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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">WASHINGTON, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">CURRENT REPORT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 80%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding: 0; font-size: 10pt; text-align: center">Date of Report (Date of earliest event reported):</TD>
    <TD STYLE="width: 50%; padding: 0; font-size: 10pt; text-align: center">August 17, 2012</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 40%; border-bottom: windowtext 1pt solid; padding: 0; font-size: 18pt; font-weight: bold; text-align: center; text-indent: 0">Net Element, Inc.</TD>
    <TD STYLE="width: 30%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="padding: 0; font-size: 10pt; text-align: center; text-indent: 0">(Exact name of registrant as specified in its charter)</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">Delaware</TD>
    <TD STYLE="width: 5%; padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">000-51108</TD>
    <TD STYLE="width: 5%; padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">20-0715816</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">(State or other jurisdiction<BR>
of incorporation)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">(Commission<BR>
(File Number)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">(I.R.S. Employer<BR>
Identification No.)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 60%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">1450 S. Miami Avenue, Miami, FL</TD>
    <TD STYLE="width: 10%; padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">33130</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">(Address of principal executive offices)</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">(Zip Code)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding: 0; text-align: center; text-indent: 0">Registrant's telephone number, including area code:</TD>
    <TD STYLE="width: 50%; padding: 0; text-align: left; text-indent: 0">(305) 507-8808</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 40%; border-bottom: windowtext 1pt solid; padding: 0; text-align: center; text-indent: 0">Not Applicable</TD>
    <TD STYLE="width: 30%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="padding: 0; text-align: center">Former name or former address, if changed since last report &nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings"><FONT STYLE="font-family: Wingdings">&#168;</FONT></FONT></TD><TD STYLE="text-align: justify">Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings"><FONT STYLE="font-family: Wingdings">&#168;</FONT></FONT></TD><TD STYLE="text-align: justify">Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings"><FONT STYLE="font-family: Wingdings">&#168;</FONT></FONT></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings"><FONT STYLE="font-family: Wingdings">&#168;</FONT></FONT></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 1.01 Entry into a Material Definitive Agreement.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 17, 2012,
OOO TOT Money (which is a subsidiary of Net Element, Inc.) (&quot;TOT Money&quot;) entered into a Credit Agreement (together with
related and ancillary agreements, collectively, the &quot;Agreement&quot;) with Alfa-Bank. Pursuant to the Agreement, Alfa-Bank
agreed to provide a line of credit to TOT Money with the credit line limit set at 300 million Russian rubles (or approximately
US$9,348,707 based on the currency exchange rate as of the close of business on August 17, 2012). The interest rate on the initial
amount borrowed under the Agreement is 3.55% per annum. Alfa-Bank has the unilateral right to change the interest rate on amounts
borrowed under the Agreement from time to time in the event of changes in certain market rates or in Alfa-Bank's reasonable discretion,
provided that the interest rate may not exceed 14% per annum. Interest must be repaid on a monthly basis on the 25th of each month.
Amounts borrowed under the Agreement must be repaid within six months of the date borrowed. The duration of the line of credit
is set from August 17, 2012 through May 21, 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">The
Agreement requires TOT Money to establish and maintain a deposit account with Alfa-Bank with a minimum balance of 150% of the
average value of liabilities on outstanding credit products provided to TOT Money by Alfa-Bank. TOT Money's obligations under
the Agreement are secured by a pledge of TOT Money's deposits in such deposit account and by a guarantee given by AO SAT &amp;
Company. AO SAT &amp; Company is an affiliate of Kenges Rakishev, a director of Net Element, Inc.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The financial
obligations of TOT Money under the Agreement may be increased in the following circumstances, among others: (i) in case of
delay in repayment of loans, Alfa-Bank may charge TOT Money a penalty of 0.2% of the defaulted obligation for each day of
delay, but not less than double the refinancing rate; (ii) in case of late payment of interest, Alfa-Bank may charge TOT
Money a penalty of 0.2% of the defaulted obligation for each day of delay, but not less than double the refinancing rate;
and/or (iii) in the event TOT Money fails to maintain the required minimum balance in its deposit account with Alfa-Bank,
then Alfa-Bank has the right to require TOT Money to pay a penalty of 0.5% of the amount by which the actual balance in such
account is below the required minimum balance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The financial obligations
of TOT Money under the Agreement may be accelerated in the following circumstances, among others: (i) if there is any delay in
payment of any accrued interest and/or fees; (ii) if any loans under the Agreement are not repaid on the dates when due; (iii)
if TOT Money fails to provide certain required information and/or documents to Alfa-Bank; (iv) if certain bankruptcy or insolvency
proceedings are initiated or similar events occur; (v) if TOT Money terminates or modifies its business; (vi) if TOT Money transfers
or encumbers its property without Alfa-Bank's written consent; (vii) if certain significant changes occur in TOT Money's management;
(viii) if TOT Money violates the terms of the Agreement or the related pledge agreement or other ancillary agreements; (ix) if
TOT Money's financial position deteriorates; and/or (x) if AO SAT &amp; Company  violates the terms of its guarantee
agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement or a Registrant.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The disclosures contained under Item 1.01
are incorporated herein by this reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 9.01 Financial Statements and Exhibits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(d) Exhibits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-indent: 0">Exhibit No.</TD>
    <TD STYLE="width: 4%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 81%; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-indent: 0">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">10.1</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Credit Agreement dated August 17, 2012 between Alpha-Bank and OOO TOT Money</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">10.2</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Agreement of Property Rights Pledge dated August 17, 2012 between Alpha-Bank and OOO TOT Money</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="padding: 0; text-align: justify; text-indent: 0">NET ELEMENT, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 3%; padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 25%; padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 22%; padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">Date: August 23, 2012</TD>
    <TD NOWRAP STYLE="padding: 0; text-align: justify; text-indent: 0">By:</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0; border-bottom: Black 1pt solid">/s/ Jonathan New</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="padding: 0; text-align: justify; text-indent: 0">Name:</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">Jonathan New</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD>
    <TD NOWRAP STYLE="padding: 0; text-align: justify; text-indent: 0">Title:</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">Chief Financial Officer</TD>
    <TD STYLE="padding: 0; text-align: justify; text-indent: 0">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-indent: 0">Exhibit No.</TD>
    <TD STYLE="width: 4%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 81%; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-indent: 0">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">10.1</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Credit Agreement dated August 17, 2012 between Alpha-Bank and OOO TOT Money</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">10.2</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Agreement of Property Rights Pledge dated August 17, 2012 between Alpha-Bank and OOO TOT Money</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



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{"company-data": {"conformed-name": "Net Element, Inc.", "cik": "0001293330", "assigned-sic": "7374", "irs-number": "200715816", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-51108", "film-number": "121051563"}, "business-address": {"street1": "1450 S. MIAMI AVE", "city": "MIAMI", "state": "FL", "zip": "33130", "phone": "305-507-8808"}, "mail-address": {"street1": "1450 S. MIAMI AVE", "city": "MIAMI", "state": "FL", "zip": "33130"}, "former-company": [{"former-conformed-name": "TOT Energy", "date-changed": "20080514"}, {"former-conformed-name": "Splinex Technology Inc.", "date-changed": "20040609"}]}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 17, 2012
Net Element, Inc.
(Exact name of registrant as specified in its charter)
Delaware
000-51108
20-0715816
(State or other jurisdiction
of incorporation)
(Commission
(File Number)
(I.R.S. Employer
Identification No.)
1450 S. Miami Avenue, Miami, FL
33130
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(305) 507-8808
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On August 17, 2012,
OOO TOT Money (which is a subsidiary of Net Element, Inc.) ("TOT Money") entered into a Credit Agreement (together with
related and ancillary agreements, collectively, the "Agreement") with Alfa-Bank. Pursuant to the Agreement, Alfa-Bank
agreed to provide a line of credit to TOT Money with the credit line limit set at 300 million Russian rubles (or approximately
US$9,348,707 based on the currency exchange rate as of the close of business on August 17, 2012). The interest rate on the initial
amount borrowed under the Agreement is 3.55% per annum. Alfa-Bank has the unilateral right to change the interest rate on amounts
borrowed under the Agreement from time to time in the event of changes in certain market rates or in Alfa-Bank's reasonable discretion,
provided that the interest rate may not exceed 14% per annum. Interest must be repaid on a monthly basis on the 25th of each month.
Amounts borrowed under the Agreement must be repaid within six months of the date borrowed. The duration of the line of credit
is set from August 17, 2012 through May 21, 2014.
The
Agreement requires TOT Money to establish and maintain a deposit account with Alfa-Bank with a minimum balance of 150% of the
average value of liabilities on outstanding credit products provided to TOT Money by Alfa-Bank. TOT Money's obligations under
the Agreement are secured by a pledge of TOT Money's deposits in such deposit account and by a guarantee given by AO SAT &
Company. AO SAT & Company is an affiliate of Kenges Rakishev, a director of Net Element, Inc.
The financial
obligations of TOT Money under the Agreement may be increased in the following circumstances, among others: (i) in case of
delay in repayment of loans, Alfa-Bank may charge TOT Money a penalty of 0.2% of the defaulted obligation for each day of
delay, but not less than double the refinancing rate; (ii) in case of late payment of interest, Alfa-Bank may charge TOT
Money a penalty of 0.2% of the defaulted obligation for each day of delay, but not less than double the refinancing rate;
and/or (iii) in the event TOT Money fails to maintain the required minimum balance in its deposit account with Alfa-Bank,
then Alfa-Bank has the right to require TOT Money to pay a penalty of 0.5% of the amount by which the actual balance in such
account is below the required minimum balance.
The financial obligations
of TOT Money under the Agreement may be accelerated in the following circumstances, among others: (i) if there is any delay in
payment of any accrued interest and/or fees; (ii) if any loans under the Agreement are not repaid on the dates when due; (iii)
if TOT Money fails to provide certain required information and/or documents to Alfa-Bank; (iv) if certain bankruptcy or insolvency
proceedings are initiated or similar events occur; (v) if TOT Money terminates or modifies its business; (vi) if TOT Money transfers
or encumbers its property without Alfa-Bank's written consent; (vii) if certain significant changes occur in TOT Money's management;
(viii) if TOT Money violates the terms of the Agreement or the related pledge agreement or other ancillary agreements; (ix) if
TOT Money's financial position deteriorates; and/or (x) if AO SAT & Company  violates the terms of its guarantee
agreement.
Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement or a Registrant.
The disclosures contained under Item 1.01
are incorporated herein by this reference.
2
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
10.1
Credit Agreement dated August 17, 2012 between Alpha-Bank and OOO TOT Money
10.2
Agreement of Property Rights Pledge dated August 17, 2012 between Alpha-Bank and OOO TOT Money
3
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
NET ELEMENT, INC.
Date: August 23, 2012
By:
/s/ Jonathan New
Name:
Jonathan New
Title:
Chief Financial Officer
4
EXHIBIT INDEX
Exhibit No.
Description
10.1
Credit Agreement dated August 17, 2012 between Alpha-Bank and OOO TOT Money
10.2
Agreement of Property Rights Pledge dated August 17, 2012 between Alpha-Bank and OOO TOT Money