Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024. Some of the information contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing, includes forward-looking statements within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including statements regarding expectations, beliefs, intentions or strategies for the future. When used in this report, the terms "anticipate," "believe," "estimate," "expect," "can," "continue," "could," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and words or phrases of similar import, as they relate to our company or our management, are intended to identify forward-looking statements. We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance, and we undertake no obligation to update or revise, nor do we have a policy of updating or revising, any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required under applicable law. Forward-looking statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements as a result of several factors including those set forth under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and in subsequent reports filed pursuant to Section 13(a) of the Exchange Act.

The Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company's other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company's fluctuations in sales and operating results; (b) regulatory, competitive and contractual risks; (c) development risks; (d) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (e) pending litigation.

OVERVIEW AND OUTLOOK

The Company was incorporated under the laws of the State of Florida on September 21, 2005 to act as an operational company and as a holding company for its subsidiaries. Its wholly-owned subsidiary is Meimoun and Mammon, LLC (100% owned) ("M&M") which provides wholesale and retail telecommunications services. The Company also own 50% of CUENTASMAX LLC, which installs WiFi6 shared network ("WSN") systems in locations in the New York metropolitan tristate area using access points and small cells to provide users with access to the WSN.The Company is focusing its business mainly on developing internal and vertical markets for Cuentas Mobile, the Company's Cellular Telecommunications solution.

Since the first quarter of 2023, Cuentas made equity investments in real estate projects in Florida under the name Cuentas Casa. Cuentas Casa partners with leading edge developers and construction technology companies to create sustainable, inclusive and affordable residential communities specifically designed to provide high quality housing alternatives at extremely competitive pricing. Our goal was to source land zoned and ready for development of multi-family buildings in strategic areas where rental prices are increasing dramatically, placing financial stress and pressure on working class families. Our real estate investments were intended to broaden our reach into the unbanked, underbanked and underserved communities by using a patented, low cost, sustainable technology that should allow us to provide reasonably priced rental apartments to working class residents who have been priced out of rental communities due to severe rent hikes in Florida and other areas in the United States. We believed that providing affordable apartments to the Hispanic Latino and other immigrant communities in Florida will enable us to introduce them our fintech solutions and generate revenue. Due to liquidity issues impeding the operation and development of its core mobile fintech and carrier services, on April 3, 2024, the limited liability company in which Cuentas had a 63.9% equity interest ("Brooksville Development Partners, LLC" or "BDP"), entered into an agreement to sell the vacant land located in Brooksville, Florida (the "Brooksville Property") The Brooksville Property was originally purchased by BDP on April 28, 2023 for $5.05 million, $2 million of which was contributed by Cuentas. On May 27, 2025, Cuentas sold its 63.9% equity interest in the Brooksville Property for $800,000 to Brooksville FL Partners, LLC (the "Buyer"), an existing minority member of BDP. The funds were distributed by a mutually agreed escrow agent, and Cuentas settled debts with 4 major creditors. The remaining funds were used for operating expenses. With these funds, the Company was able to settle debts totaling approx. $1.132M with 4 major creditors for final actual cost of $666,356

On September 18, 2025, the Company and Michael De Prado executed a Confidential Separation Agreement and related financing documents. The Company agreed to pay $110,000 in cash and issued two secured promissory notes: (i) a $473,000 note bearing interest at 2.0% per annum, maturing upon the earlier of a qualified financing of at least $2,000,000 or one year from issuance (18% default interest), with the holder's right to convert up to 50% into common stock at $0.42 per share; and (ii) a $200,000 note maturing one year from issuance, with the holder's option at maturity to require either full cash payment or transfer, via certificate of sale, of all non-telecom/MVNO assets comprising the Company's Fintech division (no cash interest unless in default; 8% default interest). Each note is secured by a first-priority security interest in the Company's Fintech (non-MVNO) assets under separate security agreements. These agreements were fully consummated on October 21, 2025 upon release of escrowed deliverables by the escrow agent.

Also on September 18, 2025, the Company entered into a 16-month license with Mr. De Prado granting use and access to the Fintech assets (as detailed in Schedule A); MVNO assets are excluded. The Fintech assets are held in escrow by AM Law pending the holder's exercise of the Note Two option.

On October 17, 2025, the Company issued three additional unsecured convertible promissory notes: (i) to Shalom Arik Maimon (CEO) for $586,087.62; (ii) to Schulman for $112,900.11; and (iii) to AM Law for $308,000. Each bears interest at 2% per annum (default interest as provided in the notes), is convertible at the holder's option at $0.42 per share, and includes piggyback registration rights. After issuance, Mr. Maimon instructed conversion of 50% of his note ($293,043.81) into 697,723 shares, and AM Law instructed conversion of 50% of its note ($154,000) into 366,666 shares, in each case at $0.42 per share.

World Mobile LLC

World Mobile LLC is the Company's majority-owned joint venture with World Mobile Group formed to operate the Company's MVNO business. Through the JV, the Company now holds a 51% membership interest and consolidates the entity for financial reporting purposes. The JV Company's operating platform includes a range of infrastructure assets, such as licensed U.S. spectrum holdings, nationwide roaming agreements, a distributed AirNode network, and core network infrastructure that supports mobile connectivity across U.S. markets. World Mobile LLC operates in active commercial environments with real usag, an established market presence, and adherence to applicable regulatory requirements. Its infrastructure model is designed to scale as additional markets are launched, customer usage increases, and new network assets are deployed.

The Latino Market

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

The 2020 U.S. Census showed the Hispanic Latino population at over 62 million and at 18.7% of the total U.S. population. The FDIC defines the "unbanked" "as those adults without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another. The Company believes that the Hispanic and Latino demographic generally have had more identification, credit, and former bank account issues than any other U.S. minority group leading to more difficulty in obtaining a traditional bank account.

RESULTS OF OPERATIONS

Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024

Revenue

Revenue by product for the nine months ended September 30, 2025, and the nine months ended September 30, 2024 are as follows:

		Nine Months Ended
		September 30
		2025				2024
		Dollars in thousands
Telecommunications		$	-			$	26
Wholesale telecommunication services			-				569
Digital products and General Purpose Reloadable Cards			-				81
Total revenue		$	-			$	676

Costs of Revenue and Gross profit

Cost of revenues during the nine months ended September 30, 2024 totaled $760,000.

Cost of revenue consists of the purchase of wholesale minutes for resale, related telecom platform costs and purchase of digital products in the amount of $565,000 during the nine months ended September 30, 2024.

Cost of revenue also consists of costs related to the sale of the Company's Digital products and GPR Card in the amount of $177,000 during the nine months ended September 30, 2024.

Gross loss by product for the nine months ended September 30, 2025, and the nine months ended September 30, 2024 are as follows:

		Nine Months Ended
		September 30
		2025				2024
		Dollars in thousands
Telecommunications		$	-			$	8
Wholesale telecommunication services			-				4
Digital products and General Purpose Reloadable Cards			-				(96	)
Total Gross profit (loss)		$	-			$	(84	)

Operating Expenses

Operating expenses consist of selling, general and administrative Expenses and amortization of Intangible assets as discussed below and totaled $899,000 during the nine months ended September 30, 2025, compared to $1,561,000 during the nine months ended September 30, 2024 representing a net decrease of $662,000.

Selling, General and Administrative Expenses

The table below summarizes our general and administrative expenses incurred during the periods presented:

		Nine Months Ended
		September 30
		2025				2024
		Dollars in thousands
Officers compensation		$	584			$	152
Directors fees			125				125
Share-based compensation			50				194
Professional services			76				556
Legal fees			-				127
Payments in accordance with the processing service agreement with Incomm			-				100
Selling and Marketing			-				35
Office expenses and other			64				253
Total		$	899			$	1,542

Other Income (Expenses)

Other Income totaled $582,000 during the nine months ended September 30, 2025. Other income are comprised of income upon extinguishment of debt net of default costs to pay principal and interest

Other expenses totaled $1,272,000 during the nine months ended September 30, 2024. Other income (expenses) are mainly comprised of gain of $682,000 from change in fair value of derivative warrants liability issued as part of our February 2023 and August 2023 security offering and from income resulting from our settlement with InComm in the amount of $517,000, offset by Loss on impairment of our investment in Brooksville and Lakewood amounting to a total of $1,916,000.

Net Loss

We incurred a net loss of $317,000 for the nine-month period ended September 30, 2025, as compared to a net loss of $2,916,000 for the nine-month period ended September 30, 2024 .

Comparison of the three months ended September 30, 2025 to the three months ended September 30, 2024

Revenue

Revenue by product for the three months ended September 30, 2025, and the three months ended September 30, 2024 are as follows:

		Three Months Ended
		September 30
		2025				2024
		Dollars in thousands
Telecommunications		$	-			$	-
Wholesale telecommunication services			-				-
Digital products			-				4
Total revenue		$	-			$	4

Costs of Revenue and Gross profit

Cost of revenues during the three months ended September 30, 2024 totaled $11,000 .

Gross loss by product for the three months ended September 30, 2025, and the three months ended September 30, 2024 are as follows:

		Three Months Ended
		September 30
		2025				2024
		Dollars in thousands
Telecommunications		$	-			$	-
Wholesale telecommunication services			-				-
Digital products			-				(7	)
Total Gross profit (loss)		$	-			$	(7	)

Operating Expenses

Operating expenses consist of selling, general and administrative Expenses and amortization of Intangible assets as discussed below and totaled $296,000 during the three months ended September 30, 2025, compared to $299,000 during the three months ended September 30, 2024.

Selling, General and Administrative Expenses

The table below summarizes our general and administrative expenses incurred during the periods presented:

		Three Months Ended
		September 30
		2025				2024
		Dollars in thousands
Officers compensation and Directors fees		$	244			$	41
Share-based compensation			13				32
Professional services			22				182
Selling and Marketing			-				2
Office expenses and other			17				42
Total		$	296			$	299

Other Income ( Expenses )

Other expenses totaled $93,000 during the three months ended September 30, 2024.

Net Loss

We incurred a net loss of $296,000 for the three-month period ended September 30, 2025, as compared to a net loss of $399,000 for the three-month period ended September 30, 2024 due to the decrease in selling and general administrative expenses as described above.

Liquidity and Capital Resources

The Company was able to continue basic operations by working with executive management and a few select employees who were willing to work for the company and accept deferred and accrued compensation. This enabled the Company to continue efforts to manage legal issues, plan for the future, attempt to raise capital, renew operations and bring the company back to compliance.

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 September 30, 2025, the Company had total current assets of $271,000 including $0 of cash, accounts receivables of $271,000 and total current liabilities of $3,708,000 creating a working capital deficit of $3,437,000.

To date, we have principally financed our operations through the sale of our Common Stock. Nevertheless, management anticipates that our current cash and cash equivalents position and generating revenue from the sales of our digital products, General-Purpose Reloadable Cards and prepaid cellular phone services will provide us limited financial resources for the near future to continue implementing our business strategy of further developing our digital products, General Purpose Reloadable Card, enhance our digital products offering and increase our sales and marketing. Therefore management plans to secure additional financing sources, including but not limited to the sale of our Common Stock in future financings. This is expected to be used to further support our operations as described above and to complete the development of its new portal and financial technology capabilities. There can be no assurance, however, that the company will be successful in raising additional capital or that the company will have net income from operations to fund the business plan of the company for the near future or long term. As of September 30, 2025, the Company had approximately $0 in cash and cash equivalents, approximately $3,437,000 in negative working capital and an accumulated deficit of approximately $58,572,000. These conditions raise substantial doubt about the Company's ability to continue as a going concern as of September 30, 2025.

Cash Flows - Operating Activities

The Company's operating activities for the nine months ended September 30, 2025, resulted in net cash used of $967,000. Net cash used in operating activities consisted of a net loss of $317,000, partially offset by non-cash expenses mainly consisting of share-based compensation of $50,000 and net income upon extinguishment of debt in the amount of $582,000, Changes in operating assets and liabilities utilized cash of $118,000.

The Company's operating activities for the nine months ended September 30, 2024, resulted in net cash used of $592,000. Net cash used in operating activities consisted of a net loss of $2,916,000, partially offset by non-cash expenses mainly consisting of share-based compensation of $194,000 and loss on impairment of an investment in unconsolidated subsidiary of $1,916,000, Changes in operating assets and liabilities utilized cash of $417,000, resulting mainly from an increase in accounts receivable of $1,628,000 offset by increase in accounts receivable - related parties of $765,000 and decrease if other accounts liabilities of $648,000.

Cash Flows - Investing Activities

The Company's investment activities for the nine months ended September 30, 2025 resulted in net cash provided by investment activities of $825,000 due to proceeds from sale of investments in unconsolidated entities.

The Company's investment activities for the nine months ended September 30, 2024 resulted in net cash provided by investment activities of $81,000 due to proceeds from sale of an investment in an unconsolidated entity.

Cash Flows - Financing Activities

The Company's financing activities for the six months ended June 30, 2025, resulted in net cash received of $127,000, mainly consisting of $300,000 received short term loans and $173,000 repayment of loans.

The Company's financing activities for the three months ended September 30, 2024, resulted in net cash received of $321,000 mainly consisting of $390,000 received from short term loan received.

On September 22, 2025 and October 1, 2025, Cuentas, Inc. (the "Company") entered into two Convertible Note Purchase Agreements with World Mobile Group Ltd. (the "Investor") for aggregate principal of $385 (the "WM Notes"). The first agreement provided for $260,000 of notes (Sept. 22, 2025) and the second provided for $125 of notes (Oct. 1, 2025). The WM Notes are convertible into shares of the Company's common stock pursuant to their terms. Closings occurred on the agreement dates. As conditions to closing, the Company agreed to deliver an irrevocable transfer-agent instruction letter and to provide a customary reserve of shares for conversions. The September 22 agreement also provides the Investor the right to designate one director to the Company's board so long as the Investor and its affiliates beneficially own at least 5% of the Company, and it grants certain protective approval rights tied to covenants and event-of-default actions under the notes.

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.

Off-Balance Sheet Arrangements

As of September 30, 2025, we had no off-balance sheet arrangements of any nature.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. Note 2 to our consolidated audited financial statements filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, describes the significant accounting policies and methods used in the preparation of our financial statements.

Recently Issued Accounting Standards

New pronouncements issued but not effective as of September 30, 2025, are not expected to have a material impact on the Company's consolidated financial statements.

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.