would like to highlight Net Element, Inc.
), a technology-driven group specializing in mobile payments and value-added transactional services that add convenience to mobile phone users’ lives and everyday commerce. The company’s innovations enable consumers to conduct commerce transactions from their mobile device, while online and offline payment capabilities allow merchants to reliably transact business anywhere and anyhow.
In the company’s news,
Net Element has released a shareholder letter from the Company’s CEO, Oleg Firer. The complete message can be found below.
Dear Net Element Shareholders,
I am writing you today for several reasons. The past several weeks have been very busy and productive, and I would like to highlight several achievements that have advanced the Company’s short-term and long-term position both financially and operationally.
Let me begin by first thanking all shareholders for their support. Making an investment is not a light decision and we value the trust you have put into Net Element’s operations, management and service offerings. We continually strive to increase both company and shareholder value, and we believe that you will find evidence of this mission in the achievements we made last month.
We kicked off a series of milestones in the month of September by announcing that we will integrate the Apple® Pay service offering into our point-of-sale payment acceptance hardware and software via Apple iPhone 6, iPhone 6 Plus and Apple Watch devices. Aligning Net Element’s services with one of the most reputable companies in the world is an achievement from which we expect to have long-term benefit.
In mid-September we finalized our debt exchange transaction with Crede Capital Group, LLC, eliminating $15,876,860 of debt from the Company’s balance sheet. This transaction, which will be reflected in our financial results for the quarter ended September 30, 2014, significantly freed up our cash flow position and strengthened our balance sheet by replacing debt with equity.
Towards the end of September Net Element secured a new $11 million credit facility from Russia’s largest private bank, Alfa-Bank. The financing supports our growth initiatives in Russia and the Commonwealth of Independent States and is specifically allocated to our TOT Money business, which in April 2014 launched a new cutting-edge platform for mobile commerce, direct carrier billing and payment processing. The credit facility not only strengthened our liquidity, but also facilitates TOT Money’s ability to attract new customers and take advantage of additional growth opportunities in the region.
We also filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”). If and when the SEC declares the registration statement effective, we will be able to raise up to $50 million, which we intend to use to execute our business strategy and invest in opportunities in mobile payments and value-added transactional services.
Also notable, brand exposure among the investment community is on the rise. In addition to SeeThruEquity, industry media outlets such as USA Today, TheStreet and 24/7 Wall St. also took notice of our progress and subsequent favorable trading activity following our news releases.
Collectively, these achievements allowed the Company to continue its momentum from our strong second-quarter performance. In the second quarter we received an additional $10 million financing from RBL Capital, after which Cayman Invest converted its $11.2 million of debt to equity. We also expanded our board of directors with the addition of Drew Freeman and William Healy, as well as launched an analytical toolbox product offering to our merchants.
The three months ended June 30, 2014, also marked Net Element’s first quarter of profitability as we reported net income of $1.3 million, or $0.04 per share, compared with a net loss of ($20.2 million), or $(0.72) per share, in the comparative second quarter. Due to restructuring of operations in Russia, second-quarter revenues decreased 12% to $4.9 million from $5.6 million in the second quarter of 2013. Liabilities decreased 40% to $22.8 million from $37.9 million at December 31, 2013. Working capital increased $8.3 million from ($8.0) million at December 31, 2013, to $0.3 million at June 30, 2014, primarily resulting from restructuring our indebtedness.
Moving forward, Net Element aims to execute on its initiatives for accelerated growth with sustained profitability. Net Element management and board of directors are committed to reinforcing the company’s underlying business as well as identifying and pursuing strategic opportunities to increase shareholder value.
For the rest of 2014 and moving into 2015 we intend to explore opportunities and the application of our technologies that will continue to propel Net Element toward its potential in the exciting global mobile payments market.
My expectation is that 2014 will unlock additional opportunities that will undoubtedly serve to benefit all who are connected to the success of our Company. On behalf of the entire Net Element family, thank you for sharing in our success and being a partner in our future.
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
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This release may contain 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. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.