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. Net revenues from the operations being divested were not significant ($14,475) for the six months ended June 30, 2013. 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. 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). 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. 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.