MIAMI, Sept. 26, 2013 (GLOBE NEWSWIRE) -- Net Element International (Nasdaq:NETE) ("Net Element" or the "Company"), a technology-driven group specializing in mobile payments and value-added transactional services in emerging countries, today announced that it has entered into a Contribution Agreement (the "Contribution Agreement") with T1T Lab, LLC ("T1T Lab"), and T1T Group, LLC, pursuant to which the Company contributed to T1T Lab all of its membership and participation interests in its subsidiaries Openfilm, LLC, Motorsport, LLC, Splinex, LLC, LegalGuru, LLC and Music 1, LLC (collectively, the "Divested Subsidiaries"). The Divested Subsidiaries constitute all of the Company's interests in online media businesses and operations (collectively "Entertainment Assets"). The divestiture will allow Net Element to focus its efforts in mobile payments and value-added transactional technologies.
This strategic decision to divest these businesses is expected to have several benefits for Net Element, including the reduction of expenses and focusing business operations in a unified business sector.Â Net revenues from the operations being divested were not significant ($14,475) for the six months ended June 30, 2013.Â If the Company had divested these subsidiaries on January 1, 2013, the Company would have reduced its loss from continuing operations of the Entertainment Assets by $679,353 for the six months ended June 30, 2013.
Commenting on the transaction, Oleg Firer, Net Element's chief executive officer said, "The divestiture of these non-core assets will allow us to be a more focused and concentrated company.Â We are well-positioned for continued growth and innovation in the mobile payments and value-added transactional business and will unite our energy and resources on the central, strategic components of our business in order to drive further innovation."
Pursuant to the Contribution Agreement, the Company contributed to T1T Lab all of its membership and participation interests in the Divested Subsidiaries and agreed to make a capital contribution to T1T Lab in the amount of $1,259,000, payable in full or in installments when requested by T1T Lab (with a possibility to pay a portion of the Company's capital contribution in the form of future services provided by the Company).Â In exchange for such contributions, the Company was issued a 10% membership interest in T1T Lab and T1T Lab assumed $2,162,158 in liabilities (not counting $75,991 of Motorsport, LLC's obligations under certain consulting contracts) related to the Divested Subsidiaries, including $2,000,000 owed by the Company to K 1 Holding Limited pursuant to a promissory note dated May 13, 2013.Â In addition, all intercompany loans payable by the Divested Subsidiaries to the Company, on the one hand, and by the Company to the Divested Subsidiaries, on the other hand, were forgiven by the Company and by T1T Lab, respectively.
Additional information regarding Net Element International's divestiture may be found in Net Element International's 8K, which was filed with the Securities and Exchange Commission (SEC) on September 24, 2013 and may be obtained from the SEC's Internet website at http://www.sec.gov.
About Net Element International (Nasdaq:NETE) Â Â Â Â Â
Net Element International (Nasdaq:NETE) is a global technology-driven group specializing in mobile payments and value-added transactional services.Â The company owns and operates a global mobile payments and transaction processing provider, TOT Group.Â TOT Group companies include Unified Payments, recognized by Inc. Magazine as the #1 Fastest Growing Private Company in America in 2012 and Aptito, a next generation cloud-based point of sale payments platform.Â The TOT Money Group has a leading position in Russia and has been ranked as the #1 SMS content provider by Beeline, Russia's second largest telecommunications operator.Â Together with its subsidiaries, Net Element International enables ecommerce and adds value to mobile commerce environments.Â Its global development centers and high-level business relationships in the United States, Russia and Commonwealth of Independent States strategically position the company for continued growth.Â The company has U.S. headquarters in Miami and international headquarters in Moscow.Â More information is available at www.netelement.com.
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 "proposed," "will," "may," "would," "could," "should," "expect," "expected," "contemplated," "plan," "planned," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the extent that Net Element's sale of its non-core entertainment subsidiaries reduces expenses of Net Element (particularly since Net Element will have ongoing capital contribution obligations to the purchaser to fund the operations and development of the businesses of the divested subsidiaries). 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) the future performance of Net Element following the Â the disposition of its non-core entertainment subsidiaires; (ii) Net Element's ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (iii) Net Element's ability to maintain existing, and secure additional, contracts with users of its payment processing services; (iv) Net Element's ability to successfully expand in existing markets and enter new markets; (v) Net Element's ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (vi) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vii) the ability to attract and retain qualified employees and key personnel; (viii) adverse effects of increased competition on Net Element's business; (ix) changes in government licensing and regulation that may adversely affect Net Element's business; (x) the risk that changes in consumer behavior could adversely affect Net Element's business; (xi) Net Element's ability to protect its intellectual property; and (xii) local, industry and general business and economic conditions. 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.