10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

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

(267) 465-7530

(Registrant’s Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
None

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 x    No o 

 1

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x     No o

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 o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company  x
Emerging growth company o

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.  o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 119,596,866 shares of common stock outstanding at August 14, 2020. 

 2

PART I - FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements		4
ITEM 1.	Financial Statements	5
Condensed Consolidated Balance Sheets (Unaudited)		6
Condensed Consolidated Statements of Operations (Unaudited)		7
Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)		8
Condensed Consolidated Statements of Cash Flows (Unaudited)		9
Notes to Condensed Consolidated Financial Statements (Unaudited)		10
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	28
ITEM 4.	Controls and Procedures	28
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	29
ITEM 1A.	Risk Factors	29
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
ITEM 3.	Defaults Upon Senior Securities	29
ITEM 4.	Mine Safety Disclosures	29
ITEM 5.	Other Information	29
ITEM 6.	Exhibits	29
SIGNATURES		30

 3

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, 2019 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.

 4

ITEM 1. FINANCIAL STATEMENTS

Rego Payment Architectures, Inc. 

CONTENTS 

	PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS	6
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT	8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	10 to 22

 5

Rego Payment Architectures, Inc.

Condensed Consolidated Balance Sheets

June 30, 2020 and December 31, 2019

	June 30, 2020			December 31, 2019
		(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	20,498		$	430,076
Deposits		341			341
TOTAL CURRENT ASSETS		20,839			430,417
PROPERTY AND EQUIPMENT
Computer equipment		5,129			5,129
Less:  accumulated depreciation		(5,129	)		(5,129	)
		-			-
OTHER ASSETS
Patents and trademarks, net of accumulated
amortization of $207,216 and $192,558		339,966			354,624
		339,966			354,624
TOTAL ASSETS	$	360,805		$	785,041
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	5,562,460		$	4,961,827
Accounts payable and accrued expenses - related parties		488,347			701,187
Paycheck protection program loan payable		81,500			-
Loans payable		85,600			85,600
Deferred revenue		200,000			200,000
10% Secured convertible notes payable - stockholders		2,813,157			2,813,157
Notes payable - stockholders, net of discount of $0 and $40,031		1,202,000			1,161,969
4% Secured convertible notes payable - stockholders		7,592,250			7,432,250
Preferred stock dividend liability		6,651,683			6,108,122
TOTAL CURRENT LIABILITIES		24,676,997			23,464,112
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 June 30, 2020 and December 31, 2019		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 June 30, 2020 and December 31, 2019		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 June 30, 2020 and December 31, 2019		-			-
Common stock, $ .0001 par value; 230,000,000 shares authorized;
119,596,866 shares issued and outstanding at June 30, 2020 and
December 31, 2019		11,960			11,960
Additional paid in capital		60,409,781			60,233,849
Accumulated deficit		(84,933,270	)		(83,130,943	)
Noncontrolling interests		195,323			206,049
STOCKHOLDERS' DEFICIT		(24,316,192	)		(22,679,071	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	360,805		$	785,041

See the accompanying notes to the condensed consolidated financial statements. 

 6

Rego Payment Architectures, Inc.

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2020 and 2019

(Unaudited)

	For the Three Months						For the Six  Months Ended
	Ended June 30,						June 30,
	2020			2019			2020			2019
SALES	$	-		$	15,226		$	-		$	34,485
OPERATING EXPENSES
Sales and marketing		11,506			(1,839	)		18,339			28,465
Product development		119,833			27,839			193,453			241,396
General and administrative		218,639			568,167			677,354			1,089,702
Total operating expenses		349,978			594,167			889,146			1,359,563
NET OPERATING LOSS		(349,978	)		(578,941	)		(889,146	)		(1,325,078	)
OTHER EXPENSE
Interest expense		(172,723	)		(150,629	)		(380,347	)		(316,346	)
		(172,723	)		(150,629	)		(380,347	)		(316,346	)
NET LOSS		(522,701	)		(729,570	)		(1,269,493	)		(1,641,424	)
LESS: Accrued preferred dividends		(271,781	)		(271,781	)		(543,561	)		(543,561	)
Net loss attributable to noncontrolling interests		469			724			726			6,481
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(794,013	)	$	(1,000,627	)	$	(1,812,328	)	$	(2,178,504	)
BASIC AND DILUTED NET LOSS PER
COMMON SHARE	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING		119,596,866			119,596,866			119,596,866			119,596,866

See the accompanying notes to the condensed consolidated financial statements.

 7

Rego Payment Architectures, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Deficit

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

	Preferred				Preferred				Preferred				Common
	Stock Series A				Stock Series B				Stock Series C				Stock				Additional
	Number of				Number of				Number of				Number of				Paid-In		Accumulated			Noncontrolling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interests			Total
Balance December 31, 2019 (Audited)		107,850	$	11		28,378	$	3		-	$	-		119,596,866	$	11,960	$	60,233,849	$	(83,130,943	)	$	206,049		$	(22,679,071	)
Issuance of warrants for services		-		-		-		-		-		-		-		-		74,886		-			-			74,886
Fair value of options for services		-		-		-		-		-		-		-		-		25,663		-			-			25,663
Accrued preferred dividends		-		-		-		-		-		-		-		-		-		(266,780	)		(5,000	)		(271,780	)
Net loss		-		-		-		-		-		-		-		-		-		(746,535	)		(257	)		(746,792	)
Balance, March 31, 2020 (Unaudited)		107,850	$	11		28,378	$	3		-		-		119,596,866	$	11,960	$	60,334,398	$	(84,144,258	)	$	200,792		$	(23,597,094	)
Issuance of warrants for services		-		-		-		-		-		-		-		-		49,599		-			-			49,599
Fair value of options for services		-		-		-		-		-		-		-		-		21,314		-			-			21,314
Fair value of options for interest		-		-		-		-		-		-		-		-		4,470		-			-			4,470
Accrued preferred dividends		-		-		-		-		-		-		-		-		-		(266,780	)		(5,000	)		(271,780	)
Net loss		-		-		-		-		-		-		-		-		-		(522,232	)		(469	)		(522,701	)
Balance, June 30, 2020 (Unaudited)		107,850	$	11		28,378	$	3		-	$	-		119,596,866	$	11,960	$	60,409,781	$	(84,933,270	)	$	195,323		$	(24,316,192	)

Condensed Consolidated Statement of Changes in Stockholders’ Deficit

For the Three and Six Month Periods Ended June 30, 2019

	Preferred				Preferred				Preferred				Common
	Stock Series A				Stock Series B				Stock Series C				Stock				Additional
	Number of				Number of				Number of				Number of				Paid-In		Accumulated			Noncontrolling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interests			Total
Balance, December 31, 2018 (Audited)		107,850	$	11		28,378	$	3		-	$	-		119,596,866	$	11,960	$	59,548,971	$	(78,880,134	)		233,278		$	(19,085,911	)
Issuance of warrants with notes payable		-		-		-		-		-		-		-		-		21,305		-			-			21,305
Fair value of options for services		-		-		-		-		-		-		-		-		222,766		-			-			222,766
Accrued preferred dividends		-		-		-		-		-		-		-		-		-		(266,780	)		(5,000	)		(271,780	)
Net loss		-		-		-		-		-		-		-		-		-		(906,097	)		(5,757	)		(911,854	)
Balance March 31, 2019 (Unaudited)		107,850	$	11		28,378	$	3		-	$	-		119,596,866	$	11,960	$	59,793,042	$	(80,053,011	)	$	222,521		$	(20,025,474	)
Issuance of warrants with notes payable		-		-		-		-		-		-		-		-		16,437		-			-			16,437
Fair value of options for services		-		-		-		-		-		-		-		-		59,636		-			-			59,636
Accrued preferred dividends		-		-		-		-		-		-		-		-		-		(266,781	)		(5,000	)		(271,781	)
Net loss		-		-		-		-		-		-		-		-		-		(728,846	)		(724	)		(729,570	)
Balance June 30, 2019 (Unaudited)		107,850	$	11		28,378	$	3		-	$	-		119,596,866	$	11,960	$	59,869,115	$	(81,048,638	)	$	216,797		$	(20,950,752	)

See the accompanying notes to the condensed consolidated financial statements.

 8

Rego Payment Architectures, Inc.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2020 and 2019

(Unaudited)

	For the Six Months Ended June 30
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,269,493	)	$	(1,641,424	)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of options issued for interest on notes payable		4,470			21,305
Fair value of options and warrants issued in exchange for services		171,463			282,402
Accretion of discount on notes payable		40,031			2,374
Depreciation and amortization		14,658			14,659
(Increase) decrease in assets
Accounts receivable		-			1,923
Prepaid expenses		-			(6,956	)
Deposits		-			25,000
Increase (decrease) in liabilities
Accounts payable and accrued expenses		600,633			395,294
Accounts payable and accrued expenses - related parties		(212,840	)		228,959
Net cash used in operating activities		(651,078	)		(676,464	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans payable		-			(4,000	)
Proceeds from notes payable - stockholders		15,000			250,000
Repayment of notes payable - stockholders		(15,000	)		(7,000	)
Proceeds from convertible notes payable - stockholders		160,000			550,000
Proceeds from paycheck protection program loan		81,500			-
Net cash provided by financing activities		241,500			789,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(409,578	)		112,536
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		430,076			10,733
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	20,498		$	123,269
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accrued preferred dividends	$	543,561		$	543,561
Exchange of 10% secured convertible notes payable for 4.0% secured convertible notes payable	$	-		$	350,000
Accrued interest as discount on notes payable	$	-		$	16,437

See the accompanying notes to the condensed consolidated financial statements.

 9

Rego Payment Architectures, Inc.

Notes to Condensed Consolidated Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

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

Rego Payment Architectures, Inc. and its subsidiaries (collectively, except where the context requires, the “Company”) is a technology company that will deliver an online and mobile payment platform solution for the family. The system will allow 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 will automatically monitor regulatory compliance in real-time for all transactions, including protection of vendors from unintended regulatory infractions.  In addition, utilizing the same architecture, individual parents will be able 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. While these are the features that separate us from other virtual payment platforms, our software platform may be used by anyone as a digital wallet, adult or child.

Management believes that building on its Children’s Online Privacy Protection Act (“COPPA”) advantage, 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 own 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.

ZOOM Solutions, Inc. (“ZS”)

ZS (formerly Zoom Payment Solutions, Inc.) was incorporated in the state of Delaware on February 16, 2018 as a subsidiary of Rego Payment Architectures, Inc.  Rego Payment Architectures, Inc. owns 78% of the common stock of ZS.  ZS is the holding company for various subsidiaries that will utilize REGO’s payment platform to address emerging markets.

REGO has licensed its technology to ZS, as REGO determined that to extend the Company’s business runway, the Company needed to adapt its technology to include blockchain, token development and cloud storage. ZS was formed to implement these specified new technologies and growth opportunities in conjunction with other business partners, as appropriate.

ZS and its subsidiaries have had minimial operations in 2020 and 2019.

ZOOM Payment Solutions, Inc. (“ZPS”)

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

 10

ZOOM Blockchain Solutions, Inc. (“ZBS”)

ZBS was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. This company focuses on blockchain as a business solution for the retail and Consumer Packaged Goods (“CPG”) industries. ZBS intends to provide a boutique agency approach to work with companies to build disruptive networks that will provide an enhanced customer experience, drive efficiency and build transparency and trust from the consumer base.

ZOOM Cloud Solutions, Inc. (“ZCS”)

ZCS (formerly Zoom Canada Solutions, Inc.) was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. ZCS is to provide highly secure cloud storage as a service with the following potential benefits:

END-TO-END PRIVATE CONNECTIVITY – The network of meshed carrier class private circuits will provide a secure, low latency private cloud experience.

UNLIMITED CLOUD CAPABILITES - The data will reside in a dedicated environment called a Hyperscale Converged Cloud Infrastructure, which is a leading-edge technology. Through an intuitive platform interface, the team will design, test, develop, manage, and deploy networks from anywhere. This includes, but is not limited to, virtualized, scalable work environments, scalable storage capabilities, state-of-the-art voice and unified communications solutions, cloud computing, and backup.

SMARTLY DESIGNED - The Cloud platform will be custom-engineered on purpose-built hardware to deliver a highly-efficient and dense infrastructure to the market. Through proprietary Software Defined Distributed Virtual Routing, the consumer will get increased network speeds, agility, scalability and reduced latency as well as application mobility, security, data integrity and, most importantly, control.

ZOOM Auto Solutions, Inc. (“ZAS”)

ZAS (formerly Zoom Mining Solutions) was incorporated in the State of Delaware on February 19, 2018 as a wholly owned subsidiary of ZCS. It is now a wholly owned subsidiary of ZBS and will be providing blockchain solutions to the auto industry.

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary of Accounting Policies included in the Company’s 2019 Annual Report on Form 10-K, as amended (the “Form 10-K”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

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.

 11

Recently Adopted Accounting Pronouncements

 
As of June 30, 2020 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2020, 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.  If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.

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

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 19, 2020, the Governor of Pennsylvania declared a health emergency and issued an order to close all nonessential businesses until further notice. The Company has temporarily curtailed its business operations and has required employees to work from home. While the Company expects this matter to negatively impact its results of operations, cash flow and financial position, the related financial impact cannot be reasonably estimated at this time.

As of August 14, 2020, the Company has a cash position of approximately $1.4 million.  Based upon the current cash position and the Company’s planned expense run rate, management believes the Company has funds currently to finance its operations through October 2020.

NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES

As of June 30, 2020 and December 31, 2019, the Company owed the Chief Executive Officer a total of $380,773 and $392,371, consisting of $380,238 and $391,836 in unpaid salary and expenses of $535 and $535.

As of June 30, 2020 and December 31, 2019, the Company owed the Chief Financial Officer $107,574 and $118,596 in unpaid salary.

NOTE 4 – PAYCHECK PROTECTION PROGRAM LOAN PAYABLE

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

 12

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

NOTE 5 – LOANS PAYABLE

During the six months ended June 30, 2020 and 2019, the Company did not receive any loans with no formal repayment terms and 10% interest. The Company also did not receive any loans with no formal repayment terms and no interest, during the six months ended June 30, 2020 and 2019.  The balance of such loans payable as of June 30, 2020 and December 31, 2019 was $85,600. Interest accrued on the loans was $18,018 and $15,118 as of June 30, 2020 and December 31, 2019.  Interest expense related to these loans payable was $1,450 and $2,901 for the three and six months ended June 30, 2020 and $706 and $2,934 for the three and six months ended June 30, 2019.

NOTE 6 – 10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

On March 6, 2015, the Company, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $2,000,000 aggregate principal amount of its 10% Secured Convertible Promissory Notes due March 5, 2016 (the “Notes”) to certain stockholders.  On May 11, 2015, the Company issued an additional $940,000 of Notes to stockholders.  The maturity dates of the Notes have been extended most recently from September 6, 2019 to September 6, 2020, 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.

The Notes are recorded as a current liability as of June 30, 2020 and December 31, 2019 in the amount of $2,813,157.  Interest accrued on the Notes was $1,708,240 and $1,567,582 as of June 30, 2020 and December 31, 2019.  Interest expense other than the warrant related interest expense related to these Notes payable was $70,329 and $140,658 for the three and six months ended June 30, 2020 and $70,329 and $143,264 for the three and six months ended June 30, 2019. 

NOTE 7 – NOTES PAYABLE - STOCKHOLDERS

During the six months ended June 30, 2020 and 2019, the Company issued $15,000 and $0 aggregate principal amount of its notes payable - stockholders with no formal repayment terms and 10% interest. These notes were repaid in full by June 30, 2020 and the Company issued an option to purchase 25,000 shares of the Company’s common stock with an exercise price of $0.90 and a term of 3 years, with a fair value of $4,470 as interest expense. These notes payable are recorded as a current liability as of June 30, 2020 and December 31, 2019 in the amount of $1,202,000 and $1,161,969.  Interest accrued on the notes, as of June 30, 2020 and December 31, 2019 was  $72,463 and $29,481.  Interest expense including accretion of discount was $21,491 and $83,013 for the three and six months ended June 30, 2020 and $3,937 and $4,681 for the three and six months ended June 30, 2019.

NOTE 8 – 4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

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

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

The maturity dates of the New Secured Notes were extended by the investors to October 31, 2020.

During the three months ended June 30, 2020, the Company issued $160,000 aggregate principal amount of its New Secured Notes to certain investors.

The New Secured Notes are recorded as a current liability in the amount of $7,592,250 as of June 30, 2020 and $7,432,250 as of December 31, 2019.  Interest accrued on the New Secured Notes was $836,510 and $687,204 as of June 30, 2020 and December 31, 2019.  Interest expense related to these notes payable was $74,983 and $149,305 for the three and six months ended June 30, 2020 and $74,912 and $144,161 for the three and six months ended June 30, 2019.

NOTE 9 – INCOME TAXES

Income tax expense was $0 for the three and six months ended June 30, 2020 and 2019.

As of January 1, 2020, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2020 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three and six months ended June 30, 2020, and there was no accrual for uncertain tax positions as of June 30, 2020. Tax years from 2016 through 2019 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three and six months ended June 30, 2020 and 2019, 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

Rego Payment Architectures, Inc. Series A Preferred Stock 

The Series A Preferred Stock has a preference in liquidation equal to two times its original issue price, or $21,570,000, to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 2.5 times its original issue price. The Series A Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock can be converted.  The Series A Preferred Stock also contains customary approval rights with respect to certain matters.  The Series A Preferred Stock accrues dividends at the rate of 8% per annum or $8.00 per Series A Preferred Share.

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

The conversion feature of the Series A Preferred Stock issued in January 2014 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 a fair market value of $1,648,825 at January 27, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series A Preferred Stock.  Since the Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution.

The conversion feature of the Series A Preferred Stock issued in April 2014 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 a fair market value of $3,489,000 at April 30, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series A Preferred Stock.  Since the Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution. 

Rego Payment Architectures, Inc. Series B Preferred Stock 

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

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

The conversion feature of the Series B 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 a fair market value of $375,841 at October 30, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series B Preferred Stock.  Since the Series B Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution. 

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. 

Rego Payment Architectures, Inc. Series C Preferred Stock 

In August 2016, Rego authorized 150,000 shares of Rego’s Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”).  As of June 30, 2020, none of the Series C Preferred Stock was issued or outstanding.  After the date of issuance of Series C Preferred Stock, dividends at the rate of $7.20 per share will begin accruing and will be cumulative. The Series C Preferred Stock is pari passu with the Series A Preferred Stock and Series B Preferred Stock and has a preference in liquidation equal to seven times its original issue price to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 7.5 times its original issue price. The Series C Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series C Preferred Stock can be converted.  The Series C Preferred Stock also contains customary approval rights with respect to certain matters.  There are no outstanding Series C Preferred Shares, therefore the current per annum dividend per share is $0.

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As of June 30, 2020, the value of the cumulative 8% dividends for all Rego preferred stock was $6,618,350  Such dividends will be paid when and if declared payable by Rego’s board of directors or upon the occurrence of certain liquidation events.  In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

ZS Series A Preferred Stock

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

The conversion feature of the ZS Series A Preferred Stock is an embedded derivative, which is classified as equity in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair market value of $193,377 at the date of issuance. However in accordance with FASB ASC 470, the value of the beneficial conversion feature is limited to the value of the ZS Series A Preferred Stock of $139,959 at the date of issuance. This was classified as an embedded derivative and a discount to the ZS Series A Preferred Stock.  Since the ZS Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution.

The warrants associated with the ZS Series A Preferred Stock were also classified as equity, in accordance with FASB ASC 480-10-25.  Therefore it is not necessary to bifurcate the warrants from the ZS Series A Preferred Stock.

As of June 30, 2020, the value of the cumulative 8% dividends for ZS preferred stock was $33,333.  Such dividends will be paid when and if declared payable by the ZS’ board of directors or upon the occurrence of certain liquidation events.  In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

NOTE 11 – STOCKHOLDERS’ EQUITY

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

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. 

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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 June 30, 2020, options to purchase 8,400,000 shares of common stock have been issued and are unexercised, and 0 shares are available for grants under the 2008 Plan. The 2008 Plan expired on March 3, 2019.

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 June 30, 2020, under the 2013 Plan grants of restricted stock and options to purchase 4,000,000 shares of common stock have been issued and are unvested and unexercised, and 1,000,000 shares of common stock remain available for grants under the 2013 Plan.  

The 2013 Plan is 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 2013 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 common stock.

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted by REGO during the six months ended June 30, 2020:

Risk Free Interest Rate		1.0	%
Expected Volatility		141.4	%
Expected Life (in years)		2.0
Dividend Yield		0	%
Weighted average estimated fair value of options during the period	$	0.07

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The following table summarizes the activities for REGO’s stock options for the six months ended June 30, 2020: 

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		13,185,000		$	0.69		2.4	$	-
Granted		325,000			0.90		1.8		-
Expired		(160,000	)		0.86		-		-
Balance at June 30, 2020		13,350,000		$	0.69		1.9	$	5
Exercisable at June 30, 2020		13,216,667		$	0.69		1.9	$	5
Exercisable at June 30, 2020 and expected to
vest thereafter		13,350,000		$	0.69		1.9	$	5

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.21 for REGO’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020, Rego expensed $25,785 and $51,447 and for the three and six months ended June 30, 2019, Rego expensed $59,636 and $254,351 with respect to options. 

As of June 30, 2020, there was no unrecognized compensation cost related to outstanding stock options. The difference between the stock options exercisable at June 30, 2020 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 REGO’s unvested stock options for the six months ended June 30, 2020:

	Unvested Options
				Weighted -
				Average
				Grant
	Number of			Date Fair
	Shares			Value
Balance at December 31, 2019		233,333		$	0.20
Granted		325,000			0.05
Expired/cancelled		(100,000	)		0.25
Vested		(325,000	)		0.05
Balance at June 30, 2020		133,333		$	0.25

During the six months ended June 30, 2020, the Company issued warrants to purchase 1,000,000 shares of common stock commensurate with a consulting agreement. The warrants were valued at $124,485 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 139.0 to 140.4%, risk free interest rate of 0.19% to 0.36% and expected life of 2 years.  The fair value of the warrants was $124,485 and was expensed immediately. During the three and six months ended June 30, 2020, the Company expensed $49,599 and $124,485 and during the three and six months ended June 30, 2019, the Company expensed $0, relative to warrants.

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The following table summarizes the activities for REGO’s warrants for the six months ended June 30, 2020:

						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		4,427,020		$	0.90		1.0	$	-
Granted		1,000,000			0.90		1.8		-
Expired		(1,852,020	)		0.90		-
Balance at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		3,575,000		$	0.90		1.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.21 for Rego’s common stock on June 30, 2020. 

All warrants were vested on the date of grant. 

 The following table summarizes the activities for ZS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,400,000	$	5.00		3.6	$	-
Balance at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,400,000	$	5.00		3.1	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS’s common stock on June 30, 2020. 

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For the three and six months ended June 30, 2020, ZS expensed $0 with respect to options and for the three and six months ended June 30, 2019, ZS expensed $0 and $28,051 with respect to options. 

The following table summarizes the activities for ZS’s warrants for the six months ended June 30, 2020:

	Warrants Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		83,334	$	3.00		1.8	$	83
Balance at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020 and expected to
vest thereafter		83,334	$	3.00		1.3	$	83

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the value of $4.00 for ZS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020 and 2019, ZS expensed $0 with respect to warrants.  

The following table summarizes the activities for ZBS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZBS’s common stock on June 30, 2020. 

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For the three and six months ended June 30, 2020 and 2019, ZBS expensed $0 with respect to options.

The following table summarizes the activities for ZCS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,200,000	$	5.00		3.8	$	-
Balance at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,200,000	$	5.00		3.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS’s common stock on June 30, 2020.

For the three and six months ended June 30, 2020 and 2019, ZCS expensed $0 with respect to options. 

The following table summarizes the activities for ZPS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZPS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020 and 2019, ZPS expensed $0 with respect to options.

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NOTE 13 – NONCONTROLLING INTERESTS

Losses incurred by the noncontrolling interests for the three months and six months ended June 30, 2020 were $469 and $726 and for the three and six months ended June 30, 2019 were $724 and $6,481.

NOTE 14 – OPERATING LEASES

For the three and six months ended June 30, 2020, total rent expense under leases amounted to $1,639 and $11,986 and for the three and six months ended June 30, 2019, total rent expense under leases amounted to $6,352 and $13,682.  The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. The Company has no long-term lease obligations as of June 30, 2020.

NOTE 15 – RELATED PARTY TRANSACTIONS

During the three and six months ended June 30, 2019, the Company received revenue from a technology company for the outsourcing of the Company’s engineers for development. In addition, the Company paid this technology company $45,000 as a deposit for technical assistance with the Platform when it becomes necessary. The deposit was fully refunded as of June 30, 2019. As of June 30, 2020, the technology company is no longer a related party.

NOTE 16 – SUBSEQUENT EVENTS

During July and August 2020, the Company raised $1.7 million through the issuance of the Company’s 4% secured convertible notes payable-stockholders.

During August 2020, the Company exchanged $107,000 principal amount of Notes Payable – Stockholders for 4% Secured Convertible Notes Payable – Stockholders.

On August 12, 2020, the Company revised a consulting agreement, whereby the principal terms stayed the same, however, the trigger dates for the issuance of stock changed as follows: a) 62,500 shares to be issued at Beta Product Launch – November 18, 2020 b) 62,500 shares to be issued upon first product revenue – January 18, 2021 c) 125,000 shares when technology passes potential buyer’s due diligence – February 18, 2021.

On August 13, 2020, the Company entered into an employment agreement with Peter S. Pelullo to become the Chief Executive Officer, President and Board Director of the Company. The principal terms of the agreement include: a) a salary of $200,000 b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.25, a term of 5 years and vesting immediately c) an option to acquire 500,000 shares of the common stock of the Company at the exercise price of the closing price per share on the date of sale or change of control (or if greater, the fair market value of such option on the grant date), for a term of 5 years that will vest immediately d) issuance of 250,000 shares of the common stock of the Company that will vest immediately e) issuance of 250,000 shares of common stock upon the sale of the Company or change in control of the Company of more than 50% of the Company.

The options associated with the employment agreement were valued at $117,514, fair market value and will be expensed over two years.

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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 325 Sentry Parkway, Suite 200, Blue Bell , PA 19422 and our telephone number is (267) 465-7530.

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 software platform (our “Platform”). During 2010, we analyzed the market potential for an expanded Company solution and decided to concentrate our efforts on the delivery of a full-featured Company solution that was not restricted to online gaming. The expanded Company solution 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.

Our focus is monetizing the Platform in the FinTech industry through technology licensing and similar partnerships.  We are focused on building and improving the existing Platform and App 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 Children’s Online Privacy Protection Act (“COPPA”) and GDPRkids^TM Trustmark compliant technology as an added feature, we believe we may have better market success.

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

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

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

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

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

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

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

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

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

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

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

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.  We are pursuing both domestic and international opportunities for the use of our payment platform. These opportunities have customer bases of their own that they could bring to our platform, thus minimizing the marketing costs for the Company, that would normally need to be incurred. 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 extremely limited capital resources, we will need to closely manage our expenses and conserve our cash by continually monitoring any increase in expenses and reducing or eliminating unnecessary expenditures. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly given that we operate in new and rapidly evolving markets, that we have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

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Results of Operations

Comparison of the Three Months Ended June 30, 2020 and 2019

The following discussion analyzes our results of operations for the three months ended June 30, 2020 and 2019. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.

Net Revenue

We have not generated significant revenue since our inception. For the three months ended June 30, 2020 and 2019 we generated revenues of $0 and $15,226.  

Net Loss 

For the three months ended June 30, 2020 and 2019, we had a net loss of $522,701 and $729,570.

Sales and Marketing

Sales and marketing expenses for the three months ended June 30, 2020 were $11,506 compared to $(1,839) for the three months ended June 30, 2019, an increase of $13,345. The Company began spending marketing funds during the three months ended June 30, 2020 to prepare for the launch of the Platform and create market visibility.

Product Development

Product development expenses were $119,833 and $27,839 for the three months ended June 30, 2020 and 2019, an increase of $91,994. The Company began the process to complete the development of the Platform and move toward the launch of the Platform.

General and Administrative Expenses

General and administrative expenses decreased $349,528 to $218,639 for the three months ended June 30, 2020 from $568,167 for the three months ended June 30, 2019. The Company is now focusing on the development of the Platform and has implemented cost containment measures to fulfill that plan.

Interest Expense

During the three months ended June 30, 2020, the Company incurred interest expense of $172,723, compared to $150,629 for the three months ended June 30, 2019, an increase of $22,094. The increase in interest expense relates additional debt outstanding.

Comparison of the Six Months Ended June 30, 2020 and 2019

The following discussion analyzes our results of operations for the six months ended June 30, 2020 and 2019. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.

Net Revenue

We have not generated significant revenue since our inception. For the six months ended June 30, 2020 and 2019 we generated revenues of $0 and $34,485.  

Net Loss 

For the six months ended June 30, 2020 and 2019, we had a net loss of $1,269,493 and $1,641,425.

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Sales and Marketing

Sales and marketing expenses for the six months ended June 30, 2020 were $18,339 compared to $28,465 for the six months ended June 30, 2019, a decrease of $10,126. The Company redirected marketing funds during the six months ended June 30, 2020 to the development of the Platform.

Product Development

Product development expenses were $193,453 and $241,396 for the six months ended June 30, 2020 and 2019, a decrease of $47,943. The Company began the process to complete the development of the Platform and move toward the launch of the Platform, however, has not reached the level of funding to be able to match amounts spent during the six months ended June 30, 2019.

General and Administrative Expenses

General and administrative expenses decreased $412,349 to $677,354 for the six months ended June 30, 2020 from $1,089,703 for the six months ended June 30, 2019. The Company is now focusing on the development of the Platform and has implemented cost containment measures to fulfill that plan.

Interest Expense

During the six months ended June 30, 2020, the Company incurred interest expense of $380,347, compared to $316,346 for the six months ended June 30, 2019, an increase of $64,001. The increase in interest expense relates additional debt outstanding.

Liquidity and Capital Resources

As of August 14, 2020 we had cash on hand of approximately $1.4 million.

Net cash used in operating activities decreased $25,387 to $651,078 for the six months ended June 30, 2020 as compared to $676,464 for the six months ended June 30, 2019.  The decrease resulted primarily from the decrease in net loss partially offset by reduced option and warrant expenses and accounts payable and accured expenses during the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Net cash provided by financing activities decreased to $241,500 for the six months ended June 30, 2020 from $789,000 for the six months ended June 30, 2019.  Cash provided by financing activities during the six months ended June 30, 2019, consisted of convertible notes payable to provide capital to continue operations and a loan pursuant to the paycheck protection program.

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. See Note 2, to our consolidated financial statements included in our most recent Form 10-K. 

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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 fourth quarter of 2020, however, we do not project that significant revenue will be developed until 2021. 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 October 2020.

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 June 30, 2020, 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, 2019. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Stock-based Compensation

We have adopted the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”) 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 vesting period.

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.

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Recently Issued Accounting Pronouncements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

ITEM 4. CONTROLS AND PROCEDURES.

As of June 30, 2020, we carried out the evaluation of the effectiveness of our disclosure controls and procedures required by Rule 13a-15(e) under the Exchange Act under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2020, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There have been no material developments since the disclosure provided in the Company’s Form 10-K for the year ended December 31, 2019.

ITEM 1A. RISK FACTORS.

Not required. 

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

In July and August 2020, the Company received $1.7 million through the issuance of our 4% secured convertible notes payable-stockholders.

During August 2020, the Company exchanged $107,000 principal amount of Notes Payable – Stockholders for 4% Secured Convertible Notes Payable – Stockholders.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On August 13, 2020, the Company entered into an employment agreement with Peter S. Pelullo to become the Chief Executive Officer, President and Board Director of the Company. The principal terms of the agreement include: a) a salary of $200,000 b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.25, a term of 5 years and vesting immediately c) an option to acquire 500,000 shares of the common stock of the Company at the exercise price of the closing price per share on the date of sale or change of control (or if greater, the fair market value of such stock on the grant date), for a term of 5 years that will vest immediately d) issuance of 250,000 shares of the common stock of the Company that will vest immediately e) issuance of 250,000 shares of common stock upon the sale of the Company or change in control of the Company of more than 50% of the Company.

ITEM 6. EXHIBITS

10.1	Peter S. Pelullo Employment Agreement
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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

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SIGNATURES

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

	REGO PAYMENT ARCHITECTURES, INC.
	By:	/s/ Scott McPherson
		Scott McPherson
		Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
Date: August 14, 2020

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, entered into August 13, 2020 by and between Rego Payment Architectures, Inc., a Delaware corporation (the “Company”) and Peter S. Pelullo (the “Employee”).

WITNESSETH:

WHEREAS, the Company wishes to employ the Employee as President, Chief Executive Officer, and Board Director of the Company and the Employee is willing to serve the Company in such capacity.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the parties hereto agree as follows:

Section 1.      Employment

The Company will employ the Employee, and the Employee will perform services for the Company and its subsidiaries, on the terms and conditions set forth in this Agreement.

Section 2.      Duties

The Employee will serve the Company as its President, Chief Executive Officer and Board Director. The Employee will have such duties and responsibilities as are assigned to him by the Board of Directors of the Company commensurate with the Employee’s position, including responsibility for all strategic and operational matters relating to the Company and its subsidiaries, subject to the direction of the Board of Directors. The Employee will perform his duties hereunder faithfully and to the best of his abilities and in furtherance of the business of the Company and its subsidiaries, and will devote his full business time, energy, attention and skill to the business of the Company and its subsidiaries and to the promotion of its interests, except as otherwise agreed by the Company.

Section 3.      Term

This Agreement shall have an initial term of two years, beginning as of the Employee’s first day of work, August 13, 2020 (the “Effective Date”). It shall renew for successive one-year periods unless either party gives notice of intent to not renew this Agreement at least 60 days prior to the renewal date. Notwithstanding the foregoing Section 3, this Agreement and the Employee’s employment hereunder shall be “at will” and is terminable at any time by either party, without further economic obligation beyond the termination date except as required by law.

Section 4.      Salary

The Employee will receive as compensation for his duties and obligations to the Company pursuant to this Agreement during its effectiveness a base salary at the annual rate of (i) Two Hundred Thousand Dollars ($200,000) during the first year after the Effective Date,

(ii) It is agreed between the parties that the Company will review the base annual salary annually and, in light of such review, may (but will not be obligated to), in the discretion of the Board of Directors of the Company or any Compensation Committee thereof, increase such applicable annual base salary taking into account any change in the Employee’s responsibilities, increases in the cost of living, performance by the Employee, and other pertinent factors.

Section 5.      Bonus

The Employee will be eligible for an annual bonus in the form of cash or Company common stock as determined at the sole discretion of the Board of Directors of the Company or any Compensation Committee thereof.

Annual bonuses payable hereunder shall be calculated after the close of the end of the calendar year, and thereafter paid in a single lump sum by no later than the 15^th day of the third month following the end of the calendar year in which the right to the bonus is no longer subject to a substantial risk of forfeiture (as defined for purposes of Internal Revenue Code Section 409A, including Treasury Regulations Section 1.409A-1(d)).

Section 6.      Equity Compensation

(a)       Options. As of the Effective Date or promptly thereafter following approval of the Board of Directors of the Company, the Employee will be granted a non-statutory stock option to acquire 500,000 shares of the common stock of the Company at an exercise price of $0.25 per share (or if greater, the fair market value of such stock on the grant date). The option will vest immediately. The grant of options will be memorialized in, and the options subject to, a separate option agreement to be entered into between the Employee and Company in accordance with the existing equity incentive plans of the Company. Upon the sale or change in control of more than 50% of the Company, the Employee will be granted a non-statutory stock option to acquire 500,000 shares of the common stock of the Company at the exercise price of the closing price per share on the date of sale or change of control (or if greater, the fair market value of such stock on the grant date). The option will vest immediately upon issuance. The grant of options will be memorialized in, and the options subject to, a separate option agreement to be entered into between the Employee and Company in accordance with the existing equity incentive plans of the Company.

(b)       Common Stock. As of the Effective Date or promptly thereafter following approval of the Board of Directors of the Company, the Employee will be granted 250,000 shares of the common stock of the Company. The shares will vest immediately. Upon the sale of the Company or change in control of more than 50% of the Company, the Employee will be granted 250,000 shares of the common stock of the Company. The shares will vest immediately.

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Section 7.      Employee Benefits

Subject to any applicable probationary or similar periods, during the period of his employment with the Company, the Employee will be entitled to participate in all employee benefit programs of the Company applicable to senior officers of the Company, as such programs may be in effect from time to time. Subject to any applicable probationary or similar periods, during his period of employment with the Company, the Employee will also be entitled to participate in all retirement programs of the Company for which current employees are eligible, as such programs may be in effect from time to time (including the Company’s 401(k) plan).

Section 8.      Business Expenses

All reasonable travel and other out-of-pocket expenses incidental to the rendering of services by the Employee hereunder will be paid by the Company, and, if expenses are paid in the first instance by the Employee, the Company will reimburse his therefor upon presentation of proper invoices, subject in each case to compliance with the Company’s reimbursement policies and procedures. All reimbursements will be paid in the same taxable year in which the expense is incurred, provided that expenses incurred toward the end of the calendar year that cannot administratively be reimbursed before the year end shall be reimbursed by no later than March 15^th of the calendar year following the calendar year in which the expense was incurred.

Section 9.      Vacations and Sick Leave

The Employee will be entitled to holidays, reasonable vacation and reasonable sick leave each year, in accordance with policies of the Company, as determined by the Board of Directors, provided, however, that the Employee will be entitled to a minimum of four (4) weeks’ vacation per year.

Section 10.      Confidential Information

The Employee agrees to keep secret and retain in the strictest confidence all confidential matters which relate to the Company or any affiliate of the Company, including, without limitation, customer lists, client lists, trade secrets, pricing policies and other business affairs of the Company and any affiliate of the Company learned by his from the Company or any such affiliate or otherwise before or after the date of this Agreement, and not to disclose any such confidential matter to anyone outside the Company, or any of its affiliates, whether during or after her period of service with the Company, except as may be required in the course of a legal or governmental proceeding. Upon request by the Company, the Employee agrees to deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all Company or affiliate memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) relating to the Company’s or any affiliate’s business and all property of the Company or any affiliate associated therewith, which she may then possess or have under his control.

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Section 11.      Successors and Assigns

This Agreement will be binding upon and inure to the benefit of the Employee, his heirs, executors, administrators and beneficiaries, and the Company and its successors and assigns.

Section 12.      Governing Law

This Agreement will be governed by and construed and enforced in accordance with the laws of the State of Pennsylvania, without reference to rules relating to conflicts of law.

Section 13.      Entire Agreement

This Agreement constitutes the full and complete understanding and agreement of the parties and supersedes all prior understandings and agreements as to employment of the Employee. This Agreement cannot be amended, changed, modified or terminated without the written consent of the parties hereto.

Section 14.      Waiver of Breach

The waiver of either party of a breach of any term of this Agreement will not operate nor be construed as a waiver of any subsequent breach thereof.

Section 15.      Notices

Any notice, report, request or other communication given under this Agreement will be written and will be effective upon delivery when delivered personally, by overnight courier or by fax. Unless otherwise notified by any of the parties, notices will be sent to the parties as follows: (i) if to the Employee, at the address set forth in the Company’s records; and (ii) if to the Company, to Rego Payment Architectures, Inc. 21171 South Western, Suite 2705 Torrance, CA 90501. Attention: Board of Directors.

Section 16.      Severability

If any one or more of the provisions contained in this Agreement will be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

Section 17.      Counterparts

This Agreement may be executed in counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument. Delivery of signatures by facsimile or electronic image shall be valid for all purposes hereunder.

Section 18.      Internal Revenue Code Section 409A Compliance.

(a)       The parties hereto recognize that certain provisions of this Agreement may be affected by Section 409A of the Internal Revenue Code and guidance issued thereunder, and agree to amend this Agreement, or take such other action as may be necessary or advisable, to comply with Section 409A.

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(b)       Notwithstanding anything herein to the contrary, it is expressly understood that at any time the Company (or any successor or related employer treated as the service recipient for purposes of Internal Revenue Code Section 409A) is publicly traded on an established securities market (as defined for purposes of Internal Revenue Code Section 409A), if a payment or provision of an amount or benefit constituting a deferral of compensation is to be made pursuant to the terms of this Agreement to the Employee on account of a Separation from Service at a time when the Employee is a Specified Employee (as defined for purposes of Internal Revenue Code Section 409A(a)(2)(B)(i)), such deferred compensation shall not be paid to the Employee prior to the date that is six (6) months after the Separation from Service or as otherwise permitted under Treasury Regulations Section 1.409A-3(i)(2).

(c)       For purposes of this Agreement, the following definitions shall apply:

(i) “Separation from Service” means, generally, a termination of employment with the Company (or any successor or related employer treated as the service recipient for purposes of Internal Revenue Code Section 409A), and shall have the same meaning as such term has for purposes of Internal Revenue Code Section 409A (including Treasury Regulation Section 1.409A-1(h)).

(ii) “Involuntary Separation from Service” means a Separation from Service due to the independent exercise of the unilateral authority of the Company (or any successor or related employer treated as the service recipient for purposes of Internal Revenue Code Section 409A) to terminate the Employee’s employment, other than due to the Employee’s implicit or explicit request, where the Employee was willing and able to continue employment with the Company. Notwithstanding the foregoing, a termination for Good Reason may constitute an Involuntary Separation from Service. Involuntary Separation from Service shall have the same meaning as such term has for purposes of Internal Revenue Code Section 409A (including Treasury Regulation Section 1.409A-1(n)).

[signature page follows]

 5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

The Company:

REGO PAYMENT ARCHITECTURES, INC.

By:	/s/ Scott A. McPherson
Name:	Scott A. McPherson
Title:	Chief Financial Officer
Employee:
/s/ Peter S. Pelullo
Peter S. Pelullo

6

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934

I, Peter S. Pelullo, 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: August 14, 2020	By:	/s/ Peter S. Pelullo
		Peter S. Pelullo
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934

I, Scott A. 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: August 14, 2020	By:	/s/ Scott A. McPherson
		Scott A. McPherson
		Chief Financial Officer

EX-32.1

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 quarterly period ended June 30, 2020, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Peter S. Pelullo, 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:  August 14, 2020	By:	/s/ Peter S. Pelullo
		Peter S. Pelullo
		Chief Executive Officer

EX-32.2

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 quarterly period ended June 30, 2020, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. McPherson, Chief Financial Officeer (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:  August 14, 2020	By:	/s/ Scott A. McPherson
		Scott A. McPherson
		Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 14, 2020
Document And Entity Information
Entity Registrant Name	REGO PAYMENT ARCHITECTURES, INC.
Entity Central Index Key	0001437283
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		119,596,866
Entity Incorporation State Country Code	DE
Entity File Number	0-53944

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 20,498	$ 430,076
Deposits	341	341
TOTAL CURRENT ASSETS	20,839	430,417
PROPERTY AND EQUIPMENT
Computer equipment	5,129	5,129
Less: accumulated depreciation	(5,129)	(5,129)
Total property and equipment
OTHER ASSETS
Patents and trademarks, net of accumulated amortization of $207,216 and $192,558	339,966	354,624
Total other assets	339,966	354,624
TOTAL ASSETS	360,805	785,041
CURRENT LIABILITIES
Accounts payable and accrued expenses	5,562,460	4,961,827
Accounts payable and accrued expenses - related parties	488,347	701,187
Paycheck protection program loan payable	81,500
Loans payable	85,600	85,600
Deferred revenue	200,000	200,000
10% Secured convertible notes payable - stockholders	2,813,157	2,813,157
Notes payable - stockholders, net of discount of $0 and $40,031	1,202,000	1,161,969
4% Secured convertible notes payable - stockholders	7,592,250	7,432,250
Preferred stock dividend liability	6,651,683	6,108,122
TOTAL CURRENT LIABILITIES	24,676,997	23,464,112
CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, $ .0001 par value; 230,000,000 shares authorized; 119,596,866 shares issued and outstanding at June 30, 2020 and December 31, 2019	11,960	11,960
Additional paid in capital	60,409,781	60,233,849
Accumulated deficit	(84,933,270)	(83,130,943)
Noncontrolling interests	195,323	206,049
STOCKHOLDERS' DEFICIT	(24,316,192)	(22,679,071)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	360,805	785,041
Series A [Member]
STOCKHOLDERS' DEFICIT
Preferred stock	11	11
Series B [Member]
STOCKHOLDERS' DEFICIT
Preferred stock	3	3
Series C [Member]
STOCKHOLDERS' DEFICIT
Preferred stock

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Patents and trademarks, accumulated amortization	$ 207,216	$ 192,558
Notes payable, discount	$ 0	$ 40,031
Preferred stock, par value per share	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	2,000,000	2,000,000
Common stock, par value per share	$ 0.0001	$ 0.0001
Common stock, shares authorized	230,000,000	230,000,000
Common stock, shares issued	119,596,866	119,596,866
Common stock, shares outstanding	119,596,866	119,596,866
Series A [Member]
Preferred stock, shares authorized	195,500	195,500
Preferred stock, shares issued	107,850	107,850
Preferred stock, shares outstanding	107,850	107,850
Series B [Member]
Preferred stock, shares authorized	222,222	222,222
Preferred stock, shares issued	28,378	28,378
Preferred stock, shares outstanding	28,378	28,378
Series C [Member]
Preferred stock, shares authorized	150,000	150,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
SALES		$ 15,226		$ 34,485
OPERATING EXPENSES
Sales and marketing	11,506	(1,839)	18,339	28,465
Product development	119,833	27,839	193,453	241,396
General and administrative	218,639	568,167	677,354	1,089,702
Total operating expenses	349,978	594,167	889,146	1,359,563
NET OPERATING LOSS	(349,978)	(578,941)	(889,146)	(1,325,078)
OTHER EXPENSE
Interest expense	(172,723)	(150,629)	(380,347)	(316,346)
Total other expense	(172,723)	(150,629)	(380,347)	(316,346)
NET LOSS	(522,701)	(729,570)	(1,269,493)	(1,641,424)
LESS: Accrued preferred dividends	(271,781)	(271,781)	(543,561)	(543,561)
Net loss attributable to noncontrolling interests	469	724	726	6,481
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (794,013)	$ (1,000,627)	$ (1,812,328)	$ (2,178,504)
BASIC AND DILUTED NET LOSS PER COMMON SHARE	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	119,596,866	119,596,866	119,596,866	119,596,866

XML

Condensed Consolidated Statement of Changes in Stockholders' Deficit - USD ($)	Preferred Stock [Member] Series A [Member]	Preferred Stock [Member] Series B [Member]	Preferred Stock [Member] Series C [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Noncontrolling Interest	Total
Balance at Dec. 31, 2018	$ 11	$ 3		$ 11,960	$ 59,548,971	$ (78,880,134)	$ 233,278	$ (19,085,911)
Balance, shares at Dec. 31, 2018	107,850	28,378		119,596,866
Issuance of warrants with notes payable					21,305			21,305
Fair value of options for services					222,766			222,766
Accrued preferred dividends						(266,780)	(5,000)	(271,780)
Net loss						(906,097)	(5,757)	(911,854)
Balance at Mar. 31, 2019	$ 11	$ 3		$ 11,960	59,793,042	(80,053,011)	222,521	(20,025,474)
Balance, shares at Mar. 31, 2019	107,850	28,378		119,596,866
Balance at Dec. 31, 2018	$ 11	$ 3		$ 11,960	59,548,971	(78,880,134)	233,278	(19,085,911)
Balance, shares at Dec. 31, 2018	107,850	28,378		119,596,866
Accrued preferred dividends								(543,561)
Net loss								(1,641,424)
Balance at Jun. 30, 2019	$ 11	$ 3		$ 11,960	59,869,115	(81,048,638)	216,797	(20,950,752)
Balance, shares at Jun. 30, 2019	107,850	28,378		119,596,866
Balance at Mar. 31, 2019	$ 11	$ 3		$ 11,960	59,793,042	(80,053,011)	222,521	(20,025,474)
Balance, shares at Mar. 31, 2019	107,850	28,378		119,596,866
Issuance of warrants with notes payable					16,437			16,437
Fair value of options for services					59,636			59,636
Accrued preferred dividends						(266,781)	(5,000)	(271,781)
Net loss						(728,846)	(724)	(729,570)
Balance at Jun. 30, 2019	$ 11	$ 3		$ 11,960	59,869,115	(81,048,638)	216,797	(20,950,752)
Balance, shares at Jun. 30, 2019	107,850	28,378		119,596,866
Balance at Dec. 31, 2019	$ 11	$ 3		$ 11,960	60,233,849	(83,130,943)	206,049	(22,679,071)
Balance, shares at Dec. 31, 2019	107,850	28,378		119,596,866
Issuance of warrants for services					74,886			74,886
Fair value of options for services					25,663			25,663
Accrued preferred dividends						(266,780)	(5,000)	(271,780)
Net loss						(746,535)	(257)	(746,792)
Balance at Mar. 31, 2020	$ 11	$ 3		$ 11,960	60,334,398	(84,144,258)	200,792	(23,597,094)
Balance, shares at Mar. 31, 2020	107,850	28,378		119,596,866
Balance at Dec. 31, 2019	$ 11	$ 3		$ 11,960	60,233,849	(83,130,943)	206,049	(22,679,071)
Balance, shares at Dec. 31, 2019	107,850	28,378		119,596,866
Accrued preferred dividends								(543,561)
Net loss								(1,269,493)
Balance at Jun. 30, 2020	$ 11	$ 3		$ 11,960	60,409,781	(84,933,270)	195,323	(24,316,192)
Balance, shares at Jun. 30, 2020	107,850	28,378		119,596,866
Balance at Mar. 31, 2020	$ 11	$ 3		$ 11,960	60,334,398	(84,144,258)	200,792	(23,597,094)
Balance, shares at Mar. 31, 2020	107,850	28,378		119,596,866
Issuance of warrants for services					49,599			49,599
Fair value of options for services					21,314			21,314
Fair value of options for interest					4,470			4,470
Accrued preferred dividends							(5,000)	(271,781)
Net loss						(522,232)	(469)	(522,701)
Balance at Jun. 30, 2020	$ 11	$ 3		$ 11,960	$ 60,409,781	$ (84,933,270)	$ 195,323	$ (24,316,192)
Balance, shares at Jun. 30, 2020	107,850	28,378		119,596,866

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,269,493)	$ (1,641,424)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of options issued for interest on notes payable	4,470	21,305
Fair value of options and warrants issued in exchange for services	171,463	282,402
Accretion of discount on notes payable	40,031	2,374
Depreciation and amortization	14,658	14,659
(Increase) decrease in assets
Accounts receivable		1,923
Prepaid expenses		(6,956)
Deposits		25,000
Increase (decrease) in liabilities
Accounts payable and accrued expenses	600,633	395,294
Accounts payable and accrued expenses - related parties	(212,840)	228,959
Net cash used in operating activities	(651,078)	(676,464)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans payable		(4,000)
Proceeds from notes payable - stockholders	15,000	250,000
Repayment of notes payable - stockholders	(15,000)	(7,000)
Proceeds from convertible notes payable - stockholders	160,000	550,000
Proceeds from paycheck protection program loan	81,500
Net cash provided by financing activities	241,500	789,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(409,578)	112,536
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	430,076	10,733
CASH AND CASH EQUIVALENTS - END OF PERIOD	20,498	123,269
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during year for: Interest
Cash paid during year for: Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accrued preferred dividends	543,561	543,561
Exchange of 10% secured convertible notes payable for 4.0% secured convertible notes payable		350,000
Accrued interest as discount on notes payable		$ 16,437

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

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

Rego Payment Architectures, Inc. and its subsidiaries (collectively, except where the context requires, the “Company”) is a technology company that will deliver an online and mobile payment platform solution for the family. The system will allow 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 will automatically monitor regulatory compliance in real-time for all transactions, including protection of vendors from unintended regulatory infractions.  In addition, utilizing the same architecture, individual parents will be able 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. While these are the features that separate us from other virtual payment platforms, our software platform may be used by anyone as a digital wallet, adult or child.

Management believes that building on its Children’s Online Privacy Protection Act (“COPPA”) advantage, 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 own 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.

ZOOM Solutions, Inc. (“ZS”)

ZS (formerly Zoom Payment Solutions, Inc.) was incorporated in the state of Delaware on February 16, 2018 as a subsidiary of Rego Payment Architectures, Inc.  Rego Payment Architectures, Inc. owns 78% of the common stock of ZS.  ZS is the holding company for various subsidiaries that will utilize REGO’s payment platform to address emerging markets.

REGO has licensed its technology to ZS, as REGO determined that to extend the Company’s business runway, the Company needed to adapt its technology to include blockchain, token development and cloud storage. ZS was formed to implement these specified new technologies and growth opportunities in conjunction with other business partners, as appropriate.

ZS and its subsidiaries have had minimial operations in 2020 and 2019.

ZOOM Payment Solutions, Inc. (“ZPS”)

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

ZOOM Blockchain Solutions, Inc. (“ZBS”)

ZBS was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. This company focuses on blockchain as a business solution for the retail and Consumer Packaged Goods (“CPG”) industries. ZBS intends to provide a boutique agency approach to work with companies to build disruptive networks that will provide an enhanced customer experience, drive efficiency and build transparency and trust from the consumer base.

ZOOM Cloud Solutions, Inc. (“ZCS”)

ZCS (formerly Zoom Canada Solutions, Inc.) was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. ZCS is to provide highly secure cloud storage as a service with the following potential benefits:

END-TO-END PRIVATE CONNECTIVITY – The network of meshed carrier class private circuits will provide a secure, low latency private cloud experience.

UNLIMITED CLOUD CAPABILITES - The data will reside in a dedicated environment called a Hyperscale Converged Cloud Infrastructure, which is a leading-edge technology. Through an intuitive platform interface, the team will design, test, develop, manage, and deploy networks from anywhere. This includes, but is not limited to, virtualized, scalable work environments, scalable storage capabilities, state-of-the-art voice and unified communications solutions, cloud computing, and backup.

SMARTLY DESIGNED - The Cloud platform will be custom-engineered on purpose-built hardware to deliver a highly-efficient and dense infrastructure to the market. Through proprietary Software Defined Distributed Virtual Routing, the consumer will get increased network speeds, agility, scalability and reduced latency as well as application mobility, security, data integrity and, most importantly, control.

ZOOM Auto Solutions, Inc. (“ZAS”)

ZAS (formerly Zoom Mining Solutions) was incorporated in the State of Delaware on February 19, 2018 as a wholly owned subsidiary of ZCS. It is now a wholly owned subsidiary of ZBS and will be providing blockchain solutions to the auto industry.

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary of Accounting Policies included in the Company’s 2019 Annual Report on Form 10-K, as amended (the “Form 10-K”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

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

 
As of June 30, 2020 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2020, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

XML

MANAGEMENT PLANS

6 Months Ended

Jun. 30, 2020

MANAGEMENT PLANS [Abstract]

MANAGEMENT PLANS

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.  If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.

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

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 19, 2020, the Governor of Pennsylvania declared a health emergency and issued an order to close all nonessential businesses until further notice. The Company has temporarily curtailed its business operations and has required employees to work from home. While the Company expects this matter to negatively impact its results of operations, cash flow and financial position, the related financial impact cannot be reasonably estimated at this time.

As of August 14, 2020, the Company has a cash position of approximately $1.4 million.  Based upon the current cash position and the Company’s planned expense run rate, management believes the Company has funds currently to finance its operations through October 2020.

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES

NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES

As of June 30, 2020 and December 31, 2019, the Company owed the Chief Executive Officer a total of $380,773 and $392,371, consisting of $380,238 and $391,836 in unpaid salary and expenses of $535 and $535.

As of June 30, 2020 and December 31, 2019, the Company owed the Chief Financial Officer $107,574 and $118,596 in unpaid salary.

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PAYCHECK PROTECTION PROGRAM LOAN PAYABLE

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

PAYCHECK PROTECTION PROGRAM LOAN PAYABLE

NOTE 4 – PAYCHECK PROTECTION PROGRAM LOAN PAYABLE

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

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

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LOANS PAYABLE

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

LOANS PAYABLE

NOTE 5 – LOANS PAYABLE

During the six months ended June 30, 2020 and 2019, the Company did not receive any loans with no formal repayment terms and 10% interest. The Company also did not receive any loans with no formal repayment terms and no interest, during the six months ended June 30, 2020 and 2019.  The balance of such loans payable as of June 30, 2020 and December 31, 2019 was $85,600. Interest accrued on the loans was $18,018 and $15,118 as of June 30, 2020 and December 31, 2019.  Interest expense related to these loans payable was $1,450 and $2,901 for the three and six months ended June 30, 2020 and $706 and $2,934 for the three and six months ended June 30, 2019.

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10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

6 Months Ended

Jun. 30, 2020

Convertible Debt [Abstract]

10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

NOTE 6 – 10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

On March 6, 2015, the Company, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $2,000,000 aggregate principal amount of its 10% Secured Convertible Promissory Notes due March 5, 2016 (the “Notes”) to certain stockholders.  On May 11, 2015, the Company issued an additional $940,000 of Notes to stockholders.  The maturity dates of the Notes have been extended most recently from September 6, 2019 to September 6, 2020, 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.

The Notes are recorded as a current liability as of June 30, 2020 and December 31, 2019 in the amount of $2,813,157.  Interest accrued on the Notes was $1,708,240 and $1,567,582 as of June 30, 2020 and December 31, 2019.  Interest expense other than the warrant related interest expense related to these Notes payable was $70,329 and $140,658 for the three and six months ended June 30, 2020 and $70,329 and $143,264 for the three and six months ended June 30, 2019. 

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NOTES PAYABLE - STOCKHOLDERS

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

NOTES PAYABLE - STOCKHOLDERS

NOTE 7 – NOTES PAYABLE - STOCKHOLDERS

During the six months ended June 30, 2020 and 2019, the Company issued $15,000 and $0 aggregate principal amount of its notes payable - stockholders with no formal repayment terms and 10% interest. These notes were repaid in full by June 30, 2020 and the Company issued an option to purchase 25,000 shares of the Company’s common stock with an exercise price of $0.90 and a term of 3 years, with a fair value of $4,470 as interest expense. These notes payable are recorded as a current liability as of June 30, 2020 and December 31, 2019 in the amount of $1,202,000 and $1,161,969.  Interest accrued on the notes, as of June 30, 2020 and December 31, 2019 was  $72,463 and $29,481.  Interest expense including accretion of discount was $21,491 and $83,013 for the three and six months ended June 30, 2020 and $3,937 and $4,681 for the three and six months ended June 30, 2019.

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4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

6 Months Ended

Jun. 30, 2020

Convertible Debt [Abstract]

4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

NOTE 8 – 4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS

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

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

The maturity dates of the New Secured Notes were extended by the investors to October 31, 2020.

During the three months ended June 30, 2020, the Company issued $160,000 aggregate principal amount of its New Secured Notes to certain investors.

The New Secured Notes are recorded as a current liability in the amount of $7,592,250 as of June 30, 2020 and $7,432,250 as of December 31, 2019.  Interest accrued on the New Secured Notes was $836,510 and $687,204 as of June 30, 2020 and December 31, 2019.  Interest expense related to these notes payable was $74,983 and $149,305 for the three and six months ended June 30, 2020 and $74,912 and $144,161 for the three and six months ended June 30, 2019.

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INCOME TAXES

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9 – INCOME TAXES

Income tax expense was $0 for the three and six months ended June 30, 2020 and 2019.

As of January 1, 2020, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2020 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three and six months ended June 30, 2020, and there was no accrual for uncertain tax positions as of June 30, 2020. Tax years from 2016 through 2019 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three and six months ended June 30, 2020 and 2019, 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.

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CONVERTIBLE PREFERRED STOCK

6 Months Ended

Jun. 30, 2020

Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]

CONVERTIBLE PREFERRED STOCK

NOTE 10 – CONVERTIBLE PREFERRED STOCK

Rego Payment Architectures, Inc. Series A Preferred Stock 

The Series A Preferred Stock has a preference in liquidation equal to two times its original issue price, or $21,570,000, to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 2.5 times its original issue price. The Series A Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock can be converted.  The Series A Preferred Stock also contains customary approval rights with respect to certain matters.  The Series A Preferred Stock accrues dividends at the rate of 8% per annum or $8.00 per Series A Preferred Share.

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

The conversion feature of the Series A Preferred Stock issued in January 2014 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 a fair market value of $1,648,825 at January 27, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series A Preferred Stock.  Since the Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution.

The conversion feature of the Series A Preferred Stock issued in April 2014 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 a fair market value of $3,489,000 at April 30, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series A Preferred Stock.  Since the Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution. 

Rego Payment Architectures, Inc. Series B Preferred Stock 

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

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

The conversion feature of the Series B 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 a fair market value of $375,841 at October 30, 2014, and $0 at June 30, 2020 and December 31, 2019. This was classified as an embedded derivative liability and a discount to Series B Preferred Stock.  Since the Series B Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution. 

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. 

Rego Payment Architectures, Inc. Series C Preferred Stock 

In August 2016, Rego authorized 150,000 shares of Rego’s Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”).  As of June 30, 2020, none of the Series C Preferred Stock was issued or outstanding.  After the date of issuance of Series C Preferred Stock, dividends at the rate of $7.20 per share will begin accruing and will be cumulative. The Series C Preferred Stock is pari passu with the Series A Preferred Stock and Series B Preferred Stock and has a preference in liquidation equal to seven times its original issue price to be paid out of assets available for distribution prior to holders of common stock and thereafter participates with the holders of common stock in any remaining proceeds subject to an aggregate cap of 7.5 times its original issue price. The Series C Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Series C Preferred Stock can be converted.  The Series C Preferred Stock also contains customary approval rights with respect to certain matters.  There are no outstanding Series C Preferred Shares, therefore the current per annum dividend per share is $0.

As of June 30, 2020, the value of the cumulative 8% dividends for all Rego preferred stock was $6,618,350  Such dividends will be paid when and if declared payable by Rego’s board of directors or upon the occurrence of certain liquidation events.  In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

ZS Series A Preferred Stock

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

The conversion feature of the ZS Series A Preferred Stock is an embedded derivative, which is classified as equity in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair market value of $193,377 at the date of issuance. However in accordance with FASB ASC 470, the value of the beneficial conversion feature is limited to the value of the ZS Series A Preferred Stock of $139,959 at the date of issuance. This was classified as an embedded derivative and a discount to the ZS Series A Preferred Stock.  Since the ZS Series A Preferred Stock can be converted at any time, the full amount of the discount was accreted and reflected as a deemed distribution.

The warrants associated with the ZS Series A Preferred Stock were also classified as equity, in accordance with FASB ASC 480-10-25.  Therefore it is not necessary to bifurcate the warrants from the ZS Series A Preferred Stock.

As of June 30, 2020, the value of the cumulative 8% dividends for ZS preferred stock was $33,333.  Such dividends will be paid when and if declared payable by the ZS’ board of directors or upon the occurrence of certain liquidation events.  In accordance with FASB ASC 260-10-45-11, the Company has recorded these accrued dividends as a current liability.

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

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

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. 

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STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK OPTIONS AND WARRANTS

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 June 30, 2020, options to purchase 8,400,000 shares of common stock have been issued and are unexercised, and 0 shares are available for grants under the 2008 Plan. The 2008 Plan expired on March 3, 2019.

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 June 30, 2020, under the 2013 Plan grants of restricted stock and options to purchase 4,000,000 shares of common stock have been issued and are unvested and unexercised, and 1,000,000 shares of common stock remain available for grants under the 2013 Plan.  

The 2013 Plan is 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 2013 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 common stock.

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted by REGO during the six months ended June 30, 2020:

Risk Free Interest Rate		1.0	%
Expected Volatility		141.4	%
Expected Life (in years)		2.0
Dividend Yield		0	%
Weighted average estimated fair value of options during the period	$	0.07

The following table summarizes the activities for REGO’s stock options for the six months ended June 30, 2020: 

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		13,185,000		$	0.69		2.4	$	-
Granted		325,000			0.90		1.8		-
Expired		(160,000	)		0.86		-		-
Balance at June 30, 2020		13,350,000		$	0.69		1.9	$	5
Exercisable at June 30, 2020		13,216,667		$	0.69		1.9	$	5
Exercisable at June 30, 2020 and expected to
vest thereafter		13,350,000		$	0.69		1.9	$	5

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.21 for REGO’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020, Rego expensed $25,785 and $51,447 and for the three and six months ended June 30, 2019, Rego expensed $59,636 and $254,351 with respect to options. 

As of June 30, 2020, there was no unrecognized compensation cost related to outstanding stock options. The difference between the stock options exercisable at June 30, 2020 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 REGO’s unvested stock options for the six months ended June 30, 2020:

	Unvested Options
				Weighted -
				Average
				Grant
	Number of			Date Fair
	Shares			Value
Balance at December 31, 2019		233,333		$	0.20
Granted		325,000			0.05
Expired/cancelled		(100,000	)		0.25
Vested		(325,000	)		0.05
Balance at June 30, 2020		133,333		$	0.25

During the six months ended June 30, 2020, the Company issued warrants to purchase 1,000,000 shares of common stock commensurate with a consulting agreement. The warrants were valued at $124,485 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 139.0 to 140.4%, risk free interest rate of 0.19% to 0.36% and expected life of 2 years.  The fair value of the warrants was $124,485 and was expensed immediately. During the three and six months ended June 30, 2020, the Company expensed $49,599 and $124,485 and during the three and six months ended June 30, 2019, the Company expensed $0, relative to warrants. 

The following table summarizes the activities for REGO’s warrants for the six months ended June 30, 2020:

						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		4,427,020		$	0.90		1.0	$	-
Granted		1,000,000			0.90		1.8		-
Expired		(1,852,020	)		0.90		-
Balance at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		3,575,000		$	0.90		1.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.21 for Rego’s common stock on June 30, 2020. 

All warrants were vested on the date of grant. 

 The following table summarizes the activities for ZS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,400,000	$	5.00		3.6	$	-
Balance at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,400,000	$	5.00		3.1	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020, ZS expensed $0 with respect to options and for the three and six months ended June 30, 2019, ZS expensed $0 and $28,051 with respect to options. 

The following table summarizes the activities for ZS’s warrants for the six months ended June 30, 2020:

	Warrants Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		83,334	$	3.00		1.8	$	83
Balance at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020 and expected to
vest thereafter		83,334	$	3.00		1.3	$	83

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the value of $4.00 for ZS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020 and 2019, ZS expensed $0 with respect to warrants.  

The following table summarizes the activities for ZBS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZBS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020 and 2019, ZBS expensed $0 with respect to options.

The following table summarizes the activities for ZCS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,200,000	$	5.00		3.8	$	-
Balance at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,200,000	$	5.00		3.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS’s common stock on June 30, 2020.

For the three and six months ended June 30, 2020 and 2019, ZCS expensed $0 with respect to options. 

The following table summarizes the activities for ZPS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZPS’s common stock on June 30, 2020. 

For the three and six months ended June 30, 2020 and 2019, ZPS expensed $0 with respect to options.

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NONCONTROLLING INTERESTS

6 Months Ended

Jun. 30, 2020

Noncontrolling Interest [Abstract]

NONCONTROLLING INTERESTS

NOTE 13 – NONCONTROLLING INTERESTS

Losses incurred by the noncontrolling interests for the three months and six months ended June 30, 2020 were $469 and $726 and for the three and six months ended June 30, 2019 were $724 and $6,481.

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OPERATING LEASES

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

OPERATING LEASES

NOTE 14 – OPERATING LEASES

For the three and six months ended June 30, 2020, total rent expense under leases amounted to $1,639 and $11,986 and for the three and six months ended June 30, 2019, total rent expense under leases amounted to $6,352 and $13,682.  The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. The Company has no long-term lease obligations as of June 30, 2020.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 15 – RELATED PARTY TRANSACTIONS

During the three and six months ended June 30, 2019, the Company received revenue from a technology company for the outsourcing of the Company’s engineers for development. In addition, the Company paid this technology company $45,000 as a deposit for technical assistance with the Platform when it becomes necessary. The deposit was fully refunded as of June 30, 2019. As of June 30, 2020, the technology company is no longer a related party.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 16 – SUBSEQUENT EVENTS

During July and August 2020, the Company raised $1.7 million through the issuance of the Company’s 4% secured convertible notes payable-stockholders.

During August 2020, the Company exchanged $107,000 principal amount of Notes Payable – Stockholders for 4% Secured Convertible Notes Payable – Stockholders.

On August 12, 2020, the Company revised a consulting agreement, whereby the principal terms stayed the same, however, the trigger dates for the issuance of stock changed as follows: a) 62,500 shares to be issued at Beta Product Launch – November 18, 2020 b) 62,500 shares to be issued upon first product revenue – January 18, 2021 c) 125,000 shares when technology passes potential buyer’s due diligence – February 18, 2021.

On August 13, 2020, the Company entered into an employment agreement with Peter S. Pelullo to become the Chief Executive Officer, President and Board Director of the Company. The principal terms of the agreement include: a) a salary of $200,000 b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.25, a term of 5 years and vesting immediately c) an option to acquire 500,000 shares of the common stock of the Company at the exercise price of the closing price per share on the date of sale or change of control (or if greater, the fair market value of such option on the grant date), for a term of 5 years that will vest immediately d) issuance of 250,000 shares of the common stock of the Company that will vest immediately e) issuance of 250,000 shares of common stock upon the sale of the Company or change in control of the Company of more than 50% of the Company.

The options associated with the employment agreement were valued at $117,514, fair market value and will be expensed over two years.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

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

Rego Payment Architectures, Inc. and its subsidiaries (collectively, except where the context requires, the “Company”) is a technology company that will deliver an online and mobile payment platform solution for the family. The system will allow 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 will automatically monitor regulatory compliance in real-time for all transactions, including protection of vendors from unintended regulatory infractions.  In addition, utilizing the same architecture, individual parents will be able 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. While these are the features that separate us from other virtual payment platforms, our software platform may be used by anyone as a digital wallet, adult or child.

Management believes that building on its Children’s Online Privacy Protection Act (“COPPA”) advantage, 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 own 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.

ZOOM Solutions, Inc. (“ZS”)

ZS (formerly Zoom Payment Solutions, Inc.) was incorporated in the state of Delaware on February 16, 2018 as a subsidiary of Rego Payment Architectures, Inc.  Rego Payment Architectures, Inc. owns 78% of the common stock of ZS.  ZS is the holding company for various subsidiaries that will utilize REGO’s payment platform to address emerging markets.

REGO has licensed its technology to ZS, as REGO determined that to extend the Company’s business runway, the Company needed to adapt its technology to include blockchain, token development and cloud storage. ZS was formed to implement these specified new technologies and growth opportunities in conjunction with other business partners, as appropriate.

ZS and its subsidiaries have had minimial operations in 2020 and 2019.

ZOOM Payment Solutions, Inc. (“ZPS”)

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

ZOOM Blockchain Solutions, Inc. (“ZBS”)

ZBS was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. This company focuses on blockchain as a business solution for the retail and Consumer Packaged Goods (“CPG”) industries. ZBS intends to provide a boutique agency approach to work with companies to build disruptive networks that will provide an enhanced customer experience, drive efficiency and build transparency and trust from the consumer base.

ZOOM Cloud Solutions, Inc. (“ZCS”)

ZCS (formerly Zoom Canada Solutions, Inc.) was incorporated in the state of Delaware on April 20, 2018 as an 85% owned subsidiary of ZS. ZCS is to provide highly secure cloud storage as a service with the following potential benefits:

END-TO-END PRIVATE CONNECTIVITY – The network of meshed carrier class private circuits will provide a secure, low latency private cloud experience.

UNLIMITED CLOUD CAPABILITES - The data will reside in a dedicated environment called a Hyperscale Converged Cloud Infrastructure, which is a leading-edge technology. Through an intuitive platform interface, the team will design, test, develop, manage, and deploy networks from anywhere. This includes, but is not limited to, virtualized, scalable work environments, scalable storage capabilities, state-of-the-art voice and unified communications solutions, cloud computing, and backup.

SMARTLY DESIGNED - The Cloud platform will be custom-engineered on purpose-built hardware to deliver a highly-efficient and dense infrastructure to the market. Through proprietary Software Defined Distributed Virtual Routing, the consumer will get increased network speeds, agility, scalability and reduced latency as well as application mobility, security, data integrity and, most importantly, control.

ZOOM Auto Solutions, Inc. (“ZAS”)

ZAS (formerly Zoom Mining Solutions) was incorporated in the State of Delaware on February 19, 2018 as a wholly owned subsidiary of ZCS. It is now a wholly owned subsidiary of ZBS and will be providing blockchain solutions to the auto industry.

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

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary of Accounting Policies included in the Company’s 2019 Annual Report on Form 10-K, as amended (the “Form 10-K”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

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

Recently Adopted Accounting Pronouncements

 
As of June 30, 2020 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2020, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

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STOCK OPTIONS AND WARRANTS (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Weighted-average Assumptions Used to Estimate the Fair Values of Stock Options Granted

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted by REGO during the six months ended June 30, 2020:

Risk Free Interest Rate		1.0	%
Expected Volatility		141.4	%
Expected Life (in years)		2.0
Dividend Yield		0	%
Weighted average estimated fair value of options during the period	$	0.07

Schedule of Stock Option Activity

The following table summarizes the activities for REGO’s stock options for the six months ended June 30, 2020: 

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		13,185,000		$	0.69		2.4	$	-
Granted		325,000			0.90		1.8		-
Expired		(160,000	)		0.86		-		-
Balance at June 30, 2020		13,350,000		$	0.69		1.9	$	5
Exercisable at June 30, 2020		13,216,667		$	0.69		1.9	$	5
Exercisable at June 30, 2020 and expected to
vest thereafter		13,350,000		$	0.69		1.9	$	5

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.21 for REGO’s common stock on June 30, 2020. 

Schedule of Unvested Options Activity

The following table summarizes the activities for REGO’s unvested stock options for the six months ended June 30, 2020:

	Unvested Options
				Weighted -
				Average
				Grant
	Number of			Date Fair
	Shares			Value
Balance at December 31, 2019		233,333		$	0.20
Granted		325,000			0.05
Expired/cancelled		(100,000	)		0.25
Vested		(325,000	)		0.05
Balance at June 30, 2020		133,333		$	0.25

Schedule of Warrant Activity

The following table summarizes the activities for REGO’s warrants for the six months ended June 30, 2020:

						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		4,427,020		$	0.90		1.0	$	-
Granted		1,000,000			0.90		1.8		-
Expired		(1,852,020	)		0.90		-
Balance at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020		3,575,000		$	0.90		1.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		3,575,000		$	0.90		1.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.21 for Rego’s common stock on June 30, 2020. 

ZS [Member] | Stock Options [Member]

Schedule of Stock Option Activity

The following table summarizes the activities for ZS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,400,000	$	5.00		3.6	$	-
Balance at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020		2,400,000	$	5.00		3.1	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,400,000	$	5.00		3.1	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS’s common stock on June 30, 2020.

ZS [Member] | Warrant [Member]

Schedule of Stock Option Activity

The following table summarizes the activities for ZS’s warrants for the six months ended June 30, 2020:

	Warrants Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		83,334	$	3.00		1.8	$	83
Balance at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020		83,334	$	3.00		1.3	$	83
Exercisable at June 30, 2020 and expected to
vest thereafter		83,334	$	3.00		1.3	$	83

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the value of $4.00 for ZS’s common stock on June 30, 2020.

ZBS [Member]

Schedule of Stock Option Activity

The following table summarizes the activities for ZBS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZBS’s common stock on June 30, 2020. 

ZCS [Member]

Schedule of Stock Option Activity

The following table summarizes the activities for ZCS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Remaining		Aggregate
			Weighted-		Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		2,200,000	$	5.00		3.8	$	-
Balance at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020		2,200,000	$	5.00		3.3	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		2,200,000	$	5.00		3.3	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS’s common stock on June 30, 2020.

ZPS [Member]

Schedule of Stock Option Activity

The following table summarizes the activities for ZPS’s stock options for the six months ended June 30, 2020:

	Options Outstanding
					Weighted -
					Average
					Remaining		Aggregate
					Contractual		Intrinsic
	Number of		Average		Term		Value
	Shares		Exercise Price		(in years)		(in 000's) (1)
Balance at December 31, 2019		100,000	$	5.00		0.7	$	-
Balance at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020		100,000	$	5.00		0.2	$	-
Exercisable at June 30, 2020 and expected to
vest thereafter		100,000	$	5.00		0.2	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZPS’s common stock on June 30, 2020. 

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Apr. 20, 2018	Feb. 16, 2018
ZS [Member] | ZS common stock [Member]
Ownership percentage		78.00%
ZBS [Member]
Ownership percentage	85.00%
ZCS [Member]
Ownership percentage	85.00%

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MANAGEMENT PLANS (Details) - USD ($)	Aug. 14, 2020	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Subsequent Event [Line Items]
Cash positions		$ 20,498	$ 430,076	$ 123,269	$ 10,733
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash positions	$ 1,400,000

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Due to related party	$ 488,347	$ 701,187
Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Due to related party	380,773	392,371
Chief Executive Officer [Member] | Unpaid payroll [Member]
Related Party Transaction [Line Items]
Due to related party	380,238	391,836
Chief Executive Officer [Member] | Expenses [Member]
Related Party Transaction [Line Items]
Due to related party	535	535
Chief Financial Officer [Member] | Unpaid payroll [Member]
Related Party Transaction [Line Items]
Due to related party	$ 107,574	$ 118,956

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PAYCHECK PROTECTION PROGRAM LOAN PAYABLE (Details) - USD ($)	1 Months Ended
	Apr. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Paycheck protection program loans payable		$ 81,500
Emergency Injury Disaster Loan program [Member]
Debt Instrument [Line Items]
Proceeds from loans payable	$ 2,000
Paycheck Protection Program [Member]
Debt Instrument [Line Items]
Proceeds from loans payable	$ 79,500

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LOANS PAYABLE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Repayment of loans payable				$ 4,000
Loans payable	$ 85,600		$ 85,600		$ 85,600
Interest rate	10.00%		10.00%
Interest accrued	$ 18,018		$ 18,018		$ 15,118
Loans Payable [Member]
Debt Instrument [Line Items]
Interest expense, notes payable	$ 1,450	$ 706	2,901	2,934
Loans Receivable [Member]
Debt Instrument [Line Items]
Aggregate loan amount received

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10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS (Details) - USD ($)		3 Months Ended		6 Months Ended
	May 11, 2015	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Maturity date	Sep. 06, 2020
Additional notes issued to stockholders	$ 940,000			$ 160,000	$ 550,000
Accrued interest		$ 18,018		18,018		$ 15,118
10% Secured Convertible Note [Member]
Debt Instrument [Line Items]
Interest expense, notes payable		70,329	$ 70,329	140,658	$ 143,264
Accrued interest		1,708,240		1,708,240		1,567,582
Notes payable Short-term Liability		$ 2,813,157		$ 2,813,157		$ 2,813,157
Preferred Class B [Member]
Debt Instrument [Line Items]
Conversion price (in dollars per share)		$ 0.90		$ 0.90
Common stock which can be purchased by warrants		100		100
Convertible Promissory Notes due March 5, 2016, Issued on March 6, 2015 [Member]
Debt Instrument [Line Items]
Note payable included per unit		$ 2,000,000		$ 2,000,000
Interest rate		10.00%		10.00%
Convertible Promissory Notes due March 5, 2016 [Member] | Preferred Class B [Member]
Debt Instrument [Line Items]
Conversion price (in dollars per share)		$ 90.00		$ 90.00
Conversion price at which preferred stock is convertible into common stock (in dollars per share)		$ 0.90		$ 0.90

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NOTES PAYABLE - STOCKHOLDERS (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Interest accrued including commitment fee amount			$ 72,463		$ 29,481
Notes payable current Liability	$ 1,202,000		$ 1,202,000		$ 1,161,969
Interest rate	10.00%		10.00%
Notes payable - stockholders [Member]
Debt Instrument [Line Items]
Interest expense, notes payable			$ 4,470
Proceeds from notes payable			$ 15,000	$ 0
Interest rate	10.00%		10.00%
Options to purchase common stock	25,000		25,000
Exercise price	$ 0.90		$ 0.90
Term	3 years		3 years
Warrant [Member]
Debt Instrument [Line Items]
Interest expense, notes payable	$ 21,491	$ 3,613	$ 83,013	$ 4,681

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4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS (1) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Aug. 26, 2016
Debt Instrument [Line Items]
Interest accrued	$ 18,018		$ 18,018		$ 15,118
4.0% Secured Convertible Note [Member]
Debt Instrument [Line Items]
Interest accrued	836,510		836,510		687,204
Interest expense, notes payable	74,983	$ 74,912	149,305	$ 144,161
Notes payable long-term Liability	$ 7,592,250		$ 7,592,250		$ 7,432,250
4.0% Secured Convertible Note [Member] | Series C [Member]
Debt Instrument [Line Items]
Conversion price (in dollars per share)	$ 90.00		$ 90.00
Conversion price at which preferred stock is convertible into common stock (in dollars per share)	$ 0.90		$ 0.90
Common stock which can be purchased by warrants	100		100
New Secured Notes [Member] | Certain Investors [Member]
Debt Instrument [Line Items]
Note payable principal amount issued	$ 160,000		$ 160,000
Convertible Promissory Notes due June 30, 2019, Issued on August 26, 2016 [Member]
Debt Instrument [Line Items]
Note payable principal amount issued						$ 600,000
Interest rate						4.00%

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INCOME TAXES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income tax expense	$ 0	$ 0	$ 0	$ 0

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CONVERTIBLE PREFERRED STOCK (Details) - USD ($)	1 Months Ended					3 Months Ended				6 Months Ended		12 Months Ended
	Nov. 30, 2018	Aug. 31, 2016	Oct. 30, 2014	Apr. 30, 2014	Jan. 27, 2014	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Class of Stock [Line Items]
Cumulative dividends						$ 271,781	$ 271,780	$ 271,781	$ 271,780	$ 543,561	$ 543,561
Preferred stock, par value per share						$ 0.0001				$ 0.0001		$ 0.0001
Preferred Class A [Member]
Class of Stock [Line Items]
Dividend rate										8.00%
Liquidation preference						$ 21,570,000				$ 21,570,000
Beneficial conversion feature				$ 3,489,000	$ 1,648,825					$ 0		$ 0
Conversion price						$ 0.90				$ 0.90
Preferred stock, par value per share						$ 8.00				$ 8.00
Preferred Class B [Member]
Class of Stock [Line Items]
Dividend rate										8.00%
Liquidation preference						$ 5,108,040				$ 5,108,040
Beneficial conversion feature			$ 375,841							$ 0		$ 0
Conversion price						$ 0.90				$ 0.90
Series C [Member]
Class of Stock [Line Items]
Issuance of shares of common stock, shares		150,000
Equity issuance, price per share		$ 7.20
Preferred stock, shares outstanding						0				0		0
Preferred Stock [Member]
Class of Stock [Line Items]
Dividend rate										8.00%
Cumulative dividends										$ 6,618,350
Current per annum dividend per share										$ 0
ZS Series A Preferred Stock [Member]
Class of Stock [Line Items]
Dividend rate	8.00%
Warrant Term	3 years
Exercise price of warrants	$ 3.00
Beneficial conversion feature at a fair market value	$ 193,377					$ 139,959				$ 139,959
Number of units issued	83,334
Per unit price	$ 3
Proceeds form issuance of warrant	$ 250,000
ZS preferred stock [Member]
Class of Stock [Line Items]
Dividend rate										8.00%
Cumulative dividends										$ 33,333

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STOCKHOLDERS' EQUITY (Details)	Jun. 30, 2020
Consultant [Member]
Class of Stock [Line Items]
Percentage of legal fees paid to financial advisor	6.00%

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STOCK OPTIONS AND WARRANTS (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation	$ 0		$ 0
Share-based compensation	25,785	$ 59,636	51,447	$ 254,351
ZBS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 0	0	$ 0	0
Total options	100,000		100,000		100,000
ZCS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 0	0	$ 0	0
Total options	2,200,000		2,200,000		2,200,000
ZPS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 0	0	$ 0	0
Total options	100,000		100,000		100,000
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of option			$ 124,485
Expected life			2 years
Number of shares purchase of common stock			1,000,000
Dividend yield			0.00%
Warrants expense	$ 49,599	0	$ 124,485	0
Warrant [Member] | ZS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 0	0	$ 0	0
Warrant [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			139.00%
Risk Free Interest Rate			0.19%
Warrant [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			140.40%
Risk Free Interest Rate			0.36%
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total options	13,350,000		13,350,000		13,185,000
Expected life			2 years
Dividend yield			0.00%
Expected volatility			141.40%
Risk Free Interest Rate			1.00%
Stock Options [Member] | ZS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 0	$ 0	$ 0	$ 28,051
Total options	2,400,000		2,400,000		2,400,000
Equity Incentive Plan 2008 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized under plan	25,000,000		25,000,000
Number of shares of common stock that have been issued and are unexercised under the plan	8,400,000		8,400,000
Shares available for grant	0		0
Equity Incentive Plan 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized under plan	5,000,000		5,000,000
Number of shares of common stock that have been issued and are unexercised under the plan	4,000,000		4,000,000
Shares available for grant	1,000,000		1,000,000
Total options	1,000,000		1,000,000

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STOCK OPTIONS AND WARRANTS (Weighted Average Assumptions Used to Estimate Fair Value of Stock Option and Warrant Grants) (Details) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2020 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk Free Interest Rate	1.00%
Expected Volatility	141.40%
Expected Life (in years)	2 years
Dividend Yield	0.00%
Weighted average estimated fair value of options during the period	$ 0.07

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STOCK OPTIONS AND WARRANTS (Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2020	Dec. 31, 2019
Weighted - Average Remaining Contractual Term (in years)
Granted		1 year 9 months 18 days
Aggregate Intrinsic Value
Closing stock price		$ 0.21
ZS [Member]
Aggregate Intrinsic Value
Closing stock price		$ 4.00
ZBS [Member]
Number of Shares
Balance at December 31, 2019		100,000
Balance at June 30, 2020		100,000	100,000
Exercisable at June 30, 2020		100,000
Exercisable at June 30, 2020 and expected to vest thereafter		100,000
Weighted-Average Exercise Price
Balance at December 31, 2019		$ 5.00
Balance at June 30, 2020		5.00	$ 5.00
Exercisable at June 30, 2020		5.00
Exercisable at June 30, 2020 and expected to vest thereafter		$ 5.00
Weighted - Average Remaining Contractual Term (in years)
Balance at June 30, 2020		2 months 12 days	8 months 12 days
Exercisable at June 30, 2020		2 months 12 days
Exercisable at June 30, 2020 and expected to vest thereafter		2 months 12 days
Aggregate Intrinsic Value
Balance at December 31, 2019	[1]
Balance at June 30, 2020	[1]
Exercisable at June 30, 2020	[1]
Exercisable at June 30, 2020 and expected to vest thereafter	[1]
Closing stock price		$ 0.01
ZCS [Member]
Number of Shares
Balance at December 31, 2019		2,200,000
Balance at June 30, 2020		2,200,000	2,200,000
Exercisable at June 30, 2020		2,200,000
Exercisable at June 30, 2020 and expected to vest thereafter		2,200,000
Weighted-Average Exercise Price
Balance at December 31, 2019		$ 5.00
Balance at June 30, 2020		5.00	$ 5.00
Exercisable at June 30, 2020		5.00
Exercisable at June 30, 2020 and expected to vest thereafter		$ 5.00
Weighted - Average Remaining Contractual Term (in years)
Balance at June 30, 2020		3 years 3 months 19 days	3 years 9 months 18 days
Exercisable at June 30, 2020		3 years 3 months 19 days
Exercisable at June 30, 2020 and expected to vest thereafter		3 years 3 months 19 days
Aggregate Intrinsic Value
Balance at December 31, 2019	[2]
Balance at June 30, 2020	[2]
Exercisable at June 30, 2020	[2]
Exercisable at June 30, 2020 and expected to vest thereafter	[2]
Closing stock price		$ 0.01
ZPS [Member]
Number of Shares
Balance at December 31, 2019		100,000
Balance at June 30, 2020		100,000	100,000
Exercisable at June 30, 2020		100,000
Exercisable at June 30, 2020 and expected to vest thereafter		100,000
Weighted-Average Exercise Price
Balance at December 31, 2019		$ 5.00
Balance at June 30, 2020		5.00	$ 5.00
Exercisable at June 30, 2020		5.00
Exercisable at June 30, 2020 and expected to vest thereafter		$ 5.00
Weighted - Average Remaining Contractual Term (in years)
Balance at June 30, 2020		2 months 12 days	8 months 12 days
Exercisable at June 30, 2020		2 months 12 days
Exercisable at June 30, 2020 and expected to vest thereafter		2 months 12 days
Aggregate Intrinsic Value
Balance at December 31, 2019	[3]
Balance at June 30, 2020	[3]
Exercisable at June 30, 2020	[3]
Exercisable at June 30, 2020 and expected to vest thereafter	[3]
Closing stock price		$ 0.01
Stock Options [Member]
Number of Shares
Balance at December 31, 2019		13,185,000
Granted		325,000
Expired/cancelled		(160,000)
Balance at June 30, 2020		13,350,000	13,185,000
Exercisable at June 30, 2020		13,216,667
Exercisable at June 30, 2020 and expected to vest thereafter		13,350,000
Weighted-Average Exercise Price
Balance at December 31, 2019		$ 0.69
Granted		0.90
Expired/cancelled		0.86
Balance at June 30, 2020		0.69	$ 0.69
Exercisable at June 30, 2020		0.69
Exercisable at June 30, 2020 and expected to vest thereafter		$ 0.69
Weighted - Average Remaining Contractual Term (in years)
Balance at June 30, 2020		1 year 10 months 25 days	2 years 4 months 24 days
Granted		1 year 9 months 18 days
Exercisable at June 30, 2020		1 year 10 months 25 days
Exercisable at June 30, 2020 and expected to vest thereafter		1 year 10 months 25 days
Aggregate Intrinsic Value
Balance at December 31, 2019	[4]
Balance at June 30, 2020	[4]	5
Exercisable at June 30, 2020	[4]	5
Exercisable at June 30, 2020 and expected to vest thereafter	[4]	$ 5
Closing stock price		$ 0.21
Stock Options [Member] | ZS [Member]
Number of Shares
Balance at December 31, 2019		2,400,000
Balance at June 30, 2020		2,400,000	2,400,000
Exercisable at June 30, 2020		2,400,000
Exercisable at June 30, 2020 and expected to vest thereafter		2,400,000
Weighted-Average Exercise Price
Balance at December 31, 2019		$ 5.00
Balance at June 30, 2020		5.00	$ 5.00
Exercisable at June 30, 2020		5.00
Exercisable at June 30, 2020 and expected to vest thereafter		$ 5.00
Weighted - Average Remaining Contractual Term (in years)
Balance at June 30, 2020		3 years 1 month 6 days	3 years 7 months 6 days
Exercisable at June 30, 2020		3 years 1 month 6 days
Exercisable at June 30, 2020 and expected to vest thereafter		3 years 1 month 6 days
Aggregate Intrinsic Value
Balance at December 31, 2019	[5]
Balance at June 30, 2020	[5]
Exercisable at June 30, 2020	[5]
Exercisable at June 30, 2020 and expected to vest thereafter	[5]
Closing stock price		$ 4.00

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZBS's common stock on June 30, 2020.

[2] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS's common stock on June 30, 2020.

[3] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZPS's common stock on June 30, 2020.

[4] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.21 for REGO's common stock on June 30, 2020.

[5] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS's common stock on June 30, 2020.

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STOCK OPTIONS AND WARRANTS (Schedule of Unvested Options) (Details) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Shares
Balance at December 31, 2019 | shares	233,333
Granted | shares	325,000
Expired/cancelled | shares	(100,000)
Vested | shares	(325,000)
Balance at June 30, 2020 | shares	133,333
Weighted - Average Grant Date Fair Value
Balance at December 31, 2019 | $ / shares	$ 0.20
Granted | $ / shares	0.07
Expired/cancelled | $ / shares	0.25
Vested | $ / shares	0.05
Balance at June 30, 2020 | $ / shares	$ 0.25

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STOCK OPTIONS AND WARRANTS (Schedule of Warrant Activity) (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Number of Shares
Balance at December 31, 2019 | shares	4,427,020
Granted | shares	1,000,000
Expired | shares	(1,852,020)
Balance at June 30, 2020 | shares	3,575,000
Exercisable at June 30, 2020 | shares	3,575,000
Exercisable at June 30, 2020 and expected to vest thereafter | shares	3,575,000
Weighted Average Exercise Price
Balance December 31, 2019	$ 0.90
Granted	0.90
Expired	0.90
Balance June 30, 2020	0.90
Exercisable at June 30, 2020	0.90
Exercisable at June 30, 2020 and expected to vest thereafter	$ 0.90
Weighted - Average Remaining Contractual Term (in Years)
Balance December 31, 2019	1 year
Granted	1 year 9 months 18 days
Balance as of June 30, 2020	1 year 3 months 19 days
Exercisable at June 30, 2020	1 year 3 months 19 days
Exercisable at June 30, 2020 and expected to vest thereafter	1 year 3 months 19 days
Aggregate Intrinsic Value
Balance December 31, 2019 | $		[1]
Granted | $		[1]
Balance June 30, 2020 | $		[1]
Exercisable at June 30, 2020 | $		[1]
Exercisable as of June 30, 2020 and expected to vest thereafter | $		[1]
Closing stock price	$ 0.21
ZS [Member]
Number of Shares
Balance at December 31, 2019 | shares	83,334
Balance at June 30, 2020 | shares	83,334
Exercisable at June 30, 2020 | shares	83,334
Exercisable at June 30, 2020 and expected to vest thereafter | shares	83,334
Weighted Average Exercise Price
Balance December 31, 2019	$ 3.00
Balance June 30, 2020	3.00
Exercisable at June 30, 2020	3.00
Exercisable at June 30, 2020 and expected to vest thereafter	$ 3.00
Weighted - Average Remaining Contractual Term (in Years)
Balance December 31, 2019	1 year 9 months 18 days
Balance as of June 30, 2020	1 year 3 months 19 days
Exercisable at June 30, 2020	1 year 3 months 19 days
Exercisable at June 30, 2020 and expected to vest thereafter	1 year 3 months 19 days
Aggregate Intrinsic Value
Balance December 31, 2019 | $	$ 83	[2]
Balance June 30, 2020 | $	83	[2]
Exercisable at June 30, 2020 | $	83	[2]
Exercisable as of June 30, 2020 and expected to vest thereafter | $	$ 83	[2]
Closing stock price	$ 4.00

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.21 for Rego's common stock on June 30, 2020.

[2] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the value of $4.00 for ZS's common stock on June 30, 2020.

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NONCONTROLLING INTERESTS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Noncontrolling Interest [Abstract]
Net loss attributable to noncontrolling interests	$ 469	$ 724	$ 726	$ 6,481

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OPERATING LEASES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Total rent expense under leases	$ 1,639	$ 6,352	$ 11,986	$ 13,682

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RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Beneficial Owner [Member]
Related Party Transaction [Line Items]
Related party expenses		$ 45,000		$ 45,000

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SUBSEQUENT EVENTS (Details) - USD ($)			1 Months Ended
	Aug. 14, 2020	Aug. 13, 2020	Aug. 14, 2020	Aug. 12, 2020	Jun. 30, 2020
Subsequent Event [Line Items]
Unrecognized compensation					$ 0
Subsequent Event [Member]
Subsequent Event [Line Items]
Number of shares to be issued at Beta Product Launch on November 18, 2020				62,500
Number of shares to be issued upon first product revenue on January 18, 2021				62,500
Number of shares to be issued when technology passes potential buyer’s due diligence on February 18, 2021				125,000
Salary per employment agreement		$ 200,000
Unrecognized compensation		$ 117,514
Unrecognized compensation cost, period of recognition		2 years
Subsequent Event [Member] | Share Issuance Tranche One [Member]
Subsequent Event [Line Items]
Common stock shares that can be purchased per employment agreement		500,000
Vesting description		Vest immediately
Exercise price		$ 0.25
Term of stock based compensation		P5Y
Subsequent Event [Member] | Share Issuance Tranche Two [Member]
Subsequent Event [Line Items]
Common stock shares that can be purchased per employment agreement		500,000
Vesting description		Vest immediately
Term of stock based compensation		P5Y
Subsequent Event [Member] | Share Issuance Tranche Three [Member]
Subsequent Event [Line Items]
Common stock shares that can be purchased per employment agreement		250,000
Vesting description		Vest immediately
Subsequent Event [Member] | Share Issuance Tranche Four [Member]
Subsequent Event [Line Items]
Common stock shares that can be purchased per employment agreement		250,000
Vesting description		Upon the sale of the Company or change in control of the Company of more than 50% of the Company
Subsequent Event [Member] | 4% secured convertible notes payable-stockholders [Member]
Subsequent Event [Line Items]
Proceeds from issuance of debt			$ 1,700,000
Notes payable exchanged principal amount	$ 107,000