On December 28, 2016, Net Element, Inc. (the Company) received a deficiency letter from the Listing Qualifications Department (the Staff) of The NASDAQ Stock Market notifying the Company that, for the last 30 consecutive business days, the bid price for the Companys common stock had closed below the minimum $1.00 per share requirement for continued inclusion on The NASDAQ Capital Market pursuant to NASDAQ Listing Rule 5550(a)(2) (the Rule). In accordance with Nasdaq Listing Rule5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until June 26, 2017, to regain compliance with the Rule.

The Staff letter has no effect on the listing of the Companys common stock at this time. The Staff advised the Company that, if at any time befor e June 26, 2017 the bid price for the Companys common stock closes at $1.00 or more for a minimum of 10 consecutive business days as required under Listing Rule 5810(c)(3)(A), the Staff will provide written notification to the Company that it complies with the Rule.

If the Company does not regain compliance with the Rule by June 26, 2017, the Company may be eligible for an additional 180 calendar day compliance period, provided that it meets the continued listing requirement for the market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and notifies the Staff of its intention to cure the deficiency during the additional compliance period.

If the Company does not regain compliance with the Rule by June 26, 2017 and is not eligible for an additional compliance period at that time, the Staff will provide written notification to the Company that its common stock may be delisted. At that time, the Company may appeal the Staffs delisting determination to a NASDAQ Listing Qualifications Panel (Panel). If the Company timely appeals, it would remain listed pending the Panels decision. There can be no assurance that, if the Company does appeal the delisting determination by the Staff to the Panel, that such appeal would be successful.

The Company intends to continue monitoring the bid price for its common stock and will consider various options available to it if its common stock does not trade at a level to regain compliance. These options include effecting a reverse stock split.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: December 30, 2016

NET ELEMENT, INC.

By:

/s/Jonathan New

Name:

Jonathan New

Title:

Chief Financial Officer

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