UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
   
FORM 10-Q
  
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2018
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                        to                      
 
Commission file number 0-53944
   
   
REGO PAYMENT ARCHITECTURES, INC.
(Exact Name of Registrant as Specified in Its Charter)
  
   
  
 
 
Delaware
 
35-2327649
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
18327 Gridley Road, Suite K
Cerritos, CA
 
90703
(Address of Principal Executive Offices)
 
(Zip Code)
 
(561)220-0408
(Registrant’s Telephone Number, Including Area Code)
     
 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    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.
 
 
Large accelerated filer
 
☐
Accelerated filer
☐ 
 
 
 
 
 
 
Non-accelerated filer
 
☐ ( Do not check if smaller reporting company)
Smaller reporting company
☒
 
  
 
 
 
 
 
Emerging growth company
 
☐
 
 
 
    
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: 119,096,866 shares of common stock outstanding at May 15, 2018.
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
 
3
ITEM 1.
4
5
6
7
8
9
ITEM 2.
20
ITEM 3.
24
ITEM 4.
24
 
 
PART II - OTHER INFORMATION
 
 
 
 
ITEM 1.
25
ITEM 1A.
25
ITEM 2.
25
ITEM 3.
25
ITEM 4.
25
ITEM 5.
25
ITEM 6.
26
26
 

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, 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, 2017 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. 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.
 
 
ITEM 1. FINANCIAL STATEMENTS
 
 
Rego Payment Architectures, Inc.
 
CONTENTS
 
 
PAGE
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
 
8
 
 
 
 
9 to 19
 
 
Rego Payment Architectures, Inc.
Condensed Consolidated Balance Sheets
March 31, 2018 and December 31, 2017

    
March 31, 2018
   
December 31, 2017
 
    
(Unaudited)
   
(Audited)
 
ASSETS
           
             
CURRENT ASSETS
           
Cash and cash equivalents
 
$
3,508
   
$
7,232
 
Prepaid expenses
   
34,400
     
57,300
 
Deposits
   
1,218
     
1,218
 
                 
TOTAL CURRENT ASSETS
   
39,126
     
65,750
 
                 
PROPERTY AND EQUIPMENT
               
Computer equipment
   
5,129
     
5,129
 
Less:  accumulated depreciation
   
(5,129
)
   
(4,773
)
     
-
     
356
 
                 
OTHER ASSETS
               
Patents and trademarks, net of accumulated
               
   amortization of $141,329 and $134,023
   
403,784
     
411,090
 
     
403,784
     
411,090
 
                 
TOTAL ASSETS
 
$
442,910
   
$
477,196
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
 
$
3,333,207
   
$
3,170,114
 
Accounts payable and accrued expenses - related parties
   
149,292
     
48,103
 
Loans payable
   
41,815
     
27,000
 
10% Secured convertible notes payable - stockholders
   
3,360,264
     
3,460,264
 
Notes payable - stockholder
   
100,000
     
100,000
 
3.5% Secured convertible notes payable - stockholders,
               
  net of discount of $3,157 and $6,421
   
5,816,043
     
5,462,779
 
Convertible notes payable
   
183,250
     
-
 
Preferred stock dividend liability
   
4,218,826
     
3,950,545
 
                 
TOTAL CURRENT LIABILITIES
   
17,202,697
     
16,218,805
 
                 
CONTINGENCIES
               
                 
STOCKHOLDERS' DEFICIT
               
                 
Preferred stock, $.0001 par value; 2,000,000 preferred shares
         
  authorized; 195,500 preferred shares Series A authorized; 107,850 shares
         
  issued and outstanding at March 31, 2018 and December 31, 2017
   
11
     
11
 
                 
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 March 31, 2018 and December 31, 2017
   
3
     
3
 
                 
Preferred stock, $.0001 par value; 2,000,000 preferred shares
         
  authorized; 150,000 preferred shares Series C authorized; 0 shares
         
  issued and outstanding at March 31, 2018 and December 31, 2017
   
-
     
-
 
                 
Common stock, $ .0001 par value; 230,000,000 shares authorized;
         
  118,596,866 shares issued and outstanding at March 31, 2018
         
  and December 31, 2017
   
11,860
     
11,860
 
                 
Additional paid in capital
   
56,715,983
     
56,390,489
 
                 
Deferred compensation
   
(21,875
)
   
(31,250
)
                 
Accumulated deficit
   
(73,459,436
)
   
(72,112,722
)
                 
Noncontrolling interests
   
(6,333
)
   
-
 
                 
STOCKHOLDERS' DEFICIT
   
(16,759,787
)
   
(15,741,609
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
442,910
   
$
477,196
 

See the accompanying notes to the condensed consolidated financial statements. 
 
 
Rego Payment Architectures, Inc.
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2018 and 2017
(Unaudited)
 
   
For the Three Months
 
   
Ended March 31,
 
   
2018
   
2017
 
             
SALES
 
$
-
   
$
-
 
                 
OPERATING EXPENSES
               
Sales and marketing
   
8,200
     
206,918
 
Product development
   
174,501
     
446,711
 
General and administrative
   
571,939
     
507,793
 
Total operating expenses
   
754,640
     
1,161,422
 
                 
NET OPERATING LOSS
   
(754,640
)
   
(1,161,422
)
                 
OTHER EXPENSE
               
Interest expense
   
(330,227
)
   
(189,568
)
                 
NET LOSS
   
(1,084,867
)
   
(1,350,990
)
                 
Less: Accrued preferred dividends
   
(268,280
)
   
(268,280
)
Add: Net loss attributable to noncontrolling interests
   
6,433
     
-
 
                 
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
 
$
(1,346,714
)
 
$
(1,619,270
)
                 
BASIC AND DILUTED NET LOSS PER
               
COMMON SHARE
 
$
(0.01
)
 
$
(0.01
)
                 
BASIC AND DILUTED WEIGHTED AVERAGE
               
COMMON SHARES OUTSTANDING
   
118,346,866
     
117,767,626
 


See the accompanying notes to the condensed consolidated financial statements.
 
 
Rego Payment Architectures, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
For the Three Months Ended March 31, 2018

 
   
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
   
Deferred
   
Accumulated
   
Noncontrolling
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Compensation
   
Deficit
   
Interests
   
Total
 
                                                                               
Balance, December 31, 2017 (Audited)
   
107,850
   
$
11
     
28,378
   
$
3
     
-
   
$
-
     
118,596,866
   
$
11,860
   
$
56,390,489
   
$
(31,250
)
 
$
(72,112,722
)
 
$
-
   
$
(15,741,609
)
                                                                                                         
Issuance of warrants for  notes payable extensions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
191,737
     
-
     
-
     
-
     
191,737
 
Stock based compensation expense
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
133,757
     
-
     
-
     
-
     
133,757
 
Amortization of deferred compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
9,375
     
-
     
-
     
9,375
 
Accrued preferred dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(268,280
)
   
-
     
(268,280
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(1,078,434
)
   
(6,333
)
   
(1,084,767
)
                                                                                                         
Balance, March 31, 2018 (Unaudited)
   
107,850
   
$
11
     
28,378
   
$
3
     
-
   
$
-
     
118,596,866
   
$
11,860
   
$
56,715,983
   
$
(21,875
)
 
$
(73,459,436
)
 
$
(6,333
)
 
$
(16,759,787
)
 
See the accompanying notes to the condensed consolidated financial statements.
 
 
Rego Payment Architectures, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2018 and 2017
(Unaudited)
 
   
Three Months Ended March 31,
 
   
2018
   
2017
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
 
$
(1,084,867
)
 
$
(1,350,990
)
Adjustments to reconcile net loss to net cash
               
used in operating activities:
               
Fair value of warrants issued for extension of notes payable
   
191,737
     
-
 
Stock based compensation expense
   
133,757
     
88,442
 
Amortization of deferred compensation
   
9,375
     
6,875
 
Accretion of discount on notes payable
   
3,264
     
62,349
 
Depreciation and amortization
   
7,663
     
10,669
 
Decrease in assets
               
Prepaid expenses
   
22,900
     
-
 
Increase in liabilities
               
Accounts payable and accrued expenses
   
163,193
     
416,643
 
Accounts payable and accrued expenses - related parties
    101,189       3,542  
Net cash used in operating activities
   
(451,789
)
   
(762,470
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from loans payable
   
42,265
     
25,000
 
Repayment of loans payable
   
(27,450
)
   
-
 
Proceeds from convertible notes payable - stockholders
   
250,000
     
500,000
 
Proceeds from notes payable - stockholders
   
-
     
200,000
 
Proceeds from convertible notes payable
   
183,250
     
-
 
Repayment of notes payable - stockholders
   
-
     
(10,800
)
 
               
Net cash provided by financing activities
   
448,065
     
714,200
 
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS
   
(3,724
)
   
(48,270
)
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
   
7,232
     
52,719
 
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD
 
$
3,508
   
$
4,449
 
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
                 
Cash paid during year for:
               
Interest
 
$
-
   
$
-
 
                 
Income taxes
 
$
-
   
$
-
 
                 
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
               
                 
Accrued preferred dividend
 
$
268,280
   
$
268,280
 
 
               
Fair value of warrants issued as discount for note payable
 
$
-
   
$
33,210
 
 
               
Exchange of 10% secured convertible notes payable for 3.5% secured convertible notes payable
 
$
100,000
   
$
-
 
 
See the accompanying notes to the condensed consolidated financial statements.     
 
 
Rego Payment Architectures, Inc.
Notes to the 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.   Effective February 28, 2017, the Company changed its name from Virtual Piggy, Inc. to Rego Payment Architectures, Inc.

Zoom Payment Solutions USA, Inc. was incorporated in the state of Nevada on December 6, 2017, as a wholly owned subsidiary of Zoom Payment Solutions, LLC.  Zoom Payment Solutions USA, Inc. had no operations during the three months ended March 31, 2018.

Zoom Payment Solutions, LLC was formed in the state of Delaware on December 15, 2017, and Rego Payment Architectures, Inc. owns 78% of Zoom Payment Solutions, LLC. 

Zoom Payment Solutions, Inc. (“ZPS”) was incorporated in the state of Delaware on February 16, 2018, as a subsidiary of Rego Payment Architectures, Inc.  Rego Payment Architectures, Inc. owns 78% of Zoom Payment Solutions, Inc.  Zoom Payment Solutions, LLC, will be merged with ZPS and ZPS will be the surviving entity. ZPS is the holding company for various subsidiaries that will utilize REGO’s payment platform to address emerging markets.

Zoom Mining Solutions, Inc. was incorporated in the State of Delaware on February 19, 2018, as a wholly owned subsidiary of ZPS. There were minimal operations during the three months ended March 31, 2018.

Rego Payment Architectures, Inc. and its subsidiaries (collectively, the “Company”) is a technology company that will deliver an online and mobile payment platform solution for the family. The system allows parents and their children to manage, allocate funds and track their expenditures, savings and charitable giving on both a mobile device and online through the Company’s web portal.   The Company’s system is designed to allow a minor to transact both online and in traditional brick and mortar retail outlets using the telephone handset as a payment device.  The new payment platform automatically monitors regulatory compliance in real-time for all transactions, including protection of vendors from unintended regulatory infractions.  In addition utilizing the same architecture we allow individual parents to create a contract with each child that sets the rules and parameters of how the child may use the mobile payment system with as much or as little parental oversight as the parent determines is necessary.  The Company is including specialized technology that increases and improves the security of the system and protects the user’s identity while in use.

Management believes that building on its Children’s Online Privacy Protection Act (“COPPA”) advantage that the future of the Company will be based on the foundational architecture of the system that will allow its use across multiple financial markets where secure controlled payments are needed.  For the under seventeen years of age market, the Company will use its OINK.com brand.  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 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 this system are anticipated to 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 with banking and distribution partners.
 

The Company has licensed its technology to ZPS, which is developing new markets for the use of the platform and its blockchain technology including the auto, consumer packaged goods and cryptocurrency industries.

The Company’s principal office is located in Cerritos, California.

Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. 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, 2017 as filed with the SEC. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

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 May 2014, the FASB issued ASU No. 2014-09,  Revenue from Contracts with Customers (Topic 606) . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of Update 2014-09 to annual reporting periods beginning after December 15, 2017.  Since the Company is a development stage company with no revenue, the adoption on January 1, 2018 of this amendment will have no effect on the financial statements.  When the Company begins to recognize revenue, it will adhere to the guidance in the amendment.

In August 2016, the FASB issued ASU No. 2016-15,  Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments . The Update addresses eight specific changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. There were no material effects to the financial statements.

In May 2017, the FASB issued ASU No. 2017-09,  Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting . The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date.  There were no material effects to the financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of March 31, 2018, 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 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.  The issuance of debt securities convertible into equity securities could also 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 likely 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.

The Company’s current monetization model is to license its platform to merchants to enable them to provide COPPA compliant services for themselves and their customers.

As of May 15, 2018, the Company has a cash position of approximately $35,000.  Based upon the current cash position and the Company’s planned expense run rate, management believes the Company does not have funds currently to finance its operations through December 31, 2018.

NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES
 
As of March 31, 2018 and December 31, 2017, the Company owed the Chief Executive Officer a total of $71,200 and $27,998, including $67,498 and $25,690 in unpaid salary and expenses of $3,702 and $2,308.
 
As of March 31, 2018 and December 31, 2017, the Company owed the Chief Financial Officer $25,256 and $9,331 including $25,256 and $9,299 in unpaid salary and expenses of $0 and $32 .

Additionally as of March 31, 2018 and December 31, 2017, the Company owed the Secretary $15,036 and $5,774 in unpaid salary.

The Company owed a company owned by a more than 5% beneficial owner $37,800 and $5,000 as of March 31, 2018 and December 31, 2017.

NOTE 4 – LOANS PAYABLE

During the three months ended March 31, 2018, the Company received loans in the amount of $42,265 with no formal repayment terms and no interest.  The Company repaid $27,450 of these loans during the three months ended March 31, 2018.  The balance of the loans payable as of March 31, 2018 and December 31, 2017 was $41,815 and $27,000.
 
 
NOTE 5 – 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 to September 6, 2018 with the consent of the Note holders.

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 first quarter of 2018, $100,000 of the Notes were exchanged for $100,000 of the 3.5% Secured convertible notes payable – stockholders (see Note 7).

On March 6, 2018, the Company issued 2 year warrants to purchase 692,020 shares of the Company’s common stock to the 10% Secured convertible note holders at an exercise price of $0.90, as consideration for the note holders extending the maturity date of the notes payable to September 6, 2018.  The warrants were valued at $128,803, fair value, using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants.  The warrant value of $128,803 was expensed immediately during the three months ended March 31, 2018 as interest expense.

The assumptions related to the use of the Black-Scholes option pricing model for warrants and options, during the three months ended March 31, 2018 are as follows: no dividend, yield, expected volatility of 203.5% to 205.6%, risk free interest rate of 1.96% to 2.28% and expected term of 2.0 years.

The Notes are recorded as a current liability as of March 31, 2018 and December 31, 2017 in the amount of $3,360,264 and $3,460,264.  Interest accrued on the Notes was $1,041,199 and $952,693 as of March 31, 2018 and December 31, 2017.  Interest expense related to these Notes payable was $88,507 and $103,370 for the three months ended March 31, 2018 and 2017.
 
NOTE 6 – NOTES PAYABLE - STOCKHOLDER
 
On December 14, 2017, the Company issued a promissory note in the amount of $100,000 non-interest bearing and maturing on December 21, 2017, along with warrants to purchase 160,000 shares of the Company’s common stock, with an exercise price of $0.90, expiring in two years.  The note also includes a provision that the promissory note holder will receive additional warrants to purchase 25,000 shares of the Company’s common stock for each week that the payment of the principal is past due.  During the three months ended March 31, 2018, the promissory note holder received additional warrants to purchase 325,000 shares of the Company’s common stock with an exercise price of $0.90, expiring in two years.  The warrants were valued at $62,934 fair value, using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 201.7% to 236.2%, risk free interest rate of 1.9% and expected option term of 2 years.  The warrant value of $62,934 was expensed as interest expense during the three months ended March 31, 2018.
 

The notes payable are recorded as a current liability as of March 31, 2018 and December 31, 2017 in the amount of $100,000.  Interest accrued on the notes as of March 31, 2018 and December 31, 2017 was  $5,065.  Interest expense, including accretion of discounts, related to these notes payable was $62,934 and $67,886 for the three months ended March 31, 2018 and 2017.

NOTE 7 – 3.5% SECURED CONVERTIBLE NOTES PAYABLE
 
On August 26, 2016, the Company, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $600,000 aggregate principal amount of its 3.5% Secured Convertible Promissory Notes due June 30, 2018 (the “New Secured Notes”) to certain accredited investors (“investors”).  The Company issued additional New Secured Notes during 2016 and 2017.
 
The New Secured Notes are convertible by the holders, at any time, into shares of the Company’s newly 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.

In March 2018, the Company issued $350,000 aggregate principal amount of its New Secured Notes to certain accredited investors.  The aggregate consideration consisted of $250,000 in cash and the exchange of $100,000 outstanding principal amount of 10% Secured Convertible Notes (See Note 5).
   
The New Secured Notes are recorded as a short-term liability in the amount of $5,716,043 and $5,462,779, net of discount of $3,157 and $6,421 as of March 31, 2018 and December 31, 2017.  Interest accrued on the New Secured Notes was $195,018 and $148,299 as of March 31, 2018 and December 31, 2017.  Interest expense, including accretion of discounts, related to these notes payable was $49,983 and $18,312 for the three months ended March 31, 2018 and 2017.
 
NOTE 8 – CONVERTIBLE NOTES PAYABLE
 
During the first quarter of 2018, Zoom Payment Solutions, Inc. and Zoom Payment Solutions, LLC received $183,250 for convertible notes payable.  The notes are non-interest bearing.  Of the $183,250 in convertible notes, $122,750 was from stockholders of Rego Payment Architectures, Inc.  The notes are convertible within 90 days of issuance into:

 
(i)
Common stock of Oil Optimization Inc., a company traded on the Toronto Stock Exchange, at the conversion price of $0.125 per share of common stock in the Canadian Company; or

 
(ii)
Common stock of Zoom Payment Solutions, Inc. at the conversion price of $500 per share of common stock;

NOTE 9 – INCOME TAXES
 
Income tax expense was $0 for the three months ended March 31, 2018 and 2017.
 
 
As of January 1, 2018, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2017 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three months ended March 31, 2018, and there was no accrual for uncertain tax positions as of March 31, 2018. Tax years from 2014 through 2017 remain subject to examination by major tax jurisdictions.
 
There is no income tax benefit for the losses for the three months ended March 31, 2018 and 2017, 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 10 – CONVERTIBLE PREFERRED STOCK

Series A Preferred Stock

The Series A Preferred Stock has a preference in liquidation equal to two times the 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 2.5 times the 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.

The conversion feature of the additional Series A Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at an original fair market value of $3,489,000 at April 30, 2014 and $0 at March 31, 2018 and December 31, 2017.

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 the 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 2.5 times the 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 Warrants associated with the Series B Preferred Stock were also classified as equity, in accordance with FASB ASC 480-10-25.  Therefore it is not necessary to bifurcate these Warrants from the Series B Preferred Stock. 
 
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.
 
 
Series C Preferred Stock

In August 2016, the Company authorized 150,000 shares of the Company’s Series C Cumulative Convertible Preferred Stock (“Series C”).  As of March 31, 2018, none of the Series C shares are issued or outstanding.  After the date of issuance of Series C, 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 the 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 the 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. 
  
As of March 31, 2018, the value of the cumulative 8% dividends for all preferred stock was $4,218,826.  Such dividends will be paid when and if declared payable by the Company’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.
 
NOTE 11 – STOCKHOLDERS’ EQUITY

Issuance of Restricted Shares
 
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, 2018 and 2017, the Company expensed $9,375 and $6,875 relative to restricted stock awards.
 
NOTE 12 – STOCK OPTIONS AND WARRANTS
 
During 2008, the Board of Directors (“Board”) of the Company adopted the 2008 Equity Incentive Plan (“2008 Plan”) that was approved by the stockholders.  Under the 2008 Plan, the Company was authorized to grant options to purchase up to 25,000,000 shares of common stock to any officer, other employee or director of, or any consultant or other independent contractor who provides services to the Company.  The 2008 Plan was intended to permit stock options granted to employees under the 2008 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”).  All options granted under the 2008 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (“Non-Statutory Stock Options”).  As of March 31, 2018, options to purchase 7,273,333 shares of common stock have been issued and are unexercised, and 7,876,667 shares are available for grants under the 2008 Plan. The 2008 Plan expiration date was extended for one year to March 3, 2019 by the Board of Directors.
 
During 2013, the Board adopted the 2013 Equity Incentive Plan (“2013 Plan”), which was approved by stockholders at the 2013 annual meeting of stockholders.  Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards of up to an aggregate of 5,000,000 shares of common stock to any officer, employee, director or consultant.  The 2013 Plan is intended to permit stock options granted to employees under the 2013 Plan to qualify as Incentive Stock Options.  All options granted under the 2013 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be Non-Statutory Stock Options.  As of March 31, 2018, under the 2013 Plan grants of restricted stock and options to purchase 1,921,666 shares of common stock have been issued and are unvested or unexercised, and 1,928,334 shares of common stock remain available for grants under the 2013 Plan.  
 
 
The 2008 Plan and 2013 Plan are administered by the Board or its compensation committee, which determines the persons to whom awards will be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the terms of the applicable Plan.
  
In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company).
 
Prior to January 1, 2014, volatility in all instances presented is the Company’s estimate of volatility that is based on the volatility of other public companies that are in closely related industries to the Company.  Beginning January 1, 2014, volatility in all instances presented is the Company’s estimate of volatility that is based on the historical volatility of the Company’s stock.
 
 
 
The following table summarizes the activities for the Company’s stock options for the three months ended March 31, 2018:
 
   
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, 2017
   
9,150,000
   
$
0.83
     
3.6
   
$
66
 
                                 
Expired
   
(155,000
)
 
$
1.19
     
-
     
-
 
                                 
Balance March 31, 2018
   
8,995,000
     
0.82
     
3.4
     
57
 
                                 
Exercisable at March 31, 2018
   
3,244,996
   
$
0.75
     
1.8
   
$
56
 
                                 
Exercisable at March 31, 2018 and expected to
                               
  vest thereafter
   
8,995,000
   
$
0.82
     
3.4
   
$
57
 


(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.23 for the Company’s common stock on March 31, 2018. 
 
 
For the three months ended March 31, 2018 and 2017, the Company expensed $133,756 and $88,442 with respect to options. 
    
In accordance with FASB ASC 505-50, Equity – Equity-Based Payments to Non-Employees , share based compensation with performance conditions should be revalued based on the modification accounting methodology described in FASB ASC 718-20, “Compensation—Stock Compensation—Awards Classified as Equity.” As such the Company has revalued certain stock options with consultants and determined that there was an aggregate decrease in fair value of $2,866 for the three months ended March 31, 2018.
 
As of March 31, 2018, there was $549,734 of unrecognized compensation cost related to outstanding stock options. This amount is expected to be recognized over a weighted-average period of 1.2 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from the Company’s expectations. The difference between the stock options exercisable at March 31, 2018 and the stock options exercisable and expected to vest relates to management’s estimate of options expected to vest in the future.

The following table summarizes the activities for the Company’s unvested stock options for the three months ended March 31, 2018:

   
Unvested Options
 
         
Weighted -
 
         
Average
 
         
Grant
 
   
Number of
   
Date Fair
 
   
Shares
   
Value
 
Balance December 31, 2017
   
5,811,670
   
$
0.13
 
                 
Vested
   
(61,666
)
   
0.37
 
                 
Balance March 31, 2018
   
5,750,004
     
0.13
 
 
 
The following table summarizes the activities for the Company’s warrants for the three months ended March 31, 2018:

               
Remaining
   
Aggregate
 
         
Weighted-
   
Contractual
   
Intrinsic
 
   
Number of
   
Average
   
Term
   
Value
 
   
Shares
   
Exercise Price
   
(in years)
   
(in 000's) (1)
 
Balance December 31, 2017
   
1,191,700
   
$
0.90
     
1.9
   
$
-
 
                                 
Granted
   
1,017,020
     
0.90
     
1.9
     
-
 
Expired
   
(96,700
)
   
0.90
     
-
     
-
 
                                 
Balance March 31, 2018
   
2,112,020
   
$
0.90
     
1.8
   
$
-
 
                                 
Exercisable at March 31, 2018
   
2,112,020
   
$
0.90
     
1.9
   
$
-
 
                                 
Exercisable at March 31, 2018 and expected to
                               
  vest thereafter
   
2,112,020
   
$
0.90
     
1.9
   
$
-
 

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.23 for the Company’s common stock on March 31, 2018. 

All warrants were vested on the date of grant.

N OTE 13 – OPERATING LEASES
 
For the three months ended March 31, 2018 and 2017, total rent expense under leases amounted to $4,967 and $34,950.   At March 31, 2018, the Company was obligated for $1,218 per month through September 30, 2018 under a non-cancelable operating lease arrangement for property.

NOTE 14 – RELATED PARTY TRANSACTIONS

The Company has a consulting agreement with a company owned by a more than 5% beneficial owner, at a cost of $15,000 per month.  For the three months ended March 31, 2018 and 2017, the Company expensed $45,000 and $55,811 to the consulting company.

The Company has a consulting agreement with the son of the principal of a company owned by a more than 5% beneficial owner, at a cost of $5,000 per month.  For the three months ended March 31, 2018 and 2017, the Company paid $15,000 to this consultant.

NOTE 15 – SUBSEQUENT EVENTS

The Company has issued 2 year warrants to purchase 150,000 shares of the Company’s common stock, with an exercise price of $0.90, to a stockholder in conjunction with notes payable issued in December 2017 (See Note 7).
 

From April 1, 2018 through the date of this report, the Company has received loans from stockholders in the amount of $37,650 and repaid $34,025.

On April 12, 2018, the Company issued options to purchase 750,000 shares of the Company’s common stock to two Board members, the Chief Financial Officer and the company owned by a more than 5% stockholder, for a total of 3 million options.  The options have an exercise price of $0.2595, vest immediately and have a term of 5 years, with a fair value of $728,345, which will be expensed immediately.

In April 2018, Crowd Cart, Inc. issued 500,000 share of its stock to the Company, for a 5% ownership interest in Crowd Cart, Inc. and the Company issued 500,000 shares of its stock to Crowd Cart, Inc. pursuant to a Stock Issuance and Stock Option Agreement.  Crowd Cart, Inc. has the option to receive an additional 500,000 shares of the Company’s common stock upon either:

1.
The formation of Zoom Mining Solutions, Inc. and the closing on a minimum 200 bitcoin mining machines being acquired into Zoom Mining Solutions, Inc. or
2.
The contribution of $500,000 in equity capital into Zoom Payment Solutions by investors introduced by Crowd Cart.

The option expires June 16, 2018.

The Company received $200,000, in May 2018, as a down payment to develop software for the automotive industry. This will be a business to business and a business to consumer application intended to remove friction in the industry and provide an improved and trusted consumer experience.
 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Overview
 
Rego Payment Architectures, Inc. (the “Company,” “we”, or “us”) was incorporated 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 with the Company (the “Merger”). In connection with the Merger and in accordance with Section 253 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 Rego Payment Architectures, Inc. Our principal offices are located at 18327 Gridley Road, Suite K Cerritos, CA 90703 and our telephone number is (561) 220-0408.

As 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 to create, monetize and distribute massive multiplayer online games (MMOG). The Company technology was the monetization component of this overall 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 is 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.
 
In April 2016, our former Chief Executive Officer (“CEO”) resigned and we hired a new CEO who was concentrating on the FinTech industry.  In September 2017, this CEO resigned and we hired a new CEO, whose focus is monetizing the Platform in the FinTech industry and crypto currencies through technology licensing and similar partnerships.  We are focused on building and improving the existing Platform that will act as the foundation for the strategic alignment with the Financial Technology (“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 COPPA compliant technology as an added feature, we believe we will have better market success.

Strategic Outlook
 
We believe that the virtual goods market and the FinTech industry will continue to grow over the long term.  Within the market and industry, we intend to provide services to allow transactions with children in compliance with COPPA 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.
 
Sustained spending on technology, our ability to raise additional financing, 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 primary strategic objectives over the next 12-18 months are to increase our user base and the engagement level of that base. We plan to achieve that by implementing our partner-first go to market model in which established payments market leaders and vertical market participants can incorporate and integrate our platform into co-branded payments solutions targeting youth and family.  Management believes this approach will enable the Company to reduce expenses while broadening its reach.
 

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.
 
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 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.
 
Results of Operations
 
Comparison of the Three Months Ended March 31, 2018 and 2017
 
The following discussion analyzes our results of operations for the three months ended March 31, 2018 and 2017. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.

Net Revenue/Net Loss
 
We have not generated significant revenue since our inception. For the three months ended March 31, 2018 and 2017 we did not generate any revenue.  For the three months ended March 31, 2018 and 2017, we had a net loss of $1,084,867 and $1,350,990. 

Sales and Marketing
 
Sales and marketing expenses for the three months ended March 31, 2018 were $8,200 as compared to $206,918 for the three months ended March 31, 2017, a decrease of $198,718. The Company has focused its resources on the development of the platform, during the three months ended March 31, 2018.

Product Development
 
Product development expenses were $174,501 and $446,711 for the three months ended March 31, 2018 and 2017, a decrease of $272,210. The current platform development is primarily labor intensive, which is being provided by employees as opposed to employee and consultant labor during the three months ended March 31, 2017.

General and Administrative Expenses
 
General and administrative expenses increased $64,146 to $571,939 for the three months ended March 31, 2018 from $507,793 for the three months ended March 31, 2018. The increase resulted primarily from consulting fees, professional fees from the formation of new subsidiaries and the legal documents necessary for their operations.
 

 
Interest Expense

During the three months ended March 31, 2018, the Company incurred interest expense of $330,227 as compared to $189,568 for the three months ended March 31, 2017, an increase of $140,659. The increase in interest expense relates to the issuance of additional 3.5% convertible notes and the fair value of warrants related to convertible notes payable to a stockholder.

Liquidity and Capital Resources
 
As of May 15, 2018, we had cash on hand of approximately $35,000.
    
Net cash used in operating activities decreased $310,581 to $451,889 for the three months ended March 31, 2018 as compared to $762,470 for the three months ended March 31, 2017.  The increase resulted primarily from a reduction in the net loss from operations.
 
Net cash provided by financing activities decreased by $266,135 to $448,065 for the three months ended March 31, 2018 from  $714,200  for the three months ended March 31, 2017.  Cash provided by financing activities during the three months ended March 31, 2018, consisted of convertible notes payable to provide capital to continue operations.
 
Subsequent to March 31, 2018, the Company raised gross proceeds of $55,000 through the issuance of convertible notes payable.
 
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.  

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 the development of 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.
 
Even if we are successful in generating sufficient revenue or in raising sufficient capital in order to complete 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.  The launch of the Platform is expected in the third quarter of 2018, however, we do not project that significant revenue will be developed until later in 2018. 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, 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 May, 2018.
 
 
The 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 March 31, 2018, 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, 2017. 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 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”) in March, 2005, 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 beginning January 1, 2006, 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).
 
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 service period, as if the Company had paid cash for the services.  At the end of each financial reporting period, prior to the completion of the services, the fair value of the equity based payments will be re-measured and the non-cash expense recognized during the period will be adjusted accordingly.  Since the fair value of equity based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity based payments are fully vested or the service is completed.
 

 
Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 104, Revenue Recognition (Codified in FASB ASC 606), we will recognize revenue when (i) persuasive evidence of a customer or distributor arrangement exists or acceptance occurs, (ii) a retailer, distributor or wholesaler receives the goods, (iii) the price is fixed or determinable, and (iv) collectability of the sales revenues is reasonably assured. Subject to these criteria, we have generally recognized revenue from our prior Oink product at the time of the sale of the associated goods.
 
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 applicable.
 
ITEM 4. CONTROLS AND PROCEDURES.

As of March 31, 2018, 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 March 31, 2018, 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 March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
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, 2017.
  
ITEM 1A. RISK FACTORS.

Not required. 
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
In March 2018, the Company issued an additional $250,000 aggregate principal amount of its New Secured Notes to  accredited investors.
 
The foregoing issuances were conducted as private placements, which were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.
 
See Note 7 to the financial statements contained herein for a description of the terms of the New Secured Notes.
       
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
 
None.
 
ITEM 4. MINE SAFETY DISCLOSURES.
 
Not applicable.
 
ITEM 5. OTHER INFORMATION.

None.
 
 
ITEM 6. EXHIBITS
 
10.1
   
10.2
   
31.1
 
 
31.2
 
 
32.1
 
 
32.2
 
 
101.INS
XBRL Instance Document
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
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: May 15, 2018 
 
 
 
 
26
 
Exhibit 10.1
 
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (“Agreement”) is made effective April 3, 2018 by and between Rego Payment Architectures, Inc., a Delaware corporation (hereinafter “Licensor” or “Rego”), and Zoom Payment Solutions Inc., a Delaware corporation (“Licensee”).

WHEREAS, Licensor owns the Licensed Technology, as such term is defined in Section 1 (c) below;

WHEREAS, Crowd Cart, Inc., a Delaware corporation (“Crowd Cart”), owns technology and intellectual property relating to blockchain and cryptocurrencies (“Crowd Cart Technology”);

WHEREAS, Licensee is owned 78% by Licensor, 15% by Crowd Cart and 7% by the Shemin Investment Group LLC;

WHEREAS, Licensee desires to license the Licensed Technology from Licensor, which Licensee will integrate with the Crowd Cart Technology in order to develop a combined technology for use in payment solutions, including mobile payment applications, blockchain solutions, and cryptocurrency products and services (“Zoom Payment Technology”);

WHEREAS, Crowd Cart will enter into a license agreement with Licensee on even date herewith, pursuant to which Crowd Cart will license the Crowd Cart Technology to Licensee for use in the development of the Zoom Payment Technology;

WHEREAS, the Zoom Payment Technology will be licensed by Licensee to its operating subsidiary, Zoom Payment Solutions USA, Inc. (“Operating Subsidiary”) for the purpose of conducting the Zoom Business, as such term is defined in Section 4 below;

WHEREAS, in furtherance of the foregoing, Licensor desires to licensee the Licensed Technology to Licensee under the terms and conditions set forth below.

NOW, THEREFORE, intending to be legally bound, the parties hereto hereby agree that the above background provisions are a part of this Agreement and further agree as follows:
 
 
1.
Definitions.

(a) “Confidential Information” means any data or information concerning Licensor, not made available to the general public, oral or written, which Licensee may receive during the Term (as defined in Section 5 below). Confidential Information includes any data or information that relates to Licensor’s past, present, or future research, development or business activities, including any unannounced product(s) and service(s), and including any information relating to services, developments, inventions, processes, plans, financial information, customer and supplier lists, forecasts, and projections, inventions, know-how, trade secrets and other proprietary Licensor information, including, without limitation, any source code, object code, and trade secrets relating to the Licensed Technology and any updates, upgrades or enhancements thereto.(b) “Intellectual Property Rights” means all rights in intellectual property, including the following rights protected, created, or arising under the laws of the United States of America or any other jurisdiction: (i) all trademarks, service marks, trade names, services names, brand names, trade dress rights, logos, corporate names, trade styles, logos, and other source or business identifiers and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, along with all applications, general intangibles of a like nature, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals, and extensions thereof; (ii) all copyrights and all mask works, databases, and design rights, whether or not registered or published, all registration and recordations thereof, and all applications in connection therewith, along with all reversions, extensions, and renewals thereof; (iii) all trade secrets; and (iv) all patents and applications therefor, including all continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations, and extensions thereof.(c) “Licensed Technology” means the information, technology, creative expression, and know-how embodied in the technology and intellectual property described in Schedule “A”. Licensed Technology also includes all enhancements, modifications, additions, translations, compilations, or other technology delivered to Licensee by Licensor hereunder or under any support agreement entered into in connection with this Agreement.


2.
Grant and Acceptance of License.

(a) Non-Exclusive . During the Term and subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee, and Licensee accepts from Licensor, a non-exclusive, worldwide limited license to reproduce, modify, display, create derivative works of, use and otherwise exploit the Licensed Technology solely for the purpose of developing the Zoom Payment Technology. Once developed, Licensee will license the Zoom Payment Technology to the Operating Subsidiary pursuant to a licensing agreement approved in writing by Licensor solely for use in conducting the Zoom Business (“Zoom Payment Technology License”).

(b) Restriction on Licensing . The Licensed Technology is licensed only to the Licensee, for the purpose described in subparagraph (a) above and may not be used for any other purpose, including the transfer or sublicensing thereof, without Licensor’s prior written consent. The parties agree that Licensee may license the Zoom Payment Technology (which technology will encompass in whole or in part the Licensed Technology) to the Operating Subsidiary for the purpose of conducting the Zoom Business, pursuant to such terms and conditions as set forth in the Zoom Payment Technology License, which must be approved in writing by Licensor.

3. Licensed Technology Restrictions. The license granted under this Agreement with respect to the Licensed Technology is subject to the following restrictions:

(a)   Source Code . To the extent that any Licensed Technology is provided in source code format, Licensee shall maintain the source code versions of the Licensed Technology, and any source code derivatives thereof, under password control protection and shall not disclose such source code versions of the Licensed Technology or any source code derivatives or documentation thereof to any third parties.
 
 
(b) No Reverse Engineering . Licensee agrees that without the prior written approval of Licensor and subject to such terms and conditions imposed by Licensor, Licensee will not, nor permit any person or entity to: (i) decompile, “unlock,” reverse-engineer, disassemble, or otherwise translate the object code versions of the Licensed Technology to human-perceivable form; (ii) otherwise discover or replicate the source code from which such object code may be generated; or (iii) except as expressly set forth in this Agreement, modify or make derivative works of the Licensed Technology. Licensee shall preserve and shall not otherwise obscure or permit deletion or alteration of any copyright notice or proprietary notices required by Licensor on any copies of the Licensed Technology.

4. Licensor’s Covenant Against Competition. Licensor hereby agrees that during the Term, Licensor shall not, directly or indirectly, own any interest in, manage, control, participate in (whether as a partner, shareholder, equity holder, member, or otherwise), render services for, license or sublicense the Licensed Technology, or in any other manner engage, directly or indirectly, in any Competitive Business. The term “Competitive Business” means any business which is in competition with the Zoom Business. The term “Zoom Business” means the business which will be conducted by the Operating Subsidiary and which is described as follows:

payment, blockchain and cryptocurrency solutions, including mobile payments, currency and token development, exchanges including ATMs, and cryptocurrency mining. The Zoom Business focuses on the retail sector and provides solutions that drive efficiency, intelligence and improve the consumer experience. Licensor reserves the right to utilize the Licensed Technology, directly or indirectly, on its own behalf or in conjunction with others for any business or purpose which is not a Competitive Business including, without limitation, the right to enter into any license or sublicense arrangement with any third party which is not a Competitive Business. The restrictions contained in this Section 4 shall terminate immediately upon the expiration of the Term.

5. Term; Termination.

(a) Term . The term of this Agreement shall commence on the Effective Date, and shall continue until the last day of the calendar month in which the one (1) year anniversary of the term falls (“Initial Term”). Thereafter, this Agreement will automatically renew for additional successive one (1) year terms unless either party notifies the other party in writing at least thirty (30) days prior to the expiration of such Term (“Renewal Term”). Notwithstanding the foregoing, the term of this Agreement shall terminate as provided for in subparagraphs (b) and (c) below. All references to the “Term” shall include the Initial Term and any Renewal Terms
.
(b)
Termination for Uncured Material Breach . Licensor may terminate this Agreement if Licensee fails to cure any material breach of this Agreement by Licensee within 4 thirty (30) days of receiving written notice of the material breach from Licensor. In the event that Licensee fails to cure such a material breach within the thirty (30) day period, Licensor may immediately terminate this Agreement upon written notice to Licensee. For the purpose of this subsection 5(b), the term “cure” or “remedy” would include any other mutually agreed upon corrective action in lieu of termination. The rights granted to Licensee under this Agreement, including all license rights, will continue in full force and effect during any cure period specified in this subsection 5(b).
 
 
(c)
Other Events of Termination . Notwithstanding subsections 5(a) and 5(b) above, Licensor may immediately terminate this Agreement upon the occurrence of any of the following events: (i) breach of the confidentiality provisions of Section 10 below; (ii) use of the Licensed Technology outside the scope of the license granted hereunder; (iii) all or a substantial part of the assets of Licensee are being sold or otherwise transferred to any person; (iv) Licensee is being merged or consolidated with any other person; (v) a receiver, trustee, or liquidator of Licensee is appointed for any of its properties or assets; (vi) Licensee admits in writing its inability to pay its debts as they mature; (vii) Licensee makes a general assignment for the benefit of creditors; (viii) Licensee is adjudicated as bankrupt or insolvent; (ix) a petition for the reorganization of Licensee or an arrangement with its creditors, or readjustment of its debts, or its dissolution or liquidation is filed under any law or statute; or (x) Licensee fails to timely pay the Licensing Fees.

(c)
Effects of Termination . Upon termination of this Agreement, all rights and benefits granted to Licensee hereunder, including the license of the Licensed Technology, will immediately terminate and the Licensed Technology shall revert to Licensor and all of Licensor’s obligations hereunder shall cease. Notwithstanding the termination of the license of the Licensed Technology, the Zoom Payment Technology License between the Licensee and the Operating Subsidiary shall continue in full force and effect pursuant to the terms and conditions thereof unless Licensor elects in writing to have Licensee terminate the Zoom Payment Technology License. Licensor may elect to have such license terminated at any time within one hundred twenty (120) days of the termination of the license granted under this Agreement. If Licensor does not elect to have the Zoom Payment Technology License terminated, then such licensing agreement shall continue in force and effect pursuant to the terms thereof and Licensor hereby agrees and consents to the continued use of any portion or all of the Licensed Technology that may be embodied in the Zoom Payment Technology. Upon termination of this Agreement, Licensor shall have no obligation to refund any amounts paid to it pursuant to Section 6. (e) Survival . The provisions regarding the ownership of the Licensed Technology and confidentiality shall survive the expiration and termination of this Agreement. Provisions of the Sections which, by their nature, would continue beyond termination of this Agreement shall also survive. Payments which accrue or are due before the termination of this Agreement shall survive termination of this Agreement.

6. Licensing Fees. In consideration of the license granted herein, Licensee shall pay to Licensor the licensing fees set forth on the attached Schedule “B”.

7. Ownership; No Implied Licenses. Licensee acknowledges and agrees that: (i) Licensor owns the Licensed Technology, (ii) Licensor retains ownership of all of its Intellectual Property Rights in the Licensed Technology, and (iii) Licensee has no right, title, or interest in or to the Licensed Technology, except as expressly granted hereunder. The parties understand and agree that no license or other right is granted herein to either party, directly or by implication, estoppel, or otherwise, with respect to any of Licensor’s Intellectual Property Rights, except as specifically provided for in this Agreement, and that no additional licenses or other right shall arise from consummation of this Agreement or from any acts, statements, or dealings leading to such consummation. Licensor reserves all rights not specifically granted to Licensee hereunder. Licensee shall at its sole cost and expense, defend, indemnify and hold Licensor harmless with respect to any claims, costs, expenses (including reasonable attorney’s fees), liabilities and damages resulting from, arising from or related to any breach or threatened by Licensee under this Section.
 
 
8. Infringement. In the event that Licensee learns of any infringement, imitation, or any use of property similar to the Licensed Technology, Licensee shall promptly notify Licensor thereof and shall cooperate with any action Licensor deems advisable for the protection of the Licensed Technology.

9. Warranty Disclaimer. LICENSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED TECHNOLOGY, ITS QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. ALL LICENSED TECHNOLOGY PROVIDED HEREUNDER IS “AS IS” AND LICENSOR MAKES NO WARRANTY THAT THE LICENSED TECHNOLOGY IS FREE FROM CLAIMS OF INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADE SECRETS, OR OTHER PROPRIETARY RIGHTS OF OTHERS. THERE ARE NO WARRANTIES, EITHER EXPRESS OR IMPLIED AND ANY AND ALL SUCH WARRANTIES ARE HEREBY DISCLAIMED AND NEGATED. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY LICENSOR OR ITS EMPLOYEES SHALL CREATE OR MAKE ANY MODIFICATION, EXTENSION OR ADDITION TO THIS WARRANTY. IN NO EVENT WHATSOEVER SHALL LICENSOR BE LIABLE TO THE LICENSEE OR TO THIRD PARTIES FOR ANY DAMAGES CAUSED, IN WHOLE OR IN PART, BY THE USE OF THE LICENSED TECHNOLOGY OR FOR ANY LOST REVENUES, LOST PROFITS, LOST SAVINGS OR OTHER DIRECT OR INDIRECT, INCIDENTIAL, SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY LICENSEE OR ANY THIRD PARTY, EVEN IF LICENSOR IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR CLAIMS. LICENSOR’S LIABILITY ARISING FROM OR RELATED TO THIS AGREEMENT SHALL NOT UNDER ANY CIRCUMSTANCES EXCEED AN AMOUNT EQUAL TO THE LICENSE FEES PAID UNDER SECTION 6 ABOVE.

10. Confidentiality. Licensee acknowledges that the Confidential Information is a valuable asset of Licensor. Except by written permission by Licensor, Licensee agrees to hold all such Confidential Information in confidence for Licensor. Licensee, its shareholders, officers, directors, employees, agents and representatives shall not disclose or cause to be disclosed to any third party any part or all of the Confidential Information. Licensee may disclose Confidential Information to employees of Licensee to whom such disclosure is necessary, for which rights are granted hereunder. Licensee shall appropriately notify all employees to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by them. Licensee shall be responsible for any non-compliance or breach of this Agreement by its employees.
 
 
11. Governing Law. This Agreement shall be governed by, and construed and enforced solely in accordance with, the laws of the State of Delaware. Any suit, action, or proceeding concerning any disputes, controversies, or claims arising out of or relating to the Licensed Technology or this Agreement shall be instituted in any applicable court in the State of Delaware and Licensee irrevocably submits to the jurisdiction of such court for such purposes and shall accept service of process via certified mail.

12. Assignment and Delegation. This Agreement shall not be assignable by Licensee without Licensor’s prior written authorization, which authorization may be withheld without cause or reason in Licensor’s sole discretion, and Licensee shall not assign, subcontract, or otherwise delegate its rights or responsibilities hereunder without such authorization. Licensor may, in its sole discretion, assign, subcontract, or otherwise delegate its rights and responsibilities hereunder. This Agreement shall be binding upon, and inure to the benefit of, each party and its successors and permitted assigns.

13. Indemnification by Licensee. Licensee shall indemnify, defend and hold harmless Licensor and its employees, officers, directors and agents (each, a “Licensor Indemnified Party”) from and against any and all liability, loss, damage, cost and expense (including reasonable attorneys’ fees) (collectively “Liabilities”) which a Licensor Indemnified Party may incur, suffer or be required to pay resulting from, or arising in connection with: (i) the breach by Licensee of any covenant, representation or warranty contained in this Agreement, including any breach the confidentiality provisions under Section 10; or (ii) any Liabilities arising from the license granted hereunder, including, without limitation, any Liabilities arising from the use or transfer of Licensed Technology, or relating to the Licensor’s Intellectual Property Rights, including, without limitation, any claims for infringement.

14. Injunctive Relief. Notwithstanding anything to the contrary in this Agreement, Licensee acknowledges and agrees that its use of the Licensed Technology outside the scope of the license granted hereunder or otherwise in violation of this Agreement may cause significant injury to Licensor, the extent of which may be difficult to ascertain and for which there may be no adequate remedy at law, and, accordingly, such use is rebuttably presumed to cause irreparable harm to Licensor. Accordingly, Licensee agrees that Licensor, in addition to any other available remedies, shall have the right to seek (and to use such presumption in seeking) an immediate injunction and other equitable relief enjoining any such use in violation of this Agreement.

15. Waiver. No waiver by either party of any term or provision of this Agreement shall be deemed to constitute a waiver of any other term or provision of this Agreement. No waiver of any term or provision of this Agreement shall be deemed to constitute a continuing waiver thereof unless otherwise expressly provided herein.

16. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
 
 
17. Authority. Each party executing this Agreement represents and warrants to the other that it has full right, power, capacity, and authority to execute, deliver, and perform its obligations hereunder.

18. Integration. This Agreement sets forth the entire agreement reached between the parties hereto with respect to the transactions contemplated hereby and supersedes all prior or contemporaneous agreements, understandings, representations, and warranties between the parties, and may not be amended except by written instrument executed by the duly authorized officers of the parties hereto.

19. Relationship of Parties. Nothing in this Agreement shall be construed as creating an employer-employee relationship between Licensor or Licensee, nor any agency, joint venture or partnership relationship between the parties hereto. Neither party shall have the right to bind the other to any obligation, nor have the right to incur any liability on behalf of the other.

20. Counterparts. This License Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one and the same instrument.

21. Non-Solicitation. During the Term hereof and for one (1) year thereafter, Licensee shall not, directly or indirectly hire or solicit any employee of Licensor or anyone who was an employee, consultant or independent contractor of Licensor at any time within the six (6) month period immediately prior thereto or encourage any employee, consultant, independent contractor of Licensor to terminate such employment, or agency or other relationship. Notwithstanding the foregoing, any employee, consultant or independent contractor of Licensee who was an employee, consultant or independent contractor of Licensor prior to the commencement of this Agreement, may return to work for Licensor at any time.

22. Use of Trademarks. Licensee may use the Licensor’s Trademarks in conjunction with the use of the Licensed Technology, subject to Licensor’s prior written consent. Licensor’s Trademarks can be used only by the Licensee and may not be used by any third party without Licensor’s prior written consent. “Licensor’s Trademarks” shall include, but are not limited to, (i) the United States Patent and Trademark Office (“USPTO”) registrations for Oink, Oink (stylized), PiggyPick, Virtual Piggy, Virtual Piggy and design (horizontal), the PIG design, Parent Match, Quickconnect, Virtual Piggy Youth Empowered Parent Approved and Design, Youth Empowered. Parent Approved, and Oink.com; (ii) the European Community registrations for Virtual Piggy, Virtual Piggy and Design, Virtual Piggy Youth Empowered Parent Approved and Design, PiggyPick, Wishlist Wednesday, the PIG design, and the PIG design (alternative); and (iii) the Canadian Intellectual Property Office registration for VP Authenticate.

23. Enforcement. If, at the time of enforcement of the covenants contained in this Agreement a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained  herein to cover the maximum period, scope and area permitted by law. In the event that any suit or action is instituted under or in relation to this Agreement, including without limitation to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, reasonable attorneys’ fees.
 
 
IN WITNESS WHEREOF , the parties hereto have hereunto set their hands and seals the day and year first above written.

Rego Payment Architectures, Inc.
 
By:
 
 
David Knight, CEO
 
     
Zoom Payment Solutions Inc.
 
By:
 
 
David Knight, Chief Executive Officer
 

LICENSE AGREEMENT
BY AND BETWEEN
REGO PAYMENT ARCHITECTURES, INC.
AND ZOOM PAYMENT SOLUTIONS INC.
DATED APRIL 3, 2018




 
SCHEDULE A
LICENSED TECHNOLOGY
I. Background
Rego owns certain payment system technologies, including, but not limited to, an online security mobile payment platform, known as “OINK”, designed for the under 18 age group in the global market, which enables online businesses to function in a manner consistent with the Children’s Online Privacy Protection Act and similar international children’s privacy laws. Rego has four issued patents with the USPTO entitled “System and Method for Verifying the Age of an Internet User,” “System and Method for Virtual Piggy Bank Wish-List”, “Parent Match” and “System and Method for Virtual Piggy Bank.” In addition, REGO has filed for additional provisional and non-provisional U.S. patent application, as well as twelve nonprovisional U.S. patent applications, three of which are pending, four of which have been allowed, and five of which have been abandoned. REGO has also been granted two patents, entitled “Virtual Piggy Bank” and “Parent Match,” in each of Germany, Canada, and Australia. The Company also has patents pending in the Republic of Korea under the Patent Cooperation Treaty (collectively, the “Rego Technology”).
 
 
II. Licensed Technology
Pursuant to the terms and conditions of this Agreement, Licensor licenses the Rego Technology, together with Licensor’s Master/Sub account patent that enables its COPPA compliant payment architecture; its Dot.Net code 360,000 lines which run the back-end of its payments platform for OINK and other payment platforms, the mobile application both Android, IOS and web app, website, the OINK brand, and all other intellectual property related to OINK (hereinafter the aforementioned technology and intellectual property rights are collectively referred to as the “Licensed Technology”).

The Licensed Technology shall be used solely for the purpose of developing the Zoom Payment Technology, which will be licensed by Licensee to the Operating Subsidiary pursuant to the Zoom Payment Technology License solely for the purpose of conducting the Zoom Business. Licensor reserves the right to utilize any portion or all of the Licensed Technology, directly or indirectly, on its own behalf or in conjunction with others including, without limitation, entering into any license or sublicense arrangement with any third party for any purpose whatsoever provided that such purpose does not violate the provisions of Section 4.

 
Exhibit 10.2
 
NEITHER THIS SIMPLE AGREEMENT FOR FUTURE EQUITY   NOR ANY OF THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY FOREIGN JURISDICTION OR ANY STATE SECURITIES LAWS WITHIN THE UNITED STATES AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS THERE IS A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IN EFFECT COVERING THIS SIMPLE AGREEMENT FOR FUTURE EQUITY   OR SUCH SECURITIES, AS THE CASE MAY BE, OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
 
SIMPLE AGREEMENT FOR FUTURE EQUITY 
 
Date of Issuance
$ ________________
_______________, 2018
 
FOR VALUE RECEIVED, Zoom Payment Solutions Inc., a Delaware corporation (the “Company”), hereby acknowledges receipt of the principal sum of $_________________ (the “Principal Amount”) from ___________________ (the “Holder”), in accordance with the terms of this Simple Agreement for Future Equity (“SAFE”).  The Holder hereby acknowledges that the only form of repayment for the Principal Amount is the conversion of the Converted Interests (defined below), in accordance with the terms of this SAFE. The Holder further acknowledges that no interest shall accrue or be paid on the Principal Amount of this SAFE.

BACKGROUND
 
A.            The Company was established as a Delaware corporation on February 16, 2018 and is authorized to issue 50,000,000 shares of common stock in the Company, of which ________________ shares of common stock are currently issued and outstanding.

B.            Rego Payment Architectures, Inc. and Crowd Cart, Inc., both shareholders of the Company, intend to license certain of their intellectual property to the Company in order to develop a combined technology for use in payment solutions, including mobile payment applications, blockchain solutions, and cryptocurrency products and services.  The Company is a holding company with three subsidiaries: Zoom Canada Solutions, Inc., a Delaware corporation (“Zoom Canada”), Zoom Payment Solutions USA, Inc., a Nevada corporation (“Zoom USA”), and Zoom Blockchain Solutions Inc. (“Zoom Blockchain”).

C.            It is the intention of the Company to merge Zoom Canada with a company which will be listed on the Canadian Share Exchange (“Canadian Company”).

D.            Zoom Canada owns 85% of Zoom Mining Solutions Inc., a Delaware corporation (“Zoom Mining”), and 15% of Zoom Mining is owned by Cyber Mining, LLC. Zoom Mining was established for the purpose of operating a crypto currency mining business.
 
 
E.            Zoom USA was established for the purpose of operating the payment solutions business, including mobile payment applications.  Zoom USA is owned 100% by the Company.

F.            Zoom Blockchain was established for the purpose of operating the blockchain solutions business.  Zoom Blockchain is owned 85% by the Company and 15% by Regency Manning Inc.

NOW, THEREFORE, for good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, intending to be legally bound, the parties hereby agree as follows:
  
1.              Conversion .

(a)             Procedure for Conversion .  Subject to the terms hereof, the Holder shall have the right, exercisable at any time prior to 90 days from the date of the issuance of this SAFE, to convert the entire outstanding Principal Amount under this SAFE, upon surrender of this SAFE, accompanied by a written notice of conversion duly executed by the Holder in the form of conversion notice attached hereto as Exhibit A , as follows:

(i)
The Holder shall have the right to convert the entire outstanding Principal Amount into common stock of the Canadian Company at the conversion price of $0.125 per share of common stock in the Canadian Company (“Canadian Company Converted Interests”); or
 
 
(ii)
The Holder shall have the right to convert the entire outstanding Principal Amount into common stock of the Company at the conversion price of $4.00 per share of common stock in the Company (“Company Converted Interests”);

(iii)
By way of example, if the Principal Amount of this SAFE is $25,000, and the Holder elects to convert the entire outstanding Principal Amount pursuant to: (i) Section 1(a)(i), the Holder will convert the entire outstanding Principal Amount into 200,000 shares of common stock in the Canadian Company; or (ii) Section 1(a)(ii), the Holder will convert the entire outstanding Principal Amount into 6,250 shares of common stock in the Company.

(b)           Converted Interests .  The Company Converted Interests and the Canadian Company Converted Interests may hereinafter be referred as the “Converted Interests”.  The Holder’s only form of repayment for the outstanding Principal Amount is the conversion of the Converted Interests as provided for in this Section. The Holder will not be entitled to any other form of compensation or repayment.

(c)             Failure to Exercise the Conversion .  In the event the Holder fails to timely exercise its option in accordance with Section 1 above, the entire outstanding Principal Amount under this SAFE will automatically be converted to a percentage interest in the Company at the conversion price of $4.00 per one (1) share of common stock in the Company.
 
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(d)             Certificates .  The Company will deliver to the Holder not later than ten (10) business days after the issuance of the Company Converted Interests, a  stock certificate of the Canadian Company or a certificate representing the Company Converted Interests being acquired upon the conversion of this SAFE.

2.               Representations and Warranties of the Company . In connection with the transactions contemplated by this SAFE, the Company hereby represents and warrants to the Holder that all requisite action has been taken on the part of the Company necessary for the authorization, execution and delivery of this SAFE. The Company has taken all requisite action to make all of the obligations of the Company reflected in the provisions of this SAFE valid and enforceable in accordance with its terms.

3.               Representations and Warranties of the Holder . In connection with the transactions contemplated by this SAFE, the Holder hereby represents and warrants to the Company as follows:

(a)             Authorization .  The Holder has full power and authority (and, if an individual, the capacity) to enter into this SAFE and to perform all obligations required to be performed by it hereunder. This SAFE, when executed and delivered by the Holder, will constitute the Holder’s valid and legally binding obligation, enforceable in accordance with its terms.

(b)             Purchase Entirely for Own Account .  The Holder acknowledges that this SAFE is made with the Holder in reliance upon the Holder’s representation to the Company, which the Holder hereby confirms by executing this SAFE, that this SAFE and the Conversion Interests (collectively, the “Securities”) will be acquired for investment for the Holder’s own account, not as a nominee or agent (unless otherwise specified on the Holder’s signature page hereto), and not with a view to the resale or distribution of any part thereof, and that the Holder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this SAFE, the Holder further represents that the Holder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Securities. If other than an individual, the Holder also represents it has not been organized solely for the purpose of acquiring the Securities.

(c)             Disclosure of Information; Non-Reliance . The Holder acknowledges that it has received all the information and documentation it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. The Holder further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the Company, its operations, the operations (or intended operations) of its subsidiaries, and Securities. The Holder confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities. In deciding to acquire the Securities, the Holder is not relying on the advice or recommendations of the Company and has made its own independent decision that the investment in the Securities is suitable and appropriate for the Holder. The Holder understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of this investment. The Holder acknowledges and agrees that the Holder should rely on the advice of Holder’s own legal, investment, financial, tax, accounting and other matters relating to an investment in the Securities and the Company, and Holder has so relied on such advice.
 
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(d)            Investment Experience .  The Holder is an investor in securities of companies and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience that it is capable of evaluating the merits and risks of the investment in the Securities.

(e)             Accredited Investor . The Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act and has delivered to the Company, a true, correct and completed form of the Investor Questionnaire attached hereto as Exhibit B . The Holder agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Securities.

(f)             Restricted Securities . The Holder understands that the Securities have not been, and will not be, registered under the Securities Act or state securities laws. The Holder understands that the Securities are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, the Holder must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission (“SEC”) and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Holder acknowledges that the Company has no obligation to register or qualify the Securities for resale.

(g)             No General Solicitation . The Holder, and its officers, directors, employees, agents, stockholders or partners, as applicable, have not either directly or indirectly, including through a broker or finder solicited offers for or offered or sold the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. The Holder acknowledges that neither the Company nor any other person offered to sell the Securities to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

(h)             Residence .  If the Holder is an individual, then the Holder resides in the state or province identified in the address shown on the Holder’s signature page hereto. If the Holder is a partnership, corporation, limited liability company or other entity, then the Holder’s principal place of business is located in the state or province identified in the address shown on the Holder’s signature page hereto.
 
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(i)              Market .  Holder understands that there is no public market for the Securities, and the Company has no plans to take such action as might reasonably result in the development of such a public market. Holder’s present financial condition is such that Holder has adequate means of providing for Holder’s existing and contemplated needs, commitments and obligations and has no need for the liquidity in Holder’s investment in the Securities and is capable of bearing the economic risks attendant to an investment in the Units, including the total loss thereof. Holder’s overall commitment to investments which are not readily marketable is not disproportionate to Holder’s net worth and the making of an investment in the Units will not cause such overall commitment to become excessive.

4.
Miscellaneous .

(a)             Successors and Assigns .  Except as otherwise provided herein, the terms and conditions of this SAFE will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties.

(b)             Governing Law . This SAFE will be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule.

(c)             Counterparts . This SAFE may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via electronic mail or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

(d)             Notices . All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by email; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the addresses shown on the signature pages hereto (or to such email address or other address as subsequently modified by written notice given in accordance with this Section).

(e)             Entire Agreement; Amendments and Waivers . This SAFE constitutes the full and entire understanding and agreement between the parties with regard to the subject hereof. Any term of this SAFE may be amended and the observance of any term may be waived with the written consent of the parties.

(f)             Severability . If one or more provisions of this SAFE are held to be unenforceable under applicable law, such provisions will be excluded from this SAFE and the balance of the SAFE will be interpreted as if such provisions were so excluded and this SAFE will be enforceable in accordance with its terms.
 
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(g)             Transfer Restrictions .  THIS SAFE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT.

IN WITNESS WHEREOF, the parties have executed this SAFE as of the Date of Issuance.

 
THE COMPANY:
   
 
Zoom Payment Solutions Inc.
   
   
 
By:
 
 
Name:  
David Knight
 
Title:
Chief Executive Officer
   
 
5100 W JB Hunt Dr., Suite 1000
 
Rogers, AR 72758
 
Attention: David Knight, CEO
 
E-Mail: david@oink.com
   
 
THE HOLDER:
   
     
    
    
     
 
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EXHIBIT A

FORM OF CONVERSION NOTICE
(To be executed by the Holder in order to convert the SAFE)

Re:
SAFE issued by Zoom Payment Solutions Inc.   on ____________, 2018 in the Principal Amount of $______________.

The undersigned hereby elects to convert the outstanding Principal Amount indicated below of this SAFE into ___ shares of common stock (the “Converted Interests”) of [Zoom Payment Solutions Inc./Canadian Company] (the “Company”) at the conversion price of [$4.00 per share of common stock in Zoom Payment Solutions Inc./ $0.125 per share of common stock in Canadian Company] according to the conditions hereof, as of the date written below.

Conversion Information:
 
Date to Effect Conversion:      
   
Principal Amount:
   
Conversion Price:
   
 
Signature:
   
     
Name:
   
 
Address to which the stock certificate or the certificate evidencing the Converted Interests should be delivered:
   
   
   
 
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EXHIBIT B
 
 
ACCREDITED INVESTOR QUESTIONNAIRE
 
 
(to be completed only by US residents)
 
The information contained herein is presented to assure Zoom Payment Solutions Inc., a Delaware corporation (the “Company”), that the undersigned is an Accredited Investor as defined in Regulation D of the Securities Act of 1933, as amended (the “Act”). Accordingly, the undersigned represents and warrants to the Company and its affiliates and advisors that the information contained herein is complete and accurate and may be relied upon by the Company and its affiliates and advisors. The undersigned understands that a false representation may constitute a violation of law, and that any person who suffers damage as a result of a false representation may have a claim against the undersigned for damages.

The undersigned also understands and agrees that, although the Company and its affiliates will use their best efforts to keep the information provided in the answers to this questionnaire strictly confidential, they may present this questionnaire and the information provided in answers to it to such parties as they deem advisable if called upon to establish the availability under any federal or state securities laws of an exemption from registration or if the contents thereof are relevant to any issue in any action, suit or proceeding to which the Company or its affiliates or advisors is a party or by which it or they are or may be bound.

The undersigned acknowledges that this questionnaire does not constitute an offer by the Company or its affiliates to sell securities, but is merely a request for information.

The undersigned hereby represents that he/she/it is an Accredited Investor within the meaning of Regulation D under the Act because he/she/it falls within the category indicated by a check mark below (please check all that apply):

             A natural person whose individual net worth, or joint net worth with that person’s spouse, on the date hereof exceeds $1,000,000, excluding the value of the primary residence of such individual. 1

              A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

              A director or executive officer of the Company.


1 In calculating net worth, the value of your primary residence and the amount of indebtedness secured by the primary residence up to its fair market value must be excluded. Indebtedness secured by your primary residence in excess of the value of your primary residence should be considered a liability and deducted from your net worth.
 
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              A bank as defined in Section 3(a)(2) of the Act or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity.
 
              A broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934.

              An insurance company as defined in Section 2(13) of the Act.
 
              An investment company registered under the Investment Company Act of 1940.
 
              A business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940.
 
              A small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.
 
              A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of $5,000,000.

              An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if either (a) the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (b) the employee benefit plan has total assets in excess of $5,000,000, or (c) if a self-directed plan, the investment decisions are made solely by persons that are accredited investors.

              A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

              An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Interests, with total assets in excess of $5,000,000.

              A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Interests, whose purchase of securities is directed by a sophisticated person as described in Rule 506(b)(2)(ii) promulgated under the Act.
 
               An entity in which all of the equity owners are accredited investors.
 
[SIGNATURE PAGE FOLLOWS]
 
9
 
       
DATE:
   
PRINTED NAME
       
     
ADDRESS:
        
        
        
        
         
     
E-MAIL:
 
 
 
10
 
 
Exhibit 31.1
 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
I, David A. Knight, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Rego Payment Architectures, Inc. (the “Registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
 
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date: May 15, 2018
By:
 
/s/ David A. Knight
 
 
 
David A. Knight
 
 
 
Chief Executive Officer
 
 
 
Exhibit 31.2
 CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
I, Scott McPherson, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Rego Payment Architectures, Inc. (the “Registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
 
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: May 15, 2018
By:
 
/s/ Scott McPherson
 
 
 
Scott McPherson
 
 
 
Chief Financial Officer
 
 
 

Exhibit 32.1
 
 
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 
In connection with this Quarterly Report of Rego Payment Architectures, Inc. (the “Registrant”) on Form 10-Q for the quarter ended March 31, 2018, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Knight, Chief Executive Officer (Principal Executive Officer) of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
1)
This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of Operations of the Registrant.
 
 
Date:  May 15, 2018
By:
/s/ David A. Knight
 
 
David A. Knight
 
 
Chief Executive Officer
 
 
 
Exhibit 32.2
 
 
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 
In connection with this Quarterly Report of Rego Payment Architectures, Inc. (the “Registrant”) on Form 10-Q for the quarter ended March 31, 2018, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Scott McPherson, Chief Financial Officer (Principal Financial Officer) of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
1)
This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of Operations  of the Registrant.
 
 
Date: May 15, 2018
By:
/s/ Scott McPherson
 
 
Scott McPherson
 
 
Chief Financial Officer