform~~its technology platform (the “Platform”) that will allow its use across multiple financial markets where secure controlled payments are needed. The Company intends to license in each alternative field of use the ability for its partners, distributors and/or ~~value-added~~value added resellers to private label each of the alternative markets. These partners would deploy, customize and support each implementation under their own label, but with acknowledgement of the Company’s proprietary intellectual assets as the base technology. Management believes this approach will enable the Company to reduce expenses while broadening its reach.

Revenues generated from the ~~platform~~Platform will come from multiple sources depending on the level of service and facilities requested by the parent. There will be levels of subscription revenue paid monthly, service fees, transaction fees and ~~in some cases,~~ revenue sharing and licensing with banking and distribution partners.

ZOOM Solutions, Inc. (“ZS”)

ZS (formerly Zoom Payment Solutions, Inc.) was incorporated in the state of Delaware on February 16, 2018 as a subsidiary of REGO Payment Architectures, Inc. During the year ended December 31, 2020, the minority common shareholders of ZS exchanged their shares in ZS for REGO 10% secured convertible notes payable. REGO now owns 100% of the common stock of ZS. ZS is the holding company for various subsidiaries that will utilize REGO’s payment platform to address emerging markets.

There were minimal operations at ZS during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

ZOOM Payment Solutions, Inc. (“ZPS”)

ZPS (formerly Zoom Payment Solutions USA, Inc.) was incorporated in the state of Nevada on December 6, 2017. ZPS is a wholly owned subsidiary of ZS with the core focus on providing mobile payments solutions. ZPS has secured a sublicense from ZS for the REGO payment ~~Platform~~platform and access to the patents from REGO.

There were minimal operations at ZPS during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

ZOOM Blockchain Solutions, Inc. (“ZBS”)

ZBS was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. This company was focused on blockchain as a business solution for the retail and Consumer Packaged Goods (“CPG”) industries.

There were minimal operations at ZBS during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

ZOOM Cloud Solutions, Inc. (“ZCS”)

ZCS (formerly Zoom Canada Solutions, Inc.) was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. ZCS was focused on providing a highly secure cloud storage as a service.

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There were minimal operations at ZCS during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

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ZOOM Auto Solutions, Inc. (“ZAS”)

ZAS (formerly Zoom Mining Solutions) was incorporated in the State of Delaware on February 19, 2018 as a wholly owned subsidiary of ZCS. It is now a wholly owned subsidiary of ZBS.

There were minimal operations at ZAS during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

~~REGO Data Solutions, Inc. (“RDS”)~~

~~RDS was incorporated in the State of Delaware on February 25, 2021 as a wholly-owned subsidiary of REGO for the purpose of maintaining data collected by Mazoola~~^SM.

~~There were minimal operation at RDS during the three and six months ended June 30, 2021.~~

The Company’s principal office is located in Blue Bell, Pennsylvania.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the financial statements and have been prepared on a consistent basis using the accounting policies described in the summary of accounting policies included in the Company’s ~~2020~~2021 Annual Report on Form 10-K (the “Form 10-K”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the SEC. Operating results for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022.

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional financing to operationalize the Company’s current technology before another company develops similar technology to compete with the Company.

Recently Adopted Accounting Pronouncements

In ~~December 2019,~~May 2021, the FASB issued ASU ~~No. 2019-12,~~ ~~Income Taxes~~2021-04, Earnings Per Share (Topic ~~740)~~260), ~~Simplifying the Accounting for Income Taxes~~. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this pronouncement on January 1, 2021, and there was not a material impact on the financial statements.

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~~In August 2020, the FASB issued ASU No. 2020-06,~~ Debt – ~~Debt with Conversion~~Modifications and ~~Other Options~~Extinguishments (Subtopic ~~470-20)~~470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for ~~Convertible Instruments and Contracts in an Entity’s Own Equity.~~Certain Modifications or Exchanges or Freestanding Equity – Classified Written Call Options. The amendments in this Update ~~affect entities~~clarify an issuer’s accounting for modifications or exchanges of freestanding equity – classified written call options (for example, warrants) that ~~issue convertible instruments and/~~remain equity classified after modification or contracts in an entity’s own equity. For convertible instruments, the instruments primarily affected are those issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendmentsexchange. This was adopted January 1, 2022 and there was no material impact to the disclosure requirements in this Update. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the prior guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. FASB simplified the settlement assessment by removing the requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is required to be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this Update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this Update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company adopted the modified retrospective transition method of this pronouncement on January 1, 2021 and as a result reclassifed $10,987,578 between debt and accumulated deficit.financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of ~~June 30, 2021,~~March 31, 2022, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

NOTE 2 – MANAGEMENT PLANS

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations since inception. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Since inception, the Company has focused on developing and implementing its business plan. The Company believes that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.

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The Company’s current monetization model is to derive revenues from levels of ~~subscription revenue paid monthly,~~ service fees, transaction fees and in some cases revenue sharing with banking and distribution partners. As these bases of revenues grow, the Company expects to generate additional revenue to support operations.

The Covid-19 pandemic caused a significant economic slowdown that adversely affected the demand for services. While the Company expects this matter to negatively impact its results of operations, cash flow and financial position, the future financial impact cannot be reasonably estimated at this time.

As of ~~August~~May 16, ~~2021,~~2022, the Company has a cash position of approximately ~~$2.5~~$1.9 million. Based upon the current cash position and the Company’s planned expense run rate, management believes the Company has funds currently to finance its operations through ~~January 2022.~~November 2022.

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NOTE 3 – IMPAIRMENT OF LONG-LIVED ASSETS

On January 1, 2021, REGO entered into a Purchase of Business Agreement (“Agreement”) with Chore Check, LLC pursuant to which it purchased the assets of Chore Check, LLC, consisting primarily of a software application, valued at $111,817, fair value. The consideration for the acquisition consisted of the issuance of an option to purchase 100,000 shares of the Company’s common stock, with an exercise price of $0.90, vesting immediately and with a term of three years.

Long-lived assets are tested for impairment by performing a qualitative assessment to determine whether it is more likely than not that the fair value is less than the carrying value. Long-lived assets are considered impaired if the carrying value exceeds its fair value. WeThe Company determined that the carrying value of the asset acquired from Chore Check, LLC exceeded its fair value and ~~have~~has recorded an impairment loss in the amount of $111,817 as of ~~June 30,~~March 31, 2021, which iswas included in general and administrative expenses.

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company owed the Chief Executive Officer, who is also a more than 5% beneficial owner, a total of ~~$160,569~~$5,962 and ~~$184,507,~~$95,185, consisting of ~~$160,569~~$5,962 and ~~$78,462~~$95,185 in unpaid ~~salary and consulting fees to a company owned by the Chief Executive Officer of $0 and $106,045.~~salary.

Additionally, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company owed the son of a more than 5% beneficial owner, Chief Executive Officer, President and Board member, ~~$10,349~~$0 and ~~$21,549,~~$10,349, pursuant to a consulting agreement.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company owed the Chief Financial Officer ~~$34,450~~$3,846 and ~~$83,648~~$35,988 in unpaid salary.

NOTE 5 – ~~PAYCHECK PROTECTION PROGRAM LOAN~~LOANS PAYABLE

During April 2020, the Company received $2,000 from the Emergency Injury Disaster Loan program and $79,500 from the Paycheck Protection Program. The Company has spent all of the proceeds under these programs for payroll related expenses.

~~In accordance with FASB ASC 470,~~ ~~Debt, the Company recorded the loans as a current liability in the amount of $81,500. The Company recorded derecognition of the liability in accordance with FASB ASC 405-20,~~ ~~Liabilities-Extinguishment of Liabilities, when either (1) the loan is, in part or wholly, forgiven and the Company has been legally released or (2) the Company pays off the loan.~~

On January 28, 2021, the Company received notification from the lender that its Paycheck Protection Program loan had been forgiven in full by the Small Business Administration in the amount of $79,500, and that no further payments were required. Therefore, the Company recorded derecognition of the liability in accordance with FASB ASC 405-20, ~~Liabilities-Extinguishment of Liabilities, when the loan was, in part or wholly, forgiven and the Company was legally released. The Paycheck Protection Program loan was recognized as forgiveness of debt.~~

~~Additionally, the Economic Injury Disaster Loan of $2,000 ($1,000 per employee) does not require repayment and was also recognized as forgiveness of debt.~~

~~NOTE 6 – LOANS PAYABLE~~

Loans payable as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were $42,600. Interest accrued on the loans at 0%6% and 10% was ~~$3,294~~$4,536 and ~~$2,790~~$3,806 as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. Interest expense related to these loans payable was ~~$253~~$730 and ~~$504~~$251 for ~~the three and six months ended June 30, 2021 and $1,450 and $2,901 for the three and six months ended June 30, 2020.~~

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~~NOTE 7 – DEFERRED REVENUE~~

~~The Company received $200,000 in May 2018 as a down payment to develop software for the automotive industry.~~

~~During~~ the three months ended ~~June 30, 2021, the Company exchanged $200,000 of deferred revenue for a 10% Secured Convertible Note Payable in the amount of $200,000 (Note 8).~~March 31, 2022 and 2021.

NOTE 86 – 10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

On March 6, 2015, the Company, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $2,000,000 aggregate principal amount of its 10% Secured Convertible Promissory Notes due March 5, 2016 (the “Notes”) to certain stockholders. On May 11, 2015, the Company issued an additional $940,000 of Notes to stockholders. The maturity dates of the Notes have been extended most recently ~~from September 6, 2019~~ to October 31, ~~2021,~~2022, with the consent of the Note holders.

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The Notes are convertible by the holders, at any time, into shares of the Company’s Series B Preferred Stock at a conversion price of $90.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions with respect to the Series B Preferred Stock only. Each share of Series B Preferred Stock is currently convertible into 100 shares of the Company’s common stock at a current conversion price of $0.90 per share, subject to anti-dilution adjustment as described in the Certificate of Designation of the Series B Preferred Stock. In addition, pursuant to the terms of a Security Agreement entered into on May 11, 2015 by and among the Company, the Note holders and a collateral agent acting on behalf of the Note holders (the “Security Agreement”), the Notes are secured by a lien against substantially all of the Company’s business assets. Pursuant to the Purchase Agreement, the Company also granted piggyback registration rights to the holders of the Series B Preferred Stock upon a conversion of the Notes.

~~During the three months ended June 30, 2021, the Company exchanged $200,000 of deferred revenue for a 10% Secured Convertible Note Payable in the amount of $200,000 (Note 7).~~

The Notes are recorded as a current liability as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 in the amount of ~~$3,316,357 and 3,116,357.~~$3,316,357. Interest accrued on the Notes was ~~$2,013,784~~$2,262,511 and ~~$1,855,368~~$2,179,602 as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. Interest expense related to these Notes payable was ~~$80,507~~$82,909 and ~~$158,416~~$77,909 for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~$70,329 and $140,658 for three and six months ended June 30, 2020.~~2021.

NOTE 97 – NOTES PAYABLE – STOCKHOLDERS

~~During the six months ended June 30, 2021 and 2020, the Company issued $100,000 and $0 aggregate principal amount of its~~

These notes payable ~~- stockholders with~~have no formal repayment terms and ~~10% interest. This loan also included an option to purchase 100,000 shares~~$370,000 of the ~~Company’s common stock with an exercise price of $1.20~~notes bear interest at 10% per annum and ~~a term of two years. The option was valued at $74,518 fair value, using~~ the ~~Black-Scholes option pricing model to calculate the grant-date fair value~~remaining $225,000 of the ~~option, with the following assumptions: 0no dividend yield, expected volatility of 124.3%, risk free~~notes bear interest ~~rate of 0.11% and expected life of 2 years. The relative fair value of the option of $42,699 was recorded as a discount to the loan payable in accordance with FASB ASC 835-30-25,~~ ~~Recognition,~~ and was accreted over the term of the note payable for financial statement purposes. The loan payable was repaid in full, plus interest, on March 2, 2021 and the full amount of the discount was accreted to interest expense.at 20% per annum.

During the six months ended June 30, 2021, the Company repaid $50,000 principal of one of the loans outstanding and then later exchanged the remaining $450,000 principal of that loan for a 4% Secured Convertible Note in the amount of $517,000, which included accrued interest of $67,000 (Note 10). The holder of this Note was given an option to purchase a total of 88,889 shares of the Company’s Series B Preferred Stock, which requires all cash purchases of Series B Preferred Stock at $90.00 per share, as detailed below, to be made to the Company by the due dates in order to prevent the termination of the option as follows:

~~$200,000 on or before July 20, 2021, unless the option has previously terminated.~~

~~$250,000 on or before August 23, 2021, unless the option has previously terminated.~~

~~$300,000 on or before October 4, 2021, unless the option has previously terminated.~~

~~$350,000 on or before November 5, 2021, unless the option has previously terminated.~~

~~$400,000 on or before December 6, 2021, unless the option has previously terminated.~~

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~~$500,000 on or before January 3, 2022, unless the option has previously terminated.~~

In order to prevent the termination of the option, unless it has previously terminated, the Holder of the option must purchase $500,000 of the Company’s Series B Preferred Stock (5,556 shares) on or before February 7, 2022 and continuing on the first Monday of every subsequent month, until a total of $8 million of the Company’s Series B Preferred Stock has been purchased.

In addition to the other termination clauses, the option will terminate and be of no further force or effect ten days after the occurrence of any of the following events, however nothing will prevent the holder from purchasing up to $8 million in the aggregate of the Company’s Series B Preferred Stock during the ten day period:

~~Execution by the Company of an engagement letter with a “major bracket” investment banking firm.~~

~~Upon the Company entering into a definitive agreement with respect to a specified Norway white label transaction.~~

~~Upon the MazoolaPay~~^SM ~~technology becoming integrated and operational on any one of the following websites:~~

~~Demandware~~

~~ii.~~

~~Magento~~

~~iii.~~

~~WooCommerce~~

~~iv.~~

~~Shopify~~

~~BigCommerce~~

~~vi.~~

~~Wix~~

~~vii.~~

~~Squarespace~~

~~viii.~~

~~Square Online~~

~~Upon the Company entering into a definitive agreement to white label the MazoolaPay~~^SM ~~technology with a banking institution with assets in excess of $1.5 billion, excluding Origin Bank.~~

The option to purchase $8 million of the Company’s Series B Preferred Stock with an exercise price of $90.00, a term of 1.5 months and fully vested was valued at $0, fair value. The option was valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the option, with the following assumptions: 0no dividend yield, expected volatility of 0%, risk free interest rate of 0.01% and expected life of 1.5 months.

These notes payable are recorded as a current liability as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 in the amount of ~~$595,000 and $1,095,000.~~$595,000. Interest accrued on the notes, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$153,935~~$216,017 and ~~$115,917.~~$195,626. Interest expense ~~including accretion of discount~~ was ~~$28,361~~$20,391 and ~~$183,566~~$155,205 for the three months March 31, 2022 and ~~six months ended June 30, 2021 and $21,491 and $83,013 for the three and six months ended June 30, 2020.~~2021.

NOTE 108 – 4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

On August 26, 2016, the Company, pursuant to a Securities Purchase Agreement, issued $600,000 aggregate principal amount of its 4.0% Secured Convertible Promissory Notes due June 30, 2019 (the “New Secured Notes”) to certain accredited investors (“investors”). The Company issued additional New Secured Notes during 2016, 2017, 2018, 2019 2020, 2021 and ~~2020.~~2022.

During the three months ended March 31, 2022, the Company issued $200,000 aggregate principal amount of its New Secured Notes to a member of the Board of Directors and his son.

The New Secured Notes are convertible by the holders, at any time, into shares of the Company’s authorized Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) at a conversion price of $90.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions with respect to the Series C Preferred Stock only. Each share of Series C Preferred Stock is currently convertible into 100 shares of the Company’s common stock at a current conversion price of $0.90 per share, subject to full ratchet anti-dilution adjustment for one year and weighted average anti-dilution adjustment thereafter, as described in the Certificate of Designation of the Series C Preferred Stock. Upon a liquidation event, the Company shall first pay to the holders of the Series C Preferred Stock, on a pari passu basis with the holders of the Company’s outstanding Series A Preferred Stock and Series B Preferred Stock, an amount per share equal to 700% of the conversion price (i.e., $630.00 per share of Series C Preferred Stock), plus all accrued and unpaid dividends on each share of Series C Preferred Stock (the “Series C Preference Amount”). The Series C Preference Amount shall be paid prior and in preference to payment of any amounts to the Common Stock. After the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and any additional senior preferred stock, the Series C Preferred Stock participates in further distributions subject to an aggregate cap of seven and one-half times (7.5x) the original issue price thereof, plus all accrued and unpaid dividends.

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The maturity dates of the New Secured Notes were extended by the investors to October 31, ~~2021.~~2022.

~~During the six months ended June 30, 2021, the Company issued $4,770,000 aggregate principal amount of its New Secured Notes to certain investors.~~

In addition, during the six months ended June 30, 2021, the Company exchanged the remaining $450,000 principal of a Note Payable for a for 4% Secured Convertible Note in the amount of $450,000 (Note 9).

The New Secured Notes are recorded as a current liability in the amount of $14,981,250 and $14,781,250 as of ~~June 30, 2021~~March 31, 2022 and ~~$9,494,250 as of~~ December 31, ~~2020.~~2021. Interest accrued on the New Secured Notes was ~~$1,256,671~~$1,701,011 and ~~$1,019,180~~$1,552,519 as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. Interest expense related to these notes payable was ~~$136,992~~$148,492 and ~~$237,491~~$100,449 for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~$74,983 and $149,305 for the three and six months ended June 30, 2020.~~2021.

NOTE 119 – INCOME TAXES

Income tax expense was $0 for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

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As of January 1, ~~2021,~~2022, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during ~~2021~~2022 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, and there was no accrual for uncertain tax positions as of ~~June 30, 2021.~~March 31, 2022. Tax years from ~~2017~~2018 through ~~2020~~2021 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

NOTE 1210 – CONVERTIBLE PREFERRED STOCK

~~Rego~~REGO Payment Architectures, Inc. Series A Preferred Stock

The Series A Preferred Stock has a preference in liquidation equal to two times its original issue price, or ~~$20,470,000,~~$20,270,000, to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 2.5 times its original issue price. The Series A Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock can be converted. The Series A Preferred Stock also contains customary approval rights with respect to certain matters. The Series A Preferred Stock accrues dividends at the rate of 8% per annum or $8.00 per Series A Preferred Share.

The conversion price of Series A Preferred Stock is currently $0.90 per share. The Series A Preferred Stock is subject to mandatory conversion if certain registration or related requirements are satisfied and the average closing price of the ~~Rego’s~~REGO’s common stock exceeds 2.5 times the conversion price over a period of twenty consecutive trading days.

~~On January 1, 2021, upon adoption of FASB ASU No. 2020-06,~~ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,

During the ~~Company reclassified the embedded derivative value of the beneficial conversion feature of the~~three months ended March 31, 2022, a Series A Preferred ~~Stock issued in January 2014 valued at $3,481,050 as of December 31, 2020, to retained earnings. The Company also reclassified the embedded derivative value of the beneficial conversion feature of the~~stockholder converted 1,000 Series Preferred A ~~Preferred Stock issued in April 2014 valued at $5,349,800 as of December 31, 2020, to accumulated deficit.~~

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~~During the six months ended June 30, 2021, certain holders of the Series A Preferred Stock converted 5,500~~shares into 111,111 shares of ~~the Series A Preferred Stock into 611,111 shares of the Company’s~~ common stock.

~~Rego~~REGO Payment Architectures, Inc. Series B Preferred Stock

The Series B Preferred Stock is pari passu with the Series A Preferred Stock and has a preference in liquidation equal to two times its original issue price, or ~~$5,108,040,~~$13,586,040 as of March 31, 2022, to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 2.5 times its original issue price. The Series B Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series B Preferred Stock can be converted. The Series B Preferred Stock also contains customary approval rights with respect to certain matters. The Series B Preferred Stock accrues dividends at the rate of 8% per annum.

The conversion price of the Series B Preferred Stock is currently $0.90 per share. The Series B Preferred Stock is subject to mandatory conversion if certain registration or related requirements are satisfied and the average closing price of the Company’s common stock exceeds 2.5 times the conversion price over a period of twenty consecutive trading days.

~~On January 1,~~

During the three months ended March 31, 2022 and 2021, ~~upon adoption of FASB ASU No. 2020-06,~~ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, the Company ~~reclassified~~sold 39,599 and 0 shares of the ~~embedded derivative liability relative to the beneficial conversion feature of the~~Company’s Series B Preferred Stock ~~issued~~ in ~~October 2014 valued at $2,156,728 as~~private placements to accredited investors and received proceeds of ~~December 31, 2020, to accumulated deficit.~~$3,564,000 and $0.

~~Rego~~REGO Payment Architectures, Inc. Series C Preferred Stock

In August 2016, ~~Rego~~REGO authorized 150,000 shares of ~~Rego’s~~REGO’s Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”). On August 23, 2021, REGO filed with the Delaware Secretary of State an Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series C Cumulative Convertible Preferred Stock, pursuant to which the amount of authorized Series C Preferred Stock was increased from 150,000 shares to 300,000 shares. As of ~~June 30, 2021,~~March 31, 2022, none of the Series C Preferred Stock was issued or outstanding. After the date of issuance of Series C Preferred Stock, dividends at the rate of $7.20 per share will begin accruing and will be cumulative. The Series C Preferred Stock is pari passu with the Series A Preferred Stock and Series B Preferred Stock and has a preference in liquidation equal to seven times its original issue price to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 7.5 times its original issue price. The Series C Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series C Preferred Stock can be converted. The Series C Preferred Stock also contains customary approval rights with respect to certain matters. There are no outstanding Series C Preferred Shares, therefore the current per annum dividend per share is $0.

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As of ~~June 30, 2021,~~March 31, 2022, the value of the cumulative 8% dividends for all ~~Rego~~REGO preferred stock was ~~$7,676,137.~~$8,147,216. Such dividends will be paid when and if declared payable by ~~Rego’s~~REGO’s board of directors or upon the occurrence of certain liquidation events. In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

ZS Series A Preferred Stock

In November 2018, ZS pursuant to a Securities Purchase Agreement (the “ZS Series A Purchase Agreement”), issued in a private placement to an accredited investor, 83,334 units at an original issue price of $3 per unit (the “ZS Original Series A Issue Price”), which includes one share of ZS’ Series A Cumulative Convertible Preferred Stock (the “ZS Series A Preferred Stock”) and one warrant to purchase one share of ZS’ common stock with an exercise price of $3.00 per share expiring in three years (the “Series A Warrants”). ZS raised $250,000 with respect to this transaction. Dividends on the ZS Series A Preferred Stock accrue at a rate of 8% per annum and are cumulative. The ZS Series A Preferred Stock has a preference in liquidation equal to two times the ZS Original Series A Issue Price to be paid out of assets available for distribution prior to holders of ZS common stock and thereafter participates with the holders of ZS common stock in any remaining proceeds subject to an aggregate cap of 2.5 times the ZS Original Series A Issue Price. The ZS Series A Preferred Stockholders may cast the number of votes equal to the number of whole shares of ZS common stock into which the shares of ZS Series A Preferred Stock can be converted.

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As of ~~June 30, 2021,~~March 31, 2022, the value of the cumulative 8% dividends for ZS preferred stock was ~~$53,334.~~$68,333. Such dividends will be paid when and if declared payable by the ZS’ board of directors or upon the occurrence of certain liquidation events. In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

The Company entered into a financial advisory agreement in November 2018 whereby generally the Company will pay ~~the~~a financial advisor a success fee equal to 6% of the capital committed in a capital transaction involving the sale of the Company.

On June 3, 2021, the Board of Directors approved amendments extending the term of certain outstanding options to purchase in the aggregate 600,000 shares of common stock of the Company at exercise prices of $0.90 per share. These options were scheduled to expire at various dates during 2021 and were each extended to June 15, 2022. The increase in fair value of this term extension was $258,622 which was expensed during the six months ended June 30, 2021. The Company used the Black-Scholes option pricing model to calculate the increase in fair value, with the following assumptions for the extended options: 0no dividend yield, expected volatility of 116.9%, risk free interest rate of 0.04%, and expected option life of 1.03 years.

A restricted stock award (“RSA”) is an award of common shares that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of nonvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding. The Company’s restricted stock awards generally vest over a period of one year. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse. For these purposes, the fair market value of the restricted stock is determined based on the closing price of the Company’s common stock on the grant date.

During the three months ended March 31, 2021, the Company issued 150,000 shares of the Company’s common stock with a value of $0.90 at the time of issuance, with a fair value of $135,000, to a vendor in settlement of $135,000 of accounts payable.

During the three months ended March 31, 2021, the Company issued a Board Member and the Chief Financial Officer 400,000 shares of the Company’s common stock each, with an aggregate fair value of $920,000 upon the launch of the Mazoola^SM ~~app. The Chief Executive Officer, who is also a Board Member, received 500,000 shares of the Company’s common stock, with an aggregate fair value of $575,000.~~

During the three months ended March 31, 2021, the Company issued the Chief Executive Officer, who is also a Board Member, 500,000 shares of the Company’s common stock with an aggregate fair value of $435,000, upon the Company raising $2,000,000.

~~During the three months ended March 31, 2021, an employee exercised an option to purchase 80,000 shares of the Company’s common stock at $0.25 per share or $20,000.~~

The following table summarizes the activities for REGO’s warrants for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:

REGO expensed $0 for the ~~three and six~~3 months ended ~~June 30,~~March 31, 2022 and 2021 ~~and $49,599 and $124,485 for the three and six months ended June 30, 2020~~ with respect to warrants.

The following table summarizes the activities for ZS’s stock options for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ ZS expensed $0 with respect to options.

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~~The following table summarizes the activities for ZS’s warrants for the three and six months ended June 30, 2021:~~

ZS Warrants Outstanding
Weighted -
Average
Remaining
Aggregate
Contractual
Intrinsic
Number of
Average
Term
Value
Shares
Exercise Price
(in years)
(in 000's) (1)
Balance, December 31, 2020
83,334
$
3.00
0.9
$
83

Balance, June 30, 2021
83,334
$
3.00
0.4
$
83

Exercisable at June 30, 2021
83,334
$
3.00
0.4
$
83

Exercisable at June 30, 2021 and expected to vest thereafter
83,334
$
3.00
0.4
$
83

~~(1)~~

~~The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the value of $4.00 for ZS’s common stock on June 30, 2021.~~

~~For the three and six months ended June 30, 2021 and 2020, ZS expensed $0 with respect to warrants.~~

The following table summarizes the activities for ZCS’s stock options for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
				Weighted-	Contractual		Intrinsic
		Number of		Average	Term		Value
		Shares		Exercise Price	(in years)		(in 000's) (1)
Balance, December 31, 2021		1,600,000	$	5.00	2.0	$	-

Balance, March 31, 2022		1,600,000	$	5.00	1.7	$	-

Exercisable at March 31, 2022		1,600,000	$	5.00	1.7	$	-

Exercisable at and March 31, 2022 and expected to
vest thereafter		1,600,000	$	5.00	1.7	$	-

ZCS Options Outstanding
Weighted -
Average
Remaining
Aggregate
Weighted -
Contractual
Intrinsic
Number of
Average
Term
Value
Shares
Exercise Price
(in years)
(in 000's) (1)
Balance, December 31, 2020
1,600,000
$
5.00
3.0
$
0-

Balance, June 30, 2021
1,600,000
$
5.00
2.5
$
0-

Exercisable at June 30, 2021
1,600,000
$
5.00
2.5
$
0-

Exercisable at June 30, 2021 and expected to vest thereafter
1,600,000
$
5.00
2.5
$
0-

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS’s common stock on ~~June 30, 2021.~~

March 31, 2022.

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ ZCS expensed $0 with respect to options.

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NOTE 1513 – NONCONTROLLING INTERESTS

Losses incurred by the noncontrolling interests for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 were ~~$00 and $101 and for the three and six months ended June 30, 2020 were $469 and $726.~~$101.

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NOTE 1614 – OPERATING LEASES

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, total rent expense under leases amounted to ~~$1,521~~$800 and ~~$2,282 and for the three and six months ended June 30, 2020, total rent expense under leases amounted to $1,639 and $11,986.~~$761. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. The Company has no long-term lease obligations as of ~~June 30, 2021.~~March 31, 2022.

NOTE 15 – RELATED PARTY TRANSACTIONS

On January 20, 2022, the Board members received cash bonuses of $50,000 each, or a total of $100,000.

On January 26, 2022, the Board approved a salary increase raising the Chief Executive Officer’s salary to $310,000 per year.

On February 22, 2022, a Board member and his son each purchased a 4% Secured Note Payable for $100,000.

During the three months ended March 31, 2022, the Company paid a consultant who is also a shareholder of $10,800 for marketing services.

NOTE 1716 – SUBSEQUENT EVENTS

~~From July~~

Between April 1, ~~2021 through August~~2022 and May 16, ~~2021,~~2022, the Company sold ~~5,000~~1,556 shares of the Company’s Series B Preferred ~~stock~~Stock in a private placement to an accredited investor and received proceeds of ~~$450,000.~~$140,000.

~~On July 16, 2021,~~

In April 2022, the Chief Executive Officer received a cash bonus of $50,000 and the Chief Financial Officer received a cash bonus of $75,000.

During April, 2022, the Company ~~authorized~~issued options to purchase 225,000 shares of the ~~issuance~~Company’s common stock to various consultants with 2 year terms and exercise prices between $1.28 and $1.31 per share.

In May 2022, the Company extended the term of options to purchase ~~10,000~~200,000 shares of the Company’s common stock with an exercise price of ~~the higher of $0.90 or the closing stock price on the date of issuance~~$0.2595 and ~~term of 2 years to each of four developers. They are also to receive a cash bonus of $2,500 each. Both of these are contingent on the completion of version 3.0 of the Mazoola~~^SM ~~app.~~

~~Also on July 16, 2021, the Company authorized the issuance of an option~~options to purchase ~~25,000~~400,000 shares of the Company’s common stock with an exercise price of ~~the higher~~$0.90. All of ~~$0.90 or the closing stock price on the date of issuance and term of 2 years~~these options were extended to ~~a development consultant contingent on the completion of version 3.0 of the Mazoola~~^SM ~~app.~~

~~On August 3, 2021, the Company authorized the issuance of cash fees and stock options to a consultant as follows:~~

~~Consultant to receive $25 per each retail store that adopts Mazoola Kid Pay Button.~~

~~Consultant to receive $5,000 per online site with between one hundred thousand and below one million users active users that adopts Mazoola Kid Pay Button.~~

~~Consultant to receive $25,000 per online site with at least one million active users that adopts Mazoola Pay Kid Button.~~

Consultant to receive an option to purchase 25,000 shares of the Company’s common stock at the close of business strike price with a term of two years on the day of activation of the Mazoola Pay Button by a retail entity.

Consultant to receive an option to purchase 50,000 shares of the Company’s common stock at the close of business strike price with a term of two years on the day of activation of the Mazoola Pay Button by a social networking site with active users over one million.June 15, 2023.

2319

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

Overview

~~Rego~~REGO Payment Architectures, Inc. ~~(the “Company,” “we”, or “us”) was incorporated~~is a provider of consumer software that delivers a mobile payment platform solution—Mazoola^R - a family focused mobile banking solution. Headquartered in Delaware on February 11, 2008 under the name Chimera International Group, Inc. On April 4, 2008, we amended our certificate of incorporation and changed our name to Moggle, Inc. On August 22, 2011, we filed a Certificate of Ownership with the Secretary of State of Delaware, pursuant to which the Company’s newly-formed wholly-owned subsidiary, Virtual Piggy Incorporated was merged into and withBlue Bell, Pennsylvania, the Company ~~(the “Merger”). In connection~~maintains a portfolio of trade secrets and four US patent awards. REGO offers an all-digital financial payments platform to enable minors, particularly under 13 years old, to transact, complete chores and learn in a secure online environment guided by parental permission, oversight, and control, while remaining COPPA and GDPR compliant.

COPPA applies not only to websites and mobile apps. It can apply to a growing list of connected devices that is included in the Internet of Things. Some of these include toys and products that could collect personal information, such as voice recordings or geolocation information. Non-compliance with COPPA has meant substantial fines for many violators.

Management believes that by building on its COPPA compliance advantage, the ~~Merger and in accordance with Section 253~~future of the Delaware General Corporation Law, the name of the Company was changed from “Moggle, Inc.” to “Virtual Piggy, Inc.” On February 28, 2017, we amended our certificate of incorporation and changed our name to RegoREGO Payment Architectures, Inc. ~~Our principal offices~~will be based on the foundational architecture of its software platform (the “Platform”) that will allow its use across multiple financial markets where secure controlled payments are ~~located at 325 Sentry Parkway, Suite 200, Blue Bell , PA 19422~~needed. The Company intends to license in each alternative field of use the ability for its partners, distributors and/or value-added resellers to private label each of the alternative markets. These partners will deploy, customize and ~~our telephone number is (267) 465-7530.~~support each implementation under their own label, but with acknowledgement of the Company’s proprietary intellectual assets as the base technology. Management believes this approach will enable the Company to reduce marketing expenses while broadening its reach.

AsFurther, California passed the California Consumer Privacy Act of 2018 (“CCPA”) on June 28, 2018. CCPA gives consumers (defined as natural citizens who are California residents) four rights relative to their personal information as follows:

●

the right to know, through a general privacy policy and with more specifics available upon request, what personal information a business has collected about them, where it was sourced from, what it is being used for, whether it is being disclosed or sold, and to whom it is being disclosed or sold;

●

the right to “opt out” of allowing a business to sell their personal information to third parties (or, for consumers who are under 16 years old, the right not to have their personal information sold absent their, or their parent’s, opt-in);

●

the right to have a business delete their personal information, with some exceptions; and

●

the right to receive equal service and pricing from a business, even if they exercise their privacy rights under the CCPA.

With respect to the evolving CCPA, the Company has designed its Platform and app to be in compliance.

Additionally, the European Parliament and Council agreed upon the General Data Protection Regulation (“GDPR”) in April 2016, to replace the Data Protection Directive 95/46/EC. This is the primary law regulating how companies protect European Union (“EU”) citizens’ personal data. GDPR became effective on May 25, 2018. Companies that fail to achieve GDPR compliance are subject to severe fines and penalties.

GDPR requirements apply to each member state of the ~~date of this report, we have not generated significant revenues. Our initial business plan was to develop an online game platform to allow game companies~~European Union, aiming to create ~~monetize~~more consistent protection of consumer and ~~distribute massive multiplayer online games (MMOG).~~personal data across EU nations. Some of the key privacy and data protection requirements of the GDPR include:

●

Requiring the consent of subjects for data processing

●

Anonymizing collected data to protect privacy

●

Providing data breach notifications

●

Safely handling the transfer of data across borders

●

Requiring certain companies to appoint a data protection officer to oversee GDPR compliance

In short, the handling of EU citizens’ data is mandated by GDPR using a baseline set of standards for companies that are designed to better safeguard the processing and movement of personal data. The Company technology was the monetization component of this overall software platform (our “Platform”). During 2010, we analyzed the market potential for an expanded Company solution and decided to concentrate our efforts on the delivery of a full-featured Company solution that was not restricted to online gaming. The expanded Company solution ishas designed to provide a complete online solution for families and parents to teach their children about financial management and spending on gaming, retail, music and entertainment. In late 2013, we rebranded our Company product under the name “Oink®”. In March 2016, we discontinued our prior Oink product offering.

~~Our current focus is monetizing the Mazoola~~^SM~~Digital Wallet Platform in the Financial Technology (“FinTech”) industry through white label, licensing and partnership agreements. We have successfully launched the Mazoola~~^SM~~App and are focused on improving and monetizing the existing~~its Platform and ~~App that will act as~~app to be in compliance with GDPR, and has received the foundation for the strategic alignment with the FinTech industry. The FinTech industry is composed primarily of startup companies that use software to provide financial services more efficiently and less costly than traditional financial service companies. With our Children’s Online Privacy Protection Act (“COPPA”) and GDPRkids^TM Trustmark ~~compliant technology as an added feature, we believe we may have better market success.~~from PRIVO.

~~Strategic Outlook~~

~~We believe that~~Revenues generated from the ~~virtual goods market~~Platform will come from multiple sources depending on the level of service and ~~the FinTech industry~~facilities requested. There will ~~continue to grow over the long term. Within the market~~be levels of subscription revenue paid monthly, service fees, transaction fees and ~~industry, we intend to provide services to allow transactions~~in some cases, revenue sharing and licensing with ~~children in compliance with COPPA~~banking and ~~similar international privacy laws. We believe that this particular opportunity is relatively untapped and intend to be a leading provider of online transactions for children.~~distribution partners.

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Sustained spending on technology, our ability to raise additional financing, our ability to successfully implement technology partnerships or joint ventures, the continued growth of the FinTech industry, and compliance with regulatory and reporting requirements are all external conditions that may affect our ability to execute our business plan. In addition, the FinTech industry is intensely competitive, and most participants have longer operating histories, significantly greater financial, technical, marketing, customer service and other resources, and greater name recognition. In addition, certain potential customers, particularly large organizations, may view our small size and limited financial resources as a negative even if they prefer our offering to those of our competitors.

Our goal, moving forward, is to enable both incumbent and new ~~FinTech~~financial technology (“FinTech”) participants, as well as key verticals with a large base of ‘family accounts,’ to provide their consumers with safe and empowering youth money management and financial literacy content and tools via the mobile payment platform.

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While some of the ~~Rego~~REGO Platform can be easily duplicated/commoditized, such as the app skin, APIs to retailers, APIs to financial infrastructure and cloud storage, we believe that defending our market position rests on three factors:

The ability to define data control settings from parent to child.

Our approach to this opportunity uses a master account to dictate purchase rules to sub-accounts via a hierarchical architecture. This approach adheres to data flow and privacy policy requirements specifically outlined for COPPA compliance. We believe other approaches based on machine learning, or other artificial intelligence methodologies are potentially viable alternatives but are likely too costly, do not meet current compliance timelines, and may defy the core of COPPA’s “opt-in” parameters. There is considerable room for next-generation automation techniques to be layered on ~~Rego’s~~REGO’s hierarchical approach. Given its current stability and scalability metrics, the ~~Rego~~REGO Platform strongly features these advances in its technical development roadmap without compromising any of its current data control performance.

The ability to (mis)attribute the child’s transaction and personal identification.

~~Rego~~REGO has solved this issue by masking user data and maintaining separate identity and financial data flows. As a result, ~~Rego~~REGO can verify the age of the internet user through the transaction lifecycle on its Platform. Authenticating and validating the identity of the actual user on the internet isremains one of the more difficult cybersecurity challenges. Current approaches are mainly not for commercial use; however, there is investment in commercial innovation in this area. ~~Rego’s~~REGO’s data control features and its (mis)attribution approach are inextricably linked and a key to its scalability and extensibility.

The ability to disseminate transactional data on minors while remaining COPPA and GDPR compliant.

The highest value data will be that which shows the most nuanced detail afforded under current regulations. Without extreme data control features, such as in the ~~Rego~~REGO Platform, any lesser data precision will be less valuable.

These three factors are all supported by ~~Rego’s~~REGO’s patented technology.

REGO addresses hard industry problems such as:

● COPPA compliant technology with a key component being its ability to verify the age of an internet user

● A master and sub-account architecture with the ability to administer user-specific controls

● An advanced rules engine to provide strict automated compliance of the parental rules for each child

● Near real-time buying behavior database on minors - anonymized geolocation, age range and purchases

Currently, we are targeting established brands with large family-focused account bases — including banks, telecommunication companies, faith-based organizations, media distributors, mobile device Original Equipment Manufacturers (“OEMs”), and merchants.

We ~~have launched~~are seeking partners that will leverage our Platform to:

Buy vs. Build: Partners can license or revenue share for their specific market or field of use a safe, compliant system, instead of building one on their own.

Safety & Security: Partners can safely engage a younger consumer segment and their families with a new family friendly peer to peer payments approach. Vendors will be explicitly protected from non-compliant transactions and the underlying technology protects the privacy of the user.

Youth Financial Literacy: Partners can expand their brand story around empowerment and education of youth financial literacy while engaging their ‘future customers’ with Gen Z, a digital native population of post-millennial youth.

The REGO Mazoola^SM ~~app. We plan to develop additional enhancements to the~~ app and ~~develop~~associated digital wallet technology is designed to enable our partners to engage families with Gen Z and Gen Alpha youths through a ~~web based~~money management, transactional and financial literacy platform ~~which~~that enables young people to make smart decisions about the things they value in life — including their money, their time, their ideas and their connections. The Mazoola^SM app enables a new way for individual users to own and monetize their purchasing behavior that is ~~expected~~currently unavailable to ~~be completed in the third quarter of 2021.~~them.

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In addition, we are analyzing specific components of our technology for individual monetization as well as exploring opportunities in the Business to ~~expanding the existing payment solution to a growing US and global customer base, management believes there is robust demand for:~~Business (“B2B”) realm.

A digital ecosystem for children embedded within a marketplace of service offerings, delivered via in-house technology and through third party integrations (“super app”). The inherent fenced design and systems architecture of the MazoolaTM digital wallet aligns well with the overall purpose and approach of a “super app”— to offer a wide array of services within a controlled environment on mobile operating systems, such as iOS and Android.

Other markets for potential licensed applications are:

●

~~Expanded in-application service modules such~~Government social services payments where control over how benefits allowances are used is required. This is particularly necessary in some European countries where social benefits are not being used as ~~investments, charitable giving, and financial literacy, as well as,~~intended by the ~~inclusion of new marketplaces, health centers, and logistic/inventory management systems.~~

~~Predictive analytic products and services based on REGO’s anonymized data collection techniques.~~

~~A two-sided platform of the REGO offering, Mazoola~~~~Pay~~~~, which is currently in later stage development. This provides a way for retailers~~government or where benefits are subject to ~~offer families a compliant payment offering when engaging in e-commerce transactions.~~fraud.

Within this model, the Company is incorporating licensing fees. This should enable the Company to begin creating shareholder value above and beyond consumer transaction fees. As our service grows, we intend to hire additional information technology staff to maintain our product offerings and develop new products to increase our market share.

●

Closed network consumer to business (C2B) and business to business (B2B). An example is school lunch programs where the consumer can make direct mobile payments to the provider’s point of sale (POS) terminal without the need to traverse the traditional merchant payment system. This reduces the cost per transaction for the vendor and provides instant non-repudiated settlement. Many school lunch programs are now provided by large catering companies. This is particularly valuable as credit card fees, transaction fees and service fees can exceed 3% in overhead costs per transaction dependent on the negotiated rate. Removing this overhead can have significant positive financial impact on profitably. It also allows the closed network to own its own behavioral use data thus obviating the need to pay a third party for the same data.

We believe that our near-term success will depend particularly on our ability to develop customer awareness and confidence in our service. Since we have extremely limited capital resources, we will need to closely manage our expenses and conserve our cash by continually monitoring any increase in expenses and reducing or eliminating unnecessary expenditures. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly given that we operate in new and rapidly evolving markets, that we have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

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Results of Operations

Comparison of the Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following discussion analyzes our results of operations for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.

Net Revenue

We have not generated significant revenue since our inception. For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020~~ we generated revenues of ~~$740~~$1,397 and ~~$0.~~$533.

Net Loss

For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we had a net loss of ~~$3,271,565~~$2,279,147 and ~~$522,701.~~$4,645,801.

Transaction Expense

Transaction expense for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~$38,745~~$62,531 compared to $0$37,314 for the three months ended ~~June 30, 2020.~~March 31, 2021. These are transactional charges primarily for the operation of the ~~Mazoola~~^SMMazoola® app, ~~but also~~and the Chore Check app.

Sales and Marketing

Sales and marketing expenses for the three months ended ~~June 30, 2021~~March 31, 2022 were ~~$166,597~~$636,608 compared to ~~$11,506~~$457,016 for the three months ended ~~June 30, 2020,~~March 31, 2021, an increase of ~~$155,091.~~$179,592. This resulted from ~~the issuance of options to~~ a marketing ~~consultant along with~~plan designed to bring users to the ~~monthly fees.~~Platform.

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Product Development

Product development expenses were ~~$817,558~~$435,366 and ~~$119,833~~$830,358 for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, an increase~~a decrease of ~~$697,725.~~$394,992. The Company continued the process to ~~complete the development of the Mazoola~~^SM~~app prior~~add further enhancement to ~~its launch and then began developing further enhancements to the~~ Mazoola®app to increase its marketability.

General and Administrative Expenses

General and administrative expenses ~~increased $1,803,192~~decreased $2,175,403 to ~~$2,021,831~~$893,554 for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$218,639~~$3,068,957 for the three months ended ~~June 30, 2020.~~March 31, 2021. This resulted from the Company issuing shares of common stock and options to Board members, officers and consultants, an increase of approximately ~~$1,637,000, and fees paid to raise capital amounting to $194,000 for~~$2,565,000, during the three months ended ~~June 30,~~March 31, 2021, ~~versus $0 for~~which did not reoccur during the three months ended ~~June 30, 2020.~~

~~Interest Expense~~

~~During~~March 31, 2022. This was offset by bonuses to the Board members of $100,000 and options issued to consultants in the amount of $318,000, during the three months ended June 30, 2021, the Company incurred interest expense of $241,507, compared to $172,723 for the three months ended June 30, 2020, an increase of $68,784. The increase in interest expense relates to additional debt outstanding.March 31, 2022.

~~Forgiveness of Debt~~

~~During the three months ended June 30, 2021, the Company had $13,925 of debt forgiven compared to $0 for the three months ended June 30, 2020, related to vendor payables.~~

~~Comparison of the Six Months Ended June 30, 2021 and 2020~~

The following discussion analyzes our results of operations for the six months ended June 30, 2021 and 2020. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.

~~Net Revenue~~

~~We have not generated significant revenue since our inception. For the six months ended June 30, 2021 and 2020 we generated revenues of $1,273 and $0.~~

~~Net Loss~~

~~For the six months ended June 30, 2021 and 2020, we had a net loss of $7,917,366 and $1,269,493.~~

~~Transaction Expense~~

~~Transaction expense for the six months ended June 30, 2021 was $76,059 compared to $0 for the six months ended June 30, 2020. These are transactional charges primarily for the operation of the Mazoola~~^SM ~~app, but also the Chore Check app.~~

~~Sales and Marketing~~

Sales and marketing expenses for the six months ended June 30, 2021 were $623,613 compared to $18,339 for the six months ended June 30, 2020, an increase of $605,274. This resulted from the issuance of options to consultants involved with the marketing of the Mazoola^SM~~app and monthly fees.~~

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~~Product Development~~Forgiveness of Debt

~~Product development expenses were $1,647,916 and $193,453~~Forgiveness of debt decreased $81,500 to $0 for the ~~six~~three months ended ~~June 30, 2021 and 2020, an increase of $1,454,463. The Company continued the process to complete the development of the Mazoola~~^SM~~app prior to its launch and then began developing further enhancements to the app to increase its marketability.~~

~~General and Administrative Expenses~~

~~General and administrative expenses increased $4,413,434 to $5,090,788 for the six months ended June 30, 2021 from $677,354 for the six months ended June 30, 2020.~~March 31, 2022. This resulted from ~~the Company issuing shares~~forgiveness of common stock and options to Board members, officers and consultants, an increase of approximately $4,110,000 for the six months ended June 30, 2021 compared to June 30, 2020. Consulting fees increased $104,000 for the six months ended June 30, 2021 compared to June 30, 2020, resulting from fees paid to raise capital. Payroll increased $122,000 resulting from the Chief Executive Officer’s salary for the six months ended June 30, 2021 compared to June 30, 2020. Additionally, impairment of the Chore Check, LLC assets of $112,000 contributeddebt related to the ~~increase for the six months ended June 30, 2021 compared to June 30, 2020.~~Paycheck Protection Program, during 2021.

Interest Expense

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, the Company incurred interest expense of ~~$575,947,~~$252,523, compared to ~~$380,347~~$334,440 for the ~~six~~three months ended ~~June 30, 2020, an increase~~March 31, 2021, a decrease of ~~$195,600.~~$81,917. The ~~increase~~decrease in interest expense relates to ~~additional debt outstanding.~~the exchange of 10% Secured Promissory Notes for 4% Secured Promissory Notes, during 2021.

~~Forgiveness of Debt~~

During the six months ended June 30, 2021, the Company had $95,425 of debt forgiven compared to $0 for the six months ended June 30, 2020. On January 28, 2021, the Company received notification that the Paycheck Protection Plan loan was forgiven in full by the Small Business Administration and therefore $79,500 was recognized as forgiveness of debt during the six months ended June 30, 2021.

~~Additionally, the Economic Injury Disaster Loan of $2,000 ($1,000 per employee) does not require repayment and was also recognized as forgiveness of debt.~~

~~The Company also had $13,925 of vendor debt forgiven during the six months ended June 30, 2021.~~

Liquidity and Capital Resources

As of ~~August~~May 16, ~~2021~~2022 we had cash on hand of approximately ~~$2.5~~$1.9 million.

Net cash used in operating activities increased ~~$1,703,976~~$791,240 to ~~$2,355,054~~$1,650,729 for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~$651,078~~$859,489 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The increase resulted primarily from the increased ~~development~~marketing costs related to ~~launch~~ the ~~Mazoola~~^SMMazoola® app ~~and continue enhancements to increase its marketability. Additionally,~~offset by the ~~Company issued common stock and options with total fair value of $5,376,276 rather than having to expend cash.~~reduction in non-cash based compensation.

Net cash used in investing activities increased $101,446 for the three months ended March 31, 2022 from $0 for the three months ended March 31, 2021 as a result of patent expenses related to current patents.

Net cash provided by financing activities increased to ~~$4,740,000~~$3,764,000 for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$241,500~~ $2,445,000 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Cash provided by financing activities during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, consisted primarily of ~~convertible notes payable~~proceeds from the sale of Series B Preferred Stock to provide capital to continue operations.

As we have not realized significant revenues since our inception, we have financed our operations through offerings of debt and equity securities. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution.

~~Table of Contents~~

Since our inception, we have focused on developing and implementing our business plan. We believe that our existing cash resources will not be sufficient to sustain our operations during the next twelve months. We currently need to generate sufficient revenues to support our cost structure to enable us to pay ongoing costs and expenses as they are incurred, finance enhancements to our Platform, and execute the business plan. If we cannot generate sufficient revenue to fund our business plan, we intend to seek to raise such financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. The issuance of convertible debt may also result in dilution to existing stockholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to us, we will be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on our business, financial condition and results of operations. See Note 2 to our consolidated financial statements included in this Form 10-Q.

Even if we are successful in generating sufficient revenue or in raising sufficient capital in order to ~~complete~~commercialize the Platform, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations. We do not project that significant revenue will be developed at the earliest until the fourth quarter of ~~2021.~~2022. There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan. Moreover, there can be no assurance that even if the Platform is fully developed and successfully ~~launched,~~commercialized, that we will generate revenues sufficient to fund our operations. In either such situation, we may not be able to continue our operations and our business might fail.

Based upon the current cash position and the Company’s planned expense run rate, management believes the Company will not be able to finance its operations beyond ~~January~~November 2022.

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The ~~foregoing~~foREGOing forward-looking information was prepared by us in good faith based upon assumptions that we believe to be reasonable. No assurance can be given, however, regarding the attainability of the projections or the reliability of the assumptions on which they are based. The projections are subject to the uncertainties inherent in any attempt to predict the results of our operations, especially where new products and services are involved. Certain of the assumptions used will inevitably not materialize and unanticipated events will occur. Actual results of operations are, therefore, likely to vary from the projections and such variations may be material and adverse to us. Accordingly, no assurance can be given that such results will be achieved. Moreover, due to changes in technology, new product announcements, competitive pressures, system design and/or other specifications we may be required to change the current plans.

Off-Balance Sheet Arrangements

As of ~~June 30, 2021,~~March 31, 2022, we do not have any off-balance sheet arrangements.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 1 of the Notes to Financial Statements included in the Company’s Form 10-K for the year ended December 31, ~~2020.~~2021. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Stock-based Compensation

We have adopted the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”), which provides supplemental FASB ASC 718 application guidance based on the views of the SEC. Under FASB ASC 718, compensation cost recognized includes compensation cost for all share-based payments granted, based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718.

We have used the Black-Scholes option-pricing model to estimate the option fair values. The option-pricing model requires a number of assumptions, of which the most significant are, expected stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire).

~~Table of Contents~~

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity based payments that do not vest immediately upon grant are recorded as an expense over the vesting period.

Revenue Recognition

In accordance with FASB ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for fulfilling those performance obligations.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements are discussed in Note 1 of the Notes to Financial Statements contained elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

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ITEM 4. CONTROLS AND PROCEDURES.

As of ~~June 30, 2021~~March 31, 2022 we carried out the evaluation of the effectiveness of our disclosure controls and procedures required by Rule 13a-15(e) under the Exchange Act under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June 30, 2021,~~March 31, 2022, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting that occurred during our fiscal quarter ended ~~June 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There have been no material developments since the disclosure provided in the Company’s Form 10-K for the year ended December 31, ~~2020.~~2021.

ITEM 1A. RISK FACTORS.

Not required.

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

~~On June 1, 2021,~~During the ~~Company exchanged a note payable in the principal amount of $450,000, plus accrued interest of $67,000 for a 4% Secured Convertible Note in the amount of $517,000.~~

~~From July 1, 2021 through August 16, 2021,~~three months ended March 31, 2022, the Company sold ~~5,000~~39,599 shares of the Company’s Series B Preferred stock in a private placement to an accredited ~~investor~~investors and received proceeds of ~~$450,000.~~$3,564,000.

During the three months ended March 31, 2022, the Company issued $200,000 aggregate principal amount of its New Secured Notes to a Board member and his son, each of whom are accredited investors.

Each of the foregoing issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities ~~Act of 1933, as amended.~~Act. See the footnotes to the financial statements contained herein for additional detail on the applicable securities issued.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

The disclosure set forth in Part II – Item 2 above is incorporated by reference.

~~Table of Contents~~

ITEM 6. EXHIBITS

~~10.1~~		~~Settlement Agreement Regarding Convertible Debenture dated June 1, 2021 between the company and Nehemiah Partners I LP.~~

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS		XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	REGO PAYMENT ARCHITECTURES, INC.

	By:	/s/ Scott McPherson
		Scott McPherson
		Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
Date: ~~August~~May 16, ~~2021~~2022

3327

Delaware		35-2327649
~~For the transition period from __________ to __________~~
~~Commission file number 0-53944~~

~~Delaware~~		~~35-2327649~~
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

325 Sentry Parkway, Suite 200
Blue Bell, PA		19422
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

Risk Free Interest Rate		0.3	%
Expected Volatility		138.8	%
Expected Life (in years)		3.1
Dividend Yield		0	%
Weighted average estimated fair value of options during the period	$	0.75

Risk Free Interest Rate		1.5	%
Expected Volatility		112.9	%
Expected Life (in years)		2.9
Dividend Yield		0	%
Weighted average estimated fair value of options during the period	$	0.53

~~(267) 465-7530~~
~~(Registrant’s Telephone Number, Including Area Code)~~

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

	For the Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(7,917,366	)	$	(1,269,493	)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of options issued for interest on notes payable		0-			4,470
Fair value of common stock issued in exchange for services		2,551,000			0-
Fair value of options and warrants issued in exchange for services		2,578,715			171,463
Accretion of discount on notes payable		0-			40,031
Impairment loss		111,817			0-
Depreciation and amortization		12,647			14,658
Forgiveness of debt		(95,425	)		0-
Decrease in assets
Prepaid expenses		148,557			0-
Increase (decrease) in liabilities
Accounts payable and accrued expenses		339,337			600,633
Accounts payable and accrued expenses - related parties		(84,336	)		(212,840	)

Net cash used in operating activities		(2,355,054	)		(651,078	)

CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of options		20,000			0-
Proceeds from notes payable - stockholders		0-			15,000
Repayment of notes payable - stockholders		(50,000	)		(15,000	)
Proceeds from convertible notes payable - stockholders		4,770,000			160,000
Proceeds from paycheck protection program loan		0-			81,500

Net cash provided by financing activities		4,740,000			241,500

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,384,946			(409,578	)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		273,176			430,076

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	2,658,122		$	20,498


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during year for:
Interest	$	576		$	0-

Income taxes	$	0-		$	0-


SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

Accrued preferred dividends	$	534,227		$	543,561

Options issued for software	$	111,817		$	0-

Issuance of common stock for accounts payable	$	135,000		$	0-

Conversion of Series A Preferred stock to common stock	$	61		$	0-

Adoption of new accounting principle for embedded derivative liabilities affecting accumulated deficit	$	10,987,578		$	0-

Exchange of deferred revenue for 10% convertible notes payable	$	200,000		$	0-

Cashless conversion of options into common stock	$	3		$	0-

Exchange of note payable - stockholder and accrued interest for 4% convertible note payable	$	517,000		$	0-

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted -		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2020		10,012,500		$	0.50	2.5	$	8,782

Granted		3,227,500			0.93
Exercised		(117,500	)		0.25
Expired		(1,000,000	)		0.71

Balance, June 30, 2021		12,122,500		$	0.59	2.4	$	5,192

Exercisable at June 30, 2021		12,122,500		$	0.59	2.4	$	5,192

Exercisable at June 30, 2021 and expected to vest thereafter		12,122,500		$	0.59	2.4	$	5,192

						Weighted-
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2021		1,500,000		$	0.90		0.5	$	-

Expired/Cancelled		(500,000	)	$	0.90		-	$	-

Balance, March 31, 2022		1,000,000		$	0.90		0.2	$	370

Exercisable at March 31, 2022		1,000,000		$	0.90		0.2	$	370

Exercisable at March 31, 2022 and expected to
vest thereafter		1,000,000		$	0.90		0.2	$	370

	Warrants Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted -		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2020		3,375,000		$	0.90	1.1	$	1,620

Expired		(175,000	)		0.90	-

Balance, June 30, 2021		3,200,000		$	0.90	0.7	$	384

Exercisable at June 30, 2021		3,200,000		$	0.90	0.7	$	384

Exercisable at June 30, 2021 and expected to vest thereafter		3,200,000		$	0.90	0.7	$	384

	ZS Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
			Weighted -		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2020		1,600,000	$	5.00	3.0	$	0-

Balance, June 30, 2021		1,600,000	$	5.00	2.5	$	0-

Exercisable at June 30, 2021		1,600,000	$	5.00	2.5	$	0-

Exercisable at June 30, 2021 and expected to vest thereafter		1,600,000	$	5.00	2.5	$	0-

	ZS Warrants Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2020		83,334	$	3.00	0.9	$	83

Balance, June 30, 2021		83,334	$	3.00	0.4	$	83

Exercisable at June 30, 2021		83,334	$	3.00	0.4	$	83

Exercisable at June 30, 2021 and expected to vest thereafter		83,334	$	3.00	0.4	$	83

	ZCS Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
			Weighted -		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance, December 31, 2020		1,600,000	$	5.00	3.0	$	0-

Balance, June 30, 2021		1,600,000	$	5.00	2.5	$	0-

Exercisable at June 30, 2021		1,600,000	$	5.00	2.5	$	0-

Exercisable at June 30, 2021 and expected to vest thereafter		1,600,000	$	5.00	2.5	$	0-