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Net Element Reports Third Quarter 2017 Results

North America Transaction Solutions leads in revenue growth; Loss per share narrows significantly vs same period last year

MIAMI, FL -- (Marketwired) -- 11/14/17 -- Net Element, Inc. (NASDAQ: NETE) ("Net Element" or the "Company"), a global financial technology and value-added solutions group that supports electronic payments acceptance in an omni-channel environment spanning across point-of-sale (POS), e-commerce and mobile devices, today reported financial results for the third quarter ended September 30, 2017 and provided an update on recent strategic and operational initiatives.

Third Quarter 2017 Results:

  • Revenues increased to $14.9 million, an increase of 6.4% compared to $14.0 million in the prior year. The increase is primarily due to organic revenue growth in the North America Transaction Solutions segment, which experienced 17.3% growth over the prior year;
  • US accounted for 88% of Revenue, while international revenues were 12%.

Recent Highlights:

  • Net Element ranked as one of the fastest growing companies in North America on Deloitte's 2017 Technology Fast 500™
  • Unified Payments launched web-based, integrated same-day ACH payment processing
  • PayOnline launched payment acceptance for Azimuth Airlines
  • Unified Payments supported Florida SMB merchants affected by Hurricane Irma with the free mobile POS card readers
  • Unified Payments launched Zero-Fee processing program for SMB merchants in the U.S., giving merchants the flexibility to pass through credit card processing costs to their customers
  • PayOnline launched payment acceptance module for Telegram, Viber, Facebook and VK instant messengers
  • PayOnline launched support for electronic commerce in the U.S. as a fully integrated offering that allows merchants to expand their business without limiting the way customers can pay
  • PayOnline added support for iDEAL, the most popular payment system in Netherlands
  • PayOnline expanded payments module to include inSales Platform

"Third quarter was an important period for the Company as we streamlined international operations to build a more profitable and less capital intensive Mobile and Online Solutions business. Additionally, we regained compliance with the Nasdaq continued listing requirements," commented Oleg Firer, CEO of Net Element. "In the United States we continue to grow organically with the focus on value-added solutions."

Conference Call:

The Company will host a conference call to discuss Third Quarter 2017 financial results and business highlights on November 15, 2017 at 8:30 a.m. ET. The conference call can be accessed live over the phone by dialing +1 (877) 303-9858, or for international callers +1 (408) 337-0139, and referencing conference code 4797319. It is recommended that participants dial in approximately 10 minutes prior to the start of the 8:30 a.m. Eastern call.

The call will also be webcast live from https://edge.media-server.com/m6/p/mn6s3mja. Following completion of the call, a recorded replay of the webcast will be available on the www.netelement.com/en/ir website.

Results of Operations for the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016

We reported a net loss attributable to our stockholders of $1,702,536, or $0.90 per share, for the three months ended September 30, 2017 as compared to a net loss attributable to our stockholders of $3,469,540, or $2.47 per share, for the three months ended September 30, 2016. This resulted in a decrease in net loss attributable to stockholders of $1,767,004 primarily due to an increase in revenues, decreases in non-cash compensation and interest expenses, partially offset by an increase in other expenses. Net loss attributable to stockholders for the three months ended September 30, 2016 was also negatively affected by an expense for loss from stock value guarantee related to the PayOnline acquisition.

Eliminating the effects of non-cash compensation and a 2016 stock value guarantee, we reported an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $1,591,259 or $0.84 per share for the three months ended September 30, 2017 as compared to an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $2,736,839 or $1.95 per share for the three months ended September 30, 2016.

Net revenues consist primarily of payment processing fees. Net revenues were $14,901,131 for the three months ended September 30, 2017 as compared to $14,009,652 for the three months ended September 30, 2016. The increase in net revenue is primarily due to an increase to North American Transaction Solutions segment revenue of $1,936,917 (or 17% increase) for the three months ended September 30, 2017 versus the three months ended September 30, 2016. Increases in our North American Transaction Solutions segment revenue were primarily due to continued organic growth of merchants with emphasis on value-added offerings partially offset by some loss of processing revenues resulting from storms primarily affecting merchants processing in Florida and Texas. Our Online Solutions segment revenue increased $180,803 (or 11%), from $1,597,124 for the three months ended September 30, 2016 to $1,777,927 for the three months ended September 30, 2017. Net revenue for the three months ended September 30, 2017 was also negatively affected by a $1,226,241 (or 100%) decrease in revenue in our Mobile Solutions segment, as we experience increased competition, decreased margins and reorganizing assignments of the Mobile Solutions segment to employees at PayOnline and TOT Group Russia.

The following table sets forth our sources of revenues, cost of revenues and gross margins for the three months ended September 30, 2017 and 2016:


Gross Margin Analysis

                              Three              Three
                           Months Ended       Months Ended
                          September 30,      September 30,       Increase /
Source of Revenues             2017     Mix       2016     Mix   (Decrease)
------------------------- ------------- ---  ------------- ---  -----------

  North American
   Transaction Solutions  $  13,123,204  88% $  11,186,287  80% $ 1,936,917
  Mobile Solutions                    -   0%     1,226,241   9%  (1,226,241)
  Online Solutions            1,777,927  12%     1,597,124  11%     180,803
                          ------------- ---  ------------- ---  -----------
    Total                 $  14,901,131 100% $  14,009,652 100% $   891,479
                          ============= ===  ============= ===  ===========

                      Three                  Three
                   Months Ended           Months Ended
                  September 30,   % of   September 30,   % of    Increase /
Cost of Revenues       2017     revenues      2016     revenues  (Decrease)
----------------- ------------- -------- ------------- -------- -----------

  North American
   Transaction
   Solutions      $  11,279,098      86% $   9,585,952      86% $ 1,693,146
  Mobile
   Solutions                  -       0%     1,045,836      85%  (1,045,836)
  Online
   Solutions          1,477,529      83%     1,063,380      67%     414,149
                  ------------- -------  ------------- -------  -----------
    Total         $  12,756,627      86% $  11,695,168      83% $ 1,061,459
                  ============= =======  ============= =======  ===========

                       Three                  Three
                    Months Ended           Months Ended
                   September 30,   % of   September 30,   % of   Increase /
Gross Margin            2017     revenues      2016     revenues (Decrease)
------------------ ------------- -------- ------------- -------- ----------

  North American
   Transaction
   Solutions       $   1,844,106      14% $   1,600,335      14% $  243,771
  Mobile Solutions             -       0%       180,405      15%   (180,405)
  Online Solutions       300,398      17%       533,744      33%   (233,346)
                   ------------- -------  ------------- -------  ----------
    Total          $   2,144,504      14% $   2,314,484      17% $ (169,980)
                   ============= =======  ============= =======  ==========

Cost of revenues represents direct costs of generating revenues, including commissions, mobile operator fees, purchases of short numbers, interchange expense and processing fees. Cost of revenues for the three months ended September 30, 2017 were $12,756,627 as compared to $11,695,168 for the three months ended September 30, 2016. The $1,061,459 increase in cost of revenues was primarily due to a $1,693,145 increase in our North American Transaction Solutions segment due to the corresponding increase in sales volume. There also was a $414,149 increase in cost of revenues resulting from our Online Solutions segment operations primarily due the costs associated with onboarding additional merchants. This was partially offset by a $1,045,836 decrease in our Mobile Solutions segment cost of revenues, which resulted from the corresponding decrease in revenues for our Mobile Solutions segment for the three months ended September 30, 2017.

Gross margin or the three months ended September 30, 2017 was $2,144,504, or 14% of net revenue, as compared to $2,314,484, or 17% of net revenue, for the three months ended September 30, 2016. The $169,980 decrease in gross margin was primarily due to a decrease of $180,405 in Mobile Solutions margin caused by a decrease in business and a $233,346 decrease in Online Solutions offset by $243,771 increase in gross margin in North American Transaction Solutions caused by continued growth of merchants with emphasis on value-added offerings.

Total operating expenses were $3,418,716 for the three months ended September 30, 2017, which consisted of general and administrative expenses of $2,357,729, non-cash compensation expenses of $111,277, provision for bad debts of $319,690, and depreciation and amortization of $630,020. Total operating expenses were $4,083,494 for the three months ended September 30, 2016, which consisted of general and administrative expenses of $2,284,737, non-cash compensation expenses of $732,701, provision for bad debts of $301,170, and depreciation and amortization of $764,886.

The components of our general and administrative expenses are discussed below.

General and administrative expenses for the three months ended September 30, 2017 and 2016 consisted of operating expenses not otherwise delineated in our Condensed Consolidated Statements of Operations and Comprehensive Loss and include salaries and benefits, professional fees, rent, business development, travel expense, filing fees, transaction gains or losses, office expenses, communication expenses, insurance expenses, and other expenses required to run our business, as follows:


Three Months Ended September 30, 2017
                       North
                      America                         Corporate
                    Transaction   Mobile    Online   Expenses &
Category             Solutions  Solutions Solutions Eliminations    Total
------------------- ----------- --------- --------- ------------ ----------
Salaries, benefits,
 taxes and
 contractor
 payments           $   459,412 $ 44,733  $ 213,351 $   539,002  $1,256,498
Professional fees       100,772      (46)   233,836     326,876     661,438
Rent                          -    5,803     39,037      58,410     103,250
Business
 development              6,572       (6)     8,902         222      15,690
Travel expense           21,753    2,897      1,142      20,634      46,426
Filing fees                   -        -          -      12,056      12,056
Transaction (gains)
 losses                       -  (13,327)        54          (3)    (13,276)
Office expenses          67,140      566     21,319      13,005     102,030
Communications
 expenses                 5,507    1,173     29,416      20,211      56,307
Insurance expense             -        -          -      34,853      34,853
Other expenses              349       87      1,619      80,402      82,457
                    ----------- --------  --------- -----------  ----------
  Total             $   661,505 $ 41,880  $ 548,676 $ 1,105,668  $2,357,729
                    =========== ========  ========= ===========  ==========

Three Months Ended September 30, 2016
                       North
                      America                         Corporate
                    Transaction   Mobile    Online   Expenses &
Category             Solutions  Solutions Solutions Eliminations    Total
------------------- ----------- --------- --------- ------------ ----------
Salaries, benefits,
 taxes and
 contractor
 payments           $   414,659 $107,310  $167,802  $   442,497  $1,132,268
Professional fees        89,985   36,874   161,394      384,227     672,480
Rent                          -      942    35,682      116,703     153,327
Business
 development             10,827    4,869    27,752        1,395      44,843
Travel expense           61,700    2,563     5,978       50,466     120,707
Filing fees                   -        -         -       17,789      17,789
Transaction (gains)
 losses                       -  (11,068)     (655)    (141,639)   (153,362)
Office expenses          29,600    8,805    21,534       33,532      93,471
Communications
 expenses                17,392      583    27,065       20,447      65,486
Insurance expense             -        -         -      123,992     123,992
Other expenses            9,755        6     1,350        2,624      13,736
                    ----------- --------  --------  -----------  ----------
  Total             $   633,918 $150,884  $447,902  $ 1,052,034  $2,284,737
                    =========== ========  ========  ===========  ==========

      Variance
-------------------
                       North
                      America                          Corporate
                    Transaction   Mobile     Online    Expenses &
Category             Solutions  Solutions  Solutions Eliminations    Total
------------------- ----------- ---------- --------- ------------- --------
Salaries, benefits,
 taxes and
 contractor
 payments           $   44,753  $ (62,577) $ 45,549  $     96,505  $124,230
Professional fees       10,787    (36,920)   72,442       (57,351)  (11,042)
Rent                         -      4,861     3,355       (58,293)  (50,077)
Business
 development            (4,255)    (4,875)  (18,850)       (1,173)  (29,153)
Travel expense         (39,947)       334    (4,836)      (29,832)  (74,281)
Filing fees                  -          -         -        (5,733)   (5,733)
Transaction (gains)
 losses                      -     (2,259)      709       141,636   140,086
Office expenses         37,540     (8,239)     (215)      (20,527)    8,559
Communications
 expenses              (11,885)       590     2,351          (236)   (9,179)
Insurance expense            -          -         -       (89,139)  (89,139)
Other expenses          (9,406)        81       269        77,778    68,721
                    ----------  ---------  --------  ------------  --------
  Total             $   27,587  $(109,004) $100,774  $     53,634  $ 72,992
                    ==========  =========  ========  ============  ========

Salaries, benefits, taxes and contractor payments were $1,256,498 for the three months ended September 30, 2017 as compared to $1,132,268 for the three months ended September 30, 2016.


                             Salaries and    Salaries and
                              benefits for    benefits for
                               the three       the three
                              months ended    months ended
                             September 30,   September 30,     Increase /
          Segment                 2017            2016         (Decrease)
--------------------------- --------------- --------------- ---------------
North America Transaction
 Solutions                  $       459,412 $       414,659 $        44,753
Mobile Solutions                     44,733         107,310         (62,577)
Online Solutions                    213,351         167,802          45,549
Corporate Expenses &
 Eliminations                       539,002         442,497          96,505
                            --------------- --------------- ---------------
    Total                   $     1,256,498 $     1,132,268 $       124,230
                            =============== =============== ===============

The increase in salaries of $124,230 was due to the North American Transaction Solutions segment and corporate salaries increasing $44,743 and $96,505, respectively, due to an increase in headcount and sales incentives for key employees as the business grows. In addition, an increase in our Online Solutions segment of $45,549 was primarily due to the Ruble exchange rate. These increases were offset by a decrease of $62,577 in our Mobile Solutions segment due to the elimination of headcount as we assigned the current workloads to existing employees of PayOnline and TOT Group Russia.

Professional fees were $661,438 for the three months ended September 30, 2017 as compared to $672,480 for the three months ended September 30, 2016.


Three Months Ended September 30, 2017
                          North
                         America                        Corporate
                       Transaction  Mobile    Online    Expenses &
   Professional Fees    Solutions  Solutions Solutions Eliminations   Total
---------------------- ----------- --------- --------- ------------ --------
General Legal          $       819 $      -  $     185 $      4,305 $  5,309
SEC Compliance Legal
 Fees                            -        -          -       88,564   88,564
Accounting and
 Auditing                        -        -      1,000       97,500   98,500
Tax Compliance and
 Planning                        -        -          -            -        -
Consulting                  99,953      (46)   232,651      136,507  469,065
                       ----------- --------  --------- ------------ --------
    Total              $   100,772 $    (46) $ 233,836 $    326,876 $661,438
                       =========== ========  ========= ============ ========

Three Months Ended September 30, 2016
                          North
                         America                        Corporate
                       Transaction  Mobile    Online    Expenses &
   Professional Fees    Solutions  Solutions Solutions Eliminations   Total
---------------------- ----------- --------- --------- ------------ --------
General Legal          $     5,818 $      56 $     847 $     99,179 $105,900
SEC Compliance Legal
 Fees                            -         -         -       43,750   43,750
Accounting and
 Auditing                        -         -         -      101,732  101,732
Tax Compliance and
 Planning                        -         -         -       33,200   33,200
Consulting                  84,167    36,818   160,547      106,366  387,898
                       ----------- --------- --------- ------------ --------
    Total              $    89,985 $  36,874 $ 161,394 $    384,227 $672,480
                       =========== ========= ========= ============ ========
      Variance
-------------------
                       North
                      America                        Corporate
                    Transaction  Mobile    Online    Expenses &  Increase /
 Professional Fees   Solutions  Solutions Solutions Eliminations (Decrease)
------------------- ----------- --------- --------- ------------ ----------
General Legal       $   (4,999) $    (56) $   (662) $   (94,874) $ (100,591)
SEC Compliance
 Legal Fees                  -         -         -       44,814      44,814
Accounting and
 Auditing                    -         -     1,000       (4,232)     (3,232)
Tax Compliance and
 Planning                    -         -         -      (33,200)    (33,200)
Consulting              15,786   (36,864)   72,104       30,141      81,167
                    ----------  --------  --------  -----------  ----------
    Total           $   10,787  $(36,920) $ 72,442  $   (57,351) $  (11,042)
                    ==========  ========  ========  ===========  ==========

Professional fees decreased by $11,042 mainly due to a decrease in general legal fees because of decreases in litigation and tax compliance fees partially offset by an increases in SEC compliance and consulting fees due to increased public market transactions.

Non-cash compensation expense from share-based compensation was $111,277 for the three months ended September 30, 2017, compared to $732,701 for the three months ended September 30, 2016. The majority of these expenses were for employee and consultant equity incentives for both periods.

We recorded bad debt expense of $319,690 for the three months ended September 30, 2017 as compared to $301,170 for the three months ended September 30, 2016. For the three months ended September 30, 2017, we recorded a loss which was primarily comprised of $227,281 in ACH rejects and a $92,409 provision from our Russian operations. Of the $678,143 of gross ACH rejects, $111,174 were passed through to independent sales organizations via a reduction in commissions. For the three months ended September 30, 2016, we recorded a loss which was primarily comprised of $301,132 in net ACH rejects. Of the $301,132 of net ACH rejects, $117,794 were passed through to independent sales organizations via a reduction in commissions.

Depreciation and amortization expense consists primarily of the amortization of merchant portfolios plus depreciation expense on fixed assets, client acquisition costs, capitalized software expenses, trademarks, domain names and employee non-compete agreements. Depreciation and amortization expense was $630,020 for the three months ended September 30, 2017 as compared to $764,886 for the three months ended September 30, 2016. The decrease was due to the full amortization of certain software and merchant portfolio assets during 2016.

Interest expense was $302,813 for the three months ended September 30, 2017 as compared to $608,716 for three months ended September 30, 2016, representing a decrease of $305,904 due to lower balances as follows:


                             Three months    Three months
                                 ended           ended
                             September 30,   September 30,     Increase /
       Funding Source             2017            2016         (Decrease)
--------------------------- --------------- --------------- ---------------
MBF Notes                   $        15,277 $        11,356 $         3,921
RBL Notes                           195,736         510,655        (314,919)
Priority Payments Note               65,630               -          65,630
Other                                26,170          86,705         (60,537)
                            --------------- --------------- ---------------
    Total                   $       302,813 $       608,716 $      (305,904)
                            =============== =============== ===============

Other interest expense for the three months ended September 30, 2017 consisted of $10,407 resulting from the promissory note entered into on March 1, 2017 with Star Equities, LLC (See Note 12. Related Party Transactions) and $17,762 related to the PayOnline acquisition. During the three months ended September 30, 2016, other interest expense primarily consisted of $76,289 related to the PayOnline acquisition. The primary reason for the decrease was due to less Crede stock exchange paydowns on RBL debt during the three months ended September 30, 2017, which resulted in increased RBL interest expense during 2016.

Other expenses for the three months ended September 30, 2017 consists primarily of a $94,267 of expenses attributed to our Mobile Solutions division.

The net income attributable to non-controlling interests amounted to $32,607 for three months ended September 30, 2017 as compared to the net loss of $33,683 for the three months ended September 30, 2016. The $66,290 decrease was caused by an adjustment to commission expense for prior quarters recorded during the three months ended September 30, 2017.

Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

We reported a net loss attributable to stockholders of $5,830,373, or $3.29 per share, for the nine months ended September 30, 2017 as compared to a net loss attributable to stockholders of $10,663,708, or $8.65 per share, for the nine months ended September 30, 2016. This resulted in a decrease in net loss attributable to stockholders of $4,833,335 primarily due to an increase in revenues and a decrease in the loss from stock value guarantee, a decrease in noncash compensation expense, and a decrease in other income offset by an increase in general and administrative expenses.

Eliminating the effects of non-cash compensation in both years and a 2016 stock value guarantee, we reported an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $4,994,154 or $2.82 per share for the nine months ended September 30, 2017 as compared to an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $5,392,573 or $4.73 per share for the nine months ended September 30, 2016.

Net revenues consist primarily of payment processing fees. Net revenues were $44,604,113 for the nine months ended September 30, 2017 as compared to $38,963,559 for the nine months ended September 30, 2016. The increase in net revenue is primarily due to organic growth of merchants in our North American Transaction Solutions segment which resulted in an increase to North American Transaction Solutions segment revenue of $8,258,268 (or 28% increase) for the nine months ended September 30, 2017 versus the nine months ended September 30, 2016. Increases in our North American Transaction Solutions segment revenue were primarily due to continued growth of merchants with emphasis on value-added offerings. Our Online Solutions segment revenue increased $1,006,578 (or 22%), from $4,521,239 for the nine months ended September 30, 2016 to $5,527,817 for the nine months ended September 30, 2017, primarily due to the onboarding of additional merchants. The increases in North American Transaction Solutions and Online Solutions segments were offset by a $3,624,292 (or 72%) decrease in our Mobile Solutions segment, as we have eliminated staff and assigned current responsibilities to team members at PayOnline and TOT Group Russia.

The following table sets forth our sources of revenues, cost of revenues and gross margins for the nine months ended September 30, 2017 and 2016:


Gross Margin Analysis

                             Nine                Nine
                         Months Ended        Months Ended
                         September 30,       September 30,       Increase /
Source of Revenues           2017      Mix       2016      Mix   (Decrease)
-------------------------------------- ---  -------------- ---  -----------

  North American
   Transaction
   Solutions            $   37,701,136  85% $   29,442,868  76% $ 8,258,268
  Mobile Solutions           1,375,160   3%      4,999,452  13%  (3,624,292)
  Online Solutions           5,527,817  12%      4,521,239  12%   1,006,578
                        -------------- ---  -------------- ---  -----------
    Total               $   44,604,113 100% $   38,963,559 100% $ 5,640,554
                        ============== ===  ============== ===  ===========

                     Nine                    Nine
                 Months Ended            Months Ended
                 September 30,   % of    September 30,   % of    Increase /
Cost of
 Revenues            2017      revenues      2016      revenues  (Decrease)
------------------------------ -------- -------------- -------- -----------

  North
   American
   Transaction
   Solutions    $   32,213,056      85% $   25,206,769      86% $ 7,006,287
  Mobile
   Solutions         1,319,704      96%      4,427,043      89%  (3,107,339)
  Online
   Solutions         4,002,251      72%      2,931,390      65%   1,070,861
                -------------- -------  -------------- -------  -----------
    Total       $   37,535,011      84% $   32,565,202      84% $ 4,969,809
                ============== =======  ============== =======  ===========

                      Nine                    Nine
                  Months Ended            Months Ended
                  September 30,   % of    September 30,   % of   Increase /
Gross Margin          2017      revenues      2016      revenues (Decrease)
------------------------------- -------- -------------- -------- ----------

  North American
   Transaction
   Solutions     $    5,488,080      15% $    4,236,099      14% $1,251,981
  Mobile
   Solutions             55,456       4%        572,409      11%   (516,953)
  Online
   Solutions          1,525,566      28%      1,589,849      35%    (64,283)
                 -------------- -------  -------------- -------  ----------
    Total        $    7,069,102      16% $    6,398,357      16% $  670,745
                 ============== =======  ============== =======  ==========

Cost of revenues represents direct costs of generating revenues, including commissions, mobile operator fees, purchases of short numbers, interchange expense and processing fees. Cost of revenues for the nine months ended September 30, 2017 were $37,535,011 as compared to $32,565,202 for the nine months ended September 30, 2016. The increase in cost of revenues was primarily due to a $7,006,287 increase in our North American Transaction Solutions segment due to the corresponding increase in sales volume. There was also a $1,070,861 increase in cost of revenues resulting from our Online Solutions segment operations also primarily due to with boarding additional merchants. This was offset by a $3,107,339 decrease in our Mobile Solutions segment cost of revenues, which resulted from the corresponding decrease in sales for our Mobile Solutions segment for the nine months ended September 30, 2017.

Gross margin for the nine months ended September 30, 2017 was $7,069,102, or 16% of net revenue, as compared to $6,398,357, or 16% of net revenue, for the nine months ended September 30, 2016. The $670,745 increase in gross margin was primarily due to the increased sales volume of processing and business mix in our North American Transaction Solutions offset by a decrease of $516,953 in our Mobile Solutions margin caused from a decrease in business.

Total operating expenses were $11,949,998 for the nine months ended September 30, 2017, which consisted of general and administrative expenses of $7,788,068, non-cash compensation expenses of $836,218, provision for bad debts of $1,465,311, and depreciation and amortization of $1,860,401. Total operating expenses were $12,656,323 for the nine months ended September 30, 2016, which consisted of general and administrative expenses of $6,372,361, non-cash compensation expenses of $3,108,274, provision for bad debts of $678,150, and depreciation and amortization of $2,497,538.

The components of our general and administrative expenses are discussed below.

General and administrative expenses for the nine months ended September 30, 2017 and 2016 consisted of operating expenses not otherwise delineated in our Consolidated Statements of Operations and Comprehensive Loss and include salaries and benefits, professional fees, rent, business development, travel expense, filing fees, transaction gains, office expenses, communication expense, insurance expense, and other expenses required to run our business, as follows:


Nine Months Ended September 30, 2017
                    North
                   America                           Corporate
                 Transaction  Mobile      Online     Expenses &
Category          Solutions  Solutions   Solutions  Eliminations    Total
---------------- ----------- ---------  ----------  ------------ ----------
Salaries,
 benefits, taxes
 and contractor
 payments        $ 1,404,162 $ 295,068  $  670,056  $  1,927,741 $4,297,027
Professional
 fees                351,736    44,793     717,713       881,613  1,995,855
Rent                       -    33,092     119,129       240,172    392,393
Business
 development           9,381       971      26,689         2,718     39,759
Travel expense       133,901     9,723       6,479       111,551    261,654
Filing fees                -         -           -        26,990     26,990
Transaction
 (gains) losses          742   (30,423)     (6,138)        3,031    (32,788)
Office expenses      165,742     6,591      62,830       104,506    339,669
Communications
 expenses             28,894     3,368      88,987        60,373    181,622
Insurance
 expense                   -         -           -       111,194    111,194
Other expenses         3,563        87       4,895       166,148    174,693
                 ----------- ---------  ----------  ------------ ----------
  Total          $ 2,098,121 $ 363,270  $1,690,640  $  3,636,037 $7,788,068
                 =========== =========  ==========  ============ ==========

Nine Months Ended September 30, 2016
                    North
                   America                          Corporate
                 Transaction  Mobile      Online    Expenses &
Category          Solutions  Solutions   Solutions Eliminations     Total
---------------- ----------- ---------  ---------- ------------  ----------
Salaries,
 benefits, taxes
 and contractor
 payments        $ 1,223,240 $ 343,247  $  423,238 $  1,498,541  $3,488,266
Professional
 fees                372,492    39,422     462,650      999,627   1,874,191
Rent                       -     3,260     104,056      317,317     424,633
Business
 development          31,784     4,869      92,544        6,043     135,240
Travel expense       152,795     9,657      15,964       88,368     266,784
Filing fees                -         -           -       77,185      77,185
Transaction
 (gains) losses            -  (394,880)     38,449     (115,797)   (472,228)
Office expenses       76,347    13,779      47,619       84,971     222,716
Communications
 expenses             64,369     1,639      42,742       69,756     178,506
Insurance
 expense                   -        87           -      129,776     129,863
Other expenses           269       152       1,615       45,169      47,205
                 ----------- ---------  ---------- ------------  ----------
  Total          $ 1,921,296 $  21,232  $1,228,877 $  3,200,956  $6,372,361
                 =========== =========  ========== ============  ==========

      Variance
-------------------
                       North
                      America                        Corporate
                    Transaction  Mobile    Online    Expenses &
Category             Solutions  Solutions Solutions Eliminations    Total
------------------- ----------- --------- --------- ------------ ----------
Salaries, benefits,
 taxes and
 contractor
 payments           $  180,922  $(48,179) $246,818  $   429,200  $  808,761
Professional fees      (20,756)    5,371   255,063     (118,014)    121,664
Rent                         -    29,832    15,073      (77,145)    (32,240)
Business
 development           (22,403)   (3,898)  (65,855)      (3,325)    (95,481)
Travel expense         (18,894)       66    (9,485)      23,183      (5,130)
Filing fees                  -         -         -      (50,195)    (50,195)
Transaction (gains)
 losses                    742   364,457   (44,587)     118,828     439,440
Office expenses         89,395    (7,188)   15,211       19,535     116,953
Communications
 expenses              (35,475)    1,729    46,245       (9,383)      3,116
Insurance expense            -       (87)        -      (18,582)    (18,669)
Other expenses           3,294       (65)    3,280      120,979     127,488
                    ----------  --------  --------  -----------  ----------
  Total             $  176,825  $342,038  $461,763  $   435,081  $1,415,707
                    ==========  ========  ========  ===========  ==========

Salaries, benefits, taxes and contractor payments were $4,297,027 for the nine months ended September 30, 2017 as compared to $3,488,266 for the nine months ended September 30, 2016.


                             Salaries and    Salaries and
                              benefits for    benefits for
                                  the             the
                              nine months     nine months
                                 ended           ended
                               September       September      Increase /
          Segment               30, 2017        30, 2016       (Decrease)
--------------------------- --------------- --------------- ---------------
North America Transaction
 Solutions                  $     1,404,162 $     1,223,240 $       180,922
Mobile Solutions                    295,068         343,247         (48,179)
Online Solutions                    670,056         423,238         246,818
Corporate Expenses &
 Eliminations                     1,927,741       1,498,541         429,200
                            --------------- --------------- ---------------
    Total                   $     4,297,027 $     3,488,266 $       808,761
                            =============== =============== ===============

The increase in salaries of $808,761 was due primarily to the increase of corporate expenses for a $300,000 discretionary bonus payable to our CEO and approved by the Board of directors. The bonus is payable when cash flow of the business can support the payment. Additionally, North American Transaction Solutions segment salaries increased $180,922 due to an increase in headcount and sales incentives for key employees. There was also an increase of $246,818 in our Online Solutions segment which were primarily due to increasing payroll and consulting on PayOnline and the Ruble exchange rate. This was offset by a decrease in Mobile Solutions segment of $48,179 due to reducing headcount in response to the continued decrease in sales and reorganizing the business and responsibilities.

Professional fees were $1,995,855 for the nine months ended September 30, 2017 as compared to $1,874,191 for the nine months ended September 30, 2016.


Nine Months Ended September 30, 2017
                        North
                       America                        Corporate
                     Transaction  Mobile    Online    Expenses &
  Professional Fees   Solutions  Solutions Solutions Eliminations    Total
-------------------- ----------- --------- --------- ------------ ----------
General Legal        $    23,418 $       - $   4,142 $     62,533 $   90,093
SEC Compliance Legal
 Fees                          -         -         -      191,349    191,349
Accounting and
 Auditing                      -         -    15,433      307,782    323,215
Tax Compliance and
 Planning                      -         -         -       15,400     15,400
Consulting               328,318    44,793   698,138      304,549  1,375,798
                     ----------- --------- --------- ------------ ----------
    Total            $   351,736 $  44,793 $ 717,713 $    881,613 $1,995,855
                     =========== ========= ========= ============ ==========

Nine Months Ended September 30, 2016
                        North
                       America                        Corporate
                     Transaction  Mobile    Online    Expenses &
  Professional Fees   Solutions  Solutions Solutions Eliminations    Total
-------------------- ----------- --------- --------- ------------ ----------
General Legal        $    39,215 $     268 $   3,867 $    168,039 $  211,389
SEC Compliance Legal
 Fees                          -         -                131,250    131,250
Accounting and
 Auditing                      -         -       578      326,132    326,710
Tax Compliance and
 Planning                      -         -         -       44,200     44,200
Consulting               273,277    39,154   458,205      390,006  1,160,642
                     ----------- --------- --------- ------------ ----------
    Total            $   312,492 $  39,422 $ 462,650 $  1,059,627 $1,874,191
                     =========== ========= ========= ============ ==========

      Variance
-------------------
                       North
                      America                        Corporate
                    Transaction  Mobile    Online    Expenses &  Increase /
 Professional Fees   Solutions  Solutions Solutions Eliminations (Decrease)
------------------- ----------- --------- --------- ------------ ----------
General Legal       $  (15,797) $   (268) $     275 $  (105,506) $ (121,296)
SEC Compliance
 Legal Fees                  -         -          -      60,099      60,099
Accounting and
 Auditing                    -         -     14,855     (18,350)     (3,495)
Tax Compliance and
 Planning                    -         -          -     (28,800)    (28,800)
Consulting              55,041     5,639    239,933     (85,457)    215,156
                    ----------  --------  --------- -----------  ----------
    Total           $   39,244  $  5,371  $ 255,063 $  (178,014) $  121,664
                    ==========  ========  ========= ===========  ==========

Professional fees increased by $121,664 primarily due to an increase in Online Solutions segment's consulting fees of $239,933 and $60,099 in corporate's SEC compliance fees primarily offset by a decrease in general legal corporate expenses of $105,506 and a $85,457 decrease in corporate consulting expenses.

Non-cash compensation expense from share-based compensation was $836,218 for the nine months ended September 30, 2017, compared to $3,108,274 for the nine months ended September 30, 2016. The majority of these expenses were for employee and consultant incentives in both periods.

We recorded bad debt expense of $1,465,311 for the nine months ended September 30, 2017 as compared to $678,150 for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, we recorded a loss which was primarily comprised of $1,185,804 in net ACH rejects and a $279,508 provision from our Russian operations. Of the $1,185,804 of net ACH rejects, $781,923 were passed through to independent sales organizations that board their merchants with us. For the nine months ended September 30, 2016, we recorded a loss which was primarily comprised of $710,508 in net ACH rejects offset by a $32,358 recovery from our Russian operations. Of the $678,150 of net ACH rejects, $286,128 were passed through as a reduction to commissions to independent sales organizations that board their merchants with us.

Depreciation and amortization expense consists primarily of the amortization of merchant portfolios plus depreciation expense on fixed assets, client acquisition costs, capitalized software expenses, trademarks, domain names and employee non-compete agreements. Depreciation and amortization expense was $1,860,401 for the nine months ended September 30, 2017 as compared to $2,497,538 for the nine months ended September 30, 2016.

Interest expense was $894,553 for the nine months ended September 30, 2017 as compared to $1,186,207 for nine months ended September 30, 2016, representing a decrease of $291,655 as follows:


                              Nine months     Nine months
                                 ended           ended
                             September 30,   September 30,     Increase /
       Funding Source             2017            2016         (Decrease)
--------------------------- --------------- --------------- ---------------
MBF Notes                   $        49,606 $        39,806 $         9,800
RBL Notes                           572,231       1,066,227        (493,996)
Priority Payments Note               90,378               -          90,378
Other                               182,338          80,174         102,164
                            --------------- --------------- ---------------
    Total                   $       894,552 $     1,186,207 $      (291,655)
                            =============== =============== ===============

Other interest expense primarily consisted of $84,199 resulting from the promissory note entered into on March 1, 2017 with Star Equities, LLC (see Note 12. Related Party Transactions) and $98,139 related to the PayOnline acquisition. During the nine months ended September 30, 2016, other interest consisted primarily of $76,289 related to the PayOnline acquisition. The primary reason for the decrease was due to less Crede stock paydowns on RBL debt during nine months ended 2017, which resulted in increased RBL interest expense during 2016.

Other expenses for the nine months ended September 30, 2017, consisted of $98,721 attributed to our Mobile Solutions Division, by $48,481 in from our North American Transaction Solutions segment and $9,128 of expenses from corporate, offset by $5,359 in other income from our Online Solutions segment.

The net income attributable to non-controlling interests amounted to $93,175 for nine months ended September 30, 2017 as compared to $110,350 for the nine months ended September 30, 2016. The decrease was caused by an adjustment to commission expense for prior quarters recorded during the three months ended September 30, 2017.

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

To supplement its consolidated financial statements presented in accordance with United States generally accepted accounting principles ("GAAP"), the Company provides additional measures of its operating results by disclosing its adjusted net loss. Adjusted net loss is calculated as net loss excluding non-cash share based compensation and other non-operating, non-recurring items. Net Element discloses this amount on an aggregate and per share basis. These measures meet the definition of non-GAAP financial measures. The Company believes that application of these non-GAAP financial measures is appropriate to enhance the understanding of its historical performance through use of a metric that seeks to normalize period-to-period earnings.

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three and nine months ended September 30, 2017 and 2016 is presented in the following Non-GAAP Financial Measures Table.


                                                        Loss
                                                         from
                                                        Stock
                                         Share-based    Value    Adjusted
                               GAAP      Compensation Guarantee   Non-GAAP
                           -----------  ------------- --------- -----------
Three Months Ended
 September 30, 2017
  Net (loss) income
   attributable to Net
   Element Inc.
   stockholders            $(1,702,536) $     111,277 $       - $(1,591,259)
  Basic and diluted
   earnings per share      $     (0.90) $        0.06 $       - $     (0.84)
  Basic and diluted shares
   used in computing
   earnings per share        1,891,023                            1,891,023

                                                        Loss
                                                         from
                                                        Stock
                                         Share-based    Value    Adjusted
                               GAAP      Compensation Guarantee   Non-GAAP
                           -----------  ------------- --------- -----------
Three Months Ended
 September 30, 2016
  Net (loss) income
   attributable to Net
   Element Inc.
   stockholders            $(3,469,540) $     732,701 $       - $(2,736,839)
  Basic and diluted
   earnings per share      $     (2.47) $        0.52 $       - $     (1.95)
  Basic and diluted shares
   used in computing
   earnings per share        1,403,020                            1,403,020

                                                        Loss
                                                         from
                                                        Stock
                                         Share-based    Value    Adjusted
                               GAAP      Compensation Guarantee   Non-GAAP
                           -----------  ------------- --------- -----------
Nine Months Ended
 September 30, 2017
  Net (loss) income
   attributable to Net
   Element Inc.
   stockholders            $(5,830,372) $     836,218 $       - $(4,994,154)
  Basic and diluted
   earnings per share      $     (3.29) $        0.47 $       - $     (2.82)
  Basic and diluted shares
   used in computing
   earnings per share        1,770,947                            1,770,947

                                                        Loss
                                         Non-Cash    from Stock
                                        Share-based     Value    Adjusted
                             GAAP       Compensation  Guarantee   Non-GAAP
                        -------------  ------------- ---------- -----------
Nine Months Ended
 September 30, 2016
  Net (loss) income
   attributable to Net
   Element Inc. common
   stockholders         $ (10,663,708) $   3,108,274 $2,162,861 $(5,392,573)
  Basic and diluted
   earnings per share   $       (8.65) $        2.52 $     1.75 $     (4.37)
  Basic and diluted
   shares used in
   computing earnings
   per share                1,232,593                             1,232,593

Additional information regarding Net Element's results for its third quarter ended September 30, 2017 may be found in Net Element's quarterly report on Form 10-Q, which was filed with the Security and Exchange Commission (SEC) on November 14, 2017 and may be obtained from the SEC's Internet website at http://www.sec.gov.

About Net Element
Net Element, Inc. (NASDAQ: NETE) operates a payments-as-a-service transactional and value-added services platform for small to medium enterprise ("SME") in the U.S. and selected emerging markets. In the U.S. it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant and retail point-of-sale solution Aptito. Internationally, Net Element's strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions. Net Element was ranked as one of the fastest growing companies in North America on Deloitte's 2017 Technology Fast 500™ and South Florida Business Journal's 2016 fastest growing technology companies. Further information is available at www.netelement.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as "continue," "will," "may," "could," "should," "expect," "expected," "plans," "intend," "anticipate," "believe," "estimate," "predict," "potential," and similar expressions are intended to identify such forward-looking statements. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Net Element and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) Net Element's ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (ii) Net Element's ability to maintain existing, and secure additional, contracts with users of its payment processing services; (iii) Net Element's ability to successfully expand in existing markets and enter new markets; (iv) Net Element's ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (v) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vi) the ability to attract and retain qualified employees and key personnel; (vii) adverse effects of increased competition on Net Element's business; (viii) changes in government licensing and regulation that may adversely affect Net Element's business; (ix) the risk that changes in consumer behavior could adversely affect Net Element's business; (x) Net Element's ability to protect its intellectual property; (xi) local, industry and general business and economic conditions; (xii) adverse effects of potentially deteriorating U.S.-Russia relations, including, without limitation, over a conflict related to Ukraine, including a risk of further U.S. government sanctions or other legal restrictions on U.S. businesses doing business in Russia. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed by Net Element with the Securities and Exchange Commission. Net Element anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. Net Element assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.


NET ELEMENT, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                               September 30,   December 31,
                                                    2017           2016
                                               -------------  -------------
ASSETS
Current assets:
  Cash                                         $     922,102  $     621,635
  Accounts receivable, net                         4,446,358      7,126,429
  Prepaid expenses and other assets                1,658,200      1,467,897
                                               -------------  -------------
    Total current assets, net                      7,026,660      9,215,961
Fixed assets, net                                     64,381        117,295
Intangible assets, net                             3,242,889      3,589,850
Goodwill                                           9,643,752      9,643,752
Other long term assets                               456,948        603,209
                                               -------------  -------------
    Total assets                                  20,434,630     23,170,067
                                               =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                 6,067,319      7,510,113
  Accrued expenses                                 3,419,879      5,518,823
  Deferred revenue                                 1,196,743      1,355,972
  Notes payable (current portion)                    503,041        808,976
  Due to related parties                             376,593        299,004
                                               -------------  -------------
    Total current liabilities                     11,563,575     15,492,888
  Notes payable (net of current portion)           6,887,382      3,615,782
                                               -------------  -------------
    Total liabilities                             18,450,957     19,108,670
                                               -------------  -------------

STOCKHOLDERS' EQUITY
  Series A Convertible Preferred stock ($.0001
   par value, 1,000,000 shares authorized, no
   shares issued and outstanding at September
   30, 2017 and December 31, 2016)                         -              -
  Common stock ($.0001 par value, 100,000,000
   shares authorized and 2,141,208 and
   1,535,349 shares issued and outstanding at
   September 30, 2017 and December 31, 2016            2,142          1,535
  Paid in capital                                167,805,711    163,918,685
  Accumulated other comprehensive loss            (2,528,424)    (2,486,616)
  Accumulated deficit                           (163,272,959)  (157,442,585)
  Noncontrolling interest                            (22,797)        70,378
                                               -------------  -------------
    Total stockholders' equity                     1,983,673      4,061,397
                                               -------------  -------------
      Total liabilities and stockholders'
       equity                                  $  20,434,630  $  23,170,067
                                               =============  =============

NET ELEMENT, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

                           Three Months Ended         Nine Months Ended
                              September 30               September 30
                        ------------------------  -------------------------
                            2017         2016         2017         2016
                        -----------  -----------  -----------  ------------

Net revenues
  Service fees          $14,901,131  $12,874,386  $43,263,217  $ 34,355,912
  Branded content                 -    1,135,266    1,340,896     4,607,647
                        -----------  -----------  -----------  ------------
Total Revenues           14,901,131   14,009,652   44,604,113    38,963,559

Costs and expenses:
  Cost of service fees   12,756,627   10,683,897   36,232,170    28,285,984
  Cost of branded
   content                        -    1,011,271    1,302,841     4,279,218
  General and
   administrative         2,357,729    2,284,737    7,788,068     6,372,361
  Non-cash compensation     111,277      732,701      836,218     3,108,274
  Bad debt expense          319,690      301,170    1,465,311       678,150
  Depreciation and
   amortization             630,020      764,886    1,860,401     2,497,538
                        -----------  -----------  -----------  ------------
Total costs and
 operating expenses      16,175,343   15,778,662   49,485,009    45,221,525
                        -----------  -----------  -----------  ------------
Loss from operations     (1,274,212)  (1,769,010)  (4,880,896)   (6,257,966)
  Interest expense, net    (302,813)    (608,716)    (894,553)   (1,186,207)
  Loss from stock value
   guarantee                      -   (1,559,281)           -    (3,722,142)
  Other income
   (expense)                (92,904)     433,784     (148,099)      392,257
                        -----------  -----------  -----------  ------------
Net loss before income
 taxes                   (1,669,929)  (3,503,223)  (5,923,548)  (10,774,058)
  Income taxes                    -            -            -             -
                        -----------  -----------  -----------  ------------
Net loss                 (1,669,929)  (3,503,223)  (5,923,548)  (10,774,058)
  Net (income) loss
   attributable to the
   noncontrolling
   interest                 (32,607)      33,683       93,175       110,350
                        -----------  -----------  -----------  ------------
Net loss attributable
 to Net Element, Inc.
 stockholders            (1,702,536)  (3,469,540)  (5,830,373)  (10,663,708)
  Foreign currency
   translation gain
   (loss)                    92,191      (96,786)     (41,809)     (622,568)
                        -----------  -----------  -----------  ------------
Comprehensive loss
 attributable to common
 stockholders           $(1,610,345) $(3,566,326) $(5,872,182) $(11,286,276)
                        ===========  ===========  ===========  ============

Loss per share - basic
 and diluted            $     (0.90) $     (2.47) $     (3.29) $      (8.65)

Weighted average number
 of common shares
 outstanding - basic
 and diluted              1,891,023    1,403,020    1,770,947     1,232,593
                        -----------  -----------  -----------  ------------

NET ELEMENT, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                Nine Months Ended September
                                                            30,
                                               ----------------------------
                                                    2017           2016
                                               -------------  -------------
Cash flows from operating activities
Net loss                                       $  (5,923,548) $ (10,663,708)
Adjustments to reconcile net loss to net cash
 (used in) provided by operating activities
    Non controlling interest                         (93,175)      (110,350)
    Share based compensation                         836,218      3,108,274
    Deferred revenue                                (159,228)       135,003
    Depreciation and amortization                  1,860,401      2,497,538
    Non cash interest                                 98,774        741,857
Changes in assets and liabilities
    Accounts receivable                            3,514,440       (610,384)
    Prepaid expenses and other assets               (352,551)      (331,498)
    Accounts payable and accrued expenses         (2,390,495)     4,165,778
                                               -------------  -------------
    Net cash used in operating activities         (2,609,164)    (1,067,490)
                                               -------------  -------------

Cash flows from investing activities

  Client acquisition costs                        (1,380,661)    (1,346,718)
  Receipt of excess reserves and ( purchase)
   of fixed and other assets                          77,430              -
                                               -------------  -------------
    Net cash used in investing activities         (1,303,231)    (1,346,718)
                                               -------------  -------------

  Proceeds from common stock                       1,150,098              -
  Proceeds from indebtedness                       3,239,033      2,668,500
  Repayment of indebtedness                         (273,360)      (110,434)
  Related party advances                              77,587        117,779
                                               -------------  -------------
  Net cash provided by financing activities        4,193,358      2,675,845
                                               -------------  -------------

  Effect of exchange rate changes on cash             19,504         97,902
                                               -------------  -------------
  Net (decrease) increase in cash                    300,467        359,539

  Cash at beginning of period                        621,635      1,025,747
                                               -------------  -------------
  Cash at end of period                        $     922,102  $   1,385,286
                                               =============  =============

Supplemental disclosure of cash flow
 information
  Cash paid during the period for:
    Interest                                   $     795,779  $     461,673
                                               =============  =============
    Taxes                                      $      86,942  $      94,718
                                               =============  =============
  Share issuance for settlement of unpaid
   compensation                                $           -  $   1,042,509
                                               =============  =============
  Shares issued for redemption of indebtedness $     363,986  $   2,328,351
                                               =============  =============
  Shares issued in settlement of advances from
   board member                                $           -  $     909,285
                                               =============  =============

Contact:
Net Element, Inc.
media@netelement.com
+1 (786) 923-0502

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With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
The dynamic nature of the cloud means that change is a constant when it comes to modern cloud-based infrastructure. Delivering modern applications to end users, therefore, is a constantly shifting challenge. Delivery automation helps IT Ops teams ensure that apps are providing an optimal end user experience over hybrid-cloud and multi-cloud environments, no matter what the current state of the infrastructure is. To employ a delivery automation strategy that reflects your business rules, making r...
The 22nd International Cloud Expo | 1st DXWorld Expo has announced that its Call for Papers is open. Cloud Expo | DXWorld Expo, to be held June 5-7, 2018, at the Javits Center in New York, NY, brings together Cloud Computing, Digital Transformation, Big Data, Internet of Things, DevOps, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...