Cuentas(CUEN) - 2020 Q4 - Annual Report

Revenue and Expenses - Revenue for the year ended December 31, 2020, totaled $558,000, a decrease of 42.3% from $967,000 in 2019, attributed to a diminishing telecom business[208] - Cost of revenues for the year ended December 31, 2020, was $697,000, down from $808,000 in 2019, with $158,000 related to the sale of the GPR Card[209] - Operating expenses increased significantly to $7,640,000 in 2020 from $2,305,000 in 2019, primarily due to higher amortization expenses and officer compensation[211] - The company incurred a net loss of $8,101,000 for the year ended December 31, 2020, compared to a net loss of $1,320,000 in 2019[213] Assets and Liabilities - As of December 31, 2020, the company had total current assets of $296,000 and total current liabilities of $6,480,000, resulting in a working capital deficit of $6,184,000[215] - Net cash used in operating activities was $1,738,000 for the year ended December 31, 2020, compared to $1,315,000 in 2019[218] - Net cash provided by financing activities was approximately $1,949,000 in 2020, an increase from approximately $1,177,000 in 2019[219] Business Focus and Strategy - The company has focused on developing fintech products and services, beginning to generate sales in the third quarter of 2020[208] - The company aims to provide affordable and secure financial services to underbanked and unbanked individuals globally[203] - The company operates in a rapidly evolving regulatory environment, emphasizing compliance with laws related to payments and consumer protection[204] Financing and Capital Structure - The company issued a convertible promissory note of $250,000 with a 10.00% annual interest rate, maturing on November 12, 2021, convertible at $2.75 per share[222] - On February 4, 2021, the company sold 2,790,697 units at $4.30 per unit, generating gross proceeds of approximately $12.0 million before expenses[223] - The total expenses of the offering were approximately $1.4 million, including underwriting discounts and commissions of 8%[223] - The company granted the underwriter a 45-day option to purchase up to 418,604 additional shares to cover over-allotments in connection with the offering[223] Regulatory and Accounting Matters - The company is currently evaluating the impact of ASU 2020-06, effective for fiscal years beginning after December 15, 2023, which simplifies accounting for convertible instruments[253] - The company adopted new credit loss guidance effective January 1, 2020, with no material impact on its consolidated financial statements[249] - The company is currently classified as a smaller reporting company, thus the quantitative and qualitative disclosures about market risk are not applicable[255] Dividends and Inflation - The company has no immediate plans to issue dividends and has historically not paid dividends[245] - The company does not expect inflation to significantly impact its operations[228] Stock Options and Compensation - The company recognizes compensation expenses for stock options based on estimated fair values, using the Black-Scholes options pricing model[245] - The company has no off-balance sheet arrangements and does not anticipate entering into any such arrangements in the foreseeable future[227]