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

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

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

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

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

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

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

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">Date of Report (Date of earliest event reported):</TD>
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">February 23, 2012</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

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    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; font-weight: bold; text-align: center"><B>Net Element, Inc.</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">(Exact name of registrant as specified in its charter)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">Delaware</TD>
    <TD STYLE="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 18%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">000-51108</TD>
    <TD STYLE="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 22%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">20-0715816</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(State or other jurisdiction</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">of incorporation)</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Commission</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(File Number)</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(I.R.S. Employer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Identification No.)</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 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: 52%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">1450 S. Miami Avenue, Miami, FL</TD>
    <TD STYLE="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 14%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">33130</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Zip Code)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&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="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Registrant&rsquo;s telephone number, including area code:</TD>
    <TD STYLE="width: 50%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(305) 507-8808</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 65%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; text-align: center">Not Applicable</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Former name or former address, if changed since
        last report</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

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

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>

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

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<TR STYLE="vertical-align: top">
     <TD STYLE="font-size: 10pt; text-align: left; width: 3%"><FONT FACE="Wingdings">&#168;</FONT></TD>
     <TD STYLE="font-size: 10pt; text-align: left; width: 97%"> Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD>
</TR>
<TR STYLE="vertical-align: top">
     <TD STYLE="font-size: 10pt; text-align: left"><FONT FACE="Wingdings">&#168;</FONT></TD>
     <TD STYLE="font-size: 10pt; text-align: left"> Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>
<TR STYLE="vertical-align: top">
     <TD STYLE="font-size: 10pt; text-align: left"><FONT FACE="Wingdings">&#168;</FONT></TD>
     <TD STYLE="font-size: 10pt; text-align: left"> Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD>
</TR>
<TR STYLE="vertical-align: top">
     <TD STYLE="font-size: 10pt; text-align: left"><FONT FACE="Wingdings">&#168;</FONT></TD>
     <TD STYLE="font-size: 10pt; text-align: left"> 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: 0; text-align: left"></P>

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

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Subscription Agreement</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 23, 2012, the
Company entered into a Subscription Agreement (the &ldquo;Subscription Agreement&rdquo;) pursuant to which it agreed to sell, subject
to the satisfaction of customary closing conditions, 13,333,334 newly issued shares of common stock of the Company to Kenges Rakishev
for an aggregate purchase price of $2,000,000.10, or $0.15 per share. Pursuant to the Subscription Agreement, the Company granted
Mr. Rakishev the right to participate in any equity-based financing of the Company so long as Mr. Rakishev and his affiliates beneficially
own greater than 5% of the Company&rsquo;s common stock, as determined under Section 13(d) of the Securities Exchange Act of 1934,
as amended (the &ldquo;Exchange Act&rdquo;), and the rules and regulations thereunder. In connection with that participation right,
Mr. Rakishev may elect to purchase all or any part of any equity or equity-based securities proposed to be issued by the Company
in any financing transaction.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The foregoing description
of the Subscription Agreement does not purport to be complete and is qualified in its entirety by reference to the Subscription
Agreement, a copy of which is attached hereto as Exhibit 10.1.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Shareholder Rights Agreement</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 24, 2012, the
Company entered into a Shareholder Rights Agreement (the &ldquo;Shareholder Rights Agreement&rdquo;) with Mark Global Corporation,
Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida) and Enerfund, LLC (collectively,
the &ldquo;Shareholders&rdquo;). The companies TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida) and Enerfund,
LLC are directly or indirectly owned and controlled by Mike Zoi. As further described below, pursuant to the Shareholder Rights
Agreement, the Shareholders agreed to certain corporate governance matters pertaining to the Company and the Company granted registration
rights to each of Mark Global Corporation, Kenges Rakishev, TGR Capital, LLC, Mike Zoi and certain of their assignees (collectively,
the &ldquo;Holders&rdquo;).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Shareholders agreed
to cause the Board of Directors of the Company to be comprised of not less than four and not more than eight directors. For so
long as TGR Capital, LLC, together with its affiliates, has beneficial ownership (as determined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of greater than 5% of the Company&rsquo;s common stock, TGR Capital,
LLC is entitled to nominate one director. For so long as Mark Global Corporation, together with its affiliates, has beneficial
ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of greater
than 5% of the Company&rsquo;s common stock, Mark Global Corporation is entitled to nominate one director. For so long as the Shareholder
Rights Agreement remains in effect, TGR Capital, LLC and Mark Global Corporation are entitled to nominate two independent directors
mutually acceptable to TGR Capital, LLC and Mark Global Corporation. In the event that Mark Global Corporation&rsquo;s director
nominee is unable to attend any meeting of the Board of Directors, Mark Global Corporation is entitled to have another representative
attend such meeting in a non-voting observer capacity. In addition, so long as Mark Global Corporation, together with its affiliates,
has beneficial ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
of greater than 10% of the Company&rsquo;s common stock, the Shareholders agreed to cause Mark Global Corporation&rsquo;s director
nominee to be a member of any compensation committee, nominating committee and audit committee that the Board of Directors may
establish, in each case to the extent such directors are permitted to serve on such committees under applicable Securities and
Exchange Commission rules.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Additionally, the Company
agreed to obtain customary director and officer indemnity insurance and the Shareholders agreed to cause the Company&rsquo;s bylaws
to be amended, in a manner acceptable to Mark Global Corporation, to provide mandatory indemnification and advancement of expenses
for directors of the Company.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Upon demand by any of the
Holders, the Company agreed to register from time to time with the Securities and Exchange Commission for resale (i) all shares
of common stock of the Company from time to time owned by Mark Global Corporation, Kenges Rakishev or any other person or entity
controlled by Kenges Rakishev, and (ii) all shares of common stock of the Company from time to time owned by TGR Capital, LLC,
Mike Zoi or any other person or entity controlled by Mike Zoi. The Company also granted the Holders piggyback registration rights
with respect to all of such shares. The Company agreed to bear substantially all expenses incidental to the registration rights
granted pursuant to the Shareholder Rights Agreement.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Shareholder Rights
Agreement is not effective until 12:01 a.m. (New York time) on the first business day immediately following the date on which Mark
Global Corporation, together with its affiliates, has beneficial ownership (as determined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) of greater than 10% of the Company&rsquo;s common stock.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The foregoing description
of the Shareholder Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Shareholder
Rights Agreement, a copy of which is attached hereto as Exhibit 4.1.</P>

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

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

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

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

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; font-weight: bold">Exhibit No.</TD>
    <TD STYLE="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 81%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt; font-weight: bold">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">4.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Shareholder Rights Agreement, dated February 24, 2012, among Mark
        Global Corporation, Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida), Enerfund,
        LLC and Net Element, Inc.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">10.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Subscription Agreement, dated February 23, 2012, between Net Element,
        Inc. and Kenges Rakishev</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 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 STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: 0; margin-top: 0pt; margin-bottom: 6pt">&nbsp;</P>

<TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD COLSPAN="2">NET ELEMENT, INC.</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; width: 50%">Date: February 28, 2012</TD>
    <TD STYLE="width: 4%">By:&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 46%; border-bottom: Black 1pt solid">/s/ Jonathan New</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD>Name: </TD>
    <TD STYLE="vertical-align: top">Jonathan New</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD>Title:</TD>
    <TD STYLE="vertical-align: top">Chief
Financial Officer</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: 0pt; margin-top: 0pt; margin-bottom: 6pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: 0pt; margin-top: 0pt; margin-bottom: 6pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 6pt">&nbsp;<B>EXHIBIT
INDEX</B></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-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Exhibit No.</TD>
    <TD STYLE="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 81%; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">4.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Shareholder Rights Agreement, dated February 24, 2012, among Mark
        Global Corporation, Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida), Enerfund,
        LLC and Net Element, Inc.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">10.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Subscription Agreement, dated February 23, 2012, between Net Element,
        Inc. and Kenges Rakishev</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P></TD></TR>
</TABLE>
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[{"type": "8-K", "sequence": "1", "filename": "v303954_8k.htm", "description": "FORM 8-K", "secsgml_size_bytes": 26133}]
{"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": "12649219"}, "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):
February 23, 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.
Subscription Agreement
On February 23, 2012, the
Company entered into a Subscription Agreement (the "Subscription Agreement") pursuant to which it agreed to sell, subject
to the satisfaction of customary closing conditions, 13,333,334 newly issued shares of common stock of the Company to Kenges Rakishev
for an aggregate purchase price of $2,000,000.10, or $0.15 per share. Pursuant to the Subscription Agreement, the Company granted
Mr. Rakishev the right to participate in any equity-based financing of the Company so long as Mr. Rakishev and his affiliates beneficially
own greater than 5% of the Company's common stock, as determined under Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder. In connection with that participation right,
Mr. Rakishev may elect to purchase all or any part of any equity or equity-based securities proposed to be issued by the Company
in any financing transaction.
The foregoing description
of the Subscription Agreement does not purport to be complete and is qualified in its entirety by reference to the Subscription
Agreement, a copy of which is attached hereto as Exhibit 10.1.
Shareholder Rights Agreement
On February 24, 2012, the
Company entered into a Shareholder Rights Agreement (the "Shareholder Rights Agreement") with Mark Global Corporation,
Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida) and Enerfund, LLC (collectively,
the "Shareholders"). The companies TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida) and Enerfund,
LLC are directly or indirectly owned and controlled by Mike Zoi. As further described below, pursuant to the Shareholder Rights
Agreement, the Shareholders agreed to certain corporate governance matters pertaining to the Company and the Company granted registration
rights to each of Mark Global Corporation, Kenges Rakishev, TGR Capital, LLC, Mike Zoi and certain of their assignees (collectively,
the "Holders").
The Shareholders agreed
to cause the Board of Directors of the Company to be comprised of not less than four and not more than eight directors. For so
long as TGR Capital, LLC, together with its affiliates, has beneficial ownership (as determined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of greater than 5% of the Company's common stock, TGR Capital,
LLC is entitled to nominate one director. For so long as Mark Global Corporation, together with its affiliates, has beneficial
ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of greater
than 5% of the Company's common stock, Mark Global Corporation is entitled to nominate one director. For so long as the Shareholder
Rights Agreement remains in effect, TGR Capital, LLC and Mark Global Corporation are entitled to nominate two independent directors
mutually acceptable to TGR Capital, LLC and Mark Global Corporation. In the event that Mark Global Corporation's director
nominee is unable to attend any meeting of the Board of Directors, Mark Global Corporation is entitled to have another representative
attend such meeting in a non-voting observer capacity. In addition, so long as Mark Global Corporation, together with its affiliates,
has beneficial ownership (as determined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
of greater than 10% of the Company's common stock, the Shareholders agreed to cause Mark Global Corporation's director
nominee to be a member of any compensation committee, nominating committee and audit committee that the Board of Directors may
establish, in each case to the extent such directors are permitted to serve on such committees under applicable Securities and
Exchange Commission rules.
Additionally, the Company
agreed to obtain customary director and officer indemnity insurance and the Shareholders agreed to cause the Company's bylaws
to be amended, in a manner acceptable to Mark Global Corporation, to provide mandatory indemnification and advancement of expenses
for directors of the Company.
Upon demand by any of the
Holders, the Company agreed to register from time to time with the Securities and Exchange Commission for resale (i) all shares
of common stock of the Company from time to time owned by Mark Global Corporation, Kenges Rakishev or any other person or entity
controlled by Kenges Rakishev, and (ii) all shares of common stock of the Company from time to time owned by TGR Capital, LLC,
Mike Zoi or any other person or entity controlled by Mike Zoi. The Company also granted the Holders piggyback registration rights
with respect to all of such shares. The Company agreed to bear substantially all expenses incidental to the registration rights
granted pursuant to the Shareholder Rights Agreement.
2
The Shareholder Rights
Agreement is not effective until 12:01 a.m. (New York time) on the first business day immediately following the date on which Mark
Global Corporation, together with its affiliates, has beneficial ownership (as determined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) of greater than 10% of the Company's common stock.
The foregoing description
of the Shareholder Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Shareholder
Rights Agreement, a copy of which is attached hereto as Exhibit 4.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
4.1
Shareholder Rights Agreement, dated February 24, 2012, among Mark
        Global Corporation, Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida), Enerfund,
        LLC and Net Element, Inc.
10.1
Subscription Agreement, dated February 23, 2012, between Net Element,
        Inc. and Kenges Rakishev
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: February 28, 2012
By:
/s/ Jonathan New
Name:
Jonathan New
Title:
Chief
Financial Officer
4
EXHIBIT
INDEX
Exhibit No.
Description
4.1
Shareholder Rights Agreement, dated February 24, 2012, among Mark
        Global Corporation, Kenges Rakishev, Mike Zoi, TGR Capital, LLC, MZ Capital, LLC (Delaware), MZ Capital, LLC (Florida), Enerfund,
        LLC and Net Element, Inc.
10.1
Subscription Agreement, dated February 23, 2012, between Net Element,
        Inc. and Kenges Rakishev
5