Exhibit 99.1

  

Net Element Reports Second Quarter 2021 Financial Results

 

MIAMI, August 16, 2021 (GLOBE NEWSWIRE) -- via InvestorWire -- Net Element, Inc. (NASDAQ:

NETE) (“Net Element” or the “Company”), a global technology and value-added solutions group that supports electronic payments acceptance in a multichannel environment including point-of-sale (“POS”), e-commerce and mobile devices, today reports its financial results for the second quarter ended June 30, 2021.

 

Second Quarter 2021 Financial Results

 

 

Net Revenue increased to $33.3 million, as compared to $13.7 million for the same comparable period in 2020

 

North American Transactions Solutions revenue increased to $32 million, as compared to $13 million for the same comparable period in 2020

 

International Transaction Solutions revenue increased to $1.3 million, as compared to $0.7 million for the same comparable period in 2020

 

Operating expenses increased to $6.5 million, as compared to $5.8 million for the same comparable period in 2020

 

Gross margin increased to $6.7 million, as compared to $4.7 million for the same comparable period in 2020

 

Net income per share increased to $0.21, as compared to a net loss of $0.08 per share for the same comparable period in 2020

  Reflected in net income attributable to common stockholders for the quarter ended June 30, 2021 are two nonrecurring other income transactions totaling approximately $1.0 million.  It was comprised of $0.4 million for the PPP Note debt forgiveness and $0.6 million in late fees due from Mullen in connection with the Mullen Merger Agreement.

 

 

Results of Operations for the Three Months Ended June 30, 2021, Compared to the Three Months Ended June 30, 2020

 

The Company reported a net income attributable to common stockholders of approximately $1.3 million or $0.21 per share income for the three months ended June 30, 2021, as compared to a net loss of approximately $325,000 or $0.08 per share loss for the three months ended June 30, 2020. The decrease in net loss attributable to stockholders of approximately $1.6 million was primarily due to an increase in net revenues of approximately $19.6 million and approximately $500,000 in late fees owed by Mullen during the three months ended June 30, 2021.

 

The following tables set forth the Company’s sources of revenues, cost of revenues and the respective gross margins for the three months ended June 30, 2021, and the same period in 2020.

 

   

Three

           

Three

                 
   

Months Ended

           

Months Ended

           

Increase /

 

Source of Revenues

 

June 30, 2021

   

Mix

   

June 30, 2020

   

Mix

   

(Decrease)

 

North American Transaction Solutions

  $ 32,015,097       96.2 %   $ 12,977,536       94.6 %   $ 19,037,561  

International Transaction Solutions

    1,276,838       3.8 %     741,073       5.4 %     535,765  

Total

  $ 33,291,935       100.0 %   $ 13,718,609       100.0 %   $ 19,573,326  

 

 

   

Three

           

Three

                 
   

Months Ended

   

% of

   

Months Ended

   

% of

   

Increase /

 

Cost of Revenues

 

June 30, 2021

   

revenues

   

June 30, 2020

   

revenues

   

(Decrease)

 

North American Transaction Solutions

  $ 28,561,909       89.2 %   $ 11,016,028       84.9 %   $ 17,545,881  

International Transaction Solutions

    1,020,689       79.9 %     520,759       70.3 %     499,930  

Total

  $ 29,582,598       88.9 %   $ 11,536,787       84.1 %   $ 18,045,811  

 

   

Three

           

Three

                 
   

Months Ended

   

% of

   

Months Ended

   

% of

   

Increase /

 

Gross Margin

 

June 30, 2021

   

revenues

   

June 30, 2020

   

revenues

   

(Decrease)

 

North American Transaction Solutions

  $ 3,453,188       10.8 %   $ 1,961,508       15.1 %   $ 1,491,680  

International Transaction Solutions

    256,149       20.1 %     220,314       29.7 %     35,835  

Total

  $ 3,709,337       11.1 %   $ 2,181,822       15.9 %   $ 1,527,515  

 

Net revenues consist primarily of service fees from transaction processing. Net revenues were approximately $33.3 million and $13.7 million for the three months ended June 30, 2021, and the same period in 2020, respectively. The Company’s revenues, which are largely tied to processing volumes, were materially impacted beginning in the final two weeks of March 2020. Since the quarter ended Dec. 31, 2020, the Company has seen a significant recovery in its end-to-end payment volumes as some merchants began resuming their normal operations.

 

Cost of revenues represents direct costs of generating revenues, including commissions, mobile operator fees, interchange expense, processing and non-processing fees. Cost of revenues for the three months ended June 30, 2021, were approximately $29.6 million, as compared to approximately $11.5 million for the three months ended June 30, 2020. The increase in cost of revenues was primarily due to a significant increase in net revenues.

 

The gross margin for the three months ended June 30, 2021, was approximately $3.7 million, or 11.1% of net revenues, as compared to approximately $2.2 million, or 15.9% of net revenues, for the three months ended June 30, 2020. The decrease in the overall gross margin percentage was primarily the result of the competitive pressure in the industry and a large wholesale client converting their merchant processing relationship to the Company’s platform. Net Element’s wholesale platform generally provides for lower margins compared to the Company’s other products and services.

 

Operating Expenses Analysis:

 

Operating expenses were approximately $3.1 million for the three months ended June 30, 2021, as compared to $2.2 million for three months ended June 30, 2020. Operating expenses for the three months ended June 30, 2021, primarily consisted of selling, general and administrative expenses of approximately $2.1 million; bad debt expense of approximately $500,000; and depreciation and amortization expense of approximately $500,000. Operating expenses for the three months ended June 30, 2020, primarily consisted of selling, general and administrative expenses of approximately $1.4 million; bad debt expense of approximately $33,000; and depreciation and amortization expense of approximately $800,000. The net increase was primarily due to additional personnel retained to meet the demand of growth, the increase in bad debt expense due to the increase in net revenues, and fees connected with the Company’s Form S-4 filing, which were partially offset by the reduction of compensation of certain employees, consultants and executives of the Company.

 

The components of the Company’s selling, general and administrative expenses are reflected in the tables below.

 

Selling, general and administrative expenses for the three months ended June 30, 2021, and the same period in 2020 consisted of operating expenses not otherwise delineated in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss, as follows:

 

Three months ended June 30, 2021

                               
                                 

Category

 

North American Transaction Solutions

   

International Transaction Solutions

   

Corporate Expenses & Eliminations

   

Total

 

Salaries, benefits, taxes and contractor payments

  $ 468,053     $ 154,778     $ 325,100     $ 947,931  

Professional fees

    217,495       32,117       438,633       688,245  

Rent

    64,178       17,223       4,885       86,286  

Business development

    37,222       6,559       35,151       78,932  

Travel expense

    5,474       25,851       15,124       46,449  

Filing fees

    -       -       16,075       16,075  

Transaction gains

    -       (36,843 )     -       (36,843 )

Office expenses

    54,124       5,934       17,612       77,670  

Communications expenses

    39,157       34,698       15,808       89,663  

Insurance expense

    -       -       41,832       41,832  

Other expenses

    537       8,607       5,477       14,621  

Total

  $ 886,240     $ 248,924     $ 915,697     $ 2,050,861  

 

Three months ended June 30, 2020

                               
                                 

Category

 

North American Transaction Solutions

   

International Transaction Solutions

   

Corporate Expenses & Eliminations

   

Total

 

Salaries, benefits, taxes and contractor payments

  $ 536,915     $ 91,825     $ 118,574     $ 747,314  

Professional fees

    55,336       39,537       241,288       336,161  

Rent

    13,070       13,325       39,093       65,488  

Business development

    32,228       -       3,805       36,033  

Travel expense

    638       9,373       39,894       49,905  

Filing fees

    -       -       15,525       15,525  

Transaction losses

    -       (80,512 )     -       (80,512 )

Office expenses

    41,976       3,759       16,879       62,614  

Communications expenses

    40,083       46,374       15,863       102,320  

Insurance expense

    -       -       42,000       42,000  

Other expenses

    292       2,104       6,085       8,481  

Total

  $ 720,538     $ 125,785     $ 539,006     $ 1,385,329  

 

Variance

                               
                                 

Category

 

North American Transaction Solutions

   

International Transaction Solutions

   

Corporate Expenses & Eliminations

   

Total

 

Salaries, benefits, taxes and contractor payments

  $ (68,862 )   $ 62,953     $ 206,526     $ 200,617  

Professional fees

    162,159       (7,420 )     197,345       352,084  

Rent

    51,108       3,898       (34,208 )     20,798  

Business development

    4,994       6,559       31,346       42,899  

Travel expense

    4,836       16,478       (24,770 )     (3,456 )

Filing fees

    -       -       550       550  

Transaction gains/losses

    -       43,669       -       43,669  

Office expenses

    12,148       2,175       733       15,056  

Communications expenses

    (926 )     (11,676 )     (55 )     (12,657 )

Insurance expense

    -       -       (168 )     (168 )

Other expenses

    245       6,503       (608 )     6,140  

Total

  $ 165,702     $ 123,139     $ 376,691     $ 665,532  

 

Salaries, benefits, taxes and contractor payments increased by approximately $200,000 on a consolidated basis for the three months ended June 30, 2021, as compared to the same three-month period ended June 30, 2020. The net increase was primarily due to additional personnel retained to meet the demand of growth offset by the reduction of compensation of certain employees, consultants and executives of the Company.

 

The following information was filed by Mullen Automotive Inc. (MULN) on Monday, August 16, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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