Entry into a Material Definitive

Effective as of May 18, 2017, TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC, as co-borrowers (collectively, the Borrower), each an indirect subsidiary of Net Element, Inc. (the Company), entered into a Loan Agreement (the Loan Agreement) and Security Agreement (the Security Agreement) with Priority Payment Systems LLC d/b/a Cynergy Data (the Lender), and issued to the Lender a Promissory Note, dated May 18, 2017 (the Note). Pursuant to the Loan Agreement and the Note, the Borrower borrowed from the Lender $2,000,000. Prior to maturity of the loan, the principal amount of the loan will carry a floating interest rate of prime rate plus 6% per annum. The Borrower may prepay the loan in whole or in part at any time. The loan is repayable in monthly inst allments as detailed in Schedule I to the Note, which shall be due and payable on the twentieth day of each month, consisting of principal plus interest. This loan maturing and becoming due and payable in full on May 20, 2019 to the extent not prepaid or amortized as described above.

Pursuant to the Security Agreement, the loan is secured by a collateral consisting of accounts, cash or cash equivalents, residuals related to the merchants originated by Borrower and processed by Lender now or in the future (the Merchants), and any proceeds, products, substitutions or replacements for any of the foregoing. The Loan Agreement, the Note and the Security Agreement contain customary representations, warranties, events of default, remedies and affirmative and negative covenants, as well as the right of first refusal and the right related to the Merchants, each fully detailed in the attached hereto copies of the Loan Agreement, the Note and the Security Agreement.

Effective as of May 17, 2017, the Company entered into a Corporate Guaranty (the Guaranty) in favor of the Lender, pursuant to which the Company unconditionally guaranteed to the Lender the full and prompt payment of each present and future liability, debt and obligation of the Borrower under the Loan Agreement, the Note, the Security Agreement and other related documents.

The above description of Loan Agreement, the Note, the Security Agreement and the Guaranty is intended as a summary only and is qualified in its entirety by the terms and conditions set forth therein. Copies of the Loan Agreement, the Note, the Security Agreement and the Guaranty are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, respectively, and each is incorporated herein by this reference. All readers are encouraged to read the entire text of such documents.

Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement or a Registrant.

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

2

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

Exhibit

Number

Description

10.1

Loan Agreement, dated as of May 18, 2017, among Priority Payment Systems LLC, as lender, and TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC, as co-borrowers

10.2

Promissory Note, dated May 18, 2017, by TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC in favor of Priority Payment Systems LLC

10.3

Security Agreement, dated as of May 18, 2017, by TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC in favor of Priority Payment Systems LLC, as secured party

10.4

Corporate Guaranty, dated March 17, 2017, by Net Element, Inc. in favor of Priority Payment Systems LLC

*Filed herewith.

3

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: May 23, 2017

NET ELEMENT, INC.

By:

/s/ Jonathan New

Name: Jonathan New

Title: Chief Financial Officer

4

EXHIBIT INDEX

Exhibit

Number

Description

10.1

Loan Agreement, dated as of May 18, 2017, among Priority Payment Systems LLC, as lender, and TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC, as co-borrowers

10.2

Promissory Note, dated May 18, 2017, by TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC in favor of Priority Payment Systems LLC

10.3

Security Agreement, dated as of May 18, 2017, by TOT Payments, LLC, TOT New Edge, LLC, Process Pink, LLC and TOT FBS, LLC in favor of Priority Payment Systems LLC, as secured party

10.4

Corporate Guaranty, dated March 17, 2017, by Net Element, Inc. in favor of Priority Payment Systems LLC

*Filed herewith.

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Other recent filings from the company include the following:

Registration statement under Securities Act of 1933 - April 18, 2018
Net Element Reports Full-Year 2017 Financial Results And Provides Business Update - April 2, 2018
Net Element International Just Filed Its Annual Report: Net Loss per Sh... - April 2, 2018
Net Element International director just declared ownership of no shares of Net Element International - March 28, 2018
Net Element Appoints Seasoned Fintech Executive To Board Of Directors - March 26, 2018

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