Rego Payment Architectures, Inc 10-Q for FY2021 Q3
Rego Payment Architectures, Inc. (RPMT)
About this 10-Q
Rego Payment Architectures, Inc filed this 10-Q on November 15, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1068
- Net loss
- $1.31M
- compared with a net loss of $1.43M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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For the quarterly period ended | |||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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For the transition period from __________ to __________ | |||
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(Former name, former address and former fiscal year, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol(s) |
Name of Each Exchange on Which Registered |
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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.
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).
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.
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Large accelerated filer ☐ |
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Accelerated filer ☐ |
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Smaller reporting company | |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
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TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION | |
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ITEM 1.Financial Statements |
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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) |
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Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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PART I - FINANCIAL INFORMATION
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” “believes,” “contemplates,” “targets,” “could,” “would” or “should” or the negative thereof or any variation thereon or similar terminology or expressions. Management cautions readers not to place undue reliance on any of the Company’s forward-looking statements, which speak only as of the date made.
We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: our ability to raise additional capital, the absence of any material operating history or revenue, our ability to attract and retain qualified personnel, our ability to develop and introduce a new service and products to the market in a timely manner, market acceptance of our services and products, our limited experience in the industry, the ability to successfully develop licensing programs and generate business, rapid technological change in relevant markets, unexpected network interruptions or security breaches, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments, intense competition with larger companies, general economic conditions, the impact of the current COVID-19 pandemic, and other risks discussed in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission (the “SEC”), and the Company’s other subsequent filings with the SEC.
All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. The Company has no obligation to and does not undertake to update, revise, or correct any of these forward-looking statements after the date of this report.
ITEM 1. FINANCIAL STATEMENTS
Rego Payment Architectures, Inc.
CONTENTS
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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT |
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9 | |
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10 to 23 | |
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Rego Payment Architectures, Inc.
Condensed Consolidated Balance Sheets
September 30, 2021 and December 31, 2020
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September 30, 2021 |
December 31, 2020 | |||||||
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ASSETS |
(Unaudited) |
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CURRENT ASSETS | ||||||||
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Cash and cash equivalents |
$ |
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$ |
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Prepaid expenses |
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Deposits |
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TOTAL CURRENT ASSETS |
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OTHER ASSETS | ||||||||
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Patents and trademarks, net of accumulated amortization of $ |
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TOTAL ASSETS |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
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CURRENT LIABILITIES | ||||||||
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Accounts payable and accrued expenses |
$ |
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$ |
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Accounts payable and accrued expenses - related parties |
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Embedded derivative liability |
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Paycheck protection program loan payable |
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Loans payable |
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Deferred revenue |
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10% secured convertible notes payable - stockholders |
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Notes payable - stockholders, net of discount of $ |
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4% secured convertible notes payable - stockholders |
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Preferred stock dividend liability |
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TOTAL CURRENT LIABILITIES |
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LONG-TERM LIABILITIES | ||||||||
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10% secured convertible notes payable - stockholders |
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4% secured convertible notes payable - stockholders |
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TOTAL LONG-TERM LIABILITIES |
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CONTINGENCIES |
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STOCKHOLDERS' DEFICIT | ||||||||
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Preferred stock, $. |
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Preferred stock, $.0001 par value; 2,000,000 preferred shares authorized; |
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Preferred stock, $.0001 par value; 2,000,000 preferred shares authorized; |
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Common stock, $ . |
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Additional paid in capital |
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Accumulated deficit |
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Noncontrolling interests |
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( |
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STOCKHOLDERS' DEFICIT |
( |
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( |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
$ |
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$ |
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See the accompanying notes to the condensed consolidated financial statements.
Rego Payment Architectures, Inc.
Condensed Consolidated Statements of Comprehensive Loss
For the Three and Nine Months Ended September 30, 2021 and 2020
(Unaudited)
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For the Three Months Ended |
For the Nine Months Ended | |||||||||||||||
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September 30, |
September 30, | |||||||||||||||
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2021 |
2020 |
2021 |
2020 | |||||||||||||
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NET REVENUE |
$ |
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$ |
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$ |
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$ |
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OPERATING EXPENSES | ||||||||||||||||
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Transaction expense |
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Sales and marketing |
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Product development |
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General and administrative |
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Total operating expenses |
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NET OPERATING LOSS |
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OTHER INCOME (EXPENSE) | ||||||||||||||||
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Interest income |
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Forgiveness of debt |
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Interest expense |
( |
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( |
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( |
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( |
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Change in fair value of embedded derivative liability |
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( |
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( |
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( |
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( |
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( |
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( |
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NET LOSS |
( |
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( |
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( |
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( |
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LESS: Accrued preferred dividends |
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( |
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( |
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Net loss attributable to noncontrolling interests |
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NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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BASIC AND DILUTED NET LOSS PER COMMON SHARE |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
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See the accompanying notes to the condensed consolidated financial statements.
Rego Payment Architectures, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
For the Three and Nine Months Ended September 30, 2021
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Preferred |
Preferred |
Preferred |
Common | |||||||||||||||||||||||||||||||||||||||||||||
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Stock Series A |
Stock Series B |
Stock Series C |
Stock | |||||||||||||||||||||||||||||||||||||||||||||
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Number |
Number |
Number |
Number |
Additional | ||||||||||||||||||||||||||||||||||||||||||||
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of |
of |
of |
of |
Paid-In |
Accumulated |
Noncontrolling | ||||||||||||||||||||||||||||||||||||||||||
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Interests |
Total | |||||||||||||||||||||||||||||||||||||
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Balance, December 31, 2020, as previously reported |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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$ |
( |
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Adoption of new accounting principle for embedded derivative liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
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- |
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Balance, December 31, 2020, as adjusted |
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( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Conversion of Series A Preferred shares into common stock |
( |
) |
( |
) |
- |
- |
- |
- |
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( |
) |
- |
- |
- | |||||||||||||||||||||||||||||||||
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Issuance of common stock to board members and employees |
- |
- |
- |
- |
- |
- |
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- |
- |
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Issuance of common stock for accounts payable |
- |
- |
- |
- |
- |
- |
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- |
- |
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Exercise of options |
- |
- |
- |
- |
- |
- |
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- |
- |
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Fair value of options for software |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
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Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
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Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Balance, March 31, 2021 (Unaudited) |
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( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Issuance of common stock to board members and employees |
- |
- |
- |
- |
- |
- |
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- |
- |
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Exercise of options, cashless |
- |
- |
- |
- |
- |
- |
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( |
) |
- |
- |
- | |||||||||||||||||||||||||||||||||||
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Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
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- |
- |
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Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
|
Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
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( |
) | ||||||||||||||||||||||||||||||||||
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Balance, June 30, 2021 (Unaudited) |
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( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Sale of Series B Preferred stock |
- |
- |
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- |
- |
- |
- |
- |
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- |
- |
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Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
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- |
- |
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Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
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( |
) |
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Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) | ||||||||||||||||||||||||||||||||||
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Balance, September 30, 2021 (Unaudited) |
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$ |
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$ |
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$ |
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$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
(30,184,601 |
) | |||||||||||||||||||||||||
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Preferred |
Preferred |
Preferred |
Common | |||||||||||||||||||||||||||||||||||||||||||||
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Stock Series A |
Stock Series B |
Stock Series C |
Stock | |||||||||||||||||||||||||||||||||||||||||||||
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Number |
Number |
Number |
Number |
Additional | ||||||||||||||||||||||||||||||||||||||||||||
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of |
of |
of |
of |
Paid-In |
Accumulated |
Noncontrolling | ||||||||||||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Interests |
Total | |||||||||||||||||||||||||||||||||||||
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Balance, December 31, 2019 |
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$ |
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$ |
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$ |
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$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
( |
) | ||||||||||||||||||||||||||
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Issuance of warrants for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
|
Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Balance, March 31, 2020 (Unaudited) |
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( |
) |
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( |
) | ||||||||||||||||||||||||||||||||||
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| ||||||||||||||||||||||||||||||||||||||||||||||||
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Issuance of warrants for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
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Fair value of options for interest |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
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Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
|
Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
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Balance, June 30, 2020 (Unaudited) |
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( |
) |
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( |
) | ||||||||||||||||||||||||||||||||||
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Fair value of common stock issued for services |
- |
- |
- |
- |
- |
- |
|
|
|
- |
- |
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Common stock forfeited |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
|
- |
- |
| ||||||||||||||||||||||||||||||||||
|
Fair value of warrants for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Fair value of options for services |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Fair value of options issued for forgiveness of debt |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Fair value of options for interest |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
| ||||||||||||||||||||||||||||||||||||
|
Accrued preferred dividends |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
|
Net loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2020 (Unaudited) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
( |
) | ||||||||||||||||||||||||||
See the accompanying notes to the condensed consolidated financial statements.
Rego Payment Architectures, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2021 and 2020
(Unaudited)
|
For the Nine Months Ended September 30, | ||||||||
|
2021 |
2020 | |||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
|
Net loss |
$ |
( |
) |
$ |
( |
) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
|
Fair value of options issued for interest on notes payable |
|
| ||||||
|
Fair value of common stock issued in exchange for services |
|
| ||||||
|
Fair value of options and warrants issued in exchange for services |
|
| ||||||
|
Change in fair value of embedded derivative liability |
|
| ||||||
|
Accretion of discount on notes payable |
|
| ||||||
|
Impairment loss |
|
| ||||||
|
Depreciation and amortization |
|
| ||||||
|
Forgiveness of debt |
( |
) |
| |||||
|
(Increase) decrease in assets | ||||||||
|
Prepaid expenses |
|
( | ||||||
|
Increase (decrease) in liabilities | ||||||||
|
Accounts payable and accrued expenses |
|
| ||||||
|
Accounts payable and accrued expenses - related parties |
( |
) |
( |
) | ||||
|
| ||||||||
|
Net cash used in operating activities |
( |
) |
( |
) | ||||
|
| ||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
|
Investment in patents |
( |
) |
| |||||
|
Net cash used in investing activities |
( |
) |
| |||||
|
| ||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
|
Exercise of options |
|
| ||||||
|
Proceeds from sale of Series B Preferred stock |
|
| ||||||
|
Proceeds from notes payable - stockholders |
|
| ||||||
|
Repayment of notes payable - stockholders |
( |
) |
( |
) | ||||
|
Proceeds from convertible notes payable - stockholders |
|
| ||||||
|
Proceeds from paycheck protection program loan |
|
| ||||||
|
| ||||||||
|
Net cash provided by financing activities |
|
| ||||||
|
| ||||||||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
| ||||||
|
| ||||||||
|
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD |
|
| ||||||
|
| ||||||||
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
1,719,658 |
$ |
| ||||
|
| ||||||||
|
| ||||||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
|
| ||||||||
|
Cash paid during year for: | ||||||||
|
Interest |
$ |
|
$ |
| ||||
|
| ||||||||
|
Income taxes |
$ |
|
$ |
| ||||
|
| ||||||||
|
| ||||||||
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
|
| ||||||||
|
Accrued preferred dividends |
$ |
|
$ |
| ||||
|
| ||||||||
|
Exchange of notes payable - stockholders for 4% secured convertible notes payable |
$ |
|
$ |
| ||||
|
| ||||||||
|
Forfeited common stock |
$ |
|
$ |
| ||||
|
| ||||||||
|
Options issued for software |
$ |
|
$ |
| ||||
|
| ||||||||
|
Issuance of common stock for accounts payable |
$ |
|
$ |
| ||||
|
| ||||||||
|
Conversion of Series A Preferred stock to common stock |
$ |
|
$ |
| ||||
|
| ||||||||
|
Adoption of new accounting principle for embedded derivative liabilities affecting accumulated deficit |
$ |
|
$ |
| ||||
|
| ||||||||
|
Exchange of deferred revenue for 10% convertible notes payable |
$ |
|
$ |
| ||||
|
| ||||||||
|
Cashless conversion of options into common stock |
$ |
|
$ |
| ||||
|
| ||||||||
|
Exchange of note payable - stockholder and accrued interest for 4% convertible note payable |
$ |
|
$ |
| ||||
See the accompanying notes to the condensed consolidated financial statements.
Rego Payment Architectures, Inc.
Notes to Condensed Consolidated Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Business
REGO Payment Architectures, Inc. (“REGO”) was incorporated in the state of Delaware on February 11, 2008.
REGO Payment Architectures, Inc. and its subsidiaries (collectively, except where the context requires, the “Company”) is a provider of consumer software that delivers a mobile payment platform solution—MazoolaSM - a family focused mobile banking solution (the “Platform”). Headquartered in Blue Bell, Pennsylvania, the Company maintains a portfolio of trade secrets and four US patent awards. REGO offers an all-digital financial payments platform to enable minors, particularly under 13 years old, to purchase goods and services, complete chores and learn in a secure online environment guided by parental permission, oversight, and control, while remaining Children’s Online Privacy Protection Act (“COPPA”) and General Data Protection Regulation (“GDPR”) compliant.
Management believes that building on its COPPA advantage, the future of REGO Payment Architectures, Inc. will be based on the foundational architecture of the Platform that will allow its use across multiple financial markets where secure controlled payments are needed. The Company intends to license in each alternative field of use the ability for its partners, distributors and/or value-added resellers to private label each of the alternative markets. These partners would deploy, customize and support each implementation under their own label, but with acknowledgement of the Company’s proprietary intellectual assets as the base technology. Management believes this approach will enable the Company to reduce expenses while broadening its reach.
Revenues generated from the Platform will come from multiple sources depending on the level of service and facilities requested by the parent. There will be levels of subscription revenue paid monthly, service fees, transaction fees and in some cases, revenue sharing and licensing with banking and distribution partners.
ZOOM Solutions, Inc. (“ZS”)
ZS (formerly Zoom Payment Solutions, Inc.) was incorporated in the state of Delaware on February 16, 2018 as a subsidiary of REGO Payment Architectures, Inc. During the year ended December 31, 2020, the minority common shareholders of ZS exchanged their shares in ZS for REGO
There were minimal operations at ZS during the three and nine months ended September 30, 2021 and 2020.
ZOOM Payment Solutions, Inc. (“ZPS”)
ZPS (formerly Zoom Payment Solutions USA, Inc.) was incorporated in the state of Nevada on December 6, 2017. ZPS is a wholly owned subsidiary of ZS with the core focus on providing mobile payments solutions. ZPS has secured a sublicense from ZS for the REGO payment Platform and access to the patents from REGO.
There were minimal operations at ZPS during the three and nine months ended September 30, 2021 and 2020.
ZOOM Blockchain Solutions, Inc. (“ZBS”)
ZBS was incorporated in the state of Delaware on April 20, 2018 as an
There were minimal operations at ZBS during the three and nine months ended September 30, 2021 and 2020.
ZOOM Cloud Solutions, Inc. (“ZCS”)
ZCS (formerly Zoom Canada Solutions, Inc.) was incorporated in the state of Delaware on April 20, 2018 as an
There were minimal operations at ZCS during the three and nine months ended September 30, 2021 and 2020.
ZOOM Auto Solutions, Inc. (“ZAS”)
ZAS (formerly Zoom Mining Solutions) was incorporated in the State of Delaware on February 19, 2018 as a wholly owned subsidiary of ZCS. It is now a wholly owned subsidiary of ZBS.
There were minimal operations at ZAS during the three and nine months ended September 30, 2021 and 2020.
REGO Data Solutions, Inc. (“RDS”)
RDS was incorporated in the State of Delaware on February 25, 2021 as a wholly-owned subsidiary of REGO for the purpose of maintaining data collected by MazoolaSM.
There were minimal operations at RDS during the three and nine months ended September 30, 2021.
The Company’s principal office is located in Blue Bell, Pennsylvania.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary of accounting policies included in the Company’s 2020 Annual Report on Form 10-K (the “Form 10-K”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional financing to operationalize the Company’s current technology before another company develops similar technology to compete with the Company.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this pronouncement on January 1, 2021, and there was not a material impact on the financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this Update affect entities that issue convertible instruments and/or contracts in an entity’s own equity. For convertible instruments, the instruments primarily affected are those issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in this Update. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the prior guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. FASB simplified the settlement assessment by removing the requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is required to be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this Update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this Update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company adopted the modified retrospective transition method of this pronouncement on January 1, 2021 and as a result reclassified $
Recently Issued Accounting Pronouncements Not Yet Adopted
As of September 30, 2021, 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.
The Covid-19 pandemic caused a significant economic slowdown that adversely affected the demand for services. While the Company expects this matter to negatively impact its results of operations, cash flow and financial position, the future financial impact cannot be reasonably estimated at this time.
As of November 15, 2021, the Company has a cash position of approximately $1.2 million. Based upon the current cash position and the Company’s planned expense run rate, management believes the Company has funds currently to finance its operations through January 2022.
NOTE 3 – IMPAIRMENT OF LONG-LIVED ASSETS
On January 1, 2021, REGO entered into a Purchase of Business Agreement (“Agreement”) with Chore Check, LLC pursuant to which it purchased the assets of Chore Check, LLC, consisting primarily of a software application, valued at $
Long-lived assets are tested for impairment by performing a qualitative assessment to determine whether it is more likely than not that the fair value is less than the carrying value. Long-lived assets are considered impaired if the carrying value exceeds its fair value. We determined that the carrying value of the asset acquired from Chore Check, LLC exceeded its fair value and have recorded an impairment loss in the amount of $
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTIES
As of September 30, 2021 and December 31, 2020, the Company owed the Chief Executive Officer, who is also a more than 5% beneficial owner, a total of $
Additionally, as of September 30, 2021 and December 31, 2020, the Company owed the son of a more than 5% beneficial owner, Chief Executive Officer, President and Board member, $
As of September 30, 2021 and December 31, 2020, the Company owed the Chief Financial Officer $
NOTE 5 – PAYCHECK PROTECTION PROGRAM LOAN PAYABLE
During April 2020, the Company received $
In accordance with FASB ASC 470, Debt, the Company recorded the loans as a current liability in the amount of $
On January 28, 2021, the Company received notification from the lender that its Paycheck Protection Program loan had been forgiven in full by the Small Business Administration in the amount of $
Additionally, the Economic Injury Disaster Loan of $
NOTE 6 – LOANS PAYABLE
Loans payable as of September 30, 2021 and December 31, 2020 were $
NOTE 7 – DEFERRED REVENUE
The Company received $
During the nine months ended September 30, 2021, the Company exchanged $
NOTE 8 – 10% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS
On March 6, 2015, the Company, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $
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 $
During the nine months ended September 30, 2021, the Company exchanged $
The Notes are recorded as a long-term liability as of September 30, 2021 and a current liability as of December 31, 2020 in the amount of $
NOTE 9 – NOTES PAYABLE – STOCKHOLDERS
During the nine months ended September 30, 2021 and 2020, the Company issued $
During the nine months ended September 30, 2021, the Company repaid $
1.
$
2.
$
3.
$
4.
$
5.
$
6.
$
7.
In order to prevent the termination of the option, unless it has previously terminated, the Holder of the option must purchase $
8.
In addition to the other termination clauses, the option will terminate and be of no further force or effect ten days after the occurrence of any of the following events, however nothing will prevent the holder from purchasing up to $8 million in the aggregate of the Company’s Series B Preferred Stock during the ten day period:
a.
Execution by the Company of an engagement letter with a “major bracket” investment banking firm.
b.
Upon the Company entering into a definitive agreement with respect to a specified Norway white label transaction.
c.
Upon the MazoolaPaySM technology becoming integrated and operational on any one of the following websites:
i.
Demandware
ii.
Magento
iii.
WooCommerce
iv.
Shopify
v.
BigCommerce
vi.
Wix
vii.
Squarespace
viii.
Square Online
d.
Upon the Company entering into a definitive agreement to white label the MazoolaPaySM technology with a banking institution with assets in excess of $
The option to purchase $
The options to purchase Series B Preferred Stock on July 20, 2021 and August 23, 2021, were exercised by the holder of the note payable and the Company issued
On September 30, 2021, the Company extended the deadline date for the exercise of the option expiring on
These notes payable are recorded as a current liability as of September 30, 2021 and December 31, 2020 in the amount of $
NOTE 10 – 4% SECURED CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS
On August 26, 2016, the Company, pursuant to a Securities Purchase Agreement, issued $
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 $
The maturity dates of the New Secured Notes were extended by the investors to October 31, 2022.
During the nine months ended September 30, 2021, the Company issued $
In addition, during the nine months ended September 30, 2021, the Company exchanged the remaining $
The New Secured Notes are recorded as a long-term liability in the amount of $
NOTE 11 – INCOME TAXES
Income tax expense was $
As of January 1, 2021, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2021 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three and nine months ended September 30, 2021, and there was no accrual for uncertain tax positions as of September 30, 2021. Tax years from 2017 through 2020 remain subject to examination by major tax jurisdictions.
There is no income tax benefit for the losses for the three and nine months ended September 30, 2021 and 2020, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.
NOTE 12 – 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 $
The conversion price of Series A Preferred Stock is currently $
On January 1, 2021, upon adoption of FASB ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, the Company reclassified the embedded derivative value of the beneficial conversion feature of the Series A Preferred Stock issued in January 2014 valued at $
During the nine months ended September 30, 2021, certain holders of the Series A Preferred Stock converted
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 $
The conversion price of the Series B Preferred Stock is currently $
On January 1, 2021, upon adoption of FASB ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, the Company reclassified the embedded derivative liability relative to the beneficial conversion feature of the Series B Preferred Stock issued in October 2014 valued at $
During the third quarter of 2021, the Company sold
Rego Payment Architectures, Inc. Series C Preferred Stock
In August 2016, Rego authorized
As of September 30, 2021, the value of the cumulative
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,
As of September 30, 2021, the value of the cumulative
NOTE 13 – 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
Option Amendments and Adjustments
On June 3, 2021, the Board of Directors approved amendments extending the term of certain outstanding options to purchase in the aggregate
Issuance of Restricted Shares
A restricted stock award (“RSA”) is an award of common shares that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of nonvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding. The Company’s restricted stock awards generally vest over a period of one year. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse. For these purposes, the fair market value of the restricted stock is determined based on the closing price of the Company’s common stock on the grant date.
During the three months ended March 31, 2021, the Company issued
During the three months ended March 31, 2021, the Company issued a Board Member and the Chief Financial Officer
During the three months ended March 31, 2021, the Company issued the Chief Executive Officer, who is also a Board Member,
During the three months ended March 31, 2021, an employee exercised an option to purchase
During the three months ended June 30, 2021, the Company issued the Chief Executive Officer, who is also a Board Member,
During the three months ended June 30, 2021, an employee exercised an option to purchase
NOTE 14 – 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
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
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 nine months ended September 30, 2021:
|
Risk Free Interest Rate |
|
% | |
|
Expected Volatility |
|
% | |
|
Expected Life (in years) |
| ||
|
Dividend Yield |
|
% | |
|
Weighted average estimated fair value of options during the period |
$ |
|
During the nine months ended September 30, 2021, the Company issued options to purchase
The following table summarizes the activities for REGO’s stock options for the nine months ended September 30, 2021:
|
Options Outstanding |
| |||||||||||||||
|
Weighted - |
| |||||||||||||||
|
Average |
| |||||||||||||||
|
Remaining |
Aggregate |
| ||||||||||||||
|
Weighted - |
Contractual |
Intrinsic |
| |||||||||||||
|
Number of |
Average |
Term |
Value |
| ||||||||||||
|
Shares |
Exercise Price |
(in years) |
(in 000's) (1) |
| ||||||||||||
|
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Granted |
|
|
| |||||||||||||
|
Exercised |
( |
) |
|
| ||||||||||||
|
Expired |
( |
) |
|
| ||||||||||||
|
|
| |||||||||||||||
|
Balance, September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 and expected to vest thereafter |
|
$ |
|
|
$ |
|
| |||||||||
|
(1) |
|
Rego expensed $
As of September 30, 2021, there was $
The following table summarizes the activities for REGO’s warrants for the nine months ended September 30, 2021:
|
Warrants Outstanding |
| |||||||||||||||
|
Weighted - |
| |||||||||||||||
|
Average |
| |||||||||||||||
|
Remaining |
Aggregate |
| ||||||||||||||
|
Weighted - |
Contractual |
Intrinsic |
| |||||||||||||
|
Number of |
Average |
Term |
Value |
| ||||||||||||
|
Shares |
Exercise Price |
(in years) |
(in 000's) (1) |
| ||||||||||||
|
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Expired |
( |
) |
|
- |
| |||||||||||
|
|
| |||||||||||||||
|
Balance, September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
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|
Exercisable at September 30, 2021 |
|
$ |
|
|
$ |
|
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|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 and expected to vest thereafter |
|
$ |
|
|
$ |
|
| |||||||||
|
(1) |
|
Rego expensed $
All warrants were vested on the date of grant.
The following table summarizes the activities for ZS’s stock options for the nine months ended September 30, 2021:
|
ZS Options Outstanding |
| |||||||||||||||
|
Weighted - |
| |||||||||||||||
|
Average |
| |||||||||||||||
|
Remaining |
Aggregate |
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|
Weighted - |
Contractual |
Intrinsic |
| |||||||||||||
|
Number of |
Average |
Term |
Value |
| ||||||||||||
|
Shares |
Exercise Price |
(in years) |
(in 000's) (1) |
| ||||||||||||
|
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Balance, September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 and expected to vest thereafter |
|
$ |
|
|
$ |
|
| |||||||||
|
(1) |
|
For the three and nine months ended September 30, 2021 and 2020, ZS expensed $
The following table summarizes the activities for ZS’s warrants for the nine months ended September 30, 2021:
|
ZS Warrants Outstanding |
| |||||||||||||||
|
Weighted - |
| |||||||||||||||
|
Average |
| |||||||||||||||
|
Remaining |
Aggregate |
| ||||||||||||||
|
Contractual |
Intrinsic |
| ||||||||||||||
|
Number of |
Average |
Term |
Value |
| ||||||||||||
|
Shares |
Exercise Price |
(in years) |
(in 000's) (1) |
| ||||||||||||
|
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Balance, September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 and expected to vest thereafter |
|
$ |
|
|
$ |
|
| |||||||||
|
(1) |
|
For the three and nine months ended September 30, 2021 and 2020, ZS expensed $
The following table summarizes the activities for ZCS’s stock options for the nine months ended September 30, 2021:
|
ZCS Options Outstanding |
| |||||||||||||||
|
Weighted - |
| |||||||||||||||
|
Average |
| |||||||||||||||
|
Remaining |
Aggregate |
| ||||||||||||||
|
Weighted - |
Contractual |
Intrinsic |
| |||||||||||||
|
Number of |
Average |
Term |
Value |
| ||||||||||||
|
Shares |
Exercise Price |
(in years) |
(in 000's) (1) |
| ||||||||||||
|
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Balance, September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 |
|
$ |
|
|
$ |
|
| |||||||||
|
|
| |||||||||||||||
|
Exercisable at September 30, 2021 and expected to vest thereafter |
|
$ |
|
|
$ |
|
| |||||||||
|
(1) |
|
For the three and nine months ended September 30, 2021 and 2020, ZCS expensed $
NOTE 15 – NONCONTROLLING INTERESTS
Losses incurred by the noncontrolling interests for the three and nine months ended September 30, 2021 were $
NOTE 16 – OPERATING LEASES
For the three and nine months ended September 30, 2021, total rent expense under leases amounted to $
NOTE 17 – SUBSEQUENT EVENTS
On October 29, 2021, the Company extended the deadline date for the exercise of the option expiring on November 1, 2021 to
On November 5, 2021, the Company sold
On November 8, 2021, two Series A Preferred shareholders elected to convert a total of
| 23 |
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 current focus is monetizing the MazoolaSM Digital Wallet Platform in the Financial Technology (“FinTech”) industry through white label, licensing and partnership agreements. We have successfully launched the MazoolaSM App and are focused on improving and monetizing the existing Platform and App that will act as the foundation for the strategic alignment with the FinTech industry. The FinTech industry is composed primarily of startup companies that use software to provide financial services more efficiently and less costly than traditional financial service companies. With our Children’s Online Privacy Protection Act (“COPPA”) and GDPRkidsTM 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.
| 24 |
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 through 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.
We have launched our MazoolaSM app. We plan to develop additional enhancements to the app and develop a web based platform, which is expected to be completed in the fourth quarter of 2021.
In addition to expanding the existing payment solution to a growing US and global customer base, management believes there is robust demand for:
| 1) | A digital ecosystem for children embedded within a marketplace of service offerings, delivered via in-house technology and through third party integrations (“super app”). The inherent fenced design and systems architecture of the MazoolaTM digital wallet aligns well with the overall purpose and approach of a “super app”— to offer a wide array of services within a controlled environment on mobile operating systems, such as iOS and Android. |
| 2) | Expanded in-application service modules such as investments, charitable giving, and financial literacy, as well as, the inclusion of new marketplaces, health centers, and logistic/inventory management systems. |
| 3) | Predictive analytic products and services based on REGO’s anonymized data collection techniques. |
| 4) | A two-sided platform of the REGO offering, MazoolaPay, which is currently in later stage development. This provides a way for retailers to offer families a compliant payment offering when engaging in e-commerce transactions. |
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.
| 25 |
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.
Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
The following discussion analyzes our results of operations for the three months ended September 30, 2021 and 2020. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.
Net Revenue
We have not generated significant revenue since our inception. For the three months ended September 30, 2021 and 2020 we generated revenues of $1,068 and $0.
Net Loss
For the three months ended September 30, 2021 and 2020, we had a net loss of $1,308,769 and $1,427,513.
Transaction Expense
Transaction expense for the three months ended September 30, 2021 was $38,389 compared to $0 for the three months ended September 30, 2020. These are transactional charges primarily for the operation of the MazoolaSM app, and the Chore Check app.
Sales and Marketing
Sales and marketing expenses for the three months ended September 30, 2021 were $178,404 compared to $22,784 for the three months ended September 30, 2020, an increase of $155,620. This resulted from hiring consultants to develop and execute a marketing plan.
Product Development
Product development expenses were $631,977 and $474,151 for the three months ended September 30, 2021 and 2020, an increase of $157,826. The Company continued the process to complete the development of the MazoolaSM app prior to its launch and then began developing further enhancements to the app to increase its marketability.
General and Administrative Expenses
General and administrative expenses decreased $719,684 to $208,497 for the three months ended September 30, 2021 from $928,181 for the three months ended September 30, 2020. This resulted from the Company issuing shares of common stock and options to Board members and officers, in the amount of approximately $710,000, during the three months ended September 30, 2020 versus $0 for the three months ended September 30, 2021.
Forgiveness of Debt
Forgiveness of debt decreased $422,419 to $0 for the three months ended September 30, 2021. This resulted from forgiveness of debt for three months ended September 30, 2020 related to accrued payroll.
Interest Expense
During the three months ended September 30, 2021, the Company incurred interest expense of $252,621, compared to $192,216 for the three months ended September 30, 2020, an increase of $60,405. The increase in interest expense relates to additional debt outstanding.
Change in Fair Value of Embedded Derivative Liability
The change in fair value of embedded derivative liability decreased to $0 for the three months ended September 30, 2021 from $232,600 for the three months ended September 30, 2020 as a result of the Company adopting FASB ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The Company adopted the modified retrospective transition method of this pronouncement on January 1, 2021 and as a result reclassified $10,987,578 between debt and accumulated deficit.
| 26 |
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following discussion analyzes our results of operations for the nine months ended September 30, 2021 and 2020. The following information should be considered together with our condensed financial statements for such period and the accompanying notes thereto.
Net Revenue
We have not generated significant revenue since our inception. For the nine months ended September 30, 2021 and 2020 we generated revenues of $2,341 and $0.
Net Loss
For the nine months ended September 30, 2021 and 2020, we had a net loss of $9,226,135 and $2,697,006.
Transaction Expense
Transaction expense for the nine months ended September 30, 2021 was $114,448 compared to $0 for the nine months ended September 30, 2020. These are transactional charges primarily for the operation of the MazoolaSM app, and the Chore Check app.
Sales and Marketing
Sales and marketing expenses for the nine months ended September 30, 2021 were $802,017 compared to $41,123 for the nine months ended September 30, 2020, an increase of $760,894. This resulted from the issuance of options to consultants involved with the marketing of the MazoolaSM app and monthly consulting fees.
Product Development
Product development expenses were $2,279,893 and $667,604 for the nine months ended September 30, 2021 and 2020, an increase of $1,612,289. The Company continued the process to complete the development of the MazoolaSM app prior to its launch and then began developing further enhancements to the app to increase its marketability.
General and Administrative Expenses
General and administrative expenses increased $3,693,750 to $5,299,285 for the nine months ended September 30, 2021 from $1,605,535 for the nine months ended September 30, 2020. This resulted from the Company issuing shares of common stock and options to Board members, officers and consultants, an increase of approximately $3,523,000 for the nine months ended September 30, 2021 compared to September 30, 2020. Additionally, impairment of the Chore Check, LLC assets of $112,000 contributed to the increase for the nine months ended September 30, 2021 compared to September 30, 2020.
| 27 |
Forgiveness of Debt
During the nine months ended September 30, 2021, the Company had $95,425 of debt forgiven compared to $422,419 for the nine months ended September 30, 2020. On January 28, 2021, the Company received notification that the Paycheck Protection Plan loan was forgiven in full by the Small Business Administration and therefore $79,500 was recognized as forgiveness of debt during the nine months ended September 30, 2021.
Additionally, the Economic Injury Disaster Loan of $2,000 ($1,000 per employee) does not require repayment and was also recognized as forgiveness of debt.
The Company also had $13,925 of vendor debt forgiven during the nine months ended September 30, 2021 and for the three months ended September 30, 2020 recognized $422,419 of forgiveness of debt related to accrued payroll.
Interest Expense
During the nine months ended September 30, 2021, the Company incurred interest expense of $828,568, compared to $572,563 for the nine months ended September 30, 2020, an increase of $256,005. The increase in interest expense relates to additional debt outstanding.
Change in Fair Value of Embedded Derivative Liability
The change in fair value of embedded derivative liability decreased to $0 for the nine months ended September 30, 2021 from $232,600 for the nine months ended September 30, 2020 as a result of the Company adopting FASB ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The Company adopted the modified retrospective transition method of this pronouncement on January 1, 2021 and as a result reclassified $10,987,578 between debt and accumulated deficit.
Liquidity and Capital Resources
As of November 15, 2021 we had cash on hand of approximately $1.2 million.
Net cash used in operating activities increased $2,368,394 to $3,727,342 for the nine months ended September 30, 2021 as compared to $1,358,948 for the nine months ended September 30, 2020. The increase resulted primarily from the increased development costs to launch the MazoolaSM app and continued enhancements to increase its marketability. Additionally, the Company issued common stock and options with total fair value of $5,143,035 rather than having to expend cash.
Net cash used in investing activities increased $41,196 for the three months ended September 30, 2021 from the three months ended September 30, 2020 as a result of patent expenses related to current patents.
Net cash provided by financing activities increased to $5,215,020 for the nine months ended September 30, 2021 from $1,941,500 for the nine months ended September 30, 2020. Cash provided by financing activities during the nine months ended September 30, 2021, consisted of proceeds from convertible notes payable and the sale of Series B Preferred Stock to provide capital to continue operations.
As we have not realized significant revenues since our inception, we have financed our operations through offerings of debt and equity securities. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution.
Since our inception, we have focused on developing and implementing our business plan. We believe that our existing cash resources will not be sufficient to sustain our operations during the next twelve months. We currently need to generate sufficient revenues to support our cost structure to enable us to pay ongoing costs and expenses as they are incurred, finance enhancements to our Platform, and execute the business plan. If we cannot generate sufficient revenue to fund our business plan, we intend to seek to raise such financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. The issuance of convertible debt may also result in dilution to existing stockholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to us, we will be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on our business, financial condition and results of operations. See Note 2, to our consolidated financial statements included in this Form 10-Q.
Even if we are successful in generating sufficient revenue or in raising sufficient capital in order to complete the Platform, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations. We do not project that significant revenue will be developed at the earliest until the first quarter of 2022. There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan. Moreover, there can be no assurance that even if the Platform is fully developed and successfully launched, 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.
| 28 |
Based upon the current cash position and the Company’s planned expense run rate, management believes the Company will not be able to finance its operations beyond January 2022.
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 September 30, 2021, we do not have any off-balance sheet arrangements.
Critical Accounting Policies
Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 1 of the Notes to Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2020. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.
Stock-based Compensation
We have adopted the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”), which provides supplemental FASB ASC 718 application guidance based on the views of the SEC. Under FASB ASC 718, compensation cost recognized includes compensation cost for all share-based payments granted, based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718.
We have used the Black-Scholes option-pricing model to estimate the option fair values. The option-pricing model requires a number of assumptions, of which the most significant are, expected stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire).
All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity based payments that do not vest immediately upon grant are recorded as an expense over the vesting period.
Revenue Recognition
In accordance with FASB ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for fulfilling those performance obligations.
| 29 |
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 September 30, 2021 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 September 30, 2021, 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 September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There have been no material developments since the disclosure provided in the Company’s Form 10-K for the year ended December 31, 2020.
ITEM 1A. RISK FACTORS.
Not required.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
From July 1, 2021 through August 16, 2021, the Company sold 5,000 shares of the Company’s Series B Preferred stock in a private placement to an accredited investor and received proceeds of $450,000.
On November 5, 2021, the Company sold 556 shares of the Company’s Series B Preferred Stock in a private placement to an accredited investor and received proceeds of $50,000.
On November 8, 2021, two Series A Preferred shareholders elected to convert a total of 750 shares of the Company’s Series A Preferred stock into 83,333 shares of the Company’s common stock.
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.
| 30 |
ITEM 5. OTHER INFORMATION.
The disclosure set forth in Part II – Item 2 above is incorporated by reference.
ITEM 6. EXHIBITS
| 31 |
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: November 15, 2021 | |||
32
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: November 15, 2021 | By: | /s/ Peter S. Pelullo |
| Peter S. Pelullo | ||
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
I, Scott 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: November 15, 2021 | By: | /s/ Scott A. McPherson |
| Scott A. McPherson | ||
| Chief Financial Officer |
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with this Quarterly Report of Rego Payment Architectures, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2021, 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: November 15, 2021 | By: | /s/ Peter S. Pelullo |
| Peter S. Pelullo | ||
| Chief Executive Officer |
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with this Quarterly Report of Rego Payment Architectures, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2021, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. McPherson, Chief Financial Officer (Principal Financial Officer) of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1) | This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2) | The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: November 15, 2021 | By: | /s/ Scott A. McPherson |
| Scott A. McPherson | ||
| Chief Financial Officer |