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

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

~~1111 BRICKEL AVE, SUITE 2200,~~235 Lincoln RD., MIAMI BEACH, FL ~~33131~~33139

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

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

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of ~~November 10, 2017,~~May 5, 2021, the issuer had ~~301,422,658~~13,829,601 shares of its common stock issued and outstanding.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)

~~The accompanying notes are an integral part of these unaudited consolidated financial statements~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

~~NEXT GROUP HOLDINGS, INC~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

~~Next Group Holdings, Inc,~~Cuentas, Inc. (the “Company”) together with its subsidiaries, is focused on financial technology (“FINTECH”) services, delivering mobile banking, online banking, prepaid debit and digital content services to unbanked, underbanked and underserved communities. The Company derives its revenue from the sales of prepaid and wholesale calling minutes. Additionally, The Company has an agreement with Interactive Communications International, Inc. (“InComm”) a leading processor of general purpose reloadable (“GPR”) debit cards, to market and distribute a line of GPR cards targeted towards the Latin American market.

The Company was incorporated under the laws of the State of Florida on September 21, 2005 to act as a holding company for its ~~subsidiaries, both current and future.~~subsidiaries. Its subsidiaries are Meimoun and Mammon, LLC (100% owned) (“M&M”), Next Cala, ~~Inc~~Inc. (94% ~~owned)~~owned -was dissolved on July 3, 2020) (“Cala”), NxtGn, Inc. (65% ~~owned)~~owned-was dissolved on August 24, 2020) (“NxtGn”) and Cuentas Mobile LLC (formerly Next Mobile 360, ~~Inc. (100%~~LLC. - 100% owned). Additionally, Next Cala, Inc. ~~has~~had a 60% interest in NextGlocal Inc. (“NextGlocal”), a subsidiary formed in May ~~2016.~~

~~On January 1,~~ 2016 ~~NGH completed an Agreement~~ and ~~Plan~~which was dissolved on September 27, 2019. Tel3, a business segment of Merger (the “Merger Agreement”) with Pleasant Kids, Inc. (“Pleasant Kids”) and its wholly owned subsidiary, NGH Acquisition Corp. (“Acquisition Sub”), pursuant to which NGH merged with Acquisition Sub and Acquisition Sub was then merged into PLKD effective January 1, 2016. Under the terms of the Merger Agreement, the NGH shareholders received shares of PLKD common stock such that the NGH shareholders received approximately 80% of the total common shares and 100% of the preferred shares of PLKD issued and outstanding following the merger. Due to the nominal assets and limited operations of PLKD prior to the merger, the transaction was accorded reverse recapitalization accounting treatment under the provision of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 805 whereby NGH became the accounting acquirer (legal acquiree) and PLKD was treated as the accounting acquiree (legal acquirer). The historical financial records of the Company are those of the accounting acquirer (NGH) adjusted to reflect the legal capital of the accounting acquire (PLKD).As the transaction was treated as a recapitalization, no intangibles, including goodwill, were recognized. Concurrent with the effective date of the reverse recapitalization transaction, the Company adopted the fiscal year end of the accounting acquirer of December 31.

Meimoun and Mammon, LLC ~~(“M&M”) was formed under~~provides prepaid calling cards to consumers directly and operates in a complimentary space as Meimoun and Mammon, LLC. On October 23, 2017, the ~~laws~~Company acquired 100% of the ~~State of Florida on May 21, 2001 as~~outstanding shares in Limecom, Inc., (“Limecom” and such acquisition, the “Limecom Acquisition”) from Heritage Ventures Limited (“Heritage”). On January 30, 2019, the Company exercised a ~~real estate investment company. During~~right to rescind the ~~year ended December 31, 2010, M&M began winding down real estate operations and engaged~~Limecom Acquisition, principally in ~~telecommunications services. M&M acquired telecom registrations, licenses and authorities~~an effort to ~~provide telecom services to~~reduce the ~~retail and wholesale markets including sales of prepaid long distance telecom services and Mobile Virtual Network Operator (MVNO) services. The services are sold under~~Company’s continuing debt obligations associated with the ~~brand name Next Mobile 360 and through the subsidiary of the same name.~~

Next Cala, Inc, (“Cala”) was formed under the laws of Florida on July 10, 2009 to the purpose of offering prepaid and reloadable debit cards to the retail market. Cala serves consumers in the underbanked and unbanked populations through Incomm, a leading provider of payment remittance services worldwide.

NxtGn, Inc. (“NxtGn”) was formed under the laws of Florida on August 24, 2011 to develop a unique High Definition telepresence product (AVYDA) which allows users to connect with celebrities, public figures, healthcare and education applications via a mobile phone, tablet or personal computer.Limecom Acquisition.

On May 27, 2016, the Cala entered into a Joint Venture Agreement (the “Agreement”) with Glocal Payments Solutions, Inc (“Glocal”) to form a joint venture in which Cala has a 60% controlling interest and Glocal has a 40% interest. The Joint Venture will seek to launch and activate up to 45,000 prepaid debit cards under the Cala brand by December ~~31, 2016 and 360,000 additional cards during the~~6, 2017, ~~calendar year. Either party may terminate the agreement at December 31, 2016 if certain objectives are not met.~~

~~On July 22, 2016,~~ the Company completed its ~~acquisition~~formation of ~~Transaction Processing Products, Inc. (“TPP”) which has a 64% interest in Accent InterMedia,~~SDI NEXT DISTRUBUTION LLC (“~~AIM”~~SDI Next”) in which the Company owns a 51% membership interest, previously announced August 24, 2017 in a letter of intent with Fisk Holdings, LLC (“Fisk Holdings”). Per the Operating Agreement of SDI Next, the Company and Fisk Holdings will serve as the Managing Members of SDI Next and the Company will contribute a total of $500,000, to be paid per an agreed-upon schedule over a twelve-month period. Fisk Holdings will contribute 30,000 active point of sale locations for distribution of retail telecommunications and prepaid financial products and services to include, but not be limited to: prepaid GPR cards, prepaid gift cards, prepaid money transfer, prepaid utility payments, and other prepaid products. The completed formation of an established distribution business for third-party gift cards, digital content, mobile top up, financial services and digital content, which presently includes more than 31,600 U.S. active Point of Sale locations, including store locations, convenience stores, bodegas, store fronts, etc. The parties agreed that additional product lines may be added with unanimous decision by the Managing Members of SDI Next. During 2018, it was agreed between the parties to distribute the Company’s recently announced CUENTAS GPR card and mobile banking solution aimed to the unbanked, underbanked and financially underserved consumers, making them available to customers at the more than 31,600 retail locations SDI Next presently serves. SDI Next was dissolved on August 22, 2020.

On December 31, 2019, the Company entered into a series of integrated transactions to license the Platforms from CIMA, through CIMA’s wholly owned subsidiaries Knetik, and Auris (the “Transaction Closing”) pursuant to that certain Platform License Agreement, dated December 31, 2019 by and among (i) the Company, (ii) CIMA, (iii) Knetik and (iv) Auris (the “License Agreement”) and nothe various other ~~assets or liabilities. AIM operates as~~agreements listed below. Under the License Agreement Cima received a ~~leading gift card provider and~~one-time licensing fee in ~~business activities very synergistic with those~~the amount of $9,000 in the form of a convertible note that may be converted, at the option of Cima, into up to 25% of the total shares of Common Stock of the Company, ~~is currently engaged in.~~par value $0.001 per share (the “Common Stock”) on a fully diluted basis as of December 31, 2019. On December 31, 2019, CIMA exercised its option to convert the Convertible Promissory Note into 702,992 shares of Common Stock of the Company. Upon the conversion of the Series B Preferred shares into common stock, CIMA received an additional five million shares pursuant to their anti-dilution warrant agreement.

The acquired intangible assets that consisted of perpetual software license had an estimated fair value of $9,000. The Company ~~sold its interest~~will amortize the intangible assets on a straight-line basis over their expected useful life of 60 months. Identifiable intangible assets were recorded as follows:

On March 5, 2021, the Company purchased the domain www.cuentas.com in ~~TPP during~~consideration of $47,000. The Company will amortize the ~~three months~~intangible assets on a straight-line basis over their expected useful life of 60 months. Identifiable intangible assets were recorded as follows:

Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment.

Amortization of intangible assets for each of the next five years and thereafter is expected to be as follows:

Amortization expense was $452 and $450 for the periods ended March 31, ~~2017~~2021 and 2020, respectively. Amortization expense for each period is included in operating expenses.

Pursuant to ~~an unaffiliated~~the License Agreement, the Company shall pay CIMA annual fees for the maintenance and support services in accordance with the following schedule: (i) for the first (1st) calendar year from the Effective Date, $300 were paid in 2020; (ii) for the second (2nd) calendar year from the Effective Date, $500 to be paid on December 31, 2020; (iii) for the third ~~party.~~(3rd) calendar year from the Effective Date, $700 to be paid on December 31, 2021; (iv) for the fourth (4th) calendar year from the Effective Date, $1,000 to be paid on December 31, 2022; (v) for the fifth (5th) calendar year from the Effective Date, $640 to be paid on December 31, 2022; and (vi) for each calendar year thereafter, $640 to be paid on the anniversary date.

On ~~August 10, 2016, M&M,~~February 2, 2021, the Company completed a ~~wholly owned subsidiary~~reverse stock split of its common stock. As a result of the ~~Company, closed~~reverse stock split, the ~~acquisition~~following changes have occurred (i) every two and a half shares of ~~Tel3 from~~common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a ~~related party. Tel3 provides prepaid international long distance telephone services.~~2.5-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 2.5-for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 2.5-for-1 reverse stock split.

On February 2, 2021 the Company’s common stock and warrants began trading on The Nasdaq Capital Market under the symbols “CUEN” and “CUENW,” respectively.

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, as well as our business and operations. The extent to which COVID-19 impacts our business and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our business and results of operations may be materially adversely affected.

The accompanying unaudited ~~interim condensed~~ consolidated financial statements ~~have been prepared pursuant to~~include the ~~rules and regulations~~accounts of the ~~Securities~~Company and Exchange Commission (“SEC”) for reporting of interim financial information. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statementsits subsidiaries, prepared in accordance with accounting principles generally accepted in the United States ~~have been condensed or omitted.~~of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, ~~these statements~~they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for three-months ended March 31, 2021. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2021. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

Certain information and footnote disclosures normally ~~required by~~included in financial statements in accordance with generally accepted accounting principles ~~generally accepted in~~have been omitted pursuant to the ~~United States for annual~~rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited consolidated financial statements ~~and~~ should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 25, 2021 (the “Annual Report”). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and notes thereto and other pertinent information contained in our annual report on form 10-K as filed with the Securities and Exchange Commission on July 3, 2017. The unaudited condensed consolidated statements of operations and cash flows for the three and nine months ended September 30, 2017 are not necessarily indicative of the consolidated results of operations or cash flows to be expected for any future period or for the year ending December 31, 2017.2020.

The ~~accompanying unaudited condensed~~ consolidated financial statements ~~have been~~are prepared ~~by management and~~ in ~~the opinion of management, the accompanying unaudited~~accordance with US GAAP. The consolidated financial statements ~~contain all adjustments necessary to present fairly the consolidated financial position and results of operations as~~ of the ~~dates and for the periods presented.~~

~~This summary of accounting policies for~~Company include the Company ~~is presented to assist in understanding the Company’s financial statements. The Company uses the accrual basis of accounting~~ and ~~accounting principles generally accepted in the United States of America (“GAAP” accounting)~~its wholly-owned and majority-owned subsidiaries. All inter-company balances and transactions have been ~~consistently applied in the preparation of the unaudited consolidated financial statements.~~eliminated.

The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates are used when accounting for ~~allowances~~stock-based compensation.

Deferred revenue is comprised mainly of unearned revenue related to prepayments from retail consumers for ~~bad debts, stock based compensation collectability~~telecommunications minutes. The following table represents the changes in deferred revenue for the three months ended March 31, 2021:

Revenue allocated to remaining performance obligations represent contracted revenue that has not yet been recognized (“contracted not recognized”). Contracted not recognized revenue was $676 as of ~~loans receivable, potential impairment losses~~March 31, 2021, of which the Company expects to recognize 100% of the ~~capitalized license fee and fair value calculations related to embedded derivative features of outstanding convertible notes payable.~~

For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company held no cash equivalents as of September 30, 2017 or December 31, 2016. As of September 30, 2017 and December 31, 2016, the Company did not hold cash with any one financial institution in excess of the FDIC insured limit of $250,000.

~~The Company follows paragraph 605-10-S99 of the FASB~~~~Accounting Standards Codification~~ ~~for~~ revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company primarily generates revenues through the sale of prepaid calling minutes to consumers through its Tel3 division. While the Company collects payment for such minutes in advance, revenue is recognized upon delivery to and consumption of minutes by the consumer. Next Cala generated revenues from commissions earned from Incomm, a leading financial services provider during the three and nine months ended September 30, 2017 and 2016.

~~Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method~~ over the ~~estimated useful lives of the related assets, which range from three to five years.~~Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations.

~~In accordance with ASC Topic 360, formerly SFAS No. 144,~~~~Accounting for the Impairment or Disposal of Long-Lived Assets,~~ the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of its asset based on estimates of its undiscounted future cash flows. If these estimated future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the difference between the asset’s estimated fair value and its carrying value. There was no impairment losses recorded to long-lived assets during the three or nine months ended September 30, 2017 or 2016.

The Company reports the non-controlling interest in its majority owned subsidiaries in the consolidated balance sheets within the stockholders’ deficit section, separately from the Company’s stockholders’ deficit. Non-controlling interest represents the non-controlling interest holders’ proportionate share of the equity of the Company’s majority-owned subsidiaries. Non-controlling interest is adjusted for the non-controlling interest holders’ proportionate share of the earnings or losses and other comprehensive income (loss) and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

Fair value of certain of the Company’s financial instruments including cash, accounts receivable, ~~account~~accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value ~~investments.~~measurements.

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

~~Except as discussed in~~~~Note 7 – Derivative Liabilities~~~~the Company did not identify any other~~The Company’s financial assets orand liabilities that are ~~required to be presented on the consolidated balance sheet~~measured at fair value ~~in accordance with ASC 825-10~~on a recurring basis by level within the fair value hierarchy are as ~~of September 30, 2017 or December 31, 2016.~~follows:

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carry forwards for income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs.

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity.

At September 30, 2017, the Company had eighteen outstanding convertible notes payable with conversion rights that are exercisable. The amount of outstanding principal on these convertible notes total $984,624 plus accrued interest of $387,927 for total convertible debts as of September 30, 2017 of $1,327,551 representing 72,980,270 new dilutive common shares if converted at the applicable rates. The effects of these notes have been included in net income per diluted share for the three and nine months ended September 30, 2017.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.~~

As discussed in the report on form 8K filed on May 18, 2016, the Company declared a special dividend on its outstanding common stock of one share of Class D Redeemable Preferred Stock. Pursuant to the dividend, the special stock dividend will be distributed to owners of the Company’s common stock as of the record date in a ratio of one share of Class D Redeemable Preferred Stock common stock for every 1 share of common stock owned as of the record date. The Company originally had set the record date as June 10, 2016 but was later modified to July 22, 2016. The Class D Preferred Stock must be redeemed within six months within six (6) months (or as soon thereafter as permitted by law) following final resolution of the Corporation’s affiliates lawsuit against ViberMedia, Inc. (Next Communications, Inc. and Nxtgn, Inc. v. Viber Media, Inc.) which is, as of the date of this filing, pending(Amounts in U.S. District Court for the Southern District of New York or any successor or other lawsuit relating to the subject matter thereof in which the Corporation (or any successor-in-interest) is named as a plaintiff (the “Lawsuit”). The Designation fixes the redemption price of eachdollar thousands, except share ~~of class D Preferred stock as the greater of par value or the amount obtained by dividing (a) 9.03 percent of the net proceeds to the Corporation of the Lawsuit after payment of fees~~ and expenses incurred in connection with such law suit and the resolution of any creditor claims against Next Communications and all taxes on net income accrued or paid with respect to such amount, by (b) the total number of shares of Class D Preferred stock issued and outstanding as of the Redemption Date, which amount shall be rounded to the nearest whole cent.

~~The Company has accrued common stock dividends payable of $30,000 as of September 30, 2017.~~

~~The Company’s policy regarding advertising is to expense advertising when incurred.~~

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of subtopic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”) and subtopic 718-20 for awards classified as equity to employees.

The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. An instrument determined to be a derivative liability is recorded at fair value with a debt discount being recorded up to the face value of the related convertible note payable with any excess value being recognized as a day one loss on initial measurements of derivative liabilities. The debt discount is amortized as interest expense over the life of the convertible notes. Changes in value of the derivative liabilities that result from conversions of the underlying instrument to common stock are written off to additional paid in capital.

~~The registrant follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.~~

Pursuant to Section 850-10-20 the Related parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the registrant; (e) management of the registrant; (f) other parties with which the registrant may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Accounts receivable balances are established for amounts owed to the Company from its customers from the sales of services and products. The Company closely monitors the collectability of outstanding accounts receivable and provide an allowance for doubtful accounts based on estimated collections of outstanding amounts.

The Company entered into an agreement with a certain vendor whereby it obtained a license to market and distribute certain closed loop general purpose reloadable debit cards for an initial term of three years. The Company remitted $250,000 as a license fee in connection with the agreement which it is recognizing over the initial term of the agreement on a straight line basis. The unamortized balance of the license fee was $55,556 and $118,056 as of September 30, 2017 and December 31, 2016, respectively.

The Company accounts for equity investments under ASC 321. Equity investments with a readily determinable market price are measured at fair value as of the date of the financial statements with any unrealized gains or losses being recognized in current period income or loss.

During the three months ended September 30, 2017, the Company accepted 50,000 shares of common stock in a publicly traded company as a referral fee. The Company classified these securities as available for sale and recorded the initial market value of the shares received as other income during the nine months ended September 30, 2017 and in accordance with~~ASC 321-10-35 Investmentsany gains or losses recognized are recorded through other income or loss. On the date of receipt, the common stock was valued at $11~~ per share equal to the close price of the security, for a total of $550,000 and recorded the value of the shares as other income. The Company marked the securities to market as of the reporting date which was $11 per share for a total balance of $550,000 as of September 30, 2017. There were no additional gains or losses recognized in other income or loss on investments available for sale during the three or nine months ended September 30, 2017 and 2016.

~~In May 2014, the FASB~~New pronouncements issued Accounting Standards Update (“ASU”) ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), that outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of thebut not effective date of ASU 2014-09 to the beginning of 2018 for public companies, with an option that would permit companies to adopt the standard as early as the original effective date of 2017. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP. ASU 2014-09 may be adopted either retrospectively or on a modified retrospective basis whereby it would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for those contracts. The updated standard is effective for us in the first quarter of 2018 and we do not plan to early adopt. We have not yet selected a transition method and weMarch 31, 2021 are ~~currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.~~

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating ASU 2016-02 and its impact on its consolidated financial position or results of operations.

In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations.” This Update provides clarifying guidance regarding the application of ASU No. 2014-09 - Revenue From Contracts with Customers when another party, along with the reporting entity, is involved in providing a good or a service to a customer. In these circumstances, an entity is required to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). The amendments in the Update clarify the implementation guidance on principal versus agent considerations. The Update is effective, along with ASU 2014-09, for annual and interim periods beginning after December 15, 2017. The adoption of ASU 2016- 08 is not expected to have a material impact on ~~our~~the Company’s consolidated financial ~~position or results of operations.~~

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016- 09”). ASU 2016-09 requires an entity to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company has implemented ASU 2016-09 effective January 1, 2017.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-1O”). The amendments in this update clarify the following two aspects to Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The entity first identifies the promised goods or services in the contract and reduce the cost and complexity. An entity evaluates whether promised goods and services are distinct. Topic 606 includes implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The Company is currently evaluating ASU 2016-10 and its impact on its consolidated financial statements or disclosures.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326).” For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230)”, which provides guidance for eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and do not expect adoption to have a material impact.

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes”, which requires that all deferred tax liabilities and assets be classified as noncurrent amounts on the balance sheet. ASU 2015-17 will be effective for interim and annuals periods beginning after December 15, 2016 and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The new standard is effective for the Company at the beginning of fiscal year 2017. There was no impact on the Company’s unaudited condensed consolidated financial statements as the Company does not currently have a deferred tax asset or liability.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.

The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.The Company had a net income before non-controlling interest of $51,243 and a loss of $4,765,328 and net cash used in operating activities of $384,716 and $967,736, for the nine months ended September 30, 2017 and 2016, respectively. The Company has a working capital deficit of $7,151,084 and $9,759,119, and an accumulated deficit of $13,436,542 and $13,499,303 as of September 30, 2017 and December 31, 2016, respectively.These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of issuance of this report. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has a minimum cash balance available for payment of ongoing operating expense, has experienced losses from operations since inception, and it does not have a source of revenue sufficient to cover its operating costs. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

Management plans to fund operations through additional debt and equity financing. Debt instruments may be convertible or non-convertible and will vary based on the Company’s needs and financing options available at such times.

During the nine months ended September 30, 2017, the Company entered into two separate loans to be paid by collection of its future accounts receivable and secured by substantially all assets of the Company including accounts receivable, cash, equipment, intangible assets, inventory and other receivables. The first loan resulted in cash proceeds $125,000 to the Company for future payments totaling $168,750 from future receivables and requires daily repayments of $1,339. The second resulted in cash proceeds of $50,000 for future payments totaling $68,000 from future receivables and requires daily cash repayments of $540. There was $91,395 due for the agreements as of September 30, 2017 included in current notes payable.

On May 1, 2017, the Company received a loan from an unrelated party for $25,000. The loan is due on demand and as such is included in current notes payable. The note does not accrue interest and had a principal balance due of $25,000 as of September 30, 2017.

The Company has entered into a series of convertible notes payable to fund operations. While with differing noteholders, the terms of the outstanding convertible notes are substantially similar and accrue interest at 8% annually with a default interest rate of 24% and allow for the conversion of outstanding principal and interest to common stock at a price equal to a 45% to 50% from the lowest trading price in the preceding 20 days. The convertible notes outstanding contain cross default features and the Company defaulted on all notes in November 2016.

In February 2017, the Company agreed with certain noteholders to extend a redemption freeze agreement whereby the convertible note holders agreed to not convert outstanding principal and accrued interest into common stock for a period of 60 days. Upon the expiration of these agreements, a 90 day extension was executed whereby the noteholders agreed to not convert additional amounts through the first week of July 2017. Under the terms of the extension, each noteholder was granted the right to convert a limited amount of outstanding principal to common stock at a rate equal to the stated rate in the convertible note payable but not less than $0.02 per share and extended the due dates of the notes to July 2017. These agreements were extended again through August 23, 2017.

On September 18, 2017, the Company agreed with Noteholder 3 to make monthly cash repayments of $9,234 over a period of eight months. If the Company repays 70% of the total outstanding principal no later than December 31, 2017, the remaining 30% principal balance will be converted to common stock at a rate equal to $0.05 per share after June 18, 2018. If the Company fails to repay 70% of the outstanding principal by December 31, 2017, the noteholder may convert the unpaid balance to common stock at $0.02 per share after June 18, 2018.

On October 9, 2017, the Company agreed with Noteholder 4 to make monthly cash repayments of $11,000 over a period of eight months. If the Company repays 70% of the total outstanding principal no later than December 31, 2017, the remaining 30% principal balance will be converted to common stock at a rate equal to $0.05 per share after June 18, 2018. If the Company fails to repay 70% of the outstanding principal by December 31, 2017, the noteholder may convert the unpaid balance to common stock at $0.02 per share after June 18, 2018. Additionally, the Company agreed to use 30% of any gross proceeds raised in any financing to retire outstanding principal due.

On October 9, 2017, the Company agreed with Noteholder 1 to make monthly cash repayments of $44,000 over a period of eight months. If the Company repays 70% of the total outstanding principal no later than December 31, 2017, the remaining 30% principal balance will be converted to common stock at a rate equal to $0.05 per share after June 18, 2018. If the Company fails to repay 70% of the outstanding principal by December 31, 2017, the noteholder may convert the unpaid balance to common stock at $0.02 per share after June 18, 2018. Additionally, the Company agreed to use 30% of any gross proceeds raised in any financing to retire outstanding principal due.

~~The following table summarizes all convertible notes payable activity for the nine months ended September 30, 2017:~~

~~The following is a summary of all convertible notes outstanding as of September 30, 2017:~~

There was $387,927 and $207,951 of accrued interest due on all convertible notes as of September 30, 2017 and December 31, 2016, respectively which is included in accounts payable and accrued liabilities on the balance sheet (see~~Note 8 – Accounts Payable and Accrued Liabilities)~~.

The Company analyzed the conversion features of the convertible notes payable as discussed in Note 4 for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative liability because the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

The embedded derivative for the note is carried on the Company’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. The Company fair values the embedded derivative using the Black-Scholes option pricing model. The aggregate fair value of the derivative at the reverse capitalization date of the convertible notes payable and certain outstanding option grants was $1,236,007 which was recorded as a derivative liability on the balance sheet.

As of September 30, 2017, the Company had a $1,143,186 derivative liability balance on the balance sheet and recorded a loss from derivative liability fair value adjustment of $161,746 during the nine months ended September 30, 2017. The derivative liability activity comes from convertible notes payable as discussed in Note 4. In addition to derivative liabilities associated with convertible notes payable, the Company recorded a derivative liability due to a ratchet strike price feature associated with the options issued in the sale of TPP. The options are exercisable at $0.18 per share unless the Company’s common stock is quoted at a price greater than $0.50 per share at which point the options are exercisable at $0.001 per share.

~~A summary of outstanding derivative liabilities as of September 30, 2017 is as follows:~~

The value of the embedded derivative liabilities for the convertible notes payable and outstanding option awards was determined using the Black-Scholes option pricing model based on the following assumptions:

~~A summary of the changes in derivative liabilities balance for the nine months ended September 30, 2017 is as follows:~~

The following table summarizes all stock option activity for the nine months ended ~~September 30, 2017:~~ March 31, 2021:

The following table discloses information regarding outstanding and exercisable options at ~~September 30, 2017:~~March 31, 2021:

On May 31, 2016, the Company issued 10,000,000 options to a board member pursuant to its agreement with the member. One third of the 10,000,000 options issued vested immediately upon execution of the related agreement, resultingNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in an immediate stock based expense of $558,323 being recognized. The remaining shares of the issuance vest based on performance milestones which the Company believes is 80% likely of occurring resulting in stock based expense of $558,328 during the year ended December 31, 2016, at which point there was a 50% probability of attainment,U.S. dollar thousands, except share and $334,997 during the nine months ended September 30, 2017 at which point the probability of attainment was updated to 80%. The remaining fair value of the unvested shares of $223,331 will be recognized according to the estimated probability of the performance obligations being achieved.

On July 14, 2016, the Company issued 7,500,000 options as part of its acquisition of TPP. The options were exercisable for a period of three years and carried an exercise price of $0.18 per share. The options carried a ratchet pricing feature whereby they become exercisable at $0.001 per share ~~if the Company’s common stock trades at a price greater than $0.50 per share. The options carried a value of $898,490 which was recorded as a derivative liability as discussed in~~~~Note 5 – Derivative Liabilities~~. On March 31, 2017, the Company, as part of its sale of TPP, cancelled these options and reissued 7,500,000 options that are exercisable for a period of three years and carry an exercise price of $0.18 per share. The options carry a ratchet pricing feature whereby they become exercisable at $0.05 per share if the Company’s common stock trades at a price greater than $0.50 per share.

The Company issued 1,000,000 stock options exercisable at $1.00 pursuant to its agreement with Glocal. This agreement was amended on August 9, 2016 in which the option owners forfeited these options. The fair value of the 1,000,000 stock options granted with an exercise price of $1.00 was amortized through the forfeiture resulting in stock based compensation expense of $14,166.

Total stock based compensation expense was $334,997 and $1,123,735 during the nine months ended September 30, 2017 and 2016 leaving an unrecognized expense of $223,331 as of September 30, 2017. In determining the compensation cost of the stock options granted, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used in these calculations are summarized as follows:

~~The Company follows the provisions of ASC 850—~~~~Related Party Transactions & Disclosures~~ ~~relating to the identification of related parties and disclosure of related party transactions.~~

Our financial statements include disclosures of material related party transactions, other than expense allowances, and other similar items in the ordinary course of business. The disclosures include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

The Company has had extensive dealings with related parties including those in which our Chief Executive Officer holds a significant ownership interest as well as an executive position during the nine months ended September 30, 2017 and 2016. Due to our operational losses, the Company has relied to a large extent on funding received from Next Communications, Inc., an organization in which our Chief Executive Officer and Chairman holds a controlling equity interest and our Chief Executive Officer holds an executive position.

With the exception of the Company’s purchase of a 9% interest in Next Cala, Inc. from a related party as described below, amounts scheduled below as “due to related parties” and “due from related parties” have not had their terms, including amounts, collection or repayment terms or similar provisions memorialized in formalized written agreements.

~~Related party balances at September 30, 2017 and December 31, 2016 consisted of the following:~~

During the nine months ended September 30, 2017 and 2016, the Company recorded interest expense of $179,008 and $180,845 using an interest rate equal to that on the outstanding convertible notes payable as discussed in~~Note 6 – Convertible Notes Payable~~ ~~as imputed interest on the related party payable due to Next Communications. The interest was immediately forgiven by the related party and recorded to additional paid in capital.~~

During the year ended December 31, 2014, the Company entered into two notes with its President to purchase his interest in Next Cala, Inc. and separately his voting control in Next Cala. Inc. During the nine months ended September 30, 2017, the outstanding principal and accrued interest totaling $294,923 was converted to 8,900,000 shares of common stock.

The Company had outstanding accounts receivable of $199,894 from related parties as of September 30, 2017 of which $197,840 was due from Next Communications and $2,054 was due from Asiya Communications SAPI de C.V. The accounts receivable arose from the sale of wholesale telecommunications minutes to these entities.

The Company generated revenues from related parties of $155,174 and $12,758 during the three months ended September 30, 2017 and 2016 and $232,605 and $12,818 during the nine months ended September 30, 2017 and 2016 as itemized below.

~~Accounts payable and accrued liabilities consisted of the following as of September 30, 2017:~~data)

During the year ended December 31, 2014, a former employee, Franjose Yglesias-Bertheau of Pleasant Kids (PLKD) filed lawsuit against PLKD claiming unpaid wages of $622,968 and was initially awarded that amount in a judgement. However, the judgement was later revised and the Company settled for $80,000 in March 2017 for which the Company paid $10,000 cash and entered into a convertible note payable for $70,000. The note was fully converted during the nine months ended September 30, 2017 leaving a payable balance of $0 outstanding as of September 30, 2017.

At the time of incorporation, the Company was authorized to issue 60,000,000 shares of preferred stock with a par value of $0.001 of which 50,000,000 was designated Series A and 10,000,000 as Series B. With the completion of the recapitalization as discussed in Note 2, the outstanding Series A preferred shares were cancelled leaving a balance outstanding of Preferred Series A of -0-.

The Company has 10,000,000 shares of Preferred Stock designated as Series B. The Series B Preferred Stock is not convertible into Common Stock at any time and is not entitled to dividends of any kind or liquidation, dissolution rights of any kind. The holders of Series B Preferred Stock shall be entitled to 1,000 votes for each share of Series B Stock that is held when voting together with holders of the Common Stock.

The Company has 36,000,000 shares of Preferred Stock designated as Series D. The Class D Preferred Stock must be redeemed within six(6) months (or as soon thereafter as permitted by law) following final resolution of the Corporation’s affiliates lawsuit against ViberMedia , Inc. (Next Communications, Inc. and Nxtgn, Inc. v. Viber Media, Inc.) which is, as of the date of this filing, pending in U.S. District Court for the Southern District of New York or any successor or other lawsuit relating to the subject matter thereof in which the Corporation (or any successor-in-interest) is named as a plaintiff (the “Lawsuit”). There were no Series D Preferred shares issued or outstanding as of September 30, 2017 or December 31, 2016.

~~Effective November 20, 2015~~The following summarizes the ~~Company amended its Articles of Incorporation to decrease~~Common Stock activity for the ~~common shares authorized from 9,500,000,000 to 360,000,000 with a par value of $0.001.~~

~~During the nine~~three months ended September 30, 2017, the Company issued 18,059,865 shares of commons stock for the conversion of $344,744 of principal of convertible notes payable and 967,045 shares for the conversion of $19,341 of accrued interest. The conversion of principal and accrued interest on convertible notes payable to common stock were done so at the contractual terms of each respective agreement. Additionally, the Company issued 8,449,654 common shares valued at $280,000 as repayment of a non-convertible related party loan and 450,346 common shares valued at $14,932 as repayment of non-convertible related party accrued interest. The related party is an officer of the Company. The fair value of the shares issued as repayment of the related party payable was $338,200 using the close price of $0.038 per share on the date of the transaction resulting in an excess fair value of shares issued upon conversion of $43,277 which was recorded as compensation expense. The Company also issued 12,809,091 shares of common stock valued at $720,200 for services were valued using the close price of the Company’s common stock on the date of issuance as quoted on the OTCBB.March 31, 2021:

On February 2, 2021, the Company issued 20,000 shares of its Common Stock to its Chief Financial Officer, 40,000 shares of its Common Stock to a member of the Board of Directors of the Company and 3,334 shares of its Common Stock to a former employee. The fair market value of the shares was $245.

On February 2, 2021 the Company’s common stock and warrants began trading on The Nasdaq Capital Market under the symbols “CUEN” and “CUENW,” respectively. On February 4, 2020 the Company sold an aggregate of 2,790,697 units at a price to the public of $4.30 per unit (the “Offering”), each unit consisting of one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and a warrant exercisable for five years to purchase one share of Common Stock at an exercise price of $4.30 per share (the “Warrants”), pursuant to that certain Underwriting Agreement, dated as of February 1, 2021 (the “Underwriting Agreement”), between the Company and Maxim Group LLC (the “Representative” or “Maxim”), as representative of the sole underwriter. In addition, pursuant to the Underwriting Agreement, the Company granted Maxim a 45-day option to purchase up to 418,604 additional shares of Common Stock, and/or 418,604 additional Warrants, to cover over-allotments in connection with the Offering. The Common Stock and the Warrants were offered and sold to the public pursuant to the Company’s registration statements on Form S-1 (File Nos. 333-249690 and 333-252642), filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), on October 28, 2020, as amended, and which became effective on February 1, 2021. The Company received gross proceeds of approximately $12.0 million, before deducting underwriting discounts and commissions of 8% of the gross proceeds and estimated Offering expenses. Pursuant to the Underwriting Agreement, the Company also agreed to issue to Maxim warrants (the “Underwriter’s Warrants”) to purchase up to a total of 223,256 shares of Common Stock (8% of the shares of Common Stock sold in the Offering). The Underwriter’s Warrants are exercisable at $5.375 per share of Common Stock and have a term of five years. The Underwriter’s Warrants are subject to a lock-up for 180 days from the commencement of sales in the Offering, including a mandatory lock-up period in accordance with FINRA Rule 5110(e), and will be non-exercisable for six months after February 1, 2021. The total expenses of the offering are estimated to be approximately $1.4 million, which included Maxim’s expenses relating to the offering.

On March 4, 2021 and pursuant to the Underwriting Agreement, Maxim exercised its 45-day option to purchase up to 418,604 additional Warrants, to cover over-allotments in connection with the Offering.

On March 17, 2021, the Company issued 10,000 shares of its Common Stock pursuant to a service Agreement between the Company and a service provider, dated May 16, 2019. The fair market value of the shares at the issuance date was $38.

Related party balances at March 31, 2021 and December 31, 2020 consisted of the following:

On February 24, 2021, the employment agreement dated July 24, 2020 for Arik Maimon expired in accordance with its terms and as previously disclosed by the Company. As a result of ~~September 30, 2017,~~the expiration of the employment agreement, Mr. Maimon was no longer employed as the Chief Executive Officer of the Company, but he continued to act as Chairman of the Board of Directors of the Company. On February 25, 2021, the Board appointed Mr. Maimon to act as interim Chief Executive Officer, which position will terminate upon the earlier of August 25, 2021 or the date on which his successor is duly elected and appointed by the Board of the Company.

On February 24, 2021, the employment agreement dated July 24, 2020 for Michael De Prado expired in accordance with its terms and as previously disclosed by the Company. As a result of the expiration of the employment agreement, Mr. De Prado is no longer the President of the Company but has ~~289,961,684 common shares outstanding,~~become the Vice Chairman of the Board.

On March 5, 2021 and pursuant to the Side Letter Agreement, the Board of Directors of the Company approved a ~~total~~special bonus in the amount of ~~72,980,270 common share equivalents as discussed in~~~~Note 2 – Summary~~$500 to each of ~~Significant Accounting Policies~~Mr. Maimon and ~~Basis of Presentation.~~~~With 360,000,000 shares authorized, there are insufficient common shares in treasury~~Mr. De Prado due to ~~meet all~~the successful up-listing of the Company’s ~~common share equivalents obligations. All~~shares on the Nasdaq Capital Markets. Half of the ~~common share equivalents, or 72,980,270, arise from outstanding convertible notes payable as discussed~~bonus ($250) was paid in~~Note 2 – Summary~~ cash and half will be paid in Common shares of ~~Significant Accounting Policies and Basis of Presentation~~ ~~and~~~~Note 4 – Notes Payable and Convertible Notes Payable~~~~and as such have been recognized as a debt obligation in conjunction with~~ the ~~underlying derivative liabilities as discussed in~~~~Note 5 – Derivative Liabilities~~. Company.

~~Sales to Next Communications, a related party as discussed in~~~~Note 7 – Related Party Transactions~~~~, generated $155,174 and $226,840 of revenue during the three and nine months ended September 30, 2017 which represented 25% and 13% of total revenues during those periods.~~

The Company did not have any one customer account for more than 10% of its revenues during the three ~~or nine~~ months ended ~~September 30, 2016.~~ March 31, 2021 and 2020, respectively.

~~The Company generated all of its revenues from the sale of telecommunications minutes, both at wholesale~~(Amounts in U.S. dollar thousands, except share and ~~retail, during the three and nine months ended September 30, 2017.~~per share data)

IfFrom time to time, the ~~assessment of a contingency indicates that it is probable that a material loss has been incurred~~Company may become involved in various lawsuits and ~~the amount of the liability can be estimated, then the estimated liability would be accrued~~legal proceedings which arise in the ~~Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency~~ordinary course of business. However, litigation is ~~not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability,~~subject to inherent uncertainties, and an ~~estimate of the range of possible losses, if determinable and material, would be disclosed.~~

~~On April 7, 2016, the Company executed an agreement with a third party~~adverse result in these or other matters may arise from time to provide market awareness services for the Company. The agreement requires 1% of the outstanding common share equivalent to be issued to the third party when the market capitalization of the Company reaches $500,000,000 and an additional 1% when it reached $750,000,000. The probability of this event is uncertain at present and the Company has not accrued a contingent loss as of September 30, 2017, or December 31, 2016 as a result.time that may harm our business.

On ~~October 14, 2014, one~~December 20, 2017, a complaint was filed by J. P. Carey Enterprises, Inc. (“JP Carey”) alleging a claim for $473,000 related to Franjose Yglesias-Bertheau, a former Vice President of ~~our operating subsidiaries, NxtGn, Inc.~~PLKD. Even though the Company made the agreed payment of $10,000 on January 2, 2017, and ~~Next Communications, Inc., an entity controlled by our CEO, (collectively~~issued 6,001 shares of Common Stock as conversion of the ~~“Plaintiffs”) filed suit~~$70,000 note as agreed in its settlement agreement, JP Carey alleges damages that the Company claims are without merit because JP Carey received full compensation as agreed. The Company is in the ~~United States District Court for the Southern district~~process of ~~New York~~defending itself against Viber Media, Inc. Plaintiffs filed an Amended Complaint asserting four claims: misappropriation of a business idea, misappropriation of trade secrets, breach of contract, and unjust enrichment. Viber moved the Court to dismiss the Amended Complaint. On March 30, 2016, U.S. District Judge Richard Sullivan issued an opinion and order on Viber’s motion to Dismiss. Specifically, Judge Sullivan ordered that Viber’s motion to dismiss is granted on Plaintiffs’ misappropriation of a business idea claim, but denied as to their misappropriation of trade secrets, breach of contract, and unjust enrichmentthese claims. ~~The Company has appealed the court’s decision to dismiss.~~ The Company has not accrued ~~any gains or~~ losses ~~associated~~related to this claim due to the early stages of litigation. On January 29, 2019, the Company was served with another complaint by JP Carey claiming similar issues as to the previous complaint, with the new claimed damages totaling $1,108,037.85. JP Carey and the Company filed motions for a summary judgment. On June 23, 2020, the case was transferred to the Business Court at the request of the Superior Court Judge previously assigned to the case. Judge Ellerbe from the Business Court has been assigned as the new judge. On October 1, 2020, the court granted the Company’s motion for summary judgment and denied JP Carey’s motion for summary judgment. On October 30, 2020, JP Carey filed a notice of appeal to the trial court’s October 1 and 7, 2020 orders granting summary judgment in favor of Cuentas. The briefing in the appeal was completed during the first quarter of 2021. Oral argument held on April 13, 2021 but no decision has been rendered yet. On November 16, 2020, Cuentas filed a motion seeking payment from JP Carey of $140,970.82 in attorney fees and costs accrued as of November 13, 2020. JP Carey’s response brief was due on December 21, 2020 and thereafter Cuentas may reply. The trial court has not yet set a date to hear this ~~case as it would be a contingent gain and recorded when received.~~motion.

On ~~September 20, 2016,~~October 23, 2018, the Company was served by Telco Cuba Inc. for an amount in excess of $15,000 but the total amount was not specified. The Company was served on December 7, 2018, with a complaint alleging damages including unspecified damages for product, advertising and other damages in addition to $50,000 paid to the Defendants. The Company retained an attorney and has taken steps to defend itself vigorously in this case. Depositions are in process of being scheduled.

On October 25, 2018, the Company was served with a complaint by former company Chief Financial Officer, Michael Naparstek, claiming breach of contract for 833,333 shares (pre-2018 reverse stock split), $25,554 of compensation and $8,823 of expenses. This case was withdrawn in Palm Beach County and on January 11, 2019, a similar complaint was filed in Miami-Dade County. During the recent mediation, the Parties reached an understanding of full settlement amount of $2,500. The Company has deposited the settlement amount to an escrow account of its counsel until a stipulation of settlement will be executed by both parties.

On November 7, 2018, the Company and its now former subsidiary, Limecom, were served with a complaint by IDT Domestic Telecom, Inc. for telecommunications services provided to Limecom during 2018 in the amount of $50,000. The Company has no accrual expenses as of December 31, 2019, related to the complaint given the early nature of the process. Limecom was a subsidiary of the Company during this period but since the Limecom Acquisition was rescinded on January 30, 2019, and Limecom agreed to indemnify and hold harmless the Company from this and other debts. The Company retained an attorney and is defending itself vigorously in this case. A court ordered mandatory arbitration session took place and the arbitration findings were issued on June 19, 2020, and a request for trial de novo was filed on July 16, 2020, in order to have the matter docketed on the calendar. The court came to the determination that while not indicative of success at trial, the court denied Plaintiff’s motion for summary judgment. As of this time, a trial date was set for July 6, 2021.

On May 1, 2019, the Company received a notice ~~it has been named as~~of demand for arbitration from Secure IP Telecom, Inc. (“Secure IP), who allegedly had a defendant in a suit brought against Next Communications, an entity controlled by our CEO. In addition to being named a defendant, it was requested the Company provide certain documents for the discovery process. Due to the original suit being filed against a related partyReciprocal Carrier Services Agreement (“RCS”) exclusively with Limecom and not with Cuentas. The arbitration demand originated from another demand for arbitration that Secure IP received from VoIP Capital International (“VoIP”) in March 2019, demanding $1,052,838.09 in damages allegedly caused by unpaid receivables that Limecom assigned to VoIP based on the RCS. On June 5, 2020, SecureIP filed a complaint against ~~the Company or its subsidiaries, we believe it likely the Company and its subsidiaries be dismissed as defendants and has not accrued a contingent loss as of September 30, 2017 as a result.~~

On July 6, 2017, the Company received notice that an existing legal claim against Accent InterMedia (“AIM”) had been amended to include claims against the Company. The claims brought against the Company include failure to comply with certain judgments for collection of funds by the plaintiff while having a controlling interest in AIM via its ownership of Transaction Processing Products (“TPP”). The Company believes the amended case is without merit and that, per its agreement to sell its interest in TPP, any claims brought against AIM or TPP would be the responsibilities of the current interest holders. Due to the original suit being filed against AIM and amended to include the Company after it disposed of its interest in TPP, which had a controlling interest in AIM, we believe it likely the Company and its subsidiaries be dismissed as defendants. As a result, no contingent loss as been accrued as of September 30, 2017.

In November 2017, the Company received a demand from legal counsel of Ridge Resources regarding the physical issuance of 8,900,000. The common shares are accounted for as issued during the nine months ended September 30, 2017 when the obligation to issue the shares arose however have yet to be physically issued. The Company intends to issue these shares when certain common share reserves associated with its convertible notes payable are released. The Company has not accrued a contingent loss associated with this demand as it expects to remedy the physical issuance before the end of 2017.

On various dates through November 10, 2017, the Company issued a total of 7,913,851 shares of common stock for the conversion of $146,250 of outstanding principal and 1,047,123 shares of common stock for the conversion of $20,942 of outstanding interest on convertible notes payable. All conversions were performed at the contractual terms within each respective convertible note. The Company also issued 2,500,000 shares of common stock for cash proceeds of $64,000.

~~As discussed in~~~~Note 4 – Convertible Notes Payable~~~~, the Company entered into the following agreements with convertible noteholders:~~

As discussed in an 8K filed with the Securities Exchange Commission on October 26, 2017, on October 24, 2017, the Company received 100% of all outstanding shares of Limecom, Inc., as per the acquisition agreement which was effective as of October 20, 2017. The Company, through its wholly-owned subsidiary, Next Group Acquisition Inc., purchased all of the issued and outstanding shares of LimeCom Inc. (“LimeCom”), a Florida corporation, from Heritage Ventures Limited (“Heritage”)~~. LimeCom is engaged in the global telecommunications business. The Stock Purchase Agreement with Heritage provided for the payment~~, an unrelated third party and owner of ~~51,804,809 shares of Next Group Holdings, Inc. restricted common stock~~Limecom, and the ~~sum~~Company. The complaint primarily concerns alleged indebtedness owed SecureIP by Limecom. SecureIP also alleges that Cuentas received certain transfers of ~~$2,000,000 for~~funds which it alleges may be an avoidable transfer under Florida Statute §725.105 up to $1,052,838.09. Cuentas is contemplating filing a motion to dismiss the ~~shares of LimeCom. The cash component of~~complaint and disputes that it received the ~~purchase price is payable within eight months~~alleged $1,052,838.09 from the closing date. 10,360,800 shares of NXGH stock will be held in escrow for a period of eight months in the event that any unknown or undisclosed claims are made against LimeCom. The Company is required to deliver the shares of stockLimecom. Moreover, to the Purchaser and the Escrow Agent within ten days of the closing date. As of November 20, 2017, the Company had not yet delivered the 51,804,809 shares of common stock to Heritage and escrow agent as required by the stock purchase agreement. The sellerextent Cuentas has ~~agreed to extend the date~~exposure for ~~delivery of the shares to December 1, 2017.~~

~~The acquisition further provides that LimeCom must achieve $125,000,000 in revenues in fiscal year 2017 and $2,500,000 in EBITA. In the event that~~any transfers from Limecom, ~~does not achieve these amounts, the Company will pay according to the formula written in the acquisition agreement. The Company~~both Limecom and Heritage have indemnified Cuentas for any such liability. The Company will vigorously defend its position to be removed as a ~~mutual right~~named party in this action due to the fact that Cuentas rescinded the Limecom Acquisition on January 30, 2019.

On April 1, 2021 the Company executed a lease for office space effective April 1, 2019. The lease requires monthly rental payments of ~~rescission if~~$7.

On April 20, 2021 the ~~$2,000,000 is not~~Company paid ~~or any unknown or undisclosed material claims are made against Limecom. as set forth~~off its loan and accrued interest in the ~~agreement.~~

~~As a part~~amount of $260 to Arie Gresonie. The Company paid an amount equal to $125 plus $ 5, which represents the ~~agreement, Orlando Taddeo, President and CEO~~amount of ~~LimeCom, will be appointed as a director~~interest accrued on such $125 since the date on which the loan was made under the Note through April 16, 2021. In addition, The Company issued 30,233 shares of Common Stock of the Company.

The following discussion and analysis ~~provides~~provide information which management of the Company believes to be relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read together with the Company’s financial statements and the notes to the financial statements, which are included in this report.

This Report contains forward-looking statements that relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Report. Forward-looking statements are often identified by words like “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project” and similar words or expressions that, by their nature, refer to future events.

In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential,” or “continue,” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors 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 these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements in an effort to conform these statements to actual results.

~~Next Group Holdings, Inc, (the “Company”) was~~The Company is a corporation incorporated under the laws ~~of the State~~ of Florida on September 21, 2005, to act as a holding company for its subsidiaries, both current and future. Its subsidiaries are Meimoun and Mammon, LLC (100% owned), Next Cala, Inc (94% owned). NxtGn, Inc. (65% owned) and Next Mobile 360, Inc. (100% owned). Additionally, Next Cala, Inc. has a 60% interest in NextGlocal, a subsidiary formed in May 2016.

~~Meimoun and Mammon, LLC (“M&M”) was formed under the laws of the State of Florida~~which focuses on May 21, 2001 as a real estate investment company. During the year ended December 31, 2010, M&M began winding down real estate operations and engaged in telecommunications services. M&M acquired telecom registrations, licenses and authorities to provide telecom services to the retail and wholesale markets including sales of prepaid long distance telecom services and Mobile Virtual Network Operator (MVNO) services. The services are sold under the brand name Next Mobile 360 and through the subsidiary of the same name.

On May 27, 2016, the Cala entered into a Joint Venture Agreement (the “Agreement”) with Glocal Payments Solutions, Inc (“Glocal”) to form a joint venture in which Cala would have a 60% interest and Glocal would have a 40% interest. The Joint Venture will seek to launch and activate up to 45,000 prepaid debit cards under the Cala brand by December 31, 2016 and 360,000 additional cards during the 2017 calendar year. Either party may terminate the agreement at December 31, 2016 if certain objectives are not met.

On July 22, 2016, the Company completed its acquisition of Transaction Processing Products, Inc. (“TPP”) which has a 64% interest in Accent InterMedia, LLC (“AIM”) and no other assets or liabilities. AIM operates as a leading gift card provider but was discontinued on March 31, 2017.

~~On August 10, 2016, M&M, a wholly owned subsidiary of the Company, closed the acquisition of Tel3 from a related party. Tel3 provides prepaid international long distance telephone services.~~

On January 12, 2016, and effective as of January 1, 2016, the Company issued 177,539,180 shares of its restricted common stock and 10,000,000 shares of its Series B preferred stock for 100% of the issued and outstanding shares of Next Group Holdings, Inc. (NEXT). Based on the completion of the agreement NEXT became a wholly-owned subsidiary of the Company.

On December 31, 2015, we signed our merger with Next Group Holdings, Inc. a Florida Corporation but the transaction was not completed until January 12, 2016, when the document was filed with the State of Florida. The accounting effective date of the transaction in January 1, 2016. The Company filed for a change of name is Next Group Holdings, Inc. and its symbol is NXGH.

As a result of this merger, we adopted Next Group’s corporate structure and began a transition into its business model. Through our subsidiaries, we engage in use of certain licensed technology to provide innovative telecommunications, mobility, and remittance solutions to unserved, unbanked, and emerging markets.

Our subsidiaries are Next Mobile 360 LLC (100%), a limited liability company formed under the laws of Florida (“Next Mobile”), Meimoun & Mammon, LLC (100%), a limited liability company formed under the laws of Florida (“M&M”), NxtGn, Inc. (65%), a corporation formed under the laws of Florida (“NxtGn”), and Next CALA, Inc. (94%), a corporation formed under the laws of Florida.

~~Next Group Holdings through its operating subsidiaries, engages in~~ the business of using proprietary technology ~~and certain licensed technology~~ to provide ~~innovative telecommunications~~e-banking and ~~telecommunications mobility~~e-commerce services delivering mobile banking, online banking, prepaid debit and ~~remittance solutions in emerging markets.~~digital content services to the unbanked, underbanked and underserved communities. The Company’s exclusivity with CIMA’s proprietary software platform enables Cuentas to offer comprehensive financial services and additional robust functionality that is absent from other General-Purpose Reloadable Cards (“GPR”).

~~Principal Products~~Operating Subsidiaries. The Company’s business operations are conducted primarily through its subsidiaries, described elsewhere in this report.

~~Through its subsidiaries,~~Properties. The Company’s headquarters are located in Miami, Florida.

The Fintech Card is a GPR integrated into a proprietary robust ecosystem that protects customers by depositing their funds in an FDIC insured bank account at the ~~Company offers telecommunication~~Issuing Bank. The comprehensive financial services include:

The ecosystem includes a mobile wallet for digital currency, stored value card balances, prepaid telecom minutes, loyalty reward points, and ~~reloadable general purpose debit~~purchases made in the Cuentas Virtual Marketplace. The Fintech Card is integrated with the Los Angeles Metro, Connecticut Transit Authority and Grand Rapids Transit system to store mass transit currency and pay for transit access via the Cuentas Digital Wallet

The Fintech Card stores products purchased in the Cuentas Virtual Market Place where Tier-1 retailers, virtual in-game currencies, Amazon Cash, and cellular telecom prepaid minutes “top ups”. Additionally, well-known brand name restaurants sell discounted prepaid gift cards ~~commercial~~in the Cuentas Virtual Marketplace.

The name “Cuentas” is a Spanish word that has multiple meanings and was chosen for strategic reasons, to develop a close relationship with the Spanish speaking population. It means “Accounts” as in “bank accounts” and it can also mean “You can count on me” as in “Cuentas conmigo”. Additionally, it can be used to “Pay or settle accounts” (saldar cuentas), “accountability” (rendición de cuentas), “to be accountable” (rendir cuentas) and other significant meanings.

The U.S. Latino population numbers 43.8 million U.S. immigrants, according to the 2017 FDIC Survey. It excludes immigrants, illegal aliens and undocumented individuals. The FDIC defines the “unbankable” as those adults without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another. The Federal Reserve estimated that there were approximately 55 million unbanked or underbanked adult Americans in 2018, which account for 22 percent of U.S. households. The Latino demographic is more distrusting of banking institutions and generally have more identification, credit, and former bank account issues more so than any other U. S. minority group.

The Fintech Card is positioned to service the Latino demographic with comprehensive financial products that do not require any visits to bank branches, and our fees are completely transparent via the Cuentas Digital Wallet and online banking. Most importantly our strategic banking partner, Sutton Bank, is able to use various forms of U.S. and some foreign government issued identification to confirm qualification.

The Cuentas Mastercard acts as a comprehensive banking solution marketed toward the over 20 million unbanked U.S. Latino community. The “unbanked” is described by the FDIC as those adults without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another. The Cuentas Mastercard is enabling access to the U.S. financial system to those without the necessary paperwork to bank at a traditional financial institution while enabling greater functionality than a traditional bank account. This proprietary GPR card allows consumers that reside in the U.S. to acquire a Cuentas Mastercard using their SSN or ITIN together with their U.S. or Foreign Passport, Driver’s License, Matricula Consular or certain U.S. residency documentation. The Cuentas Mastercard’s funds are protected in an FDIC-insured bank account at the Issuing Bank. Functionality includes ATM withdrawals, direct deposit, cash reload, fee free Cuentas App to Cuentas App fund transfers and mobile banking capabilities, among other key features such as purchasing discounted gift cards and ~~high definition telepresence products.~~adding “mass transit credits” to digital accounts (available in California, Connecticut, Michigan and other cities in the future). Upcoming Cuentas App upgrades should also include international remittance and other services. Consumers are able to use funds in their account to purchase third party digital and gift cards (many at discounted prices), U.S. and international mobile phone top-ups, mass transportation and tolling access (available in select markets - Connecticut, Grand Rapids, MI, Los Angeles, CA, etc.) as well as digital content for virtual gaming, dining, shopping and cash reloads.

The Cuentas App is available for download now on the Apple App Store and on the Google Play Store for Android. The Cuentas App allows consumers to easily activate their Cuentas Mastercard, review their account balance and conduct certain financial transactions. Cuentas is introducing fee free fund transfers to friends, family and vendors that have their own Cuentas App, which will be a very useful feature to compete with other popular apps that charge fees for immediate fund transfers and availability on the same day.

The Cuentas business model leverages profitability from multiple revenue sources, many of which are synergistic market segments.

The Cuentas Mastercard has several revenue centers. The Company receives a one-time activation charge for each activated Cuentas Mastercard and a monthly recurring charge. These charges were designed to be very reasonable to both consumers and the Company. In addition to these charges, Cuentas will receive a commission each time funds are loaded and reloaded to the Cuentas Mastercard.

The Cuentas Digital Wallet produces recurring revenue and is an integral part of the Cuentas offering. It will produce revenue each time that consumers purchase third party gift cards, digital access, mass transit tickets and mobile phone top-ups (U.S. and international) with most at discounted prices. The actual discount is shown to the consumer and is immediately applied to their purchase, so smart shoppers will be able to get everyday products and services at discounted prices.

In 2021 the Cuentas Digital Wallet is projected to add several new, profitable, mass market services including bill pay and international remittances.

Cuentas also offers rewards for free long distance calling to its cardholders (“Cuentas Rewards”) who earn value with certain transactions. Our target demographic uses both internet and prepaid calling services to communicate with family members around the U.S. and in their country. This added benefit is designed, at a very low cost, to provide extra benefits to our cardholders, which should help to maintain and solidify valuable relationships with them.

The Research and Markets report titled “Prepaid Card Market: Payment Trends, Market Dynamics, and Forecasts 2020 - 2025” released in January 2020 states that, “[i]n the United States, prepaid cards remain the preferred choice for the unbanked market segment....” It also states that “[t]he move towards a cashless society is substantial, further driving the prepaid card market.”

Major competitors to Cuentas are Green Dot, American Express Serve, Netspend Prepaid, Starbucks Rewards, Walmart Money card and Akimbo Prepaid.

Cuentas is strategically positioned in the marketplace to have a lower monthly fee and lower reload fees than most cards. Additional benefits and features should move the Cuentas Mastercard ahead of other offerings as consumers realize the value of the Cuentas Digital Wallet and the Cuentas Rewards program.

The Cuentas technology platform is comprised of CIMA Group’s Knetik and Auris software platforms (the “CIMA Licensed Technology”). The platform is built on a powerful integrated component framework delivering a variety of capabilities accessible by a set of industry standard REST-based API endpoints. In addition to handling electronic transactions such as deposits and purchasing, the platform will have the capability of organizing virtual currencies into wallets, essentially future proofing it in today’s evolving financial environment. It enables the organizing of the user’s monetary deposits into a tree-based set of wallets, through strictly enforced user permissions, to delineate proper controls in a tiered monetary asset organizational structure, thus providing a sound basis for family and/or corporate control and distribution of funds across individuals.

The platform also contains a sound and proven gamification engine, capable of driving user behaviors in a manner that entices and rewards using incentivization based on proven behavioral science patterns. At the heart of this gamification engine lies a proven and robust rules engine that can easily integrate and modify process flows and orchestrations between disparate platforms, allowing for a quick and easy integration of complex, orchestrated integrations between internal process automation and invocations of external systems. The platform will provide Android and iOS software for users to execute a wide variety of transactions including, but not limited to, account balances, account transfers and in-app purchases. User messaging are also integrated and are achieved via SMS, email, in-app messaging, and voice.

The user management application uses rich metadata CRM and single sign-on (“SSO”) to track user behavior and personalize the user experience. It is fully integrated with our Strategic Partners, scalable and manages the digital ecosystem entitlements. The platform can process both physical and virtual goods, digital assets, real time currency value exchange, virtual currency support with current exchange rates and support nontraditional assets, in addition to credit card, POS, debits, and digital wallet management.

The unique rules engine is capable of all aspects of gamification: badging, questing, leveling, points consumption, leader boards, loyalty and reward points and personalization with tracking and messaging to support behavior management. Business intelligence is used for reporting and communication of product management via Rate Deck Management, Pinless ANI Recognition, IV and Call Flows and Access Number Management. The platform has redundant reporting for enhanced billing and fraud control and integrates customer service with Business Intelligence and platform integrity.

On December 6, 2017, the Company completed its formation of SDI NEXT Distribution LLC (“SDI NEXT”) in which it owns a 51% membership interest, previously announced August 24, 2017 as a Letter of Intent with Fisk Holdings, LLC. As Managing Member of the newly formed LLC, the Company will contribute a total of $500,000, to be paid per an agreed-upon schedule over a twelve-month period. Fisk Holdings, LLC will contribute 30,000 active Point of Sale locations for distribution of retail telecommunications and prepaid financial products and services to include, but not be limited to: prepaid General Purpose Reload (“GPR”) cards, prepaid gift cards, prepaid money transfer, prepaid utility payments, and other prepaid products. The completed formation of an established distribution business for third-party gift cards, digital content, mobile top up, financial services and digital content, which presently includes more than 31,600 U.S. active Point of Sale locations, including store locations, convenience stores, bodegas, store fronts, etc. The parties agreed that additional product lines may be added with unanimous decision by the Managing Members of the LLC. During 2018, it was agreed between the parties to distribute the Company’s recently announced CUENTAS GPR card and mobile banking solution aimed to the unbanked, underbanked and financially underserved consumers, making them available to customers at the more than 31,600 retail locations SDI NEXT presently serves. It was also agreed between the parties to renegotiate the terms of the Company’s investment in SDI NEXT once the development of the GPR card and the retail stores system are completed and the GPR card is ready for distribution in the retail locations of SDI NEXT.

The graphic below illustrates Cuentas’ strategic agreements with Sutton Bank and InComm, Sutton Bank is the issuer of the Cuentas Mastercard while the InComm “Processor” relationship provides access to many third party products and services.

Sutton is our issuing bank for the Fintech Card. Sutton provides online banking, direct deposit, bank accounts, and debit functionality for our Cuentas Mastercards. Sutton is responsible for know your client (“KYC”) and Anti-Money Laundering (“AML”) compliance and enables customers to open Cuentas Prepaid Mastercard accounts electronically with non-conventional documentation that may not be accepted at traditional banks. They accept over 13 forms of identification, which, when used together with either Social Security or ITIN, can be used for confirmation of identity. These forms of identification include: Passport, Driver’s License, Matricula Consular and U.S. residency documentation, among others.

On July 23, 2019, the Company entered into a Prepaid Services Agreement with InComm (the “InComm PSA”) to power and expand the Company’s GPR card network. InComm distributes gift and GPR cards through many major U.S. retailers and has long standing partnerships with over 1,000 of the most recognized brands that are eligible for Cuentas’ Discount Purchase Platform.

Under the InComm PSA, InComm will act as prepaid card processor and through its VanillaDirect network, expand the Company’s ability for cardholders to reload their Prepaid Cuentas Mastercards through a nationwide network of retailers. VanillaDirect is currently available at major retailers such as: Walmart, 7-Eleven, Walgreens, CVS Pharmacy, Rite Aid and many more. In addition, the Company is planning to implement the Vanillacash reload services into up to 31,600 U.S. locations through which it has access.

Under the InComm PSA, InComm will provide processing services, telephone support, data storage services, account servicing, reporting, output and hot carding services to the Company. Processing services will consist mainly of authorization and transaction processing services whereby InComm will process authorizations for transactions made with or on a prepaid product, along with any payments or adjustments made to a prepaid product. InComm will also process the Company’s data and post entries in accordance with the specifications. Data storage services will consist mainly of storage of the Company’s data in a format that is accessible online by the Company through APIs designated by InComm, subject to additional API and data sharing terms and conditions. InComm will also provide Web/API services for prepaid Cuentas GPR applications and transactions.

In consideration for InComm’s services the Company agreed to pay an initial program setup and implementation fees in the amount of $500,000, of which, $300,000 was paid in 2020. Cuentas will then pay $50,000 each year at the beginning of the second, third, fourth and fifth anniversary of the agreement. In addition, the Company agreed to pay a minimum monthly fee of $30,000 starting October 2020, $50,000 during the second year following the launch of the Cuentas Mastercard and $75,000 thereafter. The Company also agreed to pay 0.25% of all funds added to the Cuentas Mastercards, excluding VanillaDirect Reload Network and an API Services fee of $0.005 per transaction. The Company may pay other fees as agreed between the Company and InComm.

Cuentas is currently offering discounted prices to its cardholders, through the Cuentas Wallet for the digital products and services illustrated in the graphic below. We intend to work to increase the quantity of offerings considerably in the future.

The below graphic illustrates the elements that Cuentas has strategically developed to provide marketplace advantages.

Cuentas’ strategic overview to augment growth and minimize churn is illustrated in the graphic below. The goal is to offer the consumer a one-stop shop, easy to use, mobile wallet that can solve many of their daily needs and desires while saving them time and money.

On December 8, 2020, the Company entered into an Agency Agreement with Western Union whereby the Company is appointed as Western Union’s delegate and authorized to offer Western Union Money Transfer Services. This cooperation would allow Cuentas cardholders to transfer money internationally via the Western Union network directly from the Cuentas Mobile App. Western Union has been providing money transfer services around the world for more than a century and currently has more than 500,000 agent locations worldwide.

On December 31, 2019, the Company entered into a Platform Exclusive License Agreement with CIMA Telecom, Inc. (“CIMA”) and two subsidiaries of CIMA (the “CIMA License Agreement”). Pursuant to the CIMA License Agreement, the Company has an exclusive, non-transferable, non-sublicensable, royalty-free license to access and use the CIMA Licensed Technology in the form provided to the Company via the Hosting Services (as defined in the CIMA License Agreement) and solely within the Fintech space for the Company’s business purposes. Under the CIMA License Agreement, CIMA received a one-time licensing fee in the amount of $9,000,000 in the form of a convertible note that may be converted, at the option of CIMA, into up to 25% of the total shares of Common Stock of the Company on a fully diluted basis as of December 31, 2019. The transactions with CIMA closed on December 31, 2019 (the “CIMA Transaction Closing”). Pursuant to the CIMA License Agreement, the Company shall pay CIMA annual fees for the maintenance and support services in accordance with the following schedule: (i) for the first calendar year from the CIMA Transaction Closing, $300,000 to be paid on June 30, 2020; (ii) for the second calendar year from the CIMA Transaction Closing, $500,000 to be paid on December 31, 2020; (iii) for the third calendar year from the CIMA Transaction Closing, $700,000 to be paid on December 31, 2021; (iv) for the fourth) calendar year from the CIMA Transaction Closing, $1,000,000 to be paid on December 31, 2022; (v) for the fifth calendar year from the CIMA Transaction Closing, $640,000 to be paid on December 31, 2022; and (vi) for each calendar year thereafter, $640,000 to be paid on the anniversary date.

Contemporaneously with the CIMA Transaction Closing, the Company entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) by and between the Company, CIMA and Dinar Zuz LLC (“Dinar”), pursuant to which the Company made and sold (i) to CIMA a 3% convertible promissory note (the “CIMA Convertible Promissory Note”) in the principal amount of $9,000,000 and (ii) a warrant to each of CIMA and Dinar (as described below). The Purchase Agreement contained customary representations, warranties, covenants, and conditions, including indemnification. Among other conditions to closing, the Company has agreed to take all necessary steps to amend and restate its Articles of Incorporation and to amend and restate its Bylaws.

On December 31, 2019 and pursuant to the CIMA Convertible Promissory Note, CIMA exercised its option to convert the CIMA Convertible Promissory Note into 702,992 shares of Common Stock of the Company.

Contemporaneously with the CIMA Transaction Closing, the Company made and sold a warrant to each of (a) CIMA (the “CIMA Warrant”) and (b) Dinar (the “Dinar Warrant”), each in accordance with the Purchase Agreement. Pursuant to the CIMA Warrant and Dinar Warrant, upon exercise, each of CIMA and Dinar shall be entitled to purchase from the Company, in the aggregate, an amount of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock equal to 25% of total outstanding shares of the Company on a fully-diluted basis (taking into account any warrants, options, debt convertible into shares or other rights underlying shares of the Company) as of the conversion date; provided, however, that each of the CIMA Warrant and Dinar Warrant shall increase to include 25% of any additional shares (or warrants, options, debt convertible into shares or other rights underlying shares of the Company) of the Company only to the extent such shares are issued in breach of the Voting Agreement (as defined below). Pursuant to their terms, the CIMA Warrant and Dinar Warrant were exercisable, in whole and not in part during the term commencing on December 31, 2019 and ending on the earlier of (a) thirty days following the date on which the Company amends and restates its Articles of Incorporation, which is amendment and restatement is filed with and accepted by the Secretary of State of the State of Florida or (b) upon a Change of Control, as defined in such warrants. At that point, the Warrants are automatically exercised. On September 17, 2020, the Company issued 2,000,000 of its Common Stock to each of Dinar and CIMA, under the automatic exercise of the warrants.

Contemporaneously with the CIMA Transaction Closing, on December 31, 2019, the Company, CIMA, Dinar, Arik Maimon and Michael De Prado entered into a Voting Agreement (the “Voting Agreement”). Pursuant to the Voting Agreement, each of CIMA, Dinar and Mr. De Prado shall have the right to designate one director to the Board, and Mr. Maimon will have the right to designate two directors to the Board as promptly as practicable after the CIMA Transaction Closing. At each meeting of the Company’s shareholders at which the election of directors is to be considered, each of CIMA, Dinar, Mr. Maimon and Mr. De Prado shall have the right to designate one nominee for election at such meeting. Additionally, the Company has granted CIMA board observer rights whereby CIMA shall have the right to invite one representative to attend all meetings of the Board in a non-voting observer capacity. The size of the Board and appointee rights are subject to change in the event that the Company’s shares of Common Stock become listed on Nasdaq. Furthermore, pursuant to the Voting Agreement, each of Mr. Maimon and Mr. De Prado appointed each of CIMA and Dinar as their proxy and attorney-in-fact, with full with full power of substitution and resubstitution, to vote or act by written consent with respect to the shares of Voting Stock (as defined in the Voting Agreement) representing each individual’s pro rata percentage of the CIMA Proxy Stock and Dinar Proxy Stock (each as defined in the Voting Agreement), as may be recalculated from time to time subject to the terms and conditions of the Voting Agreement until the CIMA Warrant and Dinar Warrant are exercised, respectively. CIMA’s rights under the Voting Agreement automatically terminate upon the earliest to occur of: (a) the termination of the CIMA License Agreement; (b) the payment in full of all outstanding principal, accrued and unpaid interest, and all other amounts required to be paid by the Company to CIMA under the Debenture in cash and not as a result of the conversion of the debenture in the principal amount of $9,000,000 that is convertible into Common Stock of the Company; or (c) after the conversion of the Debenture into Common Stock of the Company, the date on which CIMA ceases to own 5% or more of the issued and outstanding Common Stock of the Company. Dinar’s rights under the Voting Agreement automatically terminate when Dinar ceases to own 5% or more of the issued and outstanding Common Stock of the Company.

The Company also entered into an Asset Pledge Agreement with CIMA (the “Pledge Agreement”) pursuant to which the Company unconditionally and irrevocably pledged all of its rights, title and interest in and to the Licensed Technology and any rights and assets granted pursuant to the CIMA License Agreement to CIMA as a guarantee for the full and punctual fulfillment of its obligations under certain provisions of the Voting Agreement, which terms expire upon the exercise of the CIMA Warrant and Dinar Warrant, respectively, and the issuance of the securities under the CIMA Convertible Promissory Note and the CIMA Warrant. This occurred on September 21, 2020 and the Pledge Agreement expired.

Contemporaneously with the CIMA Transaction Closing, the Company, Mr. Maimon, Mr. De Prado, Dinar and CIMA entered into a side letter agreement (the “CIMA Side Letter”), dated December 31, 2019. Pursuant to the CIMA Side Letter, for as long as the CIMA License Agreement is ~~engaged~~ in effect, the convertible promissory note (the “CIMA Convertible Note”) is outstanding and unpaid, or CIMA is a shareholder of the Company and owns at least 5% of the Company’s Common Stock, in addition to any other vote or approval required under the Company’s Articles of Incorporation, Bylaws, or any other agreement, each as amended from time to time, the Company has agreed not to take certain actions without certain approval thresholds of the directors appointed by CIMA, Dinar, Mr. Maimon and Mr. De Prado. These negative covenants restrict, among other things, the Company’s ability to incur additional debt, alter certain employment agreements currently in place, enter into any consolidation, combination, recapitalization or reorganization transactions, and issue additional capital stock. Additionally, pursuant to the CIMA Side Letter, upon conversion of the CIMA Convertible Note by CIMA, Cuentas shall have the primary right of first refusal, and each of Dinar, Mr. De Prado and Mr. Maimon have a secondary right of first refusal, to purchase any shares of Common Stock that CIMA intends to sell to the bona fide third party purchaser on the same terms and conditions as CIMA would have sold such shares of the Common Stock to any third party purchaser. Further, CIMA has a co-sale right to participate in a sale of shares of the Common Stock, in the event that Mr. De Prado, Mr. Maimon or any other director or officer of the Company holding greater than 1% of the Common Stock (on a fully diluted basis) proposes to sell any of his, her or its shares of Common Stock. In addition, CIMA and/or Dinar have been granted certain information rights, subject to their continued ownership of the CIMA Convertible Note or of 5% or more shares of the Company’s issued and outstanding Common Stock. Furthermore, pursuant to the CIMA Side Letter, upon a successful up-listing of the Company’s shares on Nasdaq, and once the market capitalization of the Company is greater than $50 million for a period of 10 consecutive trading days, each of Mr. Maimon and Mr. De Prado will have a right to earn a special bonus in the amount of $500,000 each.

Cuentas Mobile is our Mobile Virtual Network Operator (“MVNO”), which provided NextMobile branded mobile phones and prepaid voice, text, and data mobile phone services to a customer base currently consisting of approximately 1,000 subscribers. The brand name of these services is being migrated to Cuentas Mobile. Cuentas Mobile operates this business pursuant to contracts with Sprint Corporation, which allow Cuentas Mobile to use T-Mobile’s (formerly Sprint)’s network infrastructure to operate a virtual telecommunications network providing voice, text, and data services of essentially the same quality as those Sprint provides to its own retail subscribers. MVNOs such as Cricket, Boost, Simple and Lyca Mobile have been successful at creating brands, without owning the towers, hardware or network. Cuentas is currently reactivating distribution projects through grass roots retailers that normally interact with Cuentas’ target audience, specifically offering low-cost mobile phone service with the ability to make international calls to specific Spanish speaking countries in Central and South America.

Graphic Description: Sample of creative message planned for future advertising campaign.

We believe that our potential customers worldwide will migrate away from legacy telephone and banking systems to enhanced mobility solutions, the Company’s technological advantage and the synergies created by its unique combination of reloadable bank card and mobile virtual network operator rights will make its products increasingly useful to unbanked, under-banked, under-served and other emerging niche markets.

Meimoun & Mammon LLC (“M&M”) is a retail provider of domestic and international long-distance voice, text, and data telephony services to consumers in the United States and throughout the world. M&M holds International and Domestic Section 214 authority issued by the FCC. M&M operates the retail Tel3 business as a separate division.

M&M uses both private and public Internet services to function as the backbone of the M&M Network.

We operate in an ever-evolving and complex legal and regulatory environment. We, the products and services that we offer and market, and those for which we provide processing services, are subject to a variety of federal, state and foreign laws and regulations, including, but not limited to: federal communications laws and regulations; foreign jurisdiction communications laws and regulations; federal anti-money laundering laws and regulations, including the Patriot Act, the BSA, anti-terrorist financing laws and anti-bribery and corrupt practice laws and regulations in the U.S., and similar international laws and regulations, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in Canada; state unclaimed property laws and money transmitter or similar licensing requirements; federal and state consumer protection laws, including the CARD Act, and the Dodd-Frank Act, and regulations relating to privacy and data security; and foreign jurisdiction payment services industry regulations.

Our subsidiaries Cuentas Mobile and M&M are subject to regulation by the FCC and other government agencies and task forces. M&M holds International and Domestic Section 214 licenses issued by the FCC, which may be suspended or revoked by the FCC if M&M does not strictly comply with all applicable regulations and the terms and conditions under which the International and Domestic Section 214 licenses were issued. Cuentas Mobile and M&M are also subject to foreign jurisdiction communications laws and regulations. We believe that we, including our subsidiaries, are currently operating in compliance with all applicable laws and regulations, but there is no certainty that laws and regulations affecting our business will not change. Any such change of laws and regulations applicable to our business might adversely affect our ability to execute our business plan and achieve profitable operating results.

At the federal level, Congress and federal regulatory agencies have enacted and implemented new laws and regulations that affect the prepaid industry, such the CARD Act and FinCEN’s Prepaid Access Rule. Moreover, there are currently proposals before Congress that could further substantially change the way banks, including prepaid card issuing banks and other financial services companies, are regulated and are permitted to offer their products to consumers. Non-bank financial services companies, including money transmitters and prepaid access providers, are now regulated at the federal level by the Consumer Financial Protection Bureau (the “CFPB”), which began operations in July 2011, bringing additional uncertainty to the regulatory system and its impact on our business. We are increasingly facing more stringent anti-money laundering rules and regulations, compliance with which may increase our costs of operation, decrease our operating revenues and disrupt our business. Abuse of our prepaid products for purposes of financing sanctioned countries, terrorist funding, bribery or corruption could cause reputational or other harm that could have a material adverse effect on our business, results of operations and financial condition. Failure to comply with, or further expansion of, consumer protection regulations could have a material adverse effect on our business, results of operations and financial condition. Failure by us to comply with federal banking regulation may subject us to fines and penalties and our relationships with our issuing banks may be harmed.

Most states regulate the business of ~~using proprietary technology~~sellers of traveler’s checks, money orders, drafts and other monetary instruments, which we refer to collectively as money transmitters. While many states expressly exempt banks and their agents from regulation as money transmitters, others purport to regulate the money transmittal businesses of bank agents or do not extend exemptions to non-branch bank agents. In those states where we are required to be licensed, we are subject to direct supervision and regulation by the relevant state banking departments or similar agencies charged with enforcement of the money transmitter statutes and must comply with various restrictions and requirements, such as those related to the maintenance of certain ~~licensed technology~~levels of net worth, surety bonding, selection and oversight of our authorized delegates, permissible investments in an amount equal to ~~provide innovative telecommunications~~our outstanding payment obligations with respect to some of the products subject to licensure, recordkeeping and ~~telecommunications mobility~~reporting, and ~~remittance solutions~~disclosures to consumers. We are also subject to periodic examinations by the relevant licensing authorities, which may include reviews of our compliance practices, policies and procedures, financial position and related records, various agreements that we have with our issuing banks, retail distribution partners and other third parties, privacy and data security policies and procedures, and other matters related to our business. As a regulated entity, Cuentas may incur significant costs associated with regulatory compliance. We anticipate that compliance costs and requirements will increase in ~~emerging markets.~~the future for our regulated subsidiaries and that additional subsidiaries will need to become subject to these or new regulations. If we fail to maintain our existing money transmitter licenses or permits, or fail to obtain new licenses or permits in a timely manner, our business, results of operations and financial condition could be materially and adversely affected.

~~Prior~~In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, as well as our business and operations. The extent to which COVID-19 impacts our business and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our business and results of operations may be materially adversely affected.

On December 30, 2020, in connection with the Company’s IPO, the Company amended its Bylaws to, among other items:

On January 28, 2021, the Company filed Articles of Amendment to the Articles of Incorporation of the Company with the Secretary of State of Florida, pursuant to which, effective as of February 2, 2021, the Company effected a 1-for-2.5 reverse ~~recapitalization, we operated primarily~~split of its authorized and issued and outstanding shares of Common Stock. No fractional shares will be issued as a ~~manufacturing, marketing and distribution company focused on juice based beverages. These operations were phased out following~~result of the reverse ~~recapitalization.~~stock split. Fractional shares will be rounded up the nearest whole share, after aggregating all fractional shares held by a stockholder.

On February 4, 2021 the Company sold an aggregate of 2,790,697 units at a price to the public of $4.30 per unit (the “Offering”), each unit consisting of one share of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), and a warrant exercisable for five years to purchase one share of Common Stock at an exercise price of $4.30 per share (the “Warrants”), pursuant to that certain Underwriting Agreement, dated as of February 1, 2021 (the “Underwriting Agreement”), between the Company and Maxim Group LLC (the “Representative” or “Maxim”), as representative of the sole underwriter. In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriter a 45-day option to purchase up to 418,604 additional shares of Common Stock, and/or 418,604 additional Warrants, to cover over-allotments in connection with the Offering. The Company received gross proceeds of approximately $12.0 million, before deducting underwriting discounts and commissions of 8% of the gross proceeds and estimated Offering expenses. Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter warrants (the “Underwriter’s Warrants”) to purchase up to a total of 223,256 shares of Common Stock (8% of the shares of Common Stock sold in the Offering). The Underwriter’s Warrants are exercisable at $5.375 per share of Common Stock and have a term of five years.

The total expenses of the offering were approximately $1.4 million, which included Maxim’s expenses relating to the offering.

On March 4, 2021 and pursuant to the Underwriting Agreement, Maxim exercised its 45-day option to purchase up to 418,604 additional Warrants, to cover over-allotments in connection with the Offering.

On September 2, 2020, the Company issued the Labrys Note to Labrys Funds LP (“Labrys”). The Labrys Note bears interest at a rate of 12% per annum, and was to mature on September 2, 2021. An amortized, monthly payment of principal and interest in the sum of $67,760 started in December 2020, with ability to extend the starting date of such amortized payments for up to two months upon notice, and the remaining loan principal becomes payable on maturity. The Labrys Note had an original issue discount in the amount of $60,500, and the issuing expenses were $40,000, resulting in net proceeds of $505,000. The Company also issued 70,906 shares of its Common Stock to Labrys. Out of those, 16,500 shares of Common Stock were issued in consideration of a commitment fee and the balance are subject to return to the Company once the Labrys Note is paid in full, if there were no defaults. In the event of a default, as defined in the Labrys Note, Labrys would have the right, to convert all or any portion of the then outstanding and unpaid principal amount and interest into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the date of the Labrys Note, or any shares of capital stock or other securities of the Company into which such Common Stock shall be changed or reclassified, at the conversion price as set forth in the Labrys Note. On February 12, 2021, the Company prepaid its loan to Labrys and Labrys returned the Second Commitment shares to the Company.

Results of operations for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

~~Total revenue~~Revenues during the three months ended March 31, 2021 totaled $225,000 compared to $134,000 for the three months ended ~~September 30, 2017, were $625,188, compared to~~March 31, 2020. The Company generated most of its revenue through the sale and distribution of ~~$515,230~~prepaid telecom minutes, digital products and other related telecom services. The Company have generated sales from its Fintech products and services in the amount of $18,000 during the first quarter of 2021.

Costs of revenue consists of the purchase of wholesale minutes for ~~the three month period ended September 30, 2016. During the three months ended September 30, 2017,~~resale and related telecom platform costs. Cost of revenues ~~from non-related parties totaled $470,014 and revenues from related parties totaled $155,174 compared to $502,472 from non-related parties and $12,758 from related parties~~ during the three months ended ~~September 30, 2016. The increase in~~March 31, 2021 totaled $ 247,000 compared to $177,000 for the three months ended March 31, 2020. Cost of revenue ~~was due to increased sales~~consists mainly of the purchase of wholesale minutes for resale, related telecom platform costs and purchase of digital products. Cost of revenue also consisted from cost related to ~~Next Communications,~~the sale of the Company’s GPR Card in the amount of $92,000 due to additional developments and testing that the Company conducted on its GPR product.

Gross loss is the net loss existing after the cost of sales. Gross loss decreased to a ~~related party, which~~loss of $22,000 for the quarter ended March 31, 2021, as compared to a loss of $47,000 for the same period in the prior year. The decrease in gross profit for the quarter ended March 31, 2021, as compared to the same period in the prior year, was primarily a result of higher profits in our telecom business.

Stock-based compensation and shares issued for services expenses decreased to $276,000 from $1,125,000 as a result of fewer issuance of shares issued for employees and for service providers.

Other selling, general and administrative expenses totaled ~~$155,174 and $0~~$862,000 during the three months ended ~~September 30, 2017 and 2016, respectively.~~

~~The Company incurred total cost of goods sold of $503,231 for the three months ended September 30, 2017,~~March 31, 2021 compared to $441,907 for the three months ended September 30, 2016 resulting in gross margins of $121,957 and $73,323. The increase in cost of goods sold was the result of increased minutes purchased to be resold as discussed previously.

Operating expenses for the three months ended September 30, 2017 were $522,183 compared to $1,868,409 for the three months ended September 30, 2016. Operating expenses were decreased in the three months ended September 30, 2017 due mainly to a decrease in stock based compensation included in officer compensation and professional fees.

~~Loss from operations was $400,226~~$1,414,000 during the three months ended ~~September 30, 2017, compared to $1,795,086 for the three months ended September 30, 2016.~~March 31, 2020 representing a net decrease of $552,000. The decrease in ~~losses from operations~~the operating expenses is mainly due to a one-time fee implantation fee in the ~~result~~amount of ~~decreased stock based compensation combined with improved gross margins as discussed previously.~~

~~Total other income (expense)~~$300,000 that was paid to Incomm during the three months ended ~~September 30, 2017~~March 31, 2020

Amortization of Intangible assets totaled $452,000 for the quarter ended March 31, 2021 and $450,000 for the quarter ended March 31, 2020, respectively. The increase is due to the amortization of the domain cuemtas.com which was purchased by the Company during the quarter ended March 31, 2021 in consideration of approximately $47,000.

Operating expenses totaled $1,590,000 during the three months ended March 31, 2021 compared to $2,539,000 during the three months ended March 31, 2020 representing a net ~~income~~decrease of ~~$2,086,834 compared~~945,000. The decrease in the operating expenses is mainly due to ~~$779,222 the same period~~decrease in 2016. The increase in other income was the result of increased gains on the fair value measurements of derivative liabilities which totaled $1,687,253 during the current period compared to $1,191,239 during the same period in 2016Stock based compensation and ~~$550,000 of available~~shares issued for ~~sale securities received as a referral fee and recorded as other income.~~services.

The Company recognized ~~net income before non-controlling interest for~~other expense of $63,000 during the three months ended ~~September 30, 2017 of $1,686,608~~March 31, 2021 compared to ~~a loss of $1,015,864 for~~an income $422,000 during the three months ended ~~September 30, 2016.~~March 31, 2020. The net change ~~in net income (loss) for~~from the ~~three months ended September 30, 2017~~prior period is ~~due~~ mainly to the decrease in stock based compensation in the current period, available for sale securities received as other income and increased gains recognized on the fair value measurement of derivative liabilities.

Total revenue for the nine months ended September 30, 2017, were $1,699,843, compared to revenue of $600,300 for the nine month period ended September 30, 2016. During the nine months ended September 30, 2017, revenues from non-related parties totaled $1,467,238 and revenues from related parties totaled $232,605 compared to $587,482 from non-related parties and $12,818 from related parties during the nine months ended September 30, 2016. The increase in revenue was due to the ~~acquisition~~change in our stock-based liabilities and interest expenses that we occurred. Gain from Change in Fair Value of ~~Tel3 which was completed during July 2016. Due to the timing of the acquisition, results of Tel3 are included for a full nine months in the current period and three months in 2016.~~

~~The Company incurred total cost of goods sold of $1,288,663~~stock-based liabilities for the ~~nine months~~three-month period ended ~~September 30, 2017, compared to $591,261 for the nine months ended September 30, 2016 resulting in gross margins of $411,180 and $9,039. The increase in cost of goods sold~~March 31, 2021 was the result of our acquisition of Tel3 closing in July 2016 and the incremental costs associated with offering telecom minutes for consumers. Due to the timing of the acquisition, results of Tel3 are included for a full nine months in the current period and three months in 2016.

Operating expenses for the nine months ended September 30, 2017 were $2,248,593 compared to $5,003,422 for the nine months ended September 30, 2016. Operating expenses were decreased in the nine months ended September 30, 2017 due mainly to a decrease in stock based compensation included in officer compensation and professional fees.

Loss from operations was $1,837,413 during the nine months ended September 30, 2017, compared to $4,994,383 for the nine months ended September 30, 2016. The decrease in losses from operations is the result of decreased stock based compensation combined with improved gross margins$56,000 as ~~discussed previously.~~

~~Total other income (expense) during the nine months ended September 30, 2017 was a net gain of $1,888,656~~ compared to a gain of ~~$229,055~~$359,000 for the ~~same~~three-month period ~~in 2016.~~ended March 31, 2020. The ~~increase in other income was the result of a~~ gain realized on the disposal of a business of $2,213,103 which occurred during the nine months ended September 30, 2017, partially offset by increased losses on the fair value measurements of derivative liabilities which totaled $161,746 during the current period compared to a gain of $1,583,425 during the same period in 2016 and available for sale securities received as a referral fee and recorded as other income totaling $550,000. We expect the gain realized from this disposal to be a one time event.

Net income before non-controlling interest for the nine months ended September 30, 2017 was $51,243 compared to a loss of $4,765,328 for the nine months ended September 30, 2016. The decrease in net loss for the nine months ended September 30, 2017(loss) is ~~due mainly~~attributable to the decrease in ~~stock based compensation,~~the Fair Value of our stock-based liabilities mainly due to the decrease (increase) in the price of share of our common stock.

We incurred a ~~referral fee~~net loss of ~~$550,000 recognized~~$1,675,000 for the three-month period ended March 31, 2021, as compared to a net loss of $2,163,000 for the three-month period ended March 31, 2020.

We may incur future operating losses. To regain and sustain profitability, we must, among other things, incrementally grow and maintain our customer base, sell our GPR products to existing and new customers, implement successful marketing strategies, maintain and upgrade our technology and transaction-processing systems, provide superior customer service, respond to competitive developments, attract, retain and motivate personnel, and respond to unforeseen industry developments among other factors.

We believe that our success will depend in ~~2017~~large part on our ability to (a) grow sales, (b) manage our operating expenses, (c) add customers to our client base, (d) meet evolving customer requirements and (e) adapt to technological changes in an emerging market. We continue to invest in our sales force and technology platforms to drive revenue growth.

In management’s opinion, our results of operations have not been materially affected by inflation or seasonality, and management does not expect that ~~did not exist~~inflation risk or seasonality would cause material impact on our operations in ~~2016~~the future.

Liquidity is the ~~disposal~~ability of a ~~business~~company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the ~~current period partially offset~~management of liquidity are funds generated by ~~increased losses on the fair value measurement~~operations, levels of ~~derivative liabilities.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~accounts receivable and accounts payable and capital expenditures.

As of ~~September 30, 2017,~~March 31, 2021, the Company had $6,482,000 of cash, ~~of $57,432, net~~total current assets of ~~$824,812~~$6,727,000 and total current liabilities of ~~$7,975,896~~$3,249,000 creating a working capital of $3,478,000. As of December 31, 2020, the Company had $227,000 of cash, total current assets of $296,000 and total current liabilities of $6,480,000 creating a working capital deficit of ~~$7,151,084.~~ $6,184,000. The increase in our working capital deficit was mainly attributable to the decrease in Accounts Payables in the amount of 1,952,000, decrease in our other Accounts Payables in the amount of 1,376,000 and increase in our Cash and Cash equivalents in the amount of $6,255,000.

On February 12 2021 the Company prepaid its loan to Labrys and Labrys returned the Second Commitment shares to the Company. The prepayment amount was approximately $635,000.

On March 5, 2021 the Company prepaid its loan to Dinar Zuz. The prepayment amount was approximately $378,000.

On April 20, 2021 the Company paid off its convertible promissory note and accrued interest in the amount of $260,000 to the private investor. The Company paid an amount equal to $125,000 plus $ 5,000, which represents the amount of interest accrued on such $125,000 since the date on which the loan was made under the Note through April 16, 2021. In addition, The Company issued 30,233 shares of Common Stock of the Company. The Company issued such shares in reliance on the exemptions from registration pursuant to Section 4(a)(2) of the Securities Act.

Net cash used in operating activities was ~~$384,716 and $967,736~~$3,356,000 for the ~~nine months~~three-month period ended ~~September 30, 2017 and 2016, respectively. Current assets consisted~~March 31, 2021, as compared to cash used in operating activities of ~~$57,432 of cash; $159,252 of accounts receivable; $49,720 of related party accounts receivable; $8,408 of prepaid expenses and $550,000 of investments.~~

As of December 31, 2016, the Company had $256,302 of cash, total current assets of $564,938 and total current liabilities of $10,324,057 creating a working capital deficit of $9,759,119. Current assets as of December 31, 2016 consisted of $256,302 of cash, accounts receivable net of allowance of $9,661, finance deposits of $25,000, prepaid expenses of $48,091 and current assets from discontinued operations of $225,884.

The Company’s unaudited condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs. These conditions raise substantial doubt about the company’s ability to continue as a going concern.

~~Under the going concern assumption, an entity is ordinarily viewed as continuing in business~~$738,000 for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the Business paragraph and eventually attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development associated with the launch of the company’s Cuentas branded NextCala general purpose reloadable card. The Company may experience a cash shortfall and be required to raise additional capital.

Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse affect upon it and its shareholders.

~~The Company used $384,716 of cash in operations during the nine months~~three-month period ended ~~September 30, 2017 and $967,736 during the nine months ended September 30, 2016.~~March 31, 2020. The Company’s primary uses of cash have been for professional support ~~marketing expenses~~ and working ~~capital.~~ capital purposes.

Net cash used in ~~operating~~investing activities ~~during~~was $47,000 for the ~~nine months~~three-month period ended ~~September 30, 2017 consisted of net income of $62,761, non-cash losses and gains totaling $738,530 and changes~~March 31, 2021. Net cash used in ~~working capital of $291,053. All cash received has been expended in~~investing activities was $0 for the ~~furtherance of growing future operations.~~three-month period ended March 31, 2020.

The Company generated cash from investing activities of $0 and $85,486 during the nine months ended September 30, 2017 and 2016. The $85,486 generated from investing activities during the nine months ended September 30, 2016 was the collection of a related party receivable of $41,913 and cash acquired in acquisitions net of cash paid totaling $43,573.

~~The Company generated cash from financing activities of $185,846 during the nine months ended September 30, 2017 compared to $998,801 during the same period in 2016.~~ Net cash provided by financing activities ~~in 2017 consisted of repayments of a bank overdraft of $7, proceeds from loans payable of $116,395 and proceeds from related party loans of $69,458. Net~~was approximately $9,658,000 for the three-month period ended March 31, 2020, as compared to net cash provided by financing activities in 2016 consisted of proceeds from bank overdrafts of $1,704, proceeds from loans payable of $50,000, repayments of loans payable totaling $20,961, proceeds from convertible notes of $969,130, repayments of related party loans payable of $47,481, $1,184 of cash assumed throughwas approximately $743,000 for the ~~reverse capitalization and $45,225 of cash contributed in an acquisition from a related party.~~three-month period ended March 31, 2020.

~~The Company may not~~Due to our operational losses, we have ~~sufficient resources to fully develop any new products or expand~~principally financed our ~~market area unless it is able to raise additional financing. The Company can make no assurances these required funds will be available on favorable terms, if at all. If additional capital is raised~~operations through the sale of ~~equity or convertible debt securities,~~our Common Stock and the issuance of convertible debt.

We have principally financed our operations through the sale of our Common Stock to private investors, issuance of convertible loans debt and loans from our shareholders.

Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.

To address these risks, we must, among other things, implement and successfully execute our business and marketing strategy surrounding the Cuentas Mastercard, continually develop and upgrade our website, respond to competitive developments, lower our financing costs and specifically our accounts receivable factoring costs, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such ~~securities would result in dilution to our existing stockholders. Additionally, these conditions may increase costs to raise capital and/or result in further dilution. The~~risks, and the failure to ~~raise capital when needed, will adversely affect~~do so can have a material adverse effect on our business prospects, financial condition and results of ~~operations, and could force the Company to reduce or cease~~ operations.

The Company believes that it will be able to meet the costs of growth and public reporting with funds generated from operations and additional amounts generated through debt and equity financing, Although management believes that the required financing to fund product development and increasing inventory levels can be securedAs at ~~terms satisfactory to the Company, there is no guarantee these funds will be made available, and if funds are available, that the terms will be satisfactory to the Company.~~

~~The Company does not expect inflation to be a significant factor in operation of the business.~~

~~There are~~March 31, 2021, we had no off-balance sheet arrangements ~~between the Company and~~of any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

The discussion and analysis of our financial condition and results of operations are based upon The Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. Some of the critical accounting estimates are detailed below.nature.

The preparation of financial statements in ~~accordance~~conformity with ~~accounting principles generally accepted~~GAAP in the ~~U.S.~~United States requires our management to make assumptions, estimates and ~~assumptions~~judgments that affect the amounts reported ~~amounts~~in the financial statements, including the notes thereto, and related disclosures inof commitments and contingencies, if any. Note 3 to our consolidated audited financial statements filed with the ~~financial statements. Management considers an accounting estimate to be critical if:~~

~~The Company base estimates and judgments~~Company’s Annual Report on ~~experience, current knowledge, and beliefs of what could occur in~~Form 10-K for the ~~future, observation of trends in~~fiscal year ended December 31, 2020 describes the industry, information provided by customers and information available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company has identified the followingsignificant accounting policies and ~~estimates as those that are believed~~methods used in the preparation of our financial statements. We consider our critical accounting policies to be ~~the most critical~~those related to share-based payments because they are both important to the portrayal of our financial condition and ~~results of operations~~require management to make judgments and that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties: share-based compensation expense, income taxes, and derivative financial instruments.

We calculate share-based compensation expense for option awards and warrant issuances (“Share-based Awards”) based on the estimated grant/issue-date fair value using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”), and recognize the expense on a straight-line basis over the vesting period, net of estimated forfeitures. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period of the Share-based Award in determining the fair value of Share-based Awards. Although we believe our assumptions used to calculate share-based compensation expense are reasonable, these assumptions can involve complex judgmentsestimates about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period.uncertain matters.

~~The Company has implemented all new accounting~~New pronouncements ~~that~~issued but not effective as of March 31, 2021 are ~~in effect. These pronouncements did~~ not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that mightexpected to have a material impact on ~~its~~the Company’s consolidated financial ~~position~~statements.

Other accounting standards that have been issued or ~~results of operations.~~proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.

~~Not required.~~As a smaller reporting company, we are not required to provide the information required by this item.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, and as discussed in greater detail below, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, disclosure controls and procedures are not effective:

Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective due to the following material weakness identified:

~~Lack~~We will continue to strive to correct the above noted weakness in internal control once we have adequate funds to do so. We believe appointing a director who qualifies as a financial expert will improve the overall performance of our control ~~procedures that include multiple levels of supervision and review, and~~over our financial reporting.

~~There is an overreliance upon independent~~Because of its inherent limitations, internal control over financial reporting ~~consultants for review~~may not prevent or detect misstatements. Projections of ~~critical accounting areas and disclosures and material, nonstandard transactions.~~any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~There have~~Management is in the process of determining how best to change our current system and implement a more effective system to ensure that information required to be disclosed has been ~~no changes~~recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this issue, and intends to develop procedures to address it to the extent possible given limitations in financial and human resources in and to remediate all the material weaknesses by the end of the fiscal quarter ending March 31, 2021.

Our management, with the participation of our CEO and CFO, performed an evaluation to determine whether any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the three-month period ~~covered by this report.~~

ended March 31, 2021. Based on that evaluation, our CEO and our CFO concluded that no change occurred in the Company’s internal controls over financial reporting during the three-month period ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

On December 20, 2017, a complaint was filed by J. P. Carey Enterprises, Inc. (“JP Carey”) alleging a claim for $473,000 related to Franjose Yglesias-Bertheau, a former Vice President of PLKD. Even though the Company made the agreed payment of $10,000 on January 2, 2017, and issued 6,001 shares of Common Stock as conversion of the $70,000 note as agreed in its settlement agreement, JP Carey alleges damages that the Company claims are without merit because JP Carey received full compensation as agreed. The Company is in the process of defending itself against these claims. The Company has not accrued losses related to this claim due to the early stages of litigation. On January 29, 2019, the Company was served with another complaint by JP Carey claiming similar issues as to the previous complaint, with the new claimed damages totaling $1,108,037.85. JP Carey and the Company filed motions for a summary judgment. On October ~~14, 2014, one~~1, 2020, the Superior Court of ~~our operating subsidiaries, NxtGn, Inc.~~Fulton County, State of Georgia granted the Company’s motion for summary judgment and ~~Next Communications, Inc., an entity controlled by our CEO, (collectively~~denied JP Carey’s motion for summary judgment. On October 30, 2020, JP Carey filed a notice of appeal to the ~~“Plaintiffs”) filed suit~~trial court’s October 1 and 7, 2020 orders granting summary judgment in favor of Cuentas. The briefing in the ~~United States District Court~~appeal was completed during the first quarter of 2021. Oral argument held on April 13, 2021 but no decision has been rendered yet. On November 16, 2020, Cuentas filed a motion seeking payment from JP Carey of $140,970.82 in attorney fees and costs accrued as of November 13, 2020. JP Carey’s responded brief was filed on or about December 21, 2020 and thereafter Cuentas filed its reply. The trial court has not yet set a date to hear this motion.

On October 23, 2018, Cuentas was served by Telco Cuba Inc. for an amount in excess of $15,000 but the ~~Southern district~~total amount was not specified. The Company was served on December 7, 2018, with a complaint alleging damages including unspecified damages for product, advertising and other damages in addition to $50,000 paid to Defendants. Cuentas has hired an attorney and has taken steps to defend itself vigorously in this case. Depositions are in process of ~~New York against Viber Media, Inc. Plaintiffs filed an Amended Complaint asserting four claims: misappropriation of~~being scheduled.

On October 25, 2018, the Company was served with a ~~business idea, misappropriation of trade secrets,~~complaint by former company Chief Financial Officer, Michael Naparstek, claiming breach of contract for 833,333 shares (pre-2018 reverse stock split), $25,554 of compensation and ~~unjust enrichment. Viber moved~~$8,823 of expenses. This case was withdrawn in Palm Beach County and on January 11, 2019, a similar complaint was filed in Miami-Dade County. During the ~~Court~~recent mediation, the Company and Mr. Naparstek reached an understanding of full settlement amount of $2,500. The Company has deposited the settlement amount to ~~dismiss the Amended Complaint. On March 30, 2016, U.S. District Judge Richard Sullivan issued~~ an ~~opinion and order on Viber’s motion to Dismiss. Specifically, Judge Sullivan ordered that Viber’s motion to dismiss is granted on Plaintiffs’ misappropriation~~escrow account of its counsel until a ~~business idea claim, but denied as to their misappropriation~~stipulation of ~~trade secrets, breach of contract, and unjust enrichment claims.~~settlement will be executed by both parties.

On ~~September 20, 2016,~~November 7, 2018, the Company and its now former subsidiary, Limecom, were served with a complaint by IDT Domestic Telecom, Inc. for telecommunications services provided to Limecom during 2018 in the amount of $50,000. The Company has no accrual expenses as of December 31, 2019, related to the complaint given the early nature of the process. Limecom was a subsidiary of the Company during this period but since the Limecom Acquisition was rescinded on January 30, 2019, and Limecom agreed to indemnify and hold harmless Cuentas from this and other debts. Cuentas hired an attorney and is defending itself vigorously in this case. A court ordered mandatory arbitration session took place and the arbitration findings were issued on June 19, 2020, and a request for trial de novo was filed on July 16, 2020, in order to have the matter docketed on the calendar. The motion for summary judgment filed by Cuentas Inc. with the New Jersey Superior Court initially set for October 16, 2020 was heard on October 30, 2020 after being rescheduled by the court. Oral arguments were held over the phone via conference call. The court came to the determination that while not indicative of success at trial, the court denied Plaintiff’s motion for summary judgment. Presently, there is a current trial date set for July 6, 2021.

On May 1, 2019, the Company received a notice of demand for arbitration from Secure IP Telecom, Inc. (“Secure IP”), who allegedly had a Reciprocal Carrier Services Agreement (“RCS”) exclusively with Limecom and not with Cuentas. The arbitration demand originated from another demand for arbitration that Secure IP received from VoIP Capital International (“VoIP”) in March 2019, demanding $1,052,838.09 in damages allegedly caused by unpaid receivables that Limecom assigned to VoIP based on the RCS. On June 5, 2020, SecureIP filed a complaint against Limecom, Heritage Ventures Limited (“Heritage”), an unrelated third party and owner of Limecom, and the Company. The complaint primarily concerns alleged indebtedness owed SecureIP by Limecom. SecureIP also alleges that Cuentas received certain transfers of funds which it alleges may be an avoidable transfer under Florida Statute §725.105 up to $1,052,838.09. Cuentas is contemplating filing a motion to dismiss the complaint and disputes that it received the alleged $1,052,838.09 from Limecom. Moreover, to the extent Cuentas has ~~been named~~exposure for any transfers from Limecom, both Limecom and Heritage have indemnified Cuentas for any such liability. The Company will vigorously defend its position to be removed as a ~~defendant~~named party in a suit brought against Next Communications, an entity controlled by our CEO. In addition to being named a defendant, it was requested the Company provide certain documents for the discovery process. Duethis action due to the ~~original suit being filed against a related party and not against~~fact that Cuentas rescinded the ~~Company or its subsidiaries, we believe it likely the Company and its subsidiaries be dismissed as defendants.~~ Limecom Acquisition on January 30, 2019.

On ~~July 6, 2017,~~April 1, 2021 the Company ~~received notice an existing legal claim against Accent InterMedia (“AIM”) had been amended to include claims against the Company.~~executed a lease for office space effective April 1, 2019. The ~~claims brought against the Company include failure to comply with certain judgments for collection~~lease requires monthly rental payments of funds by the plaintiff while having a controlling interest in AIM via its ownership of Transaction Processing Products (“TPP”). The Company believes the amended case is without merit and that, per its agreement to sell its interest in TPP, any claims brought against AIM or TPP would be the responsibilities of the current interest holders. Due to the original suit being filed against AIM and amended to include the Company after it disposed of its interest in TPP, which had a controlling interest in AIM, we believe it likely the Company and its subsidiaries be dismissed as defendants.$7.

~~During the nine months ended September 30, 2017,~~On February 2, 2021, the Company issued ~~18,059,865~~20,000 shares of ~~commons stock for~~its Common Stock to its Chief Financial Officer, 40,000 shares of its Common Stock to a member of the ~~conversion~~Board of ~~$344,744~~Directors of ~~principal~~the Company and 2,933 shares of ~~convertible notes payable and 967,045~~its Common Stock to a former employee. The fair market value of the shares ~~for~~was $459,000. We issued such shares in reliance on the ~~conversion~~exemptions from registration pursuant to Section 4(a)(2) of ~~$19,341 of accrued interest. Additionally,~~the Securities Act.

On March 17, 2021, the Company issued ~~8,449,654 common~~10,000 shares ~~valued~~of its Common Stock pursuant to a service Agreement between the Company and a service provider, dated May 16, 2019. The fair market value of the shares at ~~$280,000 as repayment~~the issuance date was $38,000. We issued such shares in reliance on the exemptions from registration pursuant to Section 4(a)(2) of ~~a non-convertible related party~~the Securities Act.

On April 20, 2021 the Company paid off its loan and ~~450,346 common shares valued at $14,932 as repayment~~accrued interest in the amount of ~~non-convertible related party accrued interest.~~$260,000 to private investor. The Company ~~also~~paid an amount equal to $125,000 plus $ 5,000, which represents the amount of interest accrued on such $125,000 since the date on which the loan was made under the Note through April 16, 2021. In addition, The Company issued ~~12,809,091~~30,233 shares of ~~common stock valued at $720,200 for services were valued using the close price~~Common Stock of the ~~Company’s common stock~~Company. We issued such shares in reliance on the ~~date~~exemptions from registration pursuant to Section 4(a)(2) of ~~issuance as quoted on~~ the ~~OTCBB.~~Securities Act.

The Company’s SEC Attorney, Simon Kogen, sole practitioner of New York, has been incapacitated and incommunicado with the Company due to a hospitalization, and as such the Company had to seek new SEC Council. The Company has retained the following two firms, respectively;None

	26Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		Filed herewith
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		Filed herewith
101.INS		XBRL Instance Document		Filed herewith
101.SCH		XBRL Taxonomy Extension Schema		Filed herewith
101.CAL		XBRL Taxonomy Extension Calculation Linkbase		Filed herewith
101.DEF		XBRL Taxonomy Extension Definition Linkbase		Filed herewith
101.LAB		XBRL Taxonomy Extension Label Linkbase		Filed herewith
101.PRE		XBRL Taxonomy Extension Presentation Linkbase		Filed herewith

SIGNATURES

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

	~~Next Group Holdings,~~Cuentas, Inc.
	(Registrant)

Date: ~~November 20, 2017~~May 5, 2021	By:	/s/ Arik Maimon
		Interim Chief Executive Officer

	By:	/s/ ~~Michael DePrado~~Ran Daniel
		Chief Financial Officer

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, par value $0.001 per share	CUEN	The Nasdaq Stock Market LLC

Warrants, each exercisable for one share of Common Stock	CUENW	The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	~~☐ (Do not check if a smaller reporting company)~~☒	Smaller reporting company	☒
		Emerging growth company	☐

	Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:	~~Pages~~

~~Unaudited Condensed Consolidated~~ Balance Sheets	as of March 31, 2021 (Unaudited) and December 31, 2020	2

~~Unaudited Condensed Consolidated~~ Statements of Operations	and Comprehensive Loss for the three-months ended March 31, 2021 and 2020 (Unaudited)	3

~~Unaudited Condensed Consolidated~~ Statements of Cash Flows	for the three months ended March 31, 2021 and 2020 (Unaudited)	4

Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements		~~5 - 18~~5-13

	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Current Assets
Cash	$	57,432		$	256,302
Accounts receivable, net		9,078			9,661
Accounts receivable, related party		199,894			-
Finance deposit		-			25,000
Prepaid expenses and other current assets		8,408			48,091
Investments		550,000			-
Assets from discontinued operations		-			225,884
Total current assets		824,812			564,938

License fee, net of accumulated amortization		55,556			118,056
Related party receivable		36,000			36,000

Total assets	$	916,368		$	718,994

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank overdraft	$	-		$	7
Accounts payable and accrued liabilities		1,697,524			1,330,789
Dividends payable		30,000			30,000
Deferred revenue		706,378			715,642
Loan payable		75,000			75,000
Convertible notes payable, net of discounts and debt issue costs		981,960			1,076,302
Derivative liability		1,143,186			1,210,281
Related party payable		3,225,453			3,155,995
Notes payable, current		116,395			-
Interest payable, related party		-			13,321
Notes payable, related party		-			280,000
Liabilities from discontinued operations		-			2,436,720
Total current liabilities		7,975,896			10,324,057

Commitments and contingencies		-			-

Stockholders' Deficit
Preferred stock, $0.001 par value, authorized 60,000,000 shares; Series A preferred stock; $0.001 par value, designated 50,000,000; 0 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.		-			-
Series B preferred stock, $0.001 par value, designated 10,000,000; 10,000,000 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		10,000			10,000
Common stock, authorized 360,000,000 shares, $0.001 par value, 289,961,684 and 249,225,683 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		289,962			249,226
Additional paid in capital		6,702,788			6,791,750
Accumulated deficit		(13,436,542	)		(13,499,303	)
Total Next Group Holdings, Inc. stockholders' deficit		(6,433,792	)		(6,448,327	)

Non-controlling interest in subsidiaries		(625,736	)		(3,156,736	)

Total liabilities and stockholders' deficit	$	916,368		$	718,994

	March 31, 2021			December 31, 2020
	Unaudited			Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		6,482			227
Accounts Receivables		40			-
Marketable securities		52			3
Related parties		-			54
Other current assets		153			12
Total current assets		6,727			296

Property and Equipment, net		4			4
Intangible assets		6,795			7,200
Total assets		13,526			7,500

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		1,402			2,354
Other accounts liabilities		819			2,195
Deferred revenue		676			652
Notes and Loan payable		94			93
Convertible Note		250			719
Related parties’ payables		-			365
Stock based liabilities		8			102
Total current liabilities		3,249			6,480

Other long-term loans		89			89

TOTAL LIABILITIES		3,338			6,569

STOCKHOLDERS’ EQUITY

Common stock, authorized 360,000,000 shares, $0.001 par value; 13,829,601 and 10,590,491 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		14			11
Additional paid in capital		39,340			28,411
Accumulated deficit		(29,166	)		(27,491	)
Total stockholders’ equity		10,188			931
Total liabilities and stockholders’ equity		13,526			7,500

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue	$	470,014		$	502,472		$	1,467,238		$	587,482
Revenue, related party		155,174			12,758			232,605			12,818
Total revenue		625,188			515,230			1,699,843			600,300

Cost of revenue		503,231			441,907			1,288,663			591,261
Gross profit (loss)		121,957			73,323			411,180			9,039

Operating expenses
Officer compensation		327,831			166,684			691,774			1,611,419
Professional fees		69,869			1,370,885			1,202,756			2,843,656
General and administrative		124,483			330,840			354,063			548,347
Total operating expenses		522,183			1,868,409			2,248,593			5,003,422

Loss from operations		(400,226	)		(1,795,086	)		(1,837,413	)		(4,994,383	)

Other income (expense)
Other income		550,000			-			729,580			10,245
Other expense		-			-			-			(45,000	)
Loss on disposal of asset		-			-			-			(2,926	)
Interest expense		(150,419	)		(412,017	)		(748,138	)		(1,302,199	)
Penalties on convertible notes payable		-			-			-			(14,490	)
Excess derivative liability expense		-			-			(144,143	)		-
(Loss) gain on derivative liability		1,687,253			1,191,239			(161,746	)		1,583,425
Gain on disposal of business		-			-			2,213,103			-
Total other income (expense)		2,086,834			779,222			1,888,656			229,055

Net income (loss) before income taxes		1,686,608			(1,015,864	)		51,243			(4,765,328	)

Income taxes		-			-			-			-

Net income (loss) before controlling interest		1,686,608			(1,015,864	)		51,243			(4,765,328	)
Net loss attributable to non-controlling interest		1,888			65,374			11,518			70,757
Net income (loss) attributable to Next Group Holdings, Inc.	$	1,688,496		$	(950,490	)	$	62,761		$	(4,694,571	)

Income (loss) per share, basic	$	0.01		$	(0.00	)	$	0.00		$	(0.02	)
Income (loss) per share, diluted	$	0.00		$	(0.00	)	$	0.00		$	(0.02	)

Weighted average number of common shares outstanding, basic		284,502,410			234,060,228			271,845,362			230,017,361
Weighted average number of common shares outstanding, diluted		357,482,680			234,060,228			344,825,632			230,017,361

	Three Months Ended March 31,
	2021			2020

REVENUE		225			134

COST OF REVENUE		247			177

GROSS LOSS		(22	)		(43	)

OPERATING EXPENSES

Amortization of Intangible assets		452			450
General and administrative		1,138			2,089
TOTAL OPERATING EXPENSES		1,590			2,539

OPERATING LOSS		(1,612	)		(2,582	)

OTHER INCOME (EXPENSES)
Other Income		53			63
Interest expense		(172	)		(3	)
Gain on derivative liability		-			3
Gain from Change in fair value of stock-based liabilities		56			359
TOTAL OTHER INCOME (EXPENSES)		(63	)		422

NET LOSS BEFORE CONTROLLING INTEREST		(1,675	)		(2,160	)

NET LOSS ATTRIBUTILE TO NON-CONTROLLING INTEREST		-			(3	)
NET LOSS ATTRIBUTILE TO NET INCOME (LOSS) ATTRIBUTILE TO CUENTAS INC.		(1,675	)		(2,163	)

Net loss per basic share		(0.13	)		(1.03	)
Net loss per diluted share		(0.13	)		(1.03	)
Weighted average number of basic and diluted common shares outstanding		12,474,008			2,100,539

Asset	Amount		Life (months)
Intangible Assets	$	9,000		60
Total	$	9,000		60

Year ended December 31,
2021	$	1,810
2022		1,810
2023		1,810
2024		1,810
2025		7
Total	$	7,247

	Deferred Revenue
Balance at December 31, 2020	$	652
Change in deferred revenue		24
Balance at March 31, 2021	$	676

	Balance as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities		52		-		-		52
Total assets		52		-		-		52

Liabilities:
Stock based liabilities		8		-		-		8
Total liabilities		8		-		-		8

	Balance as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities		3		-		-		3
Total assets		3		-		-		3

Liabilities:
Stock based liabilities		102		-		-		102
Total liabilities		102		-		-		102

Holder	Issue Date	Due Date	Original Principal		Balance, December 31, 2016		Advances		Conversions to Common Stock			Principal Balance, September 30, 2017
Noteholder 1	11/25/2015	11/24/2016	$	82,500	$	82,500	$	-	$	(35,971	)	$	46,529
Noteholder 1	12/21/2015	12/21/2016		27,000		27,000		-		-			27,000
Noteholder 1	1/15/2016	1/15/2017		131,250		131,250		-		-			131,250
Noteholder 1	3/8/2016	3/8/2017		50,000		50,000		-		-			50,000
Noteholder 1	4/11/2016	4/11/2017		82,500		82,500		-		-			82,500
Noteholder 1	4/11/2016	4/11/2017		82,500		82,500		-		-			82,500
Noteholder 1	4/11/2016	4/11/2017		82,500		82,500		-		-			82,500
Noteholder 1	5/16/2016	5/16/2017		100,000		100,000		-		(60,000	)		40,000
Noteholder 1	7/22/2016	7/22/2017		50,000		50,000		-		-			50,000
Noteholder 1	8/2/2016	8/2/2017		50,000		50,000		-		-			50,000
Noteholder 2	11/20/2015	11/20/2016		37,000		37,000		-		-			37,000
Noteholder 3	3/8/2016	3/8/2017		50,000		14,000		-		-			14,000
Noteholder 3	5/16/2016	5/16/2017		100,000		100,000		-		(77,500	)		22,500
Noteholder 3	7/22/2016	7/22/2017		50,000		50,000		-		-			50,000
Noteholder 3	3/8/2016	3/8/2017		25,000		25,000		-		(25,000	)		-
Noteholder 4	1/19/2016	1/15/2017		131,250		131,250		-		(22,704	)		108,546
Noteholder 4	3/9/2016	3/8/2017		50,000		50,000		-		(16,098	)		33,902
Noteholder 5	11/9/2015	11/9/2016		100,000		61,397		-		(12,500	)		48,897
Noteholder 6	11/2/2016	11/2/2017		52,500		52,500		-		(25,000	)		27,500
Noteholder 7	1/2/2017	8/2/2017		70,000		-		70,000		(70,000	)		-
Totals			$	1,404,000	$	1,259,397	$	70,000	$	(344,773	)	$	984,624

Holder	Derivative Balance
Noteholder 1	$	39,944
Noteholder 1		23,179
Noteholder 1		112,676
Noteholder 1		42,924
Noteholder 1		70,825
Noteholder 1		70,825
Noteholder 1		70,825
Noteholder 1		34,339
Noteholder 1		42,924
Noteholder 1		42,924
Noteholder 2		31,764
Noteholder 3		12,019
Noteholder 3		19,316
Noteholder 3		42,924
Noteholder 4		93,185
Noteholder 4		29,104
Noteholder 5		93,636
Option Holder		223,500
Noteholder 6		46,353
Total	$	1,143,186

	September 30, 2017			December 31, 2016
Expected volatility		72% - 796	%		155% - 871	%
Expected term		.09 - 2.50 years			.19 – 2.54 years
Risk free rate		0.96% - 1.62	%		.51% - 1.47	%
Forfeiture rate		0	%		0	%
Expected dividend yield		0	%		0	%

	Shares			Weighted- Average Exercise Price Per Share
Outstanding, December 31, 2016		17,500,000		$	0.18
Granted		7,500,000			0.18
Exercised		-			-
Forfeited		(7,500,000	)		(0.18	)
Expired		-			-
Outstanding, September 30, 2017		17,500,000		$	0.18

	Shares		Weighted- Average Exercise Price Per Share
Outstanding, December 31, 2020		135,200	$	11.18
Granted		-		-
Forfeited		-		-
Outstanding, March 31, 2021		135,200	$	11.18

		Outstanding						Exercisable					Outstanding						Exercisable
Exercise Prices	Exercise Prices	Number of Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Number of Option Shares		Weighted Average Exercise Price		Exercise Prices	Number of Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Number of Option Shares		Weighted Average Exercise Price
$	0.18		17,500,000	$	0.18		3.23		10,833,334	$	0.18	14.35		79,200	$	14.35		3.99		79,200	$	14.35
			17,500,000	$	0.18		3.23		10,833,334	$	0.18	7.50		36,000		7.50		3.46		36,000		7.50
												5.23		20,000		5.23		2.99		20,000		5.23
														135,200	$	11.18		3.43		135,200	$	11.18

	~~September 30,~~ ~~2017~~
~~Expected term of options granted~~		~~0 - 5 years~~
~~Expected volatility range~~		~~778 - 850~~	%
~~Range of risk-free interest rates~~		~~0.82 - 1.41~~	%
~~Expected dividend yield~~		0	%

Fair Value of Embedded Derivative Liabilities:
Balance, December 31, 2016	$	1,210,281
Initial measurement of derivative liabilities		328,932
Change in fair market value		161,746
Write off to additional paid in capital due to conversion		(557,773	)
Balance, September 30, 2017	$	1,143,186

	September 30, 2017		December 31, 2016
(a) Glocal Card Services		36,000		36,000
Total Due from related parties	$	36,000	$	36,000

	September 30, 2017		December 31, 2016
(b) Due to Next Communications, Inc.	$	3,119,851	$	2,961,271
(c) Due to Asiya Communications SAPI de C.V.		5,998		95,120
(d) Michael DePrado		99,604		99,604
Total Due from related parties	$	3,225,453	$	3,155,995

~~(a)~~	~~Glocal Card Services is our partner in the Glocal Joint Venture and is considered a related party because of our business relationship with them~~

~~(b)~~	~~Next Communication, Inc. is a corporation in which our Chief Executive Officer holds a controlling interest and serves as the Chief Executive Officer. (See~~~~Note 11 – Commitments and Contingencies~~)

~~(c)~~	Asiya Communications SAPI de C.V.is a telecommunications company organized under the laws of Mexico, in which our Chief Executive Officer holds a substantial interest and is involved in active management.

~~(d)~~	~~Michael DePrado is our Chief Operating Officer and Chief Financial Officer~~

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016
Next Communications, Inc.	$	155,174	$	-	$	226,840	$	-
Asiya Communications SAPI de C.V.		-		81		1,972		81
Next Cala 360		-		12,677		3,793		12,737
Total	$	155,174	$	12,758	$	232,605	$	12,818

Trade payables	$	1,024,564
Accrued expenses		138,836
Accrued interest, notes payable		4,810
Accrued interest, convertible notes payable		387,927
Accrued salaries and wages		141,387
Total	$	1,697,524

Summary of common stock activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021	Outstanding shares
Balance, December 31, ~~2016~~2020		~~249,225,683~~10,590,491
Shares issued for Common Stock		2,790,697
Shares issued due to conversion of Warrants		418,604
Return of commitment shares		(43,525	)
Shares issued for services		~~12,809,091~~10,000
Shares issued ~~as repayment of related party loan and accrued interest (a)~~to employees		~~8,900,000~~
~~Shares issued for conversion of convertible notes payable and accrued interest (b)~~		~~19,026,910~~63,334
Balance, ~~September 30, 2017~~March 31, 2021		~~289,961,684~~13,829,601

	March 31, 2021		December 31, 2020
	(dollars in thousands)
(a) Due to Next Communications, Inc. (current)	$	-	$	10
(c) Principal and interest due to Dinar Zuz LLC due to Dinar Zuz LLC		-		355
(d) Due to Cima Telecom Inc.		540		417
Total Due from related parties	$	540	$	782

Direct ACH Deposits	ATM Cash Withdrawal	Bill Pay and Online Purchases
Debit Card Network Processing	Peer to Peer Payments	Cash Reload at over 50,000 retailers
Online banking	Major Transit Authority Tokens	Discounted Gift Cards

	●	~~it requires assumptions to be made that were uncertain at the time the estimate was made, and~~

	●	~~changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition.~~

	●	to give reasonable assurance that the information required to be disclosed in reports that are file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and

	●	to ensure that information required to be disclosed in the reports that are file or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our CEO and our Treasurer, to allow timely decisions regarding required disclosure.

Exhibit No.	Description	Location
2	Articles of Merger- NYBD Holding, Inc/Pleasant Kids, Inc.	(1)
3.1	Articles of Incorporation- League Now Holdings, Corporation, dated September 21, 2005	(1)
3.2	Articles of incorporation – Pleasant Kids, Inc., dated July 19, 2013	(1)
3.3	Amendment to articles of incorporation, dated May 9, 2013	(1)
3.4	Amendment to articles of incorporation, dated September 14, 2014	(2)
3.5	Amendment to articles of incorporation, dated October 7, 2014	(2)
3.6	Amendment to articles of incorporation, dated February 4, 2014	(2)
3.7	Amendment to articles of incorporation, dated May 8, 2014	(2)
3.8	Amendment to articles of incorporation, dated May 19, 2014	(2)
3.9	Amendment to articles of incorporation, dated February 25, 2015	(3)
3.10	Amendment to articles of incorporation, dated March 19, 2015	(3)
3.11	Joint Venture Agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated May 27, 2016	(4)
3.12	Addendum to joint venture agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated August 9, 2016	(4)
3.13	Debt Purchase and Assignment Agreement and Stock Purchase Agreement of Transaction Processing Products, Inc. dated July 10, 2016	(5)
3.14	Agreement Regarding Purchase and Sale of All Assets and Certain Liabilities of Tel3 dated August 11, 2016	(5)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

~~(1)~~Exhibit No.	~~Incorporated by reference from Pleasant Kid’s Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2013 filed on January 14, 2014.~~	Description	Location
~~(2)~~ 10.1	~~Incorporated by reference from Pleasant Kid’s Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2014 filed on January 14, 2015.~~	Amendment to Convertible Promissory Note and Payoff Agreement	Filed herewith
~~(3)~~31.1	~~Incorporated by reference from Pleasant Kid’s Quarterly Report on Form 10-Q for~~	Certification of Chief Executive Officer pursuant to Section 302 of the ~~Fiscal Quarter Ended March 31, 2015 filed on May 20, 2015.~~ Sarbanes-Oxley Act of 2002	Filed herewith
~~(4)~~31.2	~~Incorporated by reference from Next Group Holdings’ Quarterly Report on Form 10-Q for~~	Certification of Chief Financial Officer pursuant to Section 302 of the ~~Quarter Ended June 30, 2016 filed on August 19, 2016.~~ Sarbanes-Oxley Act of 2002	Filed herewith
~~(5)~~32.1	~~Incorporated by reference from Next Group Holdings’ Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2016 filed on November 21, 2016.~~