Net
Element, a technology-driven group specializing in mobile payments and
value-added transactional services in emerging countries and in the United
States, today 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.
Significant
Achievements
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.
Outlook
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.
For
more information, visit www.netelement.com
About
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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.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
