On July 3, 2012, OOO Net Element Russia (which is a subsidiary of Net Element, Inc.) ("Net Element Russia") entered into a Loan Agreement, dated July 4, 2012, with OOO Sat-Moscow ("Sat-Moscow"). Pursuant to the Loan Agreement, Sat-Moscow agreed to loan to Net Element Russia 150 million Russian rubles (or approximately US$4,636,928 based on the currency exchange rate as of the close of business on June 4, 2012). The loan is unsecured and must be funded within five business days from July 4, 2012. The loan is intended to be used by Net Element Russia for working capital and the development of the business of OOO TOT Money, which is a subsidiary of Net Element, Inc. that was recently formed to adapt the existing revenue sharing platform used in Openfilm.com to a mobile commerce payment processing platform. The interest rate under the Loan Agreement is 8.15% per annum and outstanding principal and interest is due on or before November 1, 2012. The loan may be pre-paid at any time without penalty or charge. Under the Loan Agreement, the required repayment date of the loan may be accelerated if an event of default occurs under the terms of the Loan Agreement, including if certain bankruptcy, receiver, insolvency or dissolution events occur with respect to Net Element Russia or if Net Element Russia fails to timely pay principal and/or interest under the Loan Agreement and such failure continues for 60 business days from the date of receipt of written notice of such failure from Sat-Moscow. Sat-Moscow is indirectly controlled by Kenges Rakishev, a director of Net Element, Inc.

The disclosures contained under Item 1.01 are incorporated herein by this reference.

(d) Exhibits.

Exhibit No.      Description
10.1             Loan Agreement dated July 4, 2012 between OOO Sat-Moscow and OOO
                 Net Element Russia