Exhibit 99.1

 

Net Element Reports First Quarter 2017 Results

 

Revenues grow 20% year over year, strategic integrations and value-added services yield expansion into new markets

 

MIAMI, FL – May 15, 2017 - Net Element, Inc. (NASDAQ: NETE) (“Net Element” or the “Company”), a global financial technology and value-added solutions group that supports companies in accepting electronic payments in an omni-channel environment that spans across point-of-sale (POS), e-commerce and mobile devices, today reported financial results for the first quarter ended March 31, 2017 and provided an update on recent strategic and operational initiatives.

 

For three months ended March 31, 2017, net revenues increased 20% to $13,561,941 as compared to $11,261,059 in the prior year. The $2,300,882 increase in net revenues is primarily due to organic growth in our North America Transaction Solutions segment, which demonstrated net revenues increase of 40% as compared to the prior year:

 

·

North America Transaction Solutions segment: Continued organic growth of SMB merchants in this segment with emphasis on value-added offerings. Revenues for this segment continue to lead the growth for three months ended March 31, 2017 were $10,964,919, a 40% increase over the prior year.

·

Online Solutions segment: Continued organic growth in global online payment acceptance services with emphasis on value-added offerings. Revenues for this segment for three months ended March 31, 2017 were $1,740,029, a 23% increase over the prior year.

·

Mobile Solutions segment: Revenues for this segment were $856,993, a 57% decrease over the prior year. We continue to explore financing options for this business as well as expansion to markets that do not require us to advance capital to content providers prior to getting paid from mobile network operators.

 

Recent Highlights:

 

●

Unified Payments launched Multi Currency Processing (MCP) to allow online merchants to price their goods and services in over 90 local currencies and expand their global reach

●

Digital Provider expanded its Direct Carrier Billing (DCB) services to Poland and Turkey integrating its proprietary Trinity Platform with all major operators in the region such as T-Mobile and Orange, allowing access to 113.5 million mobile users in these markets

●

Unified Payments announced comprehensive Point-of-Sale (POS) program during its 2017 launch series at the annual Northeast Acquirers Association (NEAA) conference in Boston, Massachusetts

●

PayOnline launched Apple Pay support in Russia

	●	Unified Payments launched payment acceptance for ReservHotel, a leading provider of travel distribution and booking solutions for hotels worldwide
	●	Digital Provider announced partnership programs targeting content providers, mobile network operators and mobile application developers at GSMA Mobile World Congress 2017 in Barcelona, Spain
	●	PayOnline launched Instant Credit, an innovative microcredit solution available to online consumers that can help increase conversion rates and merchants’ revenues
	●	PayOnline launched payment acceptance for Sutochno.ru, the leading C2C short-term accommodation booking service in Russia

 

“The first quarter of the year is one of the slowest quarters of the year for processing and we remain focused on continued growth and innovation to differentiate our product offerings and provide superior products and services to our expanding customer base” commented Oleg Firer, CEO of Net Element. “We are undertaking several strategic changes in the mobile solutions segment, which should yield results in the third-quarter of this year.”

 

Conference Call:

The Company will host a conference call to discuss First Quarter 2017 financial results and business highlights on May 16, 2017 at 8:30 AM 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 24392966. It is recommended that participants dial in approximately 10 minutes prior to the start of the 8:30AM Eastern call.

 

The call will also be webcast live from http://edge.media-server.com/m/p/26rnmtr5. Following completion of the call, a recorded replay of the webcast will be available on the http://www.netelement.com/en/ir website.

 

Results of Operations for the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

 

We reported a net loss attributable to stockholders of $2,487,498, or $0.15 per share, for the three months ended March 31, 2017 as compared to a net loss attributable to stockholders of $1,847,719, or $0.16 per share, for the three months ended March 31, 2016. This resulted in an increase in net loss attributable to stockholders of $639,779 primarily as a result of higher general and administrative expenses and non-cash compensation expense offset by an improved gross margin.

 

Eliminating the effects of non-cash compensation, we reported an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $1,891,094 or $0.11 per share for the three months ended March 31, 2017 as compared to an adjusted non-GAAP, Net loss attributable to Net Element, Inc. stockholders of $1,486,735 or $0.13 per share for the three months ended March 31, 2016.

 

Net revenues consist primarily of payment processing fees. Net revenues were $13,561,941 for the three months ended March 31, 2017 as compared to $11,261,059 for the three months ended March 31, 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 $3,112,271, or 40% increase for the three months ended March 31, 2017 versus the three months ended March 31, 2016. Increases in our North American Transaction Solutions segment revenue were primarily due to a continued growth of SMB merchants with emphasis on value-added offerings. This was partially offset by a $1,136,511, or 57% decrease in our Mobile Solutions segment, as we continue to seek capital needed to prepay for content delivered through our platform as well as diversify to post-paid markets. Our Online Solutions segment revenue increased $325,122 (or 23%), from $1,414,907 for the three months ended March 31, 2016 to $1,740,029 for the three months ended March 31, 2017, primarily due to changes in foreign currency exchange rates.

 

 

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 March 31, 2017 were $11,459,992 as compared to $9,385,241 for the three months ended March 31, 2016. The $2,074,751 increase in cost of revenues was primarily due to a $2,808,416 increase in our North American Transaction Solutions segment due to increased volume. There was also a $263,960 increase in cost of revenues resulting from our Online Solutions segment operations primarily due to changes in foreign currency exchange rates. This was offset by a $997,625 decrease in our Mobile Solutions segment cost of revenues, which resulted from the decrease in sales for our Mobile Solutions segment for the three months ended March 31, 2017 versus the three months ended March 31, 2016.

 

Gross Margin for the three months ended March 31, 2017 was $2,101,949, or 15% of net revenue, as compared to $1,875,818, or 17% of net revenue, for the three months ended March 31, 2016. The $226,131 increase in gross margin was due to the increased volume of processing in our North American Transaction Solutions offset by a decrease of $138,886 in our Mobile Solutions margin caused from a decrease in business.

 

The following table sets forth our sources of revenues, cost of revenues and gross margins for the three months ended March 31, 2017 and 2016:

 

Gross Margin Analysis
		Three								Three
		Months Ended								Months Ended								Increase /
Source of Revenues		March 31, 2017				Mix				March 31, 2016				Mix				(Decrease)
North American Transaction Solutions		$	10,964,919				81	%		$	7,852,648				70	%		$	3,112,271
Mobile Solutions			856,993				6	%			1,993,504				18	%			(1,136,511	)
Online Solutions			1,740,029				13	%			1,414,907				12	%			325,122
Total		$	13,561,941				100	%		$	11,261,059				100	%		$	2,300,882

 

		Three								Three
		Months Ended				% of				Months Ended				% of				Increase /
Cost of Revenues		March 31, 2017				revenues				March 31, 2016				revenues				(Decrease)
North American Transaction Solutions		$	9,461,449				86	%		$	6,653,033				85	%		$	2,808,416
Mobile Solutions			816,963				95	%			1,814,588				91	%			(997,625	)
Online Solutions			1,181,580				68	%			917,620				65	%			263,960
Total		$	11,459,992				85	%		$	9,385,241				83	%		$	2,074,751

 

		Three								Three
		Months Ended				% of				Months Ended				% of				Increase /
Gross Margin		March 31, 2017				revenues				March 31, 2016				revenues				(Decrease)
North American Transaction Solutions		$	1,503,470				14	%		$	1,199,615				15	%		$	303,855
Mobile Solutions			40,030				5	%			178,916				9	%			(138,886	)
Online Solutions			558,449				32	%			497,287				35	%			61,162
Total		$	2,101,949				15	%		$	1,875,818				17	%		$	226,131

 

 

Total operating expenses were $4,364,687 for the three months ended March 31, 2017. Total operating expenses for the three months ended March 31, 2017 consisted of general and administrative expenses of $2,831,161, non-cash compensation expenses of $596,404, provision for bad debts of $279,759, and depreciation and amortization of $657,363. Total operating expenses were $3,589,156 for the three months ended March 31, 2016, which consisted of general and administrative expenses of $2,088,313, non-cash compensation expenses of $360,984, provision for bad debts of $251,741, and depreciation and amortization of $888,118.  

 

General and administrative expenses for the three months ended March 31, 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, travel expense, filing fees, transaction gains, office expenses, communication expense, insurance expense, and other expenses required to run our business, as follows:

 

Three Months Ended March 31, 2017
Category		North America Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Total
Salaries, benefits, taxes and contractor payments		$	480,617			$	123,818			$	221,755			$	841,520			$	1,667,710
Professional fees			168,076				25,071				225,342				255,201				673,690
Rent			-				15,169				39,468				98,428				153,065
Business development			1,824				962				9,020				1,581				13,387
Travel expense			32,804				5,096				1,171				56,225				95,296
Filing fees			-				-				-				6,426				6,426
Transaction (gains) losses			-				(49,324	)			3,316				1,731				(44,277	)
Office expenses			52,645				2,712				17,297				75,443				148,097
Communications expenses			13,319				700				30,087				20,624				64,730
Insurance expense			-				-				-				44,107				44,107
Other expenses			1,949				-				2,152				4,829				8,930
Total		$	751,234			$	124,204			$	549,608			$	1,406,115			$	2,831,161

 

Three Months Ended March 31, 2016
Category		North America Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Total
Salaries, benefits, taxes and contractor payments		$	393,446			$	107,925			$	112,773			$	564,803			$	1,178,947
Professional fees			163,239				1,108				83,743				276,297				524,387
Rent			-				11,086				32,092				93,066				136,244
Business development			8,770				-				24,673				-				33,443
Travel expense			41,312				3,875				2,938				8,884				57,009
Filing fees			-				-				-				16,499				16,499
Transaction (gains) losses			-				(55,533	)			62,763				7,736				14,966
Office expense			19,599				2,054				11,311				29,510				62,474
Communications expense			30,160				274				4,091				23,432				57,957
Insurance expense			-				-				-				3,125				3,125
Other expenses			-				289				75				2,898				3,262
Total		$	656,526			$	71,078			$	334,459			$	1,026,250			$	2,088,313

 

 

Variance
Category		North America Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Total
Salaries, benefits, taxes and contractor payments		$	87,171			$	15,893			$	108,982			$	276,717			$	488,763
Professional fees			4,837				23,963				141,599				(21,096	)			149,303
Rent			-				4,083				7,376				5,362				16,821
Business development			(6,946	)			962				(15,653	)			1,581				(20,056	)
Travel expense			(8,508	)			1,221				(1,767	)			47,341				38,287
Filing fees			-				-				-				(10,073	)			(10,073	)
Transaction (gains) losses			-				6,209				(59,447	)			(6,005	)			(59,243	)
Office expense			33,046				658				5,986				45,933				85,623
Communications expense			(16,841	)			426				25,996				(2,808	)			6,773
Insurance expense			-				-				-				40,982				40,982
Other expenses			1,949				(289	)			2,077				1,931				5,668
Total		$	94,708			$	53,126			$	215,149			$	379,865			$	742,848

 

Salaries, benefits, taxes and contractor payments were $1,367,710 for the three months ended March 31, 2017 as compared to $1,178,947 for the three months ended March 31, 2016.

 

Segment		Salaries and benefits for the  three months ended March 31, 2017				Salaries and benefits for the three months ended March 31, 2016				Increase / (Decrease)
North American Transaction Solutions		$	480,617			$	393,446			$	87,171
Mobile Solutions			123,818				107,925				15,893
Online Solutions			221,755				112,773				108,982
Corporate Expenses & Eliminations			841,520				564,803				276,717
Total		$	1,667,710			$	1,178,947			$	488,763

 

The increase in salaries of $488,763 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 $87,171 due to an increase in headcount and sales incentives for key employees. We also saw an increase of $108,982 and $15,893, respectively, in our Online Solutions and Mobile Solutions segments which were primarily due to the Ruble exchange rate and to a lesser extent, salary increases.

 

 

Professional fees were $673,690 for the three months ended March 31, 2017 as compared to $524,387 for the three months ended March 31, 2016.

 

Three Months Ended March 31, 2017
Professional Fees		North American Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Total
General Legal		$	42,599			$	-			$	713			$	33,526			$	76,838
SEC Compliance Legal Fees			-				-				-				23,750				23,750
Accounting and Auditing			-				-				9,219				112,782				122,001
Tax Compliance and Planning			-				-				-				14,900				14,900
Consulting			125,477				25,071				215,410				70,243				436,201
Total		$	168,076			$	25,071			$	225,342			$	255,201			$	673,690

 

Three Months Ended March 31, 2016
Professional Fees		North American Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Total
General Legal		$	28,171			$	200			$	513			$	24,911			$	53,795
SEC Compliance Legal Fees			-				-				-				43,750				43,750
Accounting and Auditing			-				-				578				121,344				121,922
Tax Compliance and Planning			-				-				-				-				-
Consulting			105,068				908				82,652				116,292				304,920
Total		$	133,239			$	1,108			$	83,743			$	306,297			$	524,387

 

Variance
Professional Fees		North American Transaction Solutions				Mobile Solutions				Online Solutions				Corporate Expenses & Eliminations				Increase / (Decrease)
General Legal		$	14,428			$	(200	)		$	200			$	8,615			$	23,043
SEC Compliance Legal Fees			-				-				-				(20,000	)			(20,000	)
Accounting and Auditing			-				-				8,641				(8,562	)			79
Tax Compliance and Planning			-				-				-				14,900				14,900
Consulting			20,409				24,163				132,758				(46,049	)			131,281
Total		$	34,837			$	23,963			$	141,599			$	(51,096	)		$	149,303

 

Professional fees increased by $149,303 mainly due to Online Solutions segments’ consulting fees which increased by $132,758 mainly due to an increase in portfolio management consulting.

 

Non-cash compensation expense from share-based compensation was $596,404 for the three months ended March 31, 2017, compared to $360,984 for the three months ended March 31, 2016. The majority of these expenses were for employee and consultant incentives in both periods.

 

We recorded bad debt expense of $279,759 for the three months ended March 31, 2017 as compared to $251,741 for the three months ended March 31, 2016. For the three months ended March 31, 2017, we recorded a loss which was primarily comprised of $286,943 in ACH rejects offset by a $7,184 recovery from our Russian operations. For the three months ended March 31, 2016, we recorded a loss which was primarily comprised of $263,789 in ACH rejects offset by a $12,048 recovery from our Russian operations.

 

 

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 $657,363 for the three months ended March 31, 2017 as compared to $888,118 for the three months ended March 31, 2016.

 

Interest expense was $269,688 for the three months ended March 31, 2017 as compared to $150,438 for three months ended March 31, 2016, representing an increase of $119,250 as follows:

 

Funding Source		Three months ended March 31, 2017				Three months ended March 31, 2016				Increase / (Decrease)
MBF Notes			18,813				-				18,813
RBL Notes			143,058				147,784				(4,726	)
Other			107,817				2,654				105,163
Total		$	269,688			$	150,438			$	119,250

 

The net loss attributable to non-controlling interests amounted to $50,701 for three months ended March 31, 2017 as compared to $37,876 for the three months ended March 31, 2016.

 

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 one-time, non-recurring items not present in this year or last year results. 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 months ended March 31, 2017 and 2016 is presented in the following Non-GAAP Financial Measures Table.

 

		GAAP				Share-based Compensation				Adjusted Non-GAAP
Three Months Ended March 31, 2017
Net (loss) income attributable to Net Element Inc stockholders		$	(2,487,498	)		$	596,404			$	(1,891,094	)
Basic and diluted earnings per share		$	(0.15	)		$	0.04			$	(0.11	)
Basic and diluted shares used in computing earnings per share			16,476,061								16,476,061

 

		GAAP				Share-based Compensation				Adjusted Non-GAAP
Three Months Ended March 31, 2016
Net (loss) income attributable to Net Element Inc stockholders		$	(1,847,719	)		$	360,984			$	(1,486,735	)
Basic and diluted earnings per share		$	(0.16	)		$	0.04			$	(0.13	)
Basic and diluted shares used in computing earnings per share			11,293,434								11,293,434

 

 

 

 

 

Additional information regarding Net Element’s results for its first quarter ended March 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 May 15, 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 US and selected emerging markets. In the US it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant 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 such as UAE, Kazakhstan, Kyrgyzstan and Azerbaijan where initiatives have been recently launched. 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. These forward-looking statements include, without limitation, whether the Company will experience growth on a go forward basis, whether Net Element can secure any additional financing and if such additional financing will be adequate to meet the Company's objectives. 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 and the subsequently filed 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.

 

Contact:

Net Element, Inc.

media@netelement.com

+1 (786) 923-0502

 

 

NET ELEMENT, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

		March 31, 2017				December 31, 2016
ASSETS
Current assets:
Cash		$	813,081			$	621,635
Accounts receivable, net			6,724,985				7,126,429
Prepaid expenses and other assets			1,686,126				1,467,897
Total current assets, net			9,224,192				9,215,961
Fixed assets, net			113,908				117,295
Intangible assets, net			3,466,408				3,589,850
Goodwill			9,643,752				9,643,752
Other long term assets			536,512				742,810
Total assets			22,984,772				23,309,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			8,337,673				7,510,113
Accrued expenses			5,366,887				5,518,823
Deferred revenue			910,019				1,355,972
Notes payable (current portion)			719,564				808,976
Due to related parties			356,200				299,004
Total current liabilities			15,690,343				15,492,888
Notes payable (net of current portion)			3,844,115				3,755,383
Total liabilities			19,534,458				19,248,271
STOCKHOLDERS' EQUITY
Series A Convertible Preferred stock ($.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2017 and  December 31, 2016)			-				-
Common stock ($.0001 par value, 400,000,000 shares authorized and 17,527,466 and 15,353,494 shares issued and outstanding at March 31, 2017 and December 31, 2016)			1,753				1,535
Paid in capital			165,833,480				163,918,685
Accumulated other comprehensive loss			(2,474,513	)			(2,486,616	)
Accumulated deficit			(159,930,083	)			(157,442,585	)
Noncontrolling interest			19,677				70,378
Total stockholders' equity			3,450,314				4,061,397
Total liabilities and stockholders' equity		$	22,984,772			$	23,309,668

 

 

NET ELEMENT, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

		Three months ended March 31,
		2017				2016
Net revenues
Service fees		$	12,729,663			$	9,363,820
Branded content			832,278				1,897,239
Total revenues			13,561,941				11,261,059
Costs and expenses:
Cost of service fees			10,650,748				7,598,184
Cost of branded content			809,244				1,787,057
General and administrative			2,831,161				2,088,313
Non-cash compensation			596,404				360,984
Bad debt expense			279,759				251,741
Depreciation and amortization			657,363				888,118
Total costs and operating expenses			15,824,679				12,974,397
Loss from operations			(2,262,738	)			(1,713,338	)
Interest expense, net			(269,688	)			(150,438	)
Other expense, net			(5,773	)			(21,819	)
Net loss before income taxes			(2,538,199	)			(1,885,595	)
Income taxes			-				-
Net loss			(2,538,199	)			(1,885,595	)
Net loss attributable to the noncontrolling interest			50,701				37,876
Net loss attributable to Net Element, Inc. stockholders			(2,487,498	)			(1,847,719	)
Foreign currency translation			12,103				(29,741	)
Comprehensive loss attributable to Net Element, Inc. stockholders		$	(2,475,395	)		$	(1,877,460	)
Loss per share - basic and diluted		$	(0.15	)		$	(0.16	)
Weighted average number of common shares outstanding - basic and diluted			16,476,061				11,293,434

 

 

NET ELEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Three Months Ended March 31,
		2017				2016
Cash flows from operating activities
Net loss attributable to Net Element, Inc. stockholders		$	(2,487,498	)		$	(1,847,719	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Non controlling interest			(50,701	)			(37,876	)
Share based compensation			596,404				360,984
Deferred revenue			(445,953	)			(171,908	)
Depreciation and amortization			657,363				888,118
Non cash interest			46,135				-
Changes in assets and liabilities
Accounts receivable			510,498				436,453
Prepaid expenses and other assets			(231,755	)			334,291
Accounts payable and accrued expenses			449,284				(909,344	)
Net cash used in operating activities			(956,223	)			(947,001	)
Cash flows from investing activities
Purchase of portfolio and client acquisition costs			(403,585	)			(396,819	)
Purchase of fixed, intangible and other assets			355				-
Net cash used in investing activities			(403,230	)			(396,819	)
Cash flows from financing activities
Proceeds from common stock			1,437,132
Proceeds from indebtedness			92,000				75,000
Repayment of indebtedness			(92,680	)			-
Related party advances			57,159				910,045
Net cash provided by financing activities			1,493,611				985,045
Effect of exchange rate changes on cash			57,288				57,537
Net  increase (decrease) in cash			191,446				(301,238	)
Cash at beginning of period			621,635				503,343
Cash at end of period		$	813,081			$	202,105
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest		$	166,394			$	150,438
Taxes		$	64,314			$	86,770