☒ 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

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 21,~~December 19, 2018, the issuer had ~~1,305,088~~1,454,615 shares of its common stock issued and outstanding.

Cuentas Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (the “Amendment No. 1”) to its Quarterly Report on Form 10-Q for the period ended September 30, 2018, filed with the Securities and Exchange Commission on December 19, 2018 (the “Form 10-Q”), to correct an error on the face of the Form 10-Q to reflect that the Company 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 prior to the filing date.

In connection with the foregoing, and pursuant to the rules of the SEC, we are including with this Amendment No. 1 new certifications by our principal executive officer and principal financial officer. Accordingly, Part II, Item 6 of the Form 10-Q is being amended to reflect the filing of a new Exhibits 31.1, 31.2, 32.1 and 32.2.

Other than with respect to the foregoing, this Amendment No. 1 does not modify or update in any way the disclosures made in the Form 10-Q. This Amendment No. 1 speaks as of the original filing date of the Form 10-Q and does not reflect events that may have occurred subsequent to such original filing date.

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

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVEINCOME (LOSS)

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

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

Cuentas, Inc. ~~(the~~(formerly Next Group Holdings, Inc., 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. Its subsidiaries are Meimoun and Mammon, LLC (100% owned), Next Cala, Inc (94% owned), NxtGn, Inc. (65% owned), Next Mobile 360, Inc. (100% owned) and SDI Next Distribution, LLC (51% owned). Additionally, Next Cala, Inc. has a 60% interest in NextGlocal, a subsidiary incorporated in May 2016. During the year ended December 31, 2016, the Company acquired a business segment, Tel3, from an existing corporation. Tel3 was merged into Meimoun and Mammon, LLC effective as of January 1, 2017. On October 23, 2017, the Company acquired 100% of the outstanding interests in Limecom, Inc.

In September 2018, the Company changed its name to Cuentas, Inc. to better position its intended business activities.

The Company invests in financial technology and currently derives its revenues from the sales of prepaid and wholesale calling minutes. Additionally, the Company has an agreement with 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 intends to launch the cards upon successful completion of appropriate financing and has yet to generate revenues from this activity. ~~In September 2018, the Company changed its name to Cuentas, Inc. to better represent its intended business activities.~~

Cuentas, Inc. 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. Its subsidiaries are Meimoun and Mammon, LLC (100% owned), Next Cala, Inc (94% owned), NxtGn, Inc. (65% owned), Next Mobile 360, Inc. (100% owned) and SDI Next Distribution, LLC (51% owned). Additionally, Next Cala, Inc. has a 60% interest in NextGlocal, aThe Company through it fully owned subsidiary, formed in May 2016. During the year ended December 31, 2016, the Company acquired a business segment, Tel3, from an existing corporation. Tel3 was merged into Meimoun and Mammon, LLC effective January 1, 2017. On October 23, 2017, the Company acquired 100% of the outstanding interests in Limecom, Inc.

Meimoun and Mammon, LLC (“M&M”) was formed under the laws of the State of Florida 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, provides telecom services to the retail and wholesale markets including sales of prepaid ~~long distance~~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.~~360.

Next Cala, Inc, (“Cala”) ~~was formed under the laws of Florida on July 10, 2009 for the purpose of offering~~offers 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~~develops a High Definition telepresence product ~~(AVYDA)~~(“AVYDA”) which allows users to connect with celebrities, public figures, healthcare and education applications via a mobile phone, tablet or personal computer. NxtGn has entered into a joint venture with telephony platform industry leader Telarix, Inc. to develop and market the AVYDA Powered by Telarix™ HD telepresence platform. The AVYDA Powered by Telarix™ product is marketed throughout the world by the Telarix sales force.

~~On May 27,~~Since September 17, 2016 Next Cala entered into a Joint Venture Agreement (the “Agreement”) with Glocal Payments Solutions, Inc (“Glocal”) to form a joint venture, NextGlocal, in which Cala has a 60% controlling interest and Glocal has a 40% interest. The Joint Venture sought 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. Neither milestone was achieved. Either party may terminate the agreement at December 31, 2016 if certain objectives are not met. The joint venture has not had activity since the year ended December 31, 2016 but has not been formally dissolved.

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. The Company disposed of TPP during the year ended December 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 calling cards to consumers directly and operates in a complimentary space as M&M. Tel3 was originally acquired by the Company’s CEO in a private transaction and sold to the Company for $10 cash.

On October 23, 2017, the Company closed the acquisition of Limecom, Inc. (“Limecom”). Limecom is a global telecommunication company, providing services to telecommunication providers from all over the world. Limecom operates a network built on internet protocol (“IP”) switching equipment.

~~The~~ Company has a Market Partner Agreement with InsightPOS, ~~LLC since September 17, 2016.~~LLC. InsightPOS is a “State of the Art”, “Super Functional Point Ofof Sale” system that has a combination of tools that we believe makes the retail experience quicker and better both for the shopper and for store management. The Company previously installed about 10 units including training by InsightPOS. These units were withdrawn due to required programming development and improved network interconnections.

On December 6, 2017, the Company completed its formation of SDI NEXT Distribution LLC in which it holds a 51% 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,~~$500, to be paid per an agreed-upon schedule over a twelve-month period beginning December 2017. 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~~general-purpose reloadable cards, prepaid gift cards, prepaid money transfer, prepaid utility payments, and other prepaid products. There has been no activity in or cash contributions to this entity since formation.

The Company, through its affiliate, Next Communications, Inc., has the right to sell STI Mobile, Next Cala and any Next products to 8,800 locations that were serviced by a prepaid distribution network. The Company will offer the InsightPOS system to clients of this distribution network as well via direct sales through its own sales force and affiliates. When a system is installed, ~~NGH~~the Company receives 50% of the gross profits received by InsightPOS after retailer commissions are paid.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of September 30, 2018, the Company had approximately $48 in cash and cash equivalents, approximately $7,915 in negative working capital, a stockholders’ deficiency of approximately $4,032 and an accumulated deficit of approximately $14,419. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

The Company completed a reverse stock split of its common stock, by filing articles of amendment to its Articles of Incorporation (the “Articles of Amendment”) with the Secretary of State of Florida to effect the Reverse Stock Split on August 8, 2018. As a result of the reverse stock split, the following changes have occurred (i) every three hundred shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option, common stock warrant or any other convertible instrument of the Company have been proportionately decreased on a 300-for-1 basis, and the exercise price of each such outstanding stock option, common warrant or any other convertible instrument of the Company have been proportionately increased on a 300-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 300-for-1 reverse stock split. No fractional shares were issued as a result of the reverse stock split. In lieu of issuing fractional shares, each holder of common stock who would otherwise have been entitled to a fraction of a share was entitled to receive one full share for the fraction of a share to which he or she was entitled.

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 the nine- months and three-months ended September 30, 2018. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2018. 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, 2017, filed with the SEC on June 4, 2018 (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, 2017 and notes thereto and other pertinent information contained in our annual report on form 10-K as filed with the Securities and Exchange Commission. The unaudited condensed consolidated statements of operations and cash flows for the periods ended June 30, 2018 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, 2018.

The accompanying unaudited condensed consolidated financial statements have been prepared by management and in the opinion of management, the accompanying unaudited 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 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) which have been consistently applied in the preparation of the unaudited consolidated financial statements.2017.

The consolidated financial statements are prepared in accordance with US GAAP. The consolidated financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries. All inter-company balances and transactions have been 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 for bad debts, ~~stock based~~stock-based compensation, collectability of loans receivable, potential impairment losses of intangible assets and goodwill, and fair value calculations related to embedded derivative features of outstanding convertible notes payable and other financial instruments.

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 June 30, 2018 or December 31, 2017. The Company did not hold cash with any one financial institution in excess of the FDIC insured limit of $250,000.

The Company follows ASC 606 of the FASB Accounting Standards Codification for revenue recognition. Adoption of ASC 606 did not have a significant impact on the Company’s financial statements. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company primarily generates revenues through the sale of prepaid calling minutes to consumers through its Tel3 division and the sale of wholesale telecom minutes through its Limecom subsidiary. While the Company collects payment for prepaid consumer minutes in advance, revenue is recognized upon delivery to and consumption of minutes by the consumer or upon the forfeiture of minutes with forfeitures occurring after 12 consecutive months of non-use.

The Company recognizes revenues from the sale of prepaid telecommunications minutes directly to consumers at the retail level. While the Company collects payment for prepaid consumer minutes in advance, revenue is recognized upon delivery to and consumption of minutes by the consumer or upon the forfeiture of minutes with forfeitures occurring after 12 consecutive months of non-use. Generally, consumers will prepay a fixed dollar amount then consume the prepayment upon making telephone calls on the Company’s telecommunications network. Revenues from direct to consumer retail sales were ~~$385,802~~$266 and ~~$493,458~~$469 and ~~$797,025~~$1,118 and ~~$994,049~~$1,463 during the three and ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively.

The Company recognizes revenues from the brokering of sales of minutes from one telecommunications carrier to another. The Company receives an order for a defined number of minutes to a defined geographic region at which point it sources those minutes and purchases them with an immediate resale to the customer. Revenues from wholesale telecommunications minutes were ~~$20,499,288~~$20,297 and $0 and ~~$40,086,285~~$60,352 and $0 during the three and ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively.

The Company’s contracts with consumers and telecommunications wholesalers can include promises to transfer multiple products and services. Determining whether multiple products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company’s retail products are sold with a limited right of return and the Company may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize.

Deferred revenue is comprised mainly of unearned revenue related to prepayments from retail consumers for telecommunications minutes. The following table represents the changes in deferred revenue for the ~~six~~nine months ended ~~June~~September 30, 2018:

Revenue allocated to remaining performance obligations represent contracted revenue that has not yet been recognized (“contracted not recognized”). Contracted not recognized revenue was ~~$612,174~~$561 as of ~~June~~September 30, 2018, of which the Company expects to recognize 100% of the revenue over the next 12 months.

The Company has elected to immediately expense contract acquisition costs that would be amortized in one year or less. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. There were no capitalized contract acquisition costs as of ~~June~~September 30, 2018.

(Amounts in U.S. dollar thousands, except share and ~~equipment~~per share data)

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.

Goodwill represents the excess cost over the fair value of the assets of an acquired business. Goodwill and intangible assets acquired in a business combination accounted for as a purchase and determined to have an indefinite useful life are not amortized but are tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment. The Company evaluates the possible impairment of goodwill annually as part of its reporting process for the fourth quarter of each fiscal year. The Company determines the fair value of each subsidiary the goodwill relates to and compares the fair value to the carrying amount of the subsidiary. To the extent the carrying amount of the subsidiary exceeds the fair value of it, an impairment loss is recorded.

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

Amortization expense was ~~$107,143~~$107 and ~~$214,285~~$356 and $0 and $0 for the three and ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively. Amortization expense for each period is included in cost of revenue.

~~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 were no impairment losses recorded to long-lived assets during the three or six months ended June 30, 2018 or 2017.

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, 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 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 5 – 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 June 30, 2018 or December 31, 2017.~~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 ~~June~~September 30, 2018, the Company had one outstanding convertible note payable with conversion rights that are exercisable. The amount of outstanding principal on this convertible note is $0 plus accrued interest of ~~$5,326~~$5 for total convertible debt as of ~~June~~September 30, 2018 of ~~$5,326~~$5 representing ~~1,472~~2,506 new ~~post-reverse split~~ dilutive common shares if converted at the applicable rates. Additionally, the Company has committed to issue a total of ~~107,889 post-reverse split~~179,851 shares of common stock for the settlement of a related party note payable and services which are not yet issued or outstanding. The effects of this note and total common shares committed to be issued have been ~~included in~~excluded from net income per diluted share for the ~~six~~three and nine months ended ~~June~~September 30, 2018. The effects of these notes have been excluded from net loss per diluted share for the three months ended June 30, 2018 as the impacts would be antidilutive due to the Company recording a net loss for the period.

At ~~June~~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 ~~$1,162,328~~$985 plus accrued interest of ~~$329,357~~$388 for total convertible debts as of ~~June~~September 30, 2017 of ~~$1,491,684~~$1,328 representing ~~256,130 post-reverse split~~243,268 new dilutive common shares if converted at the applicable rates. The effects of these notes have been ~~excluded~~included in net ~~loss~~income per diluted share for the three ~~and six~~ months ended ~~June~~September 30, 2017 and excluded from the nine months ended September 30, 2017.

The Net income (loss) attributable to common shareholders for the period ended September 30, 2018 is as the ~~effects~~follow:

For the nine months ended September 30, 2018, potentially dilutive securities consisted of 179,851 shares which the Company is obligated to issue and 162,044 options to purchase of common stock at prices ranging from $3 to $54 per share. Of these potentially dilutive securities, only 179,851 shares which the Company is obligated to issue and 90,000 options to purchase of common stock at price of $3 per share are included in the computation of diluted earnings per share because the effect of including the remaining instruments would be anti-dilutive.

~~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 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 (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”). The Designation fixes the redemption price of each 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 June 30, 2018 and December 31, 2017 as the Class D Preferred Stock has yet to be issued for the dividend.~~

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 earnings.

~~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 provides an allowance for doubtful accounts based on estimated collections of outstanding amounts. The Company had an allowance for doubtful accounts of $20,000 and $20,000 as of June 30, 2018 and December 31, 2017, respectively.

Limecom executed a factoring and security agreement with a financial institution on June 22, 2017, whereby it sells certain of its accounts receivable in exchange for cash. These factoring transactions qualify for sales treatment in accordance with FASB ASC 860, Transfers and Servicing. Upon purchase of the accounts receivable, the Company shall be deemed to have sold, transferred, assigned, set over and conveyed to the financial institution, without recourse except as expressly stated in the agreement, all of the Company’s right, title and interest in and to the purchased accounts receivable. Purchases have an initial gross liquidation advance rate of 90%, up to a maximum cumulative outstanding face amount of $4,000,000. The initial discount fee is 2.1%, and an additional 0.85% of certain receivables.

~~The Company has a credit insurance policy covering all factored accounts receivable, under which the financial institution is the beneficiary on the policy if default were to occur.~~

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 $0 and $34,722 as of June 30, 2018 and December 31, 2017, 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 the change in any unrealized gains or losses being recognized in current period income or loss.

During the year ended December 31, 2017, the Company acquired 50,000 shares of common stock of Green Spirit Industries, a publicly held company, as a referral fee. The total value of the common shares was recorded as other income using the price of the common stock as quoted on Nasdaq on the date received resulting in other income of $550,000 during the year ended December 31, 2017. At December 31, 2017, the Company marked the value of the shares to fair value resulting in an unrealized loss of $300,000 being recorded as other comprehensive loss for the year ended December 31, 2017. On June 30, 2018, the Company measured the fair value of the common stock as quoted on Nasdaq resulting in an unrealized loss of $70,000 being recorded as other expense for the six months ended June 30, 2018. The fair value of the common shares, as quoted by Nasdaq, as of June 30, 2018 and December 31, 2017 was $180,000 and $250,000, respectively.

~~On January 1, 2018, the Company adopted~~~~FASB Accounting Standards Update (“ASU”) 2016-01 Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The update provides guidance to improve certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company’s adoption of ASU 2016-01 resulted in an adjustment to beginning retained earnings in the current period equal to the accumulated unrealized net losses on available for sale securities previously carried in other accumulated comprehensive income totaling $300,000.

~~Recently Issued Accounting Standards~~Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have material effect on the reported results of operations, shareholder’s deficit or cash flows.

In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments apply to reporting entities that are required to make disclosures about recurring or nonrecurring fair value measurements and should improve the cost, benefit, and effectiveness of the disclosures. ASU 2018-13 categorized the changes into those disclosures that were removed, those that were modified, and those that were added. The primary disclosures that were removed related to transfers between Level 1 and Level 2 investments, along with the policy for timing of transfers between levels. In addition, disclosing the valuation processes for Level 3 fair value measurements was removed. The amendments are effective for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company notes that this guidance will impact its disclosures beginning January 1, 2020.

~~In January 2017, the FASB issued ASU 2017-04, “~~~~Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment”.~~ The amendments in this update simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. This update is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing after January 1, 2017. The Company notes that this guidance applies to its reporting requirements and will implement the new guidance accordingly in performing goodwill impairment testing; however, the Company does not believe this update will have a material impact on the consolidated financial statements.Recently adopted accounting pronouncements

In January ~~2017, the FASB issued ASU 2017-01, “~~~~Business Combinations (Topic 805): Clarifying the Definition of a Business,~~” which revises the definition of a business. This update is effective for annual periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted. The Company has adopted this guidance on January 1, 2018.

~~In April~~ 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01) “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends various aspects of the recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU ~~2016-10, “Revenue~~2016-01 as of January 1, 2018 which resulted in a $300 reclassification of net unrealized gains from ~~Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”).~~accumulated other comprehensive income to the retained earnings. 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 reduces 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 evaluated the impactsadoption of ASU ~~2016-10 and determined it did not have an impact on~~2016-01 increases the ~~Company’s revenue recognition practices.~~

volatility of our other income (expense), net, as a result of the remeasurement of our equity securities.

~~In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which supersedes the guidance~~CUENTAS, INC.

(Amounts in ~~ASC 840, “Leases.” The purpose of the new standard is to improve transparency~~U.S. dollar thousands, except share and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Modified retrospective application is required. Early adoption is permitted. The Company does not expect the standard to have a material impact on its consolidated balance sheets or consolidated statements of operations.per share data)

On August 26, 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, seeking to eliminate diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under FASB ASC 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has adopted this standard which does not have an impact on the Company’s presentation of the consolidated statements of cash flows.

On May 10, 2017, The FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms of conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, ASU 2017-09 is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The Company has adopted this standard and has not yet had an impact on its accounting practices.

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 net income of $537,108 and a loss of $4,176,268 and net cash used in operating activities of $97,327 and $116,881, for the six months ended June 30, 2018 and 2017, respectively. The Company has a working capital deficit of $5,976,529 and $7,075,716, and an accumulated deficit of $13,953,044 and $14,207,568 as of June 30, 2018 and December 31, 2017, 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 costs, 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 year ended December 31, 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 of ~~$125,000~~$125 to the Company for future payments totaling ~~$168,750~~$169 from future receivables and requires daily repayments of ~~$1,339.~~$1. The second resulted in cash proceeds of ~~$50,000~~$50 for future payments totaling ~~$68,000~~$68 from future receivables and requires daily cash repayments of ~~$540.~~$10. There was $0 and ~~$46,048~~$46 due for the agreements as of ~~June~~September 30, 2018 and December 31, 2017, respectively, included in current notes payable.

On May 1, 2017, the Company received a loan from an unrelated party for ~~$25,000.~~$25. 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~~$25 as of ~~June~~September 30, 2018 and December 31, 2017, respectively.

On April 25, 2018, the Company entered into a loan agreement 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 loan resulted in cash proceeds to the Company of ~~$180,000~~$180 for future payments totaling ~~$234,000~~$234 from future receivables and requires daily repayments of ~~$1,858.~~$2. There was ~~$47,015~~$0 and $0 due as of ~~June~~September 30, 2018 and December 31, 2017, respectively, included in current notes payable.

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 45% to 50% from the lowest trading price in the preceding 20 days.

The Company settled the majority of its convertible notes payable in December 2017 for a combination of cash and shares of common stock. An additional convertible note payable was settled in January 2018 for a combination of cash and shares of common stock.

The following table summarizes all convertible notes payable activity for the ~~six~~nine months ended ~~June~~September 30, 2018:

The following is a summary of all convertible notes outstanding as of ~~June~~September 30, 2018:

There was $5,326 and $35,136 of accrued interest due on all convertible notes as of June 30, 2018 and December 31, 2017, respectively which is included in accounts payable and accrued liabilities on the balance sheet (see~~Note 8 – Accounts Payable and Accrued Liabilities)~~.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company analyzed the conversion features of the convertible notes payable as discussed inNote 43 – Notes Payable and Convertible Notes Payable 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.

As of ~~June~~September 30, 2018, the Company had a ~~$119,269~~$64 derivative liability on the balance sheet and recorded gains from derivative liability fair value adjustments of ~~$14,729~~$27 and ~~$427,935~~$483 during the three and ~~six~~nine months ended ~~June~~September 30, 2018. The derivative liability activity comes from convertible notes payable as discussed inNote 43 –Notes Payable and Convertible Notes Payable. 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. Taking~~TPP, taking into account the effect of the reverse stock split (seeNote 9 – Stockholders’ Equity), the options are exercisable at $54 per share unless the Company’s common stock is quoted at a price greater than $150 per share at which point the options are exercisable at ~~$0.30~~$90 per share.

A summary of ~~outstanding~~the changes in derivative liabilities ~~as of June~~balance for the nine months ended September 30, 2018 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:

(Amounts in ~~derivative liabilities balance for the six months ended June 30, 2018 is as follows:~~U.S. dollar thousands, except share and per share data)

The following table summarizes all stock option activity for the ~~six~~nine months ended ~~June~~September 30, ~~2018, taking into account the effect of the reverse stock split (see~~~~Note 9 – Stockholders’ Equity~~): 2018:

The following table discloses information regarding outstanding and exercisable options at ~~June~~September 30, 2018:

On ~~May 31, 2016,~~September 13, 2018, the Company issued ~~33,334~~60,000 options to ~~a board member pursuant to~~ its ~~agreement with the member. One third of the 33,334~~President and Chief Executive Office. The options issued vested immediately upon execution of the related agreement. 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 $334,997 during the year ended December 31, 2017. There was no change in the estimated probability to attain the performance criteria during the six months ended June 30, 2018. 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 March 31, 2017, the Company, as part of its sale of TPP issued 25,000 options that are exercisable for a period of three years and~~ carry an exercise price of ~~$54~~$3 per share. A third of the options vested immediately with the remaining vesting over the course of two years. The Options are exercisable until September 12, 2023. The Company has estimated the fair value of such options ~~carried~~at a value of ~~$898,490 which was recorded as a derivative liability as discussed~~$302 at the date of issuance using the Black-Scholes option pricing model using the following assumptions:

(Amounts in~~Note 5 – Derivative Liabilities~~. U.S. dollar thousands, except share and per share data)

On September 13, 2018, the Company issued 30,000 options to its member of the Board. The options carry ~~a ratchet pricing feature whereby they become~~an exercise price of $3 per share. Third of the options vested immediately with the remaining vesting over the course of two years. The Options are exercisable ~~at $0.30 per share if~~until September 12, 2023. The Company has estimated the ~~Company’s common stock trades~~fair value of such options at a ~~price greater than $150 per share.~~value of $151 at the date of issuance using the Black-Scholes option pricing model using the following assumptions:

~~There was an unrecognized stock option based expense of $223,331 as of June 30, 2018.~~

~~As discussed in~~~~Note 9 – Stockholders’ Equity,~~~~as of June~~During the nine months ended September 30, 2018, the Company ~~has committed to issue more shares~~recorded an option-based compensation expense of common stock than it has authorized. The Company does not have available shares in its treasury to issue should option holders choose to exercise. As a result, the value of certain stock options are included in stock based liabilities on the balance sheet and subject to remeasurement at each reporting period. During August 2018, the Company effected a 1:300 reverse stock split on its common shares to remedy the shortfall in its authorized common shares.$164 associated with these grants.

The following summarizes the common stock activity for the nine months ended September 30, 2018:

On January 9, 2018, the Company issued 11,483 shares of its common stock pursuant to a settlement of stock-based liabilities. The fair market value of the shares was $155.

On January 12, 2018, the Company issued 2,000 shares of its common stock to a note holder in connection with outstanding convertible note payable and convertible accrued interest on convertible notes payable in accordance with a settlement agreement. The fair market value of the shares was $27.

On February 7, 2018, the Company issued 38,096 shares of its common stock pursuant to a common stock subscription. The fair market value of the shares at the subscription date was $400.

On September 11, 2018, the Company issued 2,167 shares of its common stock to a note holder in connection with outstanding convertible note payable and convertible accrued interest on convertible notes payable in accordance with a settlement agreement. The fair market value of the shares was $11.

On September 27, 2018, the Company issued 13,333 shares of its common stock to a consultant, pursuant to a consulting agreement dated September 18, 2018, in consideration for consulting services. The fair market value of the shares at grant date was $60.

On September 27, 2018, the Company issued 61,002 shares of its common stock pursuant to a settlement of stock-based liabilities. The fair market value of the shares was $335.

On September 21^st 2018, the Company entered into a securities purchase agreement with various purchasers to issue 146,669 shares of common stock in consideration of $440. As of the September 30, 2018 the Company has received $140. One of the purchasers is the Company’s President and CEO who purchased 16,667 shares. Another purchaser is a current shareholder which controlled by the former owner of Limecom (a fully subsidiary of the Company), who purchased 16,667 shares.

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 ~~six~~nine months ended ~~June~~September 30, 2018 and year ended December 31, 2017. 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~~the Company’s Chief Executive Officer ~~and Chairman~~ holds a controlling equity interest and ~~holds~~ an executive position. During the first calendar quarter of 2017, Next Communications, Inc. filed for bankruptcy protection. As a result, the related party payable is being handled by a court appointed trustee as an asset of Next Communications, Inc. and the Company may ~~need~~be compelled to ~~begin repaying~~repay the amounts ~~due on a more fixed schedule.~~due.

With the exception of the Company’s purchase of a 9% interest in Next Cala, Inc. from a related party and the related party payable to Orlando Taddeo for the acquisition of Limecom 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 ~~June~~September 30, 2018 and December 31, 2017 consisted of the following:

During the three and six months ended June 30, 2018 and 2017, the Company recorded interest expense of $59,760 and $59,760 and $119,517 and $119,518 using an interest rate equal to that on the outstanding convertible notes payable as discussed in~~Note 4 – Notes Payable and 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.~~

The Company had outstanding accounts receivable of ~~$610,006~~$78 from related parties as of ~~June~~September 30, 2018 of which ~~$609,312~~$71 was due from Next Communications, $6 was due from Next Cala 360 and ~~$694~~$14 was due from Asiya Communications SAPI de C.V. The accounts receivable ~~arose from~~was recorded as a result of the sale of wholesale telecommunications minutes to these entities.

As of September 30, 2018 Limecom, had outstanding accounts receivable of $4,094 from Airtime Sp.z.o.o., which is a subsidiary of one the Company’s shareholders of the Company and a former owner of Limecom. The accounts receivable was recorded as a result of the sale of wholesale telecommunications minutes to this entity.

The Company had outstanding accounts payable of ~~$1,341,427~~$507 to related parties as of ~~June~~September 30, 2018 all of which was to Asiya Communications SAPI de C.V.

The Company made sales to and generated revenues from related parties of ~~$8,941,435~~$15,942 and ~~$73,638~~$155 during the three months ended ~~June~~September 30, 2018 and 2017 as itemized below:

The Company made sales to and generated revenues from related parties of ~~$11,189,379~~$36,850 and ~~$77,431~~$233 during the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 as itemized below:

The Company made purchases from related parties totaling ~~$8,361,849 and~~$8,954and $0 during the three months ended ~~June~~September 30, 2018 and 2017 which are included in cost of revenues as itemized below:

The Company made purchases from related parties totaling ~~$11,434,687~~$20,389 and $0 during the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 which are included in cost of revenues as itemized below:

~~Accounts payable and accrued liabilities consisted of the following as of June 30, 2018 and December 31, 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 undesignated and 10,000,000 was designated as Series B. With the completion of the recapitalization as discussed in~~Note 1 – Organization and Description of Business, the outstanding Series A preferred shares were cancelled leaving a balance outstanding of Preferred Series A of -0-.~~CUSTOMER CONCENTRATION

The Company ~~has 10,000,000 shares~~generated approximately 70% of Preferred Stock designated as Series B issued and outstanding. 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 Courtits revenues 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 Junethree months ended September 30, 2018 ~~or December 31, 2017.~~

~~Effective November 20, 2015~~and 52% of its revenues for the Company amended its Articles of Incorporation to decrease the common shares authorized from 9,500,000,000 to 360,000,000 with a par value of $0.001. On August 7, 2018, the Board approved a one-for-three hundred (1:300) reverse stock split of the common stock. The effects of the reverse stock split have been reflected in the financial statements retroactively.

~~During the six~~nine months ended ~~June~~September 30, 2018 the Company issued 38,095 common shares as the settlement for common stock subscriptions totaling $400,000; 11,479 common shares valued at $154,973 for the settlement of stock based liabilities and 2,000 common shares for the settlement of a convertible note payable.

from three related parties. The Company has 1,191,972 common shares issued and outstanding and 107,889 common shares committed to be issued as of June 30, 2018. The values of the unissued shares are subject to fair value measurement at each reporting period. As of June 30, 2018, stock based liabilities consisted of:

~~As of June 30, 2018, the~~ Company did not have ~~adequate authorized common shares to fulfill~~any one customer account for more than 10% of its ~~obligations under certain agreements. Specifically,~~revenues during the ~~Company had committed to issue common shares in excess~~three or nine months ended September 30, 2017.

As of authorized shares totaling 32,365,826 (pre-reverse split); has 31,613,142 (pre- reverse split) options to purchase common stock issued of which 24,946,476 (pre-reverse split) are exercisable and has outstanding convertible accrued interest on a convertible note payable the holder of which has the right to convert into 441,554 (pre-reverse split) shares of common stock as of JuneSeptember 30, ~~2018. Total common stock and common stock equivalents in excess~~2018, three separate customers accounted for approximately 98% of the Company’s ~~authorized common shares are summarized as follows:~~total accounts receivable. As of December 31, 2017, three separate customers accounted for approximately 78% of the Company’s total accounts receivable.

The Company ~~effected~~has restated its statement of operations and statement of cash flows for the nine months ended September 30, 2017 to correct an error in the treatment of the disposal of a ~~1:300 reverse split~~subsidiary. The Company had originally recorded the elimination of the non-controlling interest component of equity of the sold subsidiary as an equity only transaction by absorbing $2,541 of non-controlling interest equity into that of the Company. The correct treatment of the disposal necessitates the amount of non-controlling interest to be included in the calculation of the gain or loss on ~~its~~the disposal of a subsidiary recognized through the income statement. The impact to the financial statements is an increase in loss from discontinued operations and net loss by $2,541 for the nine months ended September 30, 2017 and no change for the three months ended September 30, 2017. Net loss per common ~~stock~~share increased from $0.00 as originally stated to $2.73 as restated for the nine months ended September 30, 2017 with no change for the three months ended September 30, 2017. There was no impact on ~~August 7, 2018~~the net cash used in operations during the nine months ended September 30, 2017 as a result of the restatement.Although not presented, the impact of the restatement on the Company’s consolidated balance sheet as of September 30, 2017 is an increase to ~~remedy the shortfall~~additional paid in ~~authorized unissued shares.~~capital and increase to accumulated deficit of $2,541.

The Company generated approximately 79% of its revenues for the three months ended June 30, 2018 and 51% of its revenues for the six months ended June 30, 2018 from three separate customers. The Company did not have any one customer account for more than 10% of its revenues during the three or six months ended June 30, 2017.

As of June 30, 2018, four separate customers accounted for approximately 94% of the Company’s total accounts receivable. Of this amount, one customer representing 12% of the outstanding accounts receivable was due from a related party. As of December 31, 2017, three separate customers accounted for approximately 78% of the Company’s total accounts receivable.

The Company has restated its statement of operations and statement of cash flows for the six months ended June 30, 2017 to correct an error in the treatment of the disposal of a subsidiary. The Company had originally recorded the elimination of the non-controlling interest component of equity of the sold subsidiary as an equity only transaction by absorbing $2,540,903 of non-controlling interest equity into that of the Company. The correct treatment of the disposal necessitates the amount of non-controlling interest to be included in the calculation of the gain or loss on the disposal of a subsidiary recognized through the income statement. The impact to the financial statements is an increase in loss from discontinued operations and net loss by $2,540,903 for the six months ended June 30, 2017 and no change for the three months ended June 30, 2017. Net loss per common share increased from $4.23 as originally stated to $4.71 as restated for the six months ended June 30, 2017 with no change for the three months ended June 30, 2017. There was no impact on the net cash used in operations during the six months ended June 30, 2017 as a result of the restatement.Although not presented, the impact of the restatement on the Company’s consolidated balance sheet as of June 30, 2017 is an increase to additional paid in capital and increase to accumulated deficit of $2,540,903.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, 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 service provider to provide certain services for the Company. In addition to cash and stock compensation, 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~~$500 and an additional 1% when it reaches ~~$750,000,000.~~$750. The Company recorded an expense associated with the non-variable portion of the agreement. However, the probability of the Company’s market capitalization reaching these thresholds is uncertain at present and the Company has not accrued a contingent fee as of ~~June~~September 30, 2018 or December 31, 2017 as a result.

On October 14, 2014, one of our operating subsidiaries, NxtGn Inc., and Next Communications, Inc., an entity controlled by our CEO, (collectively the “Plaintiffs”) filed suit in the United States District Court for the Southern district of New York against Viber Media, Inc. (“Viber”). 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 enrichment claims. The Company has not accrued any gains associated with this case as it would be a contingent gain and recorded when received.

On February 12, 2018, the Company was served with a complaint from Viber Media, Inc. (“Viber”) for reimbursement of attorney’s fees and costs totaling ~~$527,782~~$528 arising from ~~the~~a past litigation ~~listed above.~~with Viber. The Company is vigorously defending their rights in this case as we believe this demand is premature as litigation is ongoing. The Company has not accrued an estimated loss related to this complaint as of ~~June~~September 30, 2018 or December 31, 2017 given the premature nature of the motion.

On October 20, 2016, the Company received a notice it has been named as 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 party and not against the Company or its subsidiaries, we believe it likely the Company and its subsidiaries will be dismissed as defendants and has not accrued a contingent loss as of ~~June~~September 30, 2018 or December 31, 2017 as a result.

On July 6, 2017, the Company received notice 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 will be dismissed as defendants.

On December 20, 2017, a Complaint was filed by J. P. Carey Enterprises, Inc., alleging a claim for ~~$473,264~~$473 related to the Franjose Yglesias-Bertheau filed lawsuit against PLKD listed above. Even though ~~NGH~~the Company made the agreed payment of ~~$10,000~~$10 on January 2, 2017 and issued ~~3,600,720~~12,002 shares as conversion of the ~~$70,000~~$70 note as agreed in the settlement agreement, the Plaintiff alleges damages which ~~NGH~~the Company claims are without merit because they received full compensation as agreed. ~~NGH~~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.

During 2016, Limecom had disputed accounts payable with three (3) carriers, for which the Company entered into separate settlement agreements, totaling approximately ~~$1,147,000.~~$1,147. Under the terms of these settlement agreements, the Company was provided with extended payment terms on the outstanding balances. These settlement agreements are non-interest bearing and include certain default provisions as disclosed in the related agreements. ~~The Company assumed a total of $676,563 of this liability on~~On October 23, 2017, ~~as part of its acquisition of~~this liability was $676. Limecom ~~and made repayments totaling $10,000 during~~repaid $10 from the ~~period~~date of acquisition tothrough December 31, 2017 and ~~$95,136~~$95 during the ~~six~~nine months ended ~~June~~September 30, 2018. The remaining outstanding principal balance of these settlement agreements amounted to approximately ~~$571,427~~$571 and ~~$666,563~~$666 as of ~~June~~September 30, 2018 and December 31, 2017, respectively. Of these totals, ~~$571,427~~$571 and ~~$546,563~~$546 is current and included in accrued liabilities and $0 and ~~$120,000~~$120 is long term and represented by other ~~long term~~long-term liabilities as of ~~June~~September 30, 2018 and December 31, 2017, respectively.

OnPrior to October 23, 2017 ~~the Company assumed a settlement liability~~(the date of Limecom acquisition), Limecom had entered into a settlement agreement with American Express ~~as part of its acquisition as discussed in~~~~Note 1 – Organization and Description of Business.~~.As of the date of the Limecom acquisition, there was a total outstanding balance of ~~$995,158.~~$892. The Company made repayments totaling ~~$102,727 from the period of October 23, 2017 to December 31, 2017 and $330,000 during the six months ended June 30, 2018~~$385 leaving a remaining balance due of ~~$562,431 and $892,431~~$507, as of ~~June~~September 30, ~~2018 and December 31, 2017, respectively.~~2018. The balance ~~due~~of $410 is included in other accounts ~~payable~~liabilities and ~~accrued liabilities as~~the balance of ~~June 30,~~$97 is included in other long-term accounts liabilities.

On August 9, 2018, Limecom was served with a complaint by Spectrum Intelligence Communications Agency LLC (SICA) whereby SICA claims that Limecom owes them a total of $439. Limecom is in the process of defending and ~~December 31, 2017.~~potentially negotiating a settlement with SICA.

On ~~October 23,~~September 28, 2018, the Company ~~received service~~was notified of a complaint filed against it by a former ~~supplier citing unspecified damages in excess~~supplier. The Company has not yet received formal service of ~~$15,000.~~the complaint and is awaiting such service at which time it can fully assess the complaint. The Company has not accrued any losses as of ~~June~~September 30, 2018 related to the complaint given the early nature of the process.

~~On October 25, 2018, the Company was notified by its registered agent~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in the state of Florida it had received notification of a filed complaint by a former employee that alleges breach of contract. The Company is in the early stages of discovery with a response to the complaint due on November 14, 2018. The Company has not accrued any losses as of June 30, 2018 related to the complaint given the early nature of the process.

On October 25, 2018, the Company was received a claim letter issued by TCA Gloal Master Fund in which it claims the Company is liable for unpaid investment banking services totaling $2,500,000. The Company believes this claim to be without meritU.S. dollar thousands, except share and ~~has responded to the letter as such. The Company has not accrued any losses or a liability related to this letter as of June 30, 2018.~~

On November 7, 2018, the Company was serviced with a complaint from a former service provider claiming breach of contract. The complaint alleges services were performed for which the Company owes $28,833 plus interest. The Company believes this claim to be without merit and has not accrued any losses as of June 30, 2018 related to the complaint given the early nature of the process. per share data)

The Company executed a lease for office space effective July 10, 2018 with a term to October 31, 2018. The lease requires monthly rental payments of ~~$4,750 plus monthly maintenance costs of $100.~~$5. Total future guaranteed payments under this lease are ~~$19,400.~~$5.

On October 23, 2017, the Company completed its acquisition of Limecom as discussed inNote 1 – Organization and Description of Business. The Company is furnishing the following pro forma statements of operations representing the combined results of the Company and Limecom for the nine months ended September 30, 2017 had the acquisition been completed on January 1, 2017.

On October 20, 2018, J. P. Carey Enterprises, Inc. voluntarily withdrew its claim against the Company.

On October 25, 2018, the Company received $108 under a private placement of securities closed on October 25, 2018 and issued 35,834 shares of its common stock. The issuance cost was $8.

October 25, 2018, the Company was notified by its registered agent in the state of Florida it had received notification of a filed complaint by a former employee that alleges breach of contract. The Company is in the early stages of discovery with a response to the complaint due on November 14, 2018. The Company has not accrued any losses as of September 30, 2018 related to the complaint given the early nature of the process.

On November 6, 2018, the Company, through Limecom, the Company’s wholly owned subsidiary, finalized an accounts receivable factoring agreement whereby the factor agent will purchase outstanding accounts receivable at its sole discretion less certain commissions. The factoring agent commission due under the agreement is 1.19% of the face value of the purchased accounts receivable for the twenty days immediately following invoice issuance plus 0.59% for each twenty days thereafter. The factoring agent may advance cash to the Company at its sole discretion up to 90% of the purchase price with an initial maximum advance capacity of $4,000. The Company may request increases to the maximum advance allowed under the agreement not to exceed an additional $1,000 during each 90-day period immediately following execution for up to a maximum advance of $8,000.

The Company agreed to pay ThinkEquity, a division of Fordham Financial Management Inc. (“Think”), a 2.5% fee on the initial $4 million factoring limit, equal to $100 in 4 installments for acting as a financial advisor to the Company with respect to the Agreement. Think will be paid additional fees of 3% of any increase in the facility size above the $4,000 facility up to the $8,000 total amount of the factoring facility. Think will also receive a warrant, valid for 5 years, entitling it to purchase a number of shares equal to 3.5% of the maximum facility size. The warrant shall have an exercise price equal to the five (5) day volume weighted average price of common shares on the date of closing, or if the Company is not publicly traded, equal to the per share price paid by investors in the Company’s most recent equity investment round prior to the execution of the Agreement. The shares underlying the warrant shall entitle the holder to one-time “piggyback” registration rights (unless Rule 144 is then available). The warrant may be exchanged without the payment of any additional consideration for the Company’s stock based upon the values of the warrant and the stock at the time of the exchange.

On ~~October 23, 2017,~~November 20, 2018 and November 28, 2018, the Company ~~completed~~received $100 under a private placement of securities closed on December 13, 2018 and issued 36,667 shares of its ~~acquisition~~common stock and warrants to purchase up to 36,667 shares of ~~Limecom as discussed in~~~~Note 1 – Organization and Description of Business~~.its common stock at an exercise price equal to $3.25 per share. The ~~Company is furnishing the following pro forma statements of operations representing the combined results of~~issuance cost was $10.

On November 26, 2018, the Company ~~and~~received notice of a complaint through its registered agent regarding a Complaint by American Express claiming damages incurred by Limecom for the ~~six months ended June 30, 2017~~amount of $507. On December 18, 2018, Limecom had entered into a second Amendment of the ~~acquisition been completed~~Settlement Agreement with American Express. Under the second Amendment Limecom paid $25 on ~~January 1, 2017.~~December 19, 2018 and the remaining balance in 13 installments through December 15, 2019.

During December, 2018, the Company received $248 under a private placement of securities closed on December 13, 2018 and issued 82,667 shares of its common stock and warrants to purchase up to 82,667 shares of its common stock at an exercise price equal to $3.25 per share.

On December 13, the Company issued 30,001 shares of its common stock for the consideration of $90 which it received of under the Securities Purchase Agreement which it entered on September 21^st, 2018.

~~CUENTAS, INC.~~

~~(FORMERLY NEXT GROUP HOLDINGS, INC.)~~

~~COMBINED PRO FORMA STATEMENTS OF OPERATIONS~~

~~SIX MONTHS ENDED JUNE 30, 2017~~

NGH Limecom Pro Forma Adjustments Pro Forma
Revenue $ 1,074,655 $ 46,783,665 $ - $ 47,858,320
Cost of revenue 785,432 45,354,949 214,286 (a) 46,354,667
Gross margin 289,223 1,428,716 (214,286 ) 1,503,653

Operating expenses
Officer compensation 363,943 125,165 - 489,108
Professional fees 1,132,887 257,600 - 1,390,487
General and administrative 229,580 570,196 - 799,776
Total operating expenses 1,726,410 952,961 - 2,679,371

Loss from operations (1,437,187 ) 475,755 (214,286 ) (1,175,718 )

Other income (expense)
Other income 179,580 65,465 - 245,045
Interest expense (597,719 ) (123,230 ) - (720,949 )
Loss on derivative liability (1,993,142 ) - - (1,993,142 )
Total other income (expense) (2,411,281 ) (57,765 ) - (2,469,046 )

Net income (loss) from continuing operations $ (3,848,468 ) $ 417,990 $ (214,286 ) $ (3,644,764 )

~~(a)~~

~~Amortization of acquired intangible assets from acquisition~~

~~NOTE 14 – SUBSEQUENT EVENTS~~

On August 7, 2018, the Company effected a 1:300 reverse stock split on its common stock. The effects of this stock split on the Company’s number of shares issued and outstanding has been retroactively applied to these financial statements.

Subsequent to the balance sheet date, the Company issued a total of 781 shares of common stock in conjunction with rounding from its reverse stock split; 61,001 shares of common stock for the settlement of stock based liabilities; 2,167 common shares as part of a settlement agreement; 13,333 for services and 35,834 shares of common stock for cash proceeds of $107,500.

The Company entered into a separate securities purchase agreement to raise a total of $440,000 of cash in exchange for 146,669 shares of common stock. As of the date of this filing, the Company has received total cash of $90,000. The common shares will be issued upon the receipt of all cash due under the agreement. The shares associated with this agreement have not been issued and are not included in the preceding paragraph.

On August 23, 2018, the Company committed to issue a total of 60,639 common shares for services. Of this total, 33,334 were issued in exchange for previously outstanding options totaling 33.334 which carried an exercise price of $54.

On September 13, 2018, the Company and certain officers agreed to convert $282,623 of past wages and other compensation owing to shares of common stock at a rate of $4 per share resulting in 70,657 common shares being committed to be issued. Additionally, a total of 90,000 options to purchase common stock were granted with each option grant vesting equally over a three year period and exercisable at $3 per share. The options expire in September 2023.

On November 6, 2018, the Company finalized an accounts receivable factoring agreement whereby the factor agent will purchase outstanding accounts receivable at its sole discretion less certain commissions. The factoring agent commission due under the agreement is 1.19% of the face value of the purchased accounts receivable for the twenty days immediately following invoice issuance plus 0.59% for each twenty days thereafter. The factoring agent may advance cash to the Company at its sole discretion up to 90% of the purchase price with an initial maximum advance capacity of $4,000,000. The Company may request increases to the maximum advance allowed under the agreement not to exceed an additional $1,000,000 during each 90 day period immediately following execution for up to a maximum advance of $8,000,000.

The Company will issue compensation to its financial advisor with respect to the agreement totaling 2.5% of the initial credit line limit, or $100,000, in four equal installments. The advisor will receive further compensation of 3.0% of any future increases in the credit limit above $4,000,000 up to $8,000,000. The advisor also received a warrant to purchase 74,866 shares of common stock at an exercise price of $3.74 per share for a period of five years. The warrant may be exchanged without the payment of any additional consideration for the Company’s common stock based upon the values of the warrant and the stock at the time of the exchange.

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

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.

Forward-Looking Statements

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.

~~Business History~~Company Overview

Cuentas, Inc. (the “Company”) invests in financial technology and currently derives its revenues from the sales of prepaid and wholesale calling minutes. Additionally, the Company has an agreement with 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 ~~intends to launch the cards upon successful completion of appropriate financing and has yet to generate revenues from this activity.~~

~~Next Group Holdings, Inc~~ was incorporated under the laws of the State of Florida on September 21, 2005 to act as aan 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) ~~and~~, SDI Next Distribution LLC (51% owned). Additionally, Next Cala, Inc. has a 60% interest in NextGlocal, a subsidiary formed in May 2016. During the year ended December 31, 2016, the Company acquired a business segment, Tel3, from an existing corporation. Tel3 was merged into Meimoun and Mammon, LLC effective January 1, 2017. On October 23, 2017, the Company acquired 100% of the outstanding interests in Limecom, Inc.

~~Overview~~

~~On January 12, 2016,~~Cuentas, Inc. (the “Company”) invests in financial technology and effective as of January 1, 2016, the Company issued 177,539,180 pre-split 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 is January 1, 2016. The Company filed for a change of name to Next Group Holdings, Inc. and its symbol was 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~~engages in use of certain licensed technology to provide innovative telecommunications, mobility, and remittance solutions to unserved, unbanked, and emerging markets. The Company uses proprietary technology and certain licensed technology to provide innovative telecommunications and telecommunications mobility and remittance solutions in emerging markets. The Company also offers prepaid telecommunications minutes to consumers through its Tel3 division and also offers wholesale telecommunications minutes through its Limecom subsidiary.

OThe Company has an agreement with 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 intends to launch the cards upon successful completion of appropriate financing and has yet to generate revenues from this activity.On June 25, 2018, holders of a majority of the Company’s voting stock approved by written consent in lieu of a special meeting of stockholders in accordance with 607.0704 of the Florida Business Corporation Act to change the company name to Cuentas, Inc and effect a reverse stock split of 1:300. In early August 2018, FINRA approved the new stock symbol CUEN and also approved the 1:300 reverse stock split.

Cuentas, formerly Next Group Holdings, through its operating subsidiaries, engages in the business of using proprietary technology and certain licensed technology to provide innovative telecommunications and telecommunications mobility and remittance solutions in emerging markets. The Company offers prepaid telecommunications minutes to consumers through its Tel3 division and also offers wholesale telecommunications minutes through its Limecom subsidiary.

Results of operations for the three months ended ~~June~~September 30, 2018 and 2017

Revenue

The Company generates revenues through the sale and distribution of prepaid telecom minutes and other related telecom services.

Three Months Ended
June 30,
2018 2017 Change
Revenue $ 11,967,987 $ 500,426 $ 11,467,561
Revenue, related party 8,941,435 73,638 8,867,797
Total revenue $ 20,909,422 $ 574,064 $ 20,335,358

	Three Months Ended September 30,
	2018		2017

Revenue from sales		4,621		470
Revenue, sales to related parties		15,942		155
Total revenue		20,563		625

Revenues during the three months ended ~~June~~September 30, 2018 totaled ~~$20,909,422~~$20,563 thousand compared to ~~$574,064~~$625 thousands for the three months ended ~~June~~September 30, 2017. The increase of $19,938 thousands in ~~revenues of $20,335,358~~the total Revenue is mainly due to the acquisition of Limecom which was consolidated for the full three months ended ~~June~~September 30, 2018 and not ~~included~~consolidated in the three months ended ~~June~~September 30, 2017. ~~Limecom contributed a total of $20,499,288 of revenues during the three months ended June 30, 2018.~~

Costs of Revenue

Costs of revenue consists of the purchase of wholesale minutes for resale and related telecom platform costs.

Three Months Ended
June 30,
2018 2017 Change
Cost of revenue $ 12,293,982 $ 450,175 $ 11,843,807
Cost of revenue, related party 8,361,849 - 8,361,849
Total cost of revenue $ 20,655,831 $ 450,175 $ 20,205,656

Cost of revenues during the three months ended ~~June~~September 30, 2018 totaled ~~$20,655,831~~$20,458 thousands compared to ~~$450,175~~$503 thousands for the three months ended ~~June~~September 30, 2017. The increase in cost of revenues ~~of $20,205,656~~ is mainly due to the acquisition of Limecom which was consolidated for the full three months ended ~~June~~September 30, 2018 and not ~~included~~consolidated in the three months ended ~~June~~September 30, 2017. ~~Limecom contributed a total of $20,306,388 of costs of revenues during the three months ended June 30, 2018.~~

Operating Expenses

Three Months Ended
June 30,
2018 2017 Change
Officer compensation $ 193,525 $ 147,777 $ 45,748
Professional fees 214,340 641,603 (427,263 )
General and administrative 419,997 132,688 287,309
Total operating expenses $ 827,862 $ 922,068 $ (94,206 )

Operating expenses totaled ~~$827,862~~$1,119 thousands during the three months ended ~~June~~September 30, 2018 compared to ~~$922,068~~$522 thousands during the three months ended ~~June~~September 30, 2017 representing a net ~~decrease~~increase of ~~$94,206.~~$597 thousands. The ~~Company incurred approximately $45,000 of incremental~~increase in the operating expenses is mainly due to the increase in the officer compensation expenses, professional fees and the acquisition of Limecom.

Other Income

The Company recognized other income of $545 thousand during the three months ended ~~June~~September 30, 2018 as the three months ended June 30, 2017 due to stock based compensation occurring in the current period not present in the prior period totaling $44,333. Additionally, the Company incurred fewer professional fees during the current period as the result of issuing fewer shares of common stock for professional services in the current period when compared to the same quarter in 2017. Lastly, the increase in general and administrative expenses is the result of the acquisition of Limecom which contributed a total of $329,186 of general and administrative expenses$2,087 thousand during the three months ended ~~June 30, 2018.~~

~~Other Income (Expense)~~

Three Months Ended
June 30,
2018 2017 Change
Other income $ - $ 178,712 $ (178,712 )
Other expense (69,912 ) - (69,912 )
Interest expense (346,325 ) (238,477 ) (107,848 )
Gain (loss) on derivative liability 14,729 (1,579,105 ) 1,593,834
Gain on fair value of stock based liabilities (3,069 ) - (3,069 )
Total other income (expense) $ (404,577 ) $ (1,638,870 ) $ 1,234,293

~~The Company recognized other expense of $404,577 during the three months ended June 30, 2018 compared to a net expense of $1,638,870 during the three months ended June~~September 30, 2017. The net change from the prior period is mainly due to the ~~current is driven by a $1,593,834 favorable~~ change in the gain recognized on the fair value measurement of our derivative ~~liabilities, offset by a decrease in other income~~and stock-based liabilities. It was also due to forgiveness of ~~$178,712.~~

accounts payable during the three months ended September 30, 2017 that was not present during the current period. The fair value measurements related to derivative liabilities ~~and stock-based liabilities are~~is driven by market inputs and inherently subject to volatility. The decrease in other income is the result of the Company recognizing forgiveness of accounts payable during the three months ended ~~June~~September 30, 2017 that was not present during the current period.

Gain from Change in Fair Value of stock-based liabilities for the three-month period ended September 30, 2018 was $632 thousand as compared to a gain of 0 for the three-month period ended September 30, 2017. The gain is attributable to the decrease in the Fair Value of our stock-based liabilities mainly due to the decrease in the price of share of our common stock.

Net ~~Loss~~Income (Loss)

Three Months Ended
June 30,

2018 2017 Change
Net income (loss) $ (978,848 ) $ (2,437,049 ) $ 1,458,201
Net income attributable to non-controlling interest 9,619 (144 ) 9,763
Net loss attributable to Cuentas, Inc. $ (969,229 ) $ (2,437,193 ) $ 1,467,964

~~The Company recognized~~We incurred a net loss of $466 thousand for the ~~three months~~three-month period ended ~~June~~September 30, 2018, ~~of $969,229~~as compared to a ~~loss~~net income of ~~$2,437,193~~$1,689 for the ~~three months~~three-month period ended ~~June~~September 30, 2017. The ~~change~~increase in net loss ~~for the three months ended June 30, 2018~~ is ~~due~~ mainly attributable to ~~the increased revenues~~increase in General and ~~margins~~Administrative Expenses and decrease in ~~absolute dollars during the current period combined with favorable changes in gains for the fair value measurements of derivative and stock-based liabilities.~~other income.

Results of operations for the ~~six~~Nine months ended ~~June~~September 30, 2018 and 2017

Revenue

The Company generates revenues through the sale and distribution of prepaid telecom minutes and other related telecom services.

Six Months Ended
June 30,
2018 2017 Change
Revenue $ 29,718,263 $ 997,224 $ 28,721,039
Revenue, related party 11,189,379 77,431 11,111,948
Total revenue $ 40,907,642 $ 1,074,655 $ 39,832,987

	Nine Months Ended September 30,
	2018		2017

Revenue from sales		24,622		1,467
Revenue, sales to related parties		36,850		233
Total revenue		61,472		1,700

Revenues during the ~~six~~nine months ended ~~June~~September 30, 2018 totaled ~~$40,907,642~~$61,472 thousand compared to ~~$1,074,655~~$1,700 thousands for the ~~six~~three months ended ~~June~~September 30, 2017. The increase in ~~revenues of $39,832,987~~the total Revenue is mainly due to the acquisition of Limecom which was consolidated for the full ~~six~~nine months ended ~~June~~September 30, 2018 and not ~~included~~consolidated in the ~~six~~nine months ended ~~June~~September 30, 2017. ~~Limecom contributed a total of $40,086,285 of revenues during the six months ended June 30, 2018.~~

Costs of Revenue

Costs of revenue consists of the purchase of wholesale minutes for resale and related telecom platform costs.

Six Months Ended
June 30,
2018 2017 Change
Cost of revenue $ 28,479,619 $ 785,432 $ 27,694,187
Cost of revenue, related party 11,434,687 - 11,434,687
Total cost of revenue $ 39,914,306 $ 785,432 $ 39,128,874

Cost of revenues during the ~~six~~nine months ended ~~June~~September 30, 2018 totaled ~~$39,914,306~~$60,372 thousands compared to ~~$785,432~~$1,289 thousands for the ~~six~~nine months ended ~~June~~September 30, 2017. The increase in cost of revenues ~~of $39,128,874~~ is mainly due to the acquisition of Limecom which was consolidated ~~for~~in the ~~full six~~period of the nine months ended ~~June~~September 30, 2018 and not ~~included~~consolidated in the ~~six~~nine months ended ~~June~~September 30, 2017. ~~Limecom contributed a total of $39,265,195 of costs of revenues during the six months ended June 30, 2018.~~

Operating Expenses

Six Months Ended
June 30,
2018 2017 Change
Officer compensation $ 328,717 $ 363,943 $ (35,226 )
Professional fees 514,698 1,132,887 (618,189 )
General and administrative 855,003 229,580 625,423
Total operating expenses $ 1,698,418 $ 1,726,410 $ (27,992 )

Operating expenses totaled ~~$1,698,418~~$2,817 thousand during the ~~six~~nine months ended ~~June~~September 30, 2018 compared to ~~$1,726,410~~$2,249 thousand during the ~~six~~nine months ended ~~June~~September 30, 2017 representing a net ~~decrease~~increase of ~~$27,992.~~$568 thousands. The ~~Company incurred fewer~~increase in the operating expenses is mainly due to the increase in the officer compensation expenses, during the six months ended June 30, 2018 from there being approximately $110,000 of stock option-based compensation recognized during the six months ended June 30, 2017 compared to approximately $44,000 during the six months ended June 30, 2018. Additionally, the Company incurred fewer professional fees during the current period as the result of issuing fewer shares of common stock for professional services in the current period when compared to the same period in 2017. Lastly, the increase in general and ~~administrative expenses is the result of~~ the acquisition ~~of Limecom which contributed a total of $670,066 of general and administrative expenses during the six months ended June 30, 2018.~~od Limecom.

Other Income ~~(Expense)~~

Six Months Ended
June 30,
2018 2017 Change
Other income $ - $ 179,580 $ (179,580 )
Other expense (94,862 ) - (94,862 )
Interest expense (748,907 ) (597,719 ) (151,188 )
Gain (loss) on derivative liability 427,935 (1,993,142 ) 2,421,077
Gain on extinguishment of debt 98,611 - 98,611
Gain on fair value of stock based liabilities 1,559,413 - 1,559,413
Total other income (expense) $ 1,242,190 $ (2,411,281 ) $ 3,653,471

The Company recognized other income of ~~$1,242,190~~$1,787 thousand during the ~~six~~nine months ended ~~June~~September 30, 2018 compared to a ~~net expense~~loss of ~~$2,411,281~~$324 thousand during the ~~six~~nine months ended ~~June~~September 30, 2017. The net change from the prior period is mainly due to the ~~current is driven by a $2,421,077 favorable~~ change in the gain recognized on the fair value measurement of our derivative ~~liabilities, $98,611 favorable variance in the gain on extinguishment of debt~~ and ~~$1,559,413 favorable change in gains recognized from the fair value measurements of~~ stock-based liabilities.

It was also due to forgiveness of accounts payable during the nine months ended September 30, 2017 that was not present during the current period. The fair value measurements related to derivative liabilities ~~and stock-based liabilities are~~is driven by market inputs and inherently subject to volatility. The ~~increase~~decrease in other income is the ~~gain on extinguishment~~result of ~~debt is from~~ the Company ~~entering into a settlement agreement with a convertible noteholder~~recognizing forgiveness of accounts payable during the nine months ended September 30, 2017 that was not present during the current ~~period where similar events did not exist during the six months ended June 30, 2017.~~period.

~~Loss~~

Gain from ~~Discontinued Operations~~Change in Fair Value of stock-based liabilities for the nine-month period ended September 30, 2018 was $2,191 thousand as compared to a gain of 0 for the nine-month period ended September 30, 2017. The gain is attributable to the decrease in the Fair Value of our stock-based liabilities mainly due to the decrease in the price of share of our common stock.

Six Months Ended
June 30,
2018 2017 Change
Loss from discontinued operations $ - $ 327,800 $ (327,800 )

The Company recorded a loss from discontinued operations of $327,800 during the six months ended June 30, 2017 from its disposal of a former subsidiary, Transaction Processing Products, LLC. There were no discontinued operations or disposals of business entities or segments during the six months ended June 30, 2018.

Net Income (Loss)

Six Months Ended
June 30,
2018 2017 Change
Net income (loss) $ 537,108 $ (4,176,268 ) $ 4,713,376
Net income attributable to non-controlling interest 17,416 9,630 7,786
Net loss attributable to Cuentas, Inc. $ 554,524 $ (4,166,638 ) $ 4,721,162

~~The Company recognized~~We incurred a net income of $89 thousand for the ~~six months~~nine-month period ended ~~June~~September 30, 2018, ~~of $554,524~~as compared to a net loss of ~~$4,166,638~~$2,478 for the ~~six months~~nine-month period ended ~~June~~September 30, 2017. The ~~change~~increase in net income ~~(loss) for~~is mainly attributable to increase in the six months ended June 30, 2018 is due mainly to the increased revenues and margins during the current period combined with favorable changes in gains for the fair value measurements of derivative and stock-based liabilities.other income.

~~GOING CONCERN, LIQUIDITY AND CAPITAL RESOURCES~~Inflation and Seasonality

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

Liquidity and Capital Resources

Liquidity is the ability of a 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 management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of ~~June~~September 30, 2018, ~~the Company~~we had cash and cash equivalents of ~~$12,770, current assets~~$48 thousand as compared to $93 thousand as of ~~$5,132,441 and current liabilities~~December 31, 2017. As of ~~$11,108,970 creating~~September 30, 2018, we had a working capital deficit of ~~$5,976,529.~~ $7,915 thousand, as compared to $6,714 thousand as of December 31, 2017. The increase in our working capital deficit was mainly attributable to the decrease of $3,266 thousand in our trade account receivables and increase of $2,700 thousand in our short-term related parties’ payables, which was mitigated by a decrease of $2,085 in our trade account payables.

Net cash used in operating activities was ~~$97,327 during~~$208 thousand for the ~~six months~~nine-month period ended ~~June~~September 30, 2018, ~~and $116,881~~as compared to cash used ~~during~~in operating activities of $384 thousand for the ~~six months~~nine-month period ended ~~June~~September 30, 2017. ~~Current assets consisted~~The Company’s primary uses of ~~$12,770 of cash; $4,382,269 of accounts receivable; $610,006 of related party accounts receivable; $90,755 of prepaid~~cash have been for professional support, marketing expenses and ~~other current assets; $36,000 of related party receivables and $641 of other receivables.~~working capital purposes.

~~As of December 31, 2017,~~Net cash used in investing activities was $11 thousand for the ~~Company had $92,714 of cash, total current assets of $7,934,821 and total current liabilities of $15,010,537 creating a working capital deficit of $7,075,716. Current assets~~nine-month period ended September 30, 2018, as of December 31, 2017 consisted of $92,714 of cash, accounts receivable net of allowance of $7,623,197, accounts receivable from related parties totaling $8,545, prepaid expenses and other current assets of $74,365, related party receivables of $36,000 and an other receivable of $100,000.compared to $0 thousand for the nine-month period ended September 30, 2018.

~~Liquidity and Other Considerations~~

~~During~~Net cash provided by financing activities was approximately $174 thousand for the ~~six months~~nine-month period ended ~~June~~September 30, 2018, as compared to approximately $185 thousand for the ~~Company’s loss from~~nine-month period ended September 30, 2017. We have principally financed our operations ~~was $705,082. As~~through the sale of June 30, 2018, the Company had $12,770 of cash, a working capital deficit of $5,976,529, which included accounts payable and accrued liabilities of $4,524,873 and accounts payable to related parties of $1,341,427,our common stock and the ~~Company’s shareholder deficit was $4,333,280. During 2017, the Company acquired a cash flow positive subsidiary.~~

issuance of debt. Due to our operational losses, ~~the Company has~~we 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 holds an executive position. During the first calendar quarter of 2017, Next Communications, Inc. filed for bankruptcy protection. As a result, the related party payable is being handled by a court appointed trustee as an asset of Next Communications, Inc. and the Company may need to begin repaying the amounts due on a more fixed schedule. There was ~~$2,943,519~~$2,972 thousand and ~~$2,919,615~~$2,919 thousand due to Next Communications, Inc. as of ~~June~~September 30, 2018 and December 31, 2017, respectively.

~~The Company’s unaudited condensed consolidated~~ Our financial statements have been prepared onassuming that the Company will continue as a going ~~concern basis, which contemplates~~concern. As of September 30, 2018, the ~~realization of assets and satisfaction of liabilities in the normal course of business.~~ ~~The~~ Company had ~~net income of $554,524~~approximately $48 in cash and ~~a net loss of $4,176,268 and net~~ cash ~~used~~equivalents, approximately $8,012 in ~~operating activities of $97,327 and $116,881, for the six months ended June 30, 2018 and 2017, respectively. The Company has a~~negative working capital, ~~deficit~~a stockholders’ deficiency of ~~$5,976,529 and $7,075,716,~~approximately $4,032 and an accumulated deficit of ~~$13,953,044 and $14,207,568 as of June 30, 2018 and December 31, 2017, respectively.~~ approximately $14,419. These conditions raise substantial doubt about ~~the Company’s~~our 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~~concern. Although we anticipate that ~~might result from the outcome of this uncertainty.~~

~~The Company has a minimum~~ cash balance available for payment of ongoing operating costs, 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 financingresources will be available to the Company through its current operations, it believes existing cash will not be sufficient to fund planned operations and projects investments through the next 12 months. Therefore, we are still striving to increase our sales, attain profitability and raise additional funds for future operations and any meaningful equity or debt financing will likely result in significant dilution to our existing stockholders. There is no assurance that additional funds will be available on terms acceptable to ~~the Company.~~us, or at all.

Off-Balance Sheet Arrangements

~~Operating Activities~~

~~The Company used $97,327 of cash in operations during the six months ended June~~September 30, 2018, and $116,881 during the six months ended June 30, 2017. The Company’s primary uses of cash have been for professional support, marketing expenses and working capital. Net cash used in operating activities during the six months ended June 30, 2018 consisted of net income of $537,108, net non-cash gains of $1,529,660 and changes in working capital totaling $895,225.

~~Investing Activities~~

The Company used cash of $11,499 in investing activities during the six months ended June 30, 2018 which consisted solely of the purchase of equipment. There was no cash used in or provided by investing activities during the six months ended June 30, 2017.

~~Financing Activities~~

The Company generated $28,882 of cash in financing activities during the six months ended June 30, 2018 compared to using $75,549 during the six months ended June 30, 2017. Cash generated by financing activities during the six months ended June 30, 2018 consisted of repayments of convertible notes payable of $12,000, proceeds from related party loans of $40,199, proceeds from loans payable of $967 and repayments of related party loans of $284. Cash used in financing activities during the six months ended June 30, 2017 consisted of repayments of a bank overdraft of $7, proceeds from loans payable of $25,000 and repayments on related party loans of $100,542.

The Company may not have sufficient resources to fully develop any new products or expand 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 through the sale of equity or convertible debt securities, the issuance of 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 failure to raise capital when needed, will adversely affect our business, 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 can be secured 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.

~~Impact of Inflation~~

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

~~Off-Balance Sheet Arrangements~~

~~There are~~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.

~~Critical Accounting Policies~~

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.

Critical Accounting ~~Estimates and New Accounting Pronouncements~~

~~Critical Accounting Estimates~~Policies

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 2 to our consolidated audited financial statements filed with the ~~financial statements. Management considers an accounting estimate to be critical if:~~

	●	~~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.~~

~~The Company bases 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, 2017 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, and derivative financial instruments.~~

~~Share-Based Compensation Expense~~

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.

Recent Accounting ~~Pronouncements~~Standards announced

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments apply to reporting entities that are required to make disclosures about recurring or nonrecurring fair value measurements and should improve the cost, benefit, and effectiveness of the disclosures. ASU 2018-13 categorized the changes into those disclosures that were removed, those that were modified, and those that were added. The primary disclosures that were removed related to transfers between Level 1 and Level 2 investments, along with the policy for timing of transfers between levels. In addition, disclosing the valuation processes for Level 3 fair value measurements was removed. The amendments are effective for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company notes that this guidance will impact its disclosures beginning January 1, 2020.

Recently adopted accounting pronouncements

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01) “Financial Instruments-Overall (Subtopic 825-10): Recognition andMeasurement of Financial Assets and Financial Liabilities,” which amends various aspects of the recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018 which resulted in a $300 reclassification of net unrealized gains from accumulated other comprehensive income to the retained earnings. The adoption of ASU 2016-01 increases the volatility of our other income (expense), net, as a result of the remeasurement of our equity securities. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted.

The ~~Company has implemented all new~~significant accounting ~~pronouncements that are~~policies applied in ~~effect. These pronouncements did not have any material impact on~~ the annual financial statements ~~unless otherwise disclosed, and~~of the Company ~~does not believe that there~~as of December 31, 2017 are ~~any other new accounting pronouncements that have been issued that might have a material impact on its~~applied consistently in these financial ~~position or results of operations.~~statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~RISK.

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

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

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:

	●	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.

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 of appropriate oversight of third party service providers,

Lack of appropriate segregation of duties,

Lack of an independent audit committee,

Lack of information technology (“IT”) controls over revenue,

Lack of adequate review of internal controls to ascertain effectiveness,

Lack of communication to third party service providers regarding key events and agreements within the organization,

Lack of control procedures that include multiple levels of supervision and review, and

There is an overreliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material, nonstandard transactions.

~~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 weaknessesby the end of the fiscal quarter ending March 31, 2019.

Changes in Internal Controls over Financial Reporting

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 September 30, 2018. 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 September 30, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 12, 2018, the Company was served with a complaint from Viber for reimbursement of ~~attorneys~~attorney’s fees and costs totaling ~~$527,782~~$527 thousand arising from the litigation listed above. The Company is vigorously defending their rights in this case as we believe this demand is premature as litigation is ongoing. The Company has not accrued an estimated loss related to this complaint as of ~~June~~September 30, 2018 or December 31, 2017 given the premature nature of the motion.

On December 20, 2017, a Complaint was filed by J. P. Carey Enterprises, Inc., alleging a claim for ~~$473,264 related~~$473related to the Franjose Yglesias-Bertheau filed lawsuit against PLKD listed above. Even though ~~NGH~~the Company made the agreed payment of ~~$10,000~~$10 thousand on January 2, 2017 and issued 3,600,720 shares as conversion of the ~~$70,000~~$70 thousand note as agreed in the settlement agreement, the Plaintiff alleges damages which ~~NGH~~the Company claims are without merit because they received full compensation as agreed. ~~NGH~~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 October 20, 2018, J. P. Carey Enterprises, Inc. voluntarily withdrew its claim against the Company.

During 2016, Limecom had disputed accounts payable with three (3) carriers, for which the Company entered into separate settlement agreements, totaling approximately $1,147. Under the terms of these settlement agreements, the Company was provided with extended payment terms on the outstanding balances. These settlement agreements are non-interest bearing and include certain default provisions as disclosed in the related agreements. On October 23, 2017, this liability was $676. Limecom repaid $10 from the date of acquisition through December 31, 2017 and $95 during the nine months ended September 30, 2018. The remaining outstanding principal balance of these settlement agreements amounted to approximately $571 and $666 as of September 30, 2018 and December 31, 2017, respectively. Of these totals, $571 and $546 is current and included in accrued liabilities and $0 and $120 is long term and represented by other long-term liabilities as of September 30, 2018 and December 31, 2017, respectively.

Prior to October 23, 2017 (the date of Limecom acquisition), Limecom had entered into a settlement agreement with American Express.As of the date of the Limecom acquisition, there was a total outstanding balance of $892. The Company made repayments totaling $385 leaving a remaining balance due of $507, as of September 30, 2018. The balance of $410 is included in other accounts liabilities and the balance of $97 is included in other long-term accounts liabilities. On November 26, 2018, the Company received ~~service~~notice of a complaint through its registered agent regarding a Complaint by American Express claiming damages incurred by Limecom for the amount of $507. On December 18, 2018, Limecom had entered into a second Amendment of the Settlement Agreement with American Express. Under the second Amendment Limecom paid $25 upon on December 19, 2018 and the remaining balance in 13 installments through December 15, 2019.

On December 18, 2018, Limecom had entered into a second Amendment of the Settlement Agreement with American Express. Under the second Amendment Limecom paid $25 on December 14, 2018 and the remaining balance in 13 installments through December 15, 2019.

On September 28, 2018, the Company was notified of a complaint filed against it by a former ~~supplier citing unspecified damages in excess~~supplier. The Company has not yet received formal service of ~~$15,000.~~the complaint and is awaiting such service at which time it can fully assess the complaint. The Company has not accrued any losses as of ~~June~~September 30, 2018 related to the complaint given the early nature of the process.

On October 25, 2018, the Company was notified by its registered agent in the state of Florida it had received notification of a filed complaint by a former employee that alleges breach of contract. The Company is in the early stages of discovery with a response to the complaint due on November 14, 2018. The Company has not accrued any losses as of ~~June~~September 30, 2018 related to the complaint given the early nature of the process.

On October 25, 2018, the Company was received a claim letter issued by TCA Gloal Master Fund in which it claims the Company is liable for unpaid investment banking services totaling $2,500,000. The Company believes this claim to be without merit and has responded to the letter as such. The Company has not accrued any losses or a liability related to this letter as of June 30, 2018.

ITEM 1A. RISK FACTORS

Not applicable.

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

On January 9, 2018, the Company issued 11,483 shares of its common stock pursuant to a settlement of stock-based liabilities. The fair market value of the shares was $155.

On February 7, 2018, the Company issued 38,096 shares of its common stock pursuant to a common stock subscription. The fair market value of the shares at the subscription date was $400.

On September 27, 2018, the Company issued 61,002 shares of its common stock pursuant to a settlement of stock-based liabilities. The fair market value of the shares was $335.

During 2018, the ~~six months ended June~~Company entered into various securities purchase agreement to issue 146,669 shares of common stock in consideration of $440. As of the September 30, 2018 the Company ~~issued 38,095~~has received $140. One of the purchasers is the Company’s President and CEO who purchased 16,667 shares. Another purchaser is a current shareholder which controlled by the former owner of Limecom (a fully subsidiary of the Company), who purchased 16,667 shares. The balance of the common shares aswill be issued upon the ~~settlement for~~receipt the full consideration under the various securities purchase agreements.

On October 25, 2018, the Company received $108 under a private placement of securities closed on October 25, 2018 and issued 35,834 shares of its common stock. The issuance cost was $8.

On November 20, 2018 and November 28, 2018, the Company received $100 under a private placement of securities closed on December 13, 2018 and issued 36,667 shares of its common stock ~~subscriptions totaling $400,000; 11,479~~and warrants to purchase up to 36,667 shares of its common stock at an exercise price equal to $3.25 per share. The issuance cost was $10.

During December, 2018, the Company received $248 under a private placement of and issued 82,667 shares ~~valued~~of its common stock and warrants to purchase up to 82,667 shares of its common stock at ~~$154,973~~an exercise price equal to $3.25 per share.

On December 13, the Company issued 30,001 shares of its common stock for the ~~settlement~~consideration of ~~stock based liabilities~~$90 which it received of under the Securities Purchase Agreement which it entered on September 21^st, 2018.

Each of the transactions described above give effect to the Reverse Stock Split (as defined below) and ~~2,000 common shares for~~were exempt from the ~~settlement~~registration requirements of ~~a convertible note payable.~~the Securities Act of 1933, as amended (“Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act, Regulation D promulgated under the Securities Act and, in the case of sales to investors who are non-US persons, Regulation S promulgated under the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR DEBT

None.

ITEM 4. ~~REMOVED AND RESERVED~~MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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)
3.9 Amendment to articles of incorporation, dated February 25, 2015 (2)
3.10 Amendment to articles of incorporation, dated March 19, 2015 (2)
3.11 Joint Venture Agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated May 27, 2016 (3)
3.12 Addendum to joint venture agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated August 9, 2016 (3)
3.13 Debt Purchase and Assignment Agreement and Stock Purchase Agreement of Transaction Processing Products, Inc. dated July 10, 2016 (4)
3.14 Agreement Regarding Purchase and Sale of All Assets and Certain Liabilities of Tel3 dated August 11, 2016 (4)
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
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

Exhibit No.	Description	Location
2.1	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 February 25, 2015	(2)
3.5	Amendment to articles of incorporation, dated March 19, 2015	(2)
3.6	Articles of Amendment, as filed with the Secretary of State of the State of Florida on August 8, 2018	(3)
10.1	Joint Venture Agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated May 27, 2016	(4)
10.2	Addendum to joint venture agreement between NextCala, Inc. and Glocal Payment Solutions, Inc. dated August 9, 2016	(4)
10.3	Debt Purchase and Assignment Agreement and Stock Purchase Agreement of Transaction Processing Products, Inc. dated July 10, 2016	(5)
10.4	Agreement Regarding Purchase and Sale of All Assets and Certain Liabilities of Tel3 dated August 11, 2016	(5)
10.5	Factoring Agreement with AEC Yield Capital, LLC dated October 30, 2018	(6)
10.6	Agreement with Think Equity dated May 7, 2018.	(6)

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
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

(1)	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.
(2)	Incorporated by reference from Pleasant Kid’s Quarterly Report on Form 10-Q for the Fiscal Quarter Ended March 31, 2015 filed on May 20, 2015.
(3)	Incorporated by reference from Cuentas, Inc’s Current Report on Form 8-K filed with the SEC on August 8, 2018.
(4)	Incorporated by reference from Next Group Holdings’ Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2016 filed on August 19, 2016.
~~(4)~~(5)	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.
(6)	Incorporated by reference from Cuentas, Inc’s Current Report on Form 8-K filed with the SEC on November 15, 2018.

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 21, 2018~~January 28, 2019	By:	/s/ Arik Maimon
		Chief Executive Officer

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

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 September 30, 2018 (Unaudited) and December 31, 2017	2

~~Unaudited Condensed Consolidated~~ Statements of Operations	and Comprehensive Income (Loss) for the nine and three-months ended September 30, 2018 and 2017 (Unaudited)	3

~~Unaudited Condensed Consolidated~~ Statements of Cash Flows	for the nine months ended September 30, 2018 and 2017 (Unaudited)	4

Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements		~~5 - 21~~5-21

	June 30, 2018			December 31, 2017
ASSETS
Current Assets
Cash	$	12,770		$	92,714
Accounts receivable, net		4,382,269			7,623,197
Accounts receivable, related party		610,006			8,545
Prepaid expenses and other current assets		90,755			74,365
Related party receivable		36,000			36,000
Other receivable		641			100,000
Total current assets		5,132,441			7,934,821

Equipment, net of accumulated depreciation		15,734			5,608
Intangible assets, net of accumulated amortization		2,721,472			2,935,757
License fee, net of accumulated amortization		-			34,722
Investments		180,000			250,000
Goodwill		1,333,713			1,333,713

Total assets	$	9,383,360		$	12,494,621

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	4,524,873		$	7,030,050
Accounts payable, related party		1,341,427			499,668
Dividends payable		30,000			30,000
Deferred revenue		612,174			685,905
Loan payable		75,000			75,000
Convertible notes payable, net of discounts and debt issue costs		-			48,897
Derivative liability		119,269			574,130
Related party payables		3,072,482			3,032,567
Notes payable, current		72,015			71,048
Stock based liabilities		1,261,730			2,963,272
Total current liabilities		11,108,970			15,010,537

Related party payables, net of discounts		2,607,670			2,535,601
Other long term liabilities		-			120,000
Total liabilities		13,716,640			17,666,138

Commitments and contingencies		-			-

Stockholders’ Deficit
Common stock subscribed		-			400,000
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 June 30, 2018 and December 31, 2017, respectively		-			-
Series B preferred stock, $0.001 par value, designated 10,000,000; 10,000,000 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		10,000			10,000
Common stock, authorized 360,000,000 shares, $0.001 par value; 1,191,972 and 1,140,398 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		1,192			1,140
Additional paid in capital		10,254,782			9,554,844
Accumulated deficit		(13,953,044	)		(14,207,568	)
Accumulated other comprehensive income		-			(300,000	)
Total Cuentas, Inc. stockholders’ deficit		(3,687,070	)		(4,541,584	)

Non-controlling interest in subsidiaries		(646,210	)		(629,933	)
Total stockholders’ deficit		(4,333,280	)		(5,171,517	)
Total liabilities and stockholders’ deficit	$	9,383,360		$	12,494,621

	September 30, 2018			December 31, 2017
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		48			93
Trade account receivables		4,366			7,632
Other current assets		128			210
Total current assets		4,542			7,935

Property and Equipment		15			6
Intangible assets		2,614			2,970
Investments		81			250
Goodwill		1,334			1,334
Total assets		8,586			12,495

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable		3,483			5,568
Other accounts liabilities		1,491			1,962
Dividends payable		30			30
Deferred revenue		561			686
Notes and Loan payable		100			146
Convertible notes payable, net of discounts and debt issue costs		-			49
Derivative liability		-			212
Related parties payables		5,733			3,033
Stock based liabilities		1,059			2,963
Total current liabilities		12,457			14,649

Related party payables – Long term		-			2,536
Derivative liabilities – long term		64			362
Other long-term liabilities		97			120
TOTAL LIABILITIES		12,618			17,667

STOCKHOLDERS’ DEFICIENCY
Common stock subscribed		140			400
Series B preferred stock, $0.001 par value, designated 10,000,000; 10,000,000 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		10			10
Common stock, authorized 360,000,000 shares, $0.001 par value; 1,269,446 and 1,140,398 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		1			1
Additional paid in capital		10,885			9,555
Accumulated deficit		(14,419	)		(14,208	)
Accumulated other comprehensive income		-			(300	)
Total Cuestas Inc. stockholders’ deficit		(3,383	)		(4,542	)

Non-controlling interest in subsidiaries		(649	)		(630	)
Total stockholders’ deficit		(4,032	)		(5,172	)
Total liabilities and stockholders’ deficit		8,586			12,495

	Nine Months Ended September 30,						Three Months Ended September 30,
	2018			2017			2018			2017
										( Restated)

REVENUE		61,472			1,700			20,563			625

COST OF REVENUE		60,372			1,289			20,458			503

GROSS PROFIT		1,100			411			105			122

OPERATING EXPENSES

General and administrative		2,817			2,249			1,119			522
TOTAL OPERATING EXPENSES		2,817			2,249			1,119			522

OPERATING LOSS		(1,717	)		(1,838	)		(1,014	)		(400	)

OTHER INCOME (EXPENSE)
Other income		197			730			197			550
Other expense		(279	)		-			(184	)		-
Interest expense		(904	)		(748	)		(156	)		(150	)
Gain (loss) on derivative liability		483			(306	)		56			1,687
Gain from Change in extinguishment of debt		99			-			-			-
Gain from Change in fair value of stock-based liabilities		2,191			-			632			-
TOTAL OTHER INCOME (EXPENSE)		1,787			(324	)		545			2,087

Loss from discontinued operations		-			(328	)		-			-

NET INCOME (LOSS) BEFORE CONTROLLING INTEREST		70			(2,490	)		(469	)		1,687

NET INCOME ATTRIBUTILE TO NON-CONTROLLING INTEREST		19			12			3			2
NET LOSS ATTRIBUTILE TO NET INCOME (LOSS) ATTRIBUTILE TO CUENTAS INC.		89			(2,478	)		(466	)		1,689

Net income (loss) per basic share		0.06			(*)(2.75	)		(0.39	)		(*)1.78
Net income (loss) per diluted share		(1.50	)		(*)(2.75	)		(0.39	)		(*)1.42

Weighted average number of basic common shares outstanding		1,188,418			(*)906,151			1,201,083			(*)948,341
Weighted average number of diluted common shares outstanding		1,301,258			(*)906,151			1,201,083			(*)1,191,609

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
										(Restated)
Revenue	$	11,967,987		$	500,426		$	29,718,263		$	997,224
Revenue, sales to related parties		8,941,435			73,638			11,189,379			77,431
Total revenue		20,909,422			574,064			40,907,642			1,074,655

Cost of revenue		12,293,982			450,175			28,479,619			785,432
Cost of revenue, purchases from related parties		8,361,849			-			11,434,687			-
Gross profit (loss)		253,591			123,889			993,336			289,223

Operating expenses
Officer compensation		193,525			147,777			328,717			363,943
Professional fees		214,340			641,603			514,698			1,132,887
General and administrative		419,997			132,688			855,003			229,580
Total operating expenses		827,862			922,068			1,698,418			1,726,410

Loss from operations		(574,271	)		(798,179	)		(705,082	)		(1,437,187	)

Other income (expense)
Other income		-			178,712			-			179,580
Other expense		(69,912	)		-			(94,862	)		-
Interest expense		(346,325	)		(238,477	)		(748,907	)		(597,719	)
Gain (loss) on derivative liability		14,729			(1,579,105	)		427,935			(1,993,142	)
Gain on extinguishment of debt		-			-			98,611			-
Gain (loss) on fair value of stock based liabilities		(3,069	)		-			1,559,413			-
Total other income (expense)		(404,577	)		(1,638,870	)		1,242,190			(2,411,281	)

Loss from discontinued operations		-			-			-			(327,800	)

Income (loss) before income taxes		(978,848	)		(2,437,049	)		537,108			(4,176,268	)

Income taxes		-			-			-			-

Net income (loss)		(978,848	)		(2,437,049	)		537,108			(4,176,268	)
Net (income) loss attributable to non-controlling interest		9,619			(144	)		17,416			9,630
Net income (loss) attributable to Cuentas, Inc.	$	(969,229	)	$	(2,437,193	)	$	554,524		$	(4,166,638	)

Net income (loss) per basic share	$	(0.81	)	$	(2.62	)	$	0.47		$	(4.71	)
Net income (loss) per diluted share	$	(0.81	)	$	(2.62	)	$	0.43		$	(4.71	)

Weighted average number of basic common shares outstanding		1,191,972			930,122			1,183,555			884,706
Weighted average number of diluted common shares outstanding		1,191,972			930,122			1,287,382			884,706

	Deferred Revenue
Balance at December 31, 2017	$	685,905
Deferred revenue		723,294
Recognition of deferred revenue		(797,025	)
Balance at June 30, 2018	$	612,174

Year ended December 31,
2018	$	214,286
2019		428,571
2020		428,571
2021		428,571
2022		428,571
Thereafter		792,902
Total	$	2,721,472

	Balance as of September 30, 2018
	Level 1		Level 2		Level 3		Total
Liabilities:
Stock based liabilities		1,059		—		—		1,059
Short term derivative value		—		—		—		—
Long term derivative value		64		—		—		64
Total liabilities		1,123		—		—		1,123

	Balance as of December 31, 2017
	Level 1		Level 2		Level 3		Total
Liabilities:
Stock based liabilities		2,963		—		—		2,963
Short term derivative value		212		—		—		212
Long term derivative value		362		—		—		362
Total liabilities		3,537		—		—		3,537

Net income (loss) before controlling interest	70

Reallocation of stock-based compensation	164

Reallocation of Gain from Change in fair value of stock-based liabilities	(2,191	)

Net income (loss) attributable to common shareholders	(1,957	)

Holder	Issue Date	Due Date	Original Principal		Balance, December 31, 2017		Repayments			Conversions to Common Stock			Forgiveness of Principal			Balance, June 30, 2018		Issue Date	Due Date	Original Principal		Balance, December 31, 2017		Repayments			Conversions to Common Stock			Forgiveness of Principal			Balance, September 30, 2018
Noteholder 5	11/9/2015	11/9/2016		100,000		48,897		(12,000	)		(26,640	)		(10,257	)		-	11/9/2015	11/9/2016		100		49		(12	)		(27	)		(10	)		-
Totals			$	100,000	$	48,897	$	(12,000	)	$	(26,640	)	$	(10,257	)	$	-				100		49		(12	)		(27	)		(10	)		-

Fair Value of Embedded Derivative Liabilities:
Balance, December 31, 2017	574
Change in fair value	(483	)
Change due to conversion	(27	)
Balance, September 30, 2018	64

	June 30, 2018	December 31, 2017
Expected volatility	213%	178% - 334%
Expected term	1.76 years	.01 - 2.25 years
Risk free rate	2.52%	0.97% - 1.89%
Forfeiture rate	0%	0%
Expected dividend yield	0%	0%

	September 30, 2018			December 31, 2017
Common stock price		5.00			17.40
Expected volatility		211	%		178% - 334	%
Expected term		1.51 years			.01 - 2.25 years
Risk free rate		2.81	%		0.97% - 1.89	%
Forfeiture rate		0	%		0	%
Expected dividend yield		0	%		0	%

	Shares		Weighted- Average Exercise Price Per Share		Shares			Weighted- Average Exercise Price Per Share
Outstanding, December 31, 2017		105,378	$	39.27		105,378		$	39.27
Granted		-		-		90,000			3.00
Exercised		-		-
Forfeited		-		-		(33,334	)		54.00
Expired		-		-
Outstanding, June 30, 2018		105,378	$	39.27
Outstanding, September 30, 2018						162,044		$	16.09

		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
$	54.00		58,334	$	54.00		2.34		36,112	$	54.00	54.00		25,000	$	54.00		1.5		25,000	$	54.00
	21.00		47,044		21.00		1.99		47,044		21.00	21.00		47,044		21.00		1.74		47,044		21.00
			105,378	$	39.27		2.16		83,156	$	35.33	3.00		90,000		3.00		4.96		30,000		3.00
														162,044	$	16.09		2.98		102,044	$	23.79

Common stock price	5.05
Dividend yield	0	%
Risk-free interest rate	2.87	%
Expected term (years)	5
Expected volatility	374.26	%

Summary of common stock activity for the nine months ended September 30, 2018	Outstanding shares
Balance, December 31, 2017		1,140,398
Shares issued for common stock subscriptions		38,096
Shares issued as settlement of stock-based liabilities		72,485
Shares issued for services		13,333
Shares issued for rounding from 1:300 reverse stock split		967
Shares issued for settlement of convertible notes payable and accrued interest		4,167
Balance, September 30, 2018		1,269,446

	June 30, 2018		December 31, 2017
(b) Due to Next Communications, Inc. (current)	$	2,943,519	$	2,919,615
(c) Due to Asiya Communications SAPI de C.V. (current)		19,009		5,998
(d) Michael DePrado (current)		99,604		99,604
(e) Orlando Taddeo, net of discount of $0 and $72,069 (long term, due July 21, 2019)		2,607,670		2,535,601
(f) Next Cala 360 (current)		10,350		7,350
Total related party payables	$	5,680,152	$	5,568,168

	September 30, 2018 (unaudited)		December 31, 2017
(b) Due to Next Communications, Inc. (current)		2,972		2,920
(c) Due to Asiya Communications SAPI de C.V. (current)		36		6
(d) Michael DePrado (current)		100		100
(e) Orlando Taddeo, net of discount of $0 and $72 (due July 21, 2019)		2,613		2,536
(f) Next Cala 360 (current)		12		7
Total related party payables		5,733		5,569

(a)	Glocal Card Services is our partner in the Glocal Joint Venture
(b)	Next Communication, Inc. is a corporation in which our Chief Executive Officer holds a controlling interest and serves as the Chief Executive ~~Officer~~Officer. The balance with Next Communication, Inc. accrues an annual interest of 8%.
(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~~the Company’s Chief Operating Officer
(e)	Amount due to Orlando Taddeo from the acquisition of Limecom
(f)	Next Cala 360, is a Florida corporation established and managed by our Chief Executive Officer.

	For the Three Months Ended June 30,
	2018		2017
Next Communications, Inc.	$	4,688,134	$	71,666
Asiya Communications SAPI de C.V.		4,253,301		1,972
Next Cala 360		-		-
Total	$	8,941,435	$	73,638

	For the Three Months Ended September 30,
	2018		2017
Next Communications, Inc.		4,208		155
VTX Corporation (a)		1,587
Airtime Sp.z.o.o.		5,095		-
Asiya Communications SAPI de C.V.		5,052		-
Total		15,942		155

	For the Six Months Ended June 30,
	2018		2017
Next Communications, Inc.	$	5,812,611	$	71,666
Asiya Communications SAPI de C.V.		5,376,768		1,972
Next Cala 360		-		3,793
Total	$	11,189,379	$	77,431

	For the Nine Months Ended September 30,
	2018		2017
Next Communications, Inc.		10,021		227
VTX Corporation		11,305		-
Airtime Sp.z.o.o.		5,095		-
Asiya Communications SAPI de C.V.		10,429		2
Next Cala 360		-		4
Total		36,850		233

	June 30, 2018		December 31, 2017
Trade payables	$	2,671,537	$	5,067,841
Settlements payable (seeNote 12 – Commitments and Contingencies)		1,133,858		1,438,994
Accrued expenses		235,742		153,223
Accrued interest		13,129		40,955
Accrued salaries and wages		470,607		329,037
Total	$	4,524,873	$	7,030,050

~~Summary of common stock activity for the six months ended June 30, 2018~~	~~Outstanding shares~~
~~Balance, December 31, 2017~~		~~1,140,398~~
~~Shares issued for common stock subscriptions~~		~~38,095~~	��
~~Shares issued as settlement of stock based liabilities~~		~~11,479~~
~~Shares issued for settlement of convertible notes payable and accrued interest (a)~~		~~2,000~~
~~Balance, June 30, 2018~~		~~1,191,972~~

	Number of Common Shares and Common Share Equivalents		Fair Value
Common stock to be issued (1)		107,889	$	803,122
Options to purchase common stock (2)		80,378		458,608
Totals		188,267	$	1,261,730

~~(1)~~	~~Includes 34,537 common shares committed to be issued in connection with our acquisition of Limecom as discussed in~~~~Note 1 Organization and Description of Business~~.
~~(2)~~	Excludes 25,000 options with ratchet pricing features included in derivative liabilities. The total value of $458,608 will be reclassified to equity in conjunction with the timing of our reverse stock split taking effect on August 7, 2018.

	Pre-Reverse Split		Post-reverse split
Committed shares beyond authorized		32,365,826		107,889
Stock options granted		31,613,142		105,378
Convertible notes payable and accrued interest		441,554		1,472
Total		64,420,522		214,739

	Cuentas			Limecom			Pro Forma Adjustments			Pro Forma
Revenue	$	1,700		$	65,743		$	-		$	67,443
Cost of revenue		1,289			63,653			321	(a)		65,263
Gross margin		411			2,090			(321	)		2,180

Operating expenses
General and administrative		2,249			1,491			-			3,740
Total operating expenses		2,249			1,491			-			3,740

Income (loss) from operations		(1,838	)		599			(321	)		(1,560	)

Other income (expense)
Other income		730			92			-			822
Interest expense		(748	)		(242	)		-			(990	)
Loss on derivative liability		(306	)		-			-			(306	)
Total other income (expense)		(324	)		(150	)		-			(474	)

Net income (loss) from continuing operations	$	(2,162	)	$	449		$	(321	)	$	(2,034	)

	Three Months Ended June 30,
	2018		2017		Change
Revenue	$	11,967,987	$	500,426	$	11,467,561
Revenue, related party		8,941,435		73,638		8,867,797
Total revenue	$	20,909,422	$	574,064	$	20,335,358

	Six Months Ended June 30,
	2018		2017		Change
Revenue	$	29,718,263	$	997,224	$	28,721,039
Revenue, related party		11,189,379		77,431		11,111,948
Total revenue	$	40,907,642	$	1,074,655	$	39,832,987