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Net Element Q2 net income $.04 per share

Staff writer ▼ | August 19, 2014
Net Element announced financial results for its second quarter ended June 30, 2014. The company generated positive operating cash flows for the six months ended June 30, 2014.
Net Element
Second quarter   Technology group from loss to profit
The company reported net income of $1,347,769 or $.04 per share, for the three months ended June 30, 2014 as compared with a net loss of $20,231,697 or $0.72 per share, for the three months ended June 30, 2013. Net income for the three months ended June 30, 2014 was primarily the result of gains from restructuring of the MBF debt of $1,596,000, the net effect from Cayman Invest note conversion of $562,908, recovery of $352,993 in mobile operator penalties and a reduction in bad debt allowance of $1,640,111 for aggregator advances in our mobile payment processing business.

The net loss of $20,231,697 for the three months ended June 30, 2013 was primarily due to $11,200,000 in goodwill impairment, $4,792,487 in loss provision and $3,486,950 in general and administrative expenses.

Net revenues consist primarily of payment processing fees. Net revenues were $4,912,035 for the three months ended June 30, 2014 as compared to $5,607,609 for the three months ended June 30, 2013. The decrease in net revenues is primarily due to the mobile payment processing operation change of its billing system and business development personnel which unfavorably impacted revenues unfavorably by $666,953.

Cost of revenues represents direct costs of generating revenues, including commissions, purchases of short numbers, interchange expense and processing fees. Cost of revenues for the three months ended June 30, 2014 was $3,345,087 as compared to $4,133,953 for the three months ended June 30, 2013. The year over year decrease in cost of revenues of $788,866 is primarily a result of decrease of mobile payment processing cost of revenues due to a $352,993 recovery of penalties in the current quarter.

Operating expenses totaled $1,629,928 for the three months ended June 30, 2014, as compared to operating expenses of $21,096,401 for the three months ended June 30, 2013. Total operating expenses for the three months ended June 30, 2014 consisted of general and administrative expenses of $2,545,552, depreciation and amortization expense of $624,790 offset by recovery of loan loss provision in the amount of $1,540,415 and.

For the three months ended June 30, 2013, general and administrative expenses were $3,486,950, or 17% of total operating expenses. Loan losses for the three months ended June 30, 2013 were $5,792,487 and depreciation and amortization was $616,964. The components of our general and administrative expenses are discussed below.


 

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