Net Element Inc (NASDAQ:NETE) Consolidates

Net Element Inc (NASDAQ:NETE) is still trying to find direction. Shares have traded in a sideways pattern for over a month now, ever since the company released earnings on March 31. We said at the time that on the surface, the numbers were quite good. However, we think that momentum players were expecting much more from the company and shares sold off. Net Element needs a catalyst to get the momo players back in the stock and get the shorts covering.Net Element operates a payments-as-a-service transactional and value-added services platform for small to medium enterprises in the US and selected emerging markets. In the US it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant point-of-sale solution Aptito. Internationally, Net Element’s strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions such as UAE, Kazakhstan, Kyrgyzstan and Azerbaijan where initiatives have been recently launched.For full-year 2015, net revenue increased 89.5% to $40,235,362 million as compared to $21,236,704 in the prior year. NETE saw growth in all three business segments. The North America Transaction Solution segment reported revenues increased 41% to $27.4 million. The mobile solutions segment saw a 385% jump to $9 million. As a result of the PayOnline acquisition, the online solutions business reported $3.8 million in revenues.Total US Dollar volume transactions processed globally in 2015 exceeded $1.75 billion with an annual run rate of over $2 billion as of December 2015, an increase of 9.4% compared to $1.6 billion in 2014. Total transactions processed for 2015 exceeded 160.7 million compared to 51.9 million in 2014, an increase of 210%.Net Element acquired PayOnline, which led to new sources of revenue for the company by signing multi-year contracts with premium on-line dating networks such as Dating.com, AnastasiaDate, AmoLatina and AsianDate. DigitalProvider (formerly TOT Money), exceeded 3 million recurring mobile subscribers and experienced 171% subscriber growth from January 2015 to October 2015.Earlier this month, Net Element announced that it had completed the closing of a renewal and increase to $15 million of the credit facility from RBL Capital Group LLC and entered into a debt exchange agreement with Crede CG III, Ltd. Under the Exchange Agreement, the Company has the ability to exchange up to $5 million of indebtedness under certain promissory notes through December 31, 2016. Net Element said:

The Company continues to grow rapidly with 89.5% growth in revenue in 2015 over the prior year. The $15 million credit facility extended to the Company by RBL Capital coupled with the debt exchange will be used to accelerate the Company's organic and acquisition growth initiatives. This $15 million credit facility replaces the Company's $10 million credit facility with RBL Capital that has expired.

Last week, Net Element announced that Unified Payments launched a mobile point of sale application that allows for mobile transactions in a card present or card not present environment. The free app is available now in the iTunes store. The company said that "Unified Payments Mobile POS packs all the functionality that a merchant needs to accept payments in a neat and easy to use interface. It can be used for a simple payment acceptance, which takes seconds, or to manage product inventory and build orders with customer details for future use. Utilizing an EMV and NFC enabled card reader merchants can accept secure EMV chip-enabled or mobile Apple Pay transactions."Currently trading with a market cap of $33 million, NETE has until June 16 to bring its share price back up over $1 per share to comply with its NASDAQ listing. We expect the company to possibly do a reverse split and this is another overhang on the stock. We’ve see what’s happened to Great Basin Scientific Inc (NASDAQ:GBSN) in doing reverse splits and it’s not pretty. We’re hoping NETE doesn’t go the way of GBSN. The good news for shareholders is that board member Rakishev Kenges is on the same side as stockholders and has been adding to his holdings. He purchased 7.1m shares at $.14 and 4.6m shares at $.20 per share. We will be updating Insider Financial as soon as we know more. For continuing coverage on NETE, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in NETE and have not been compensated for this article.