 MIAMI, Aug. 13, 2020 GLOBE NEWSWIRE -- via NetworkWire -- 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, 2020.Second Quarter 2020 Financial Results Total transaction volume decreased to 717.9 million, as compared to 950.2 million for the same comparable period. Net revenue decreased to 13.7 million, as compared to 16.5 million for the same comparable period in 2019. North American Transactions Solutions revenue decreased to 13.0 million, as compared to 15.7 million for the same comparable period. International Transaction Solutions revenue decreased slightly to 0.74 million, as compared to 0.75 million in 2019. Operating expenses decreased to 2.2 million, as compared to 5.2 million for the same comparable period. Gross margin decreased to 2.2 million, as compared to 2.6 million for the same comparable period.The COVID-19 pandemic continued to negatively impact our financial results during the second quarter of this year. Our ability to adapt quickly by implementing safety protocols to protect our employees has been successful so far, and we are happy to report we have had zero cases of COVID-19 among our employees. We also implemented cost-cutting initiatives while boosting support for our merchants through e-commerce solutions, contactless payment alternatives and online food ordering for restaurants, commented Oleg Firer, CEO of Net Element. We continue working diligently to increase shareholder value as we continue to work toward the proposed merger with Mullen Technologies Inc.Results of Operations for the Three Months Ended June 30, 2020, Compared to the Three Months Ended June 30, 2019We reported a net loss attributable to common stockholders of approximately 300,000 or 0.08 per share loss for the three months ended June 30, 2020, as compared to a net loss of approximately 1.5 million or 0.37 per share loss for the three months ended June 30, 2019. The decrease in net loss attributable to stockholders of approximately 1.2 million was primarily due to the reorganization of the labor force, including layoffs, which reduced our selling, general and administrative expenses.The following table sets forth our sources of revenues, cost of revenues and the respective gross margins for the three months ended June 30, 2020, and 2019. Three Months Ended Three Months Ended Increase Source of RevenuesJune 30, 2020MixJune 30, 2019MixDecrease North American Transaction Solutions 12,977,53694.6 15,737,99895.5 2,760,462 International Transaction Solutions 741,0735.4 749,3134.5 8,240 Total 13,718,609100.0 16,487,311100.0 2,768,702 Six Months Ended ofSix Months Ended of Increase Cost of RevenuesJune 30, 2020revenuesJune 30, 2019revenuesDecrease North American Transaction Solutions 23,840,30084.7 25,212,81283.8 1,372,512 International Transaction Solutions 996,89570.0 948,70066.2 48,195 Total 24,837,19584. 26,161,51283.0 1,324,317 Three Months Ended ofThree Months Ended of Increase Gross MarginJune 30, 2020revenuesJune 30, 2019revenuesDecrease North American Transaction Solutions 1,961,50815.1 2,293,92414.6 332,416 International Transaction Solutions 220,31429.7 292,02239.0 71,708 Total 2,181,82215.9 2,585,94615.7 404,124 Net revenues consist primarily of service fees from transaction processing. Net revenues were approximately 13.7 million for the three months ended June 30, 2020, as compared to 16.5 million for the three months ended June 30, 2019. The decrease in net revenues in our North American Transaction Solutions segment was primarily driven by the adverse impact of the COVID-19 pandemic on our end-to-end payment volumes and gateway transactions.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, 2020, were approximately 11.5 million as compared to approximately 13.9 million for the three months ended June 30, 2019. This decrease is in line with the decrease in revenues for the three months ending June 30, 2020.The gross margin for the three months ended June 30, 2020, was approximately 2.2 million, or 15.9, as compared to approximately 2.6 million, or 15.7, for the three months ended June 30, 2019. The gross margin percentage was in line with the results from the previous comparable period.Operating Expenses Analysis:Operating expenses were approximately 2.2 million for the three months ended June 30, 2020, as compared to 5.2 million for three months ended June 30, 2019. Operating expenses for the three months ended June 30, 2020, primarily consisted of selling, general and administrative expenses of approximately 1.4 million and depreciation and amortization of approximately 0.8 million. Operating expenses for the three months ended June 30, 2019, primarily consisted of selling, general and administrative expenses of approximately 2.3 million; non-cash compensation of 2.0 million; and depreciation and amortization expense of approximately 0.7 million.The components of our selling, general and administrative expenses are reflected in the table below.Selling, general and administrative expenses for the three months ended June 30, 2020, and 2019 consisted of operating expenses not otherwise delineated in our Condensed Consolidated Statements of Operations and Comprehensive Loss, as follows: 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 gains - 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 Three months ended June 30, 2019 Category North American Transaction Solutions International Transaction Solutions Corporate Expenses Eliminations Total Salaries, benefits, taxes and contractor payments 318,487 95,231 799,417 1,213,135 Professional fees 133,316 72,497 345,723 551,536 Rent - 15,277 51,277 66,554 Business development 56,184 489 4,944 61,617 Travel expense 35,511 5,084 33,299 73,894 Filing fees 1,078 - 17,704 18,782 Transaction losses - 12,974 - 12,974 Office expenses 83,122 4,147 12,990 100,259 Communications expenses 41,746 65,717 18,447 125,910 Insurance expense - - 36,267 36,267 Other income expenses 286 2,745 61,059 64,090 Total 669,730 248,213 1,381,127 2,299,070 Variance Category North American Transaction Solutions International Transaction Solutions Corporate Expenses Eliminations Total Salaries, benefits, taxes and contractor payments 218,428 3,406 680,843 465,821 Professional fees 77,980 32,960 104,435 215,375 Rent 13,070 1,952 12,184 1,066 Business development 23,956 489 1,139 25,584 Travel expense 34,873 4,289 6,595 23,989 Filing fees 1,078 - 2,179 3,257 Transaction gains - 67,538 - 67,538 Office expenses 41,146 388 3,889 37,645 Communications expenses 1,663 19,343 2,584 23,590 Insurance expense - - 5,733 5,733 Other income expenses 6 641 54,974 55,609 Total 50,808 122,428 842,121 913,741 Salaries, benefits, taxes, contractor payments and professional fees decreased by approximately 0.7 million on a consolidated basis for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019. This was due to the staffing reductions necessary due to the effects of the COVID-19 pandemic on our operations.Reconciliation of Non-GAAP Financial Measures and Regulation G DisclosureTo supplement its consolidated financial statements presented in accordance with United States generally accepted accounting principles GAAP, the Company provides additional measures of its operating results by disclosing its adjusted net loss attributable to Net Element, Inc. stockholders. Adjusted net loss attributable to Net Element stockholders is calculated as net loss attributable to Net Element stockholders excluding non-cash share-based compensation. The Company discloses this amount on an aggregate and per-share basis. These measures meet the definition of non-GAAP financial measures. The Company believes that application of these non- GAAP financial measures is appropriate to enhance the understanding of the Companys investors of its historical performance through the use of a metric that seeks to normalize period-to-period earnings. A reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the quarter ended June 30, 2020, and June 30, 2019, is presented in the following tables. 