SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 2)

Net Element, Inc.

(Name of Issuer)

Common Stock, $0.0001 per share par value

(Title of Class of Securities)

64111R 102

(CUSIP Number)

Oleg Firer

Star Equities, LLC

c/o Net Element, Inc.

3363 NE 163rd Street, Suite 705

North Miami Beach, FL 33160

(305) 507-8808

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

September 11, 2015

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

* Based on 100,857,828 outstanding shares of Common Stock (including all shares issuable upon exercise of the Option (as defined below)) as of September 15, 2015.

* Based on 100,857,828 outstanding shares of Common Stock (including all shares issuable upon exercise of the Option (as defined below)) as of September 15, 2015.

This Amendment No. 2 to Schedule 13D (the “Amendment No. 2”) relates to the common stock, $0.0001 per share par value (the “Common Stock”), of Net Element, Inc., a Delaware corporation (the “Company”), and amends the Schedule 13D filed by Oleg Firer with the Securities and Exchange Commission on September 18, 2014, as amended by the Amendment No. 1 filed by Mr. Firer on May 12, 2015 (the “Schedule 13D”). The Company’s principal executive offices are located at 3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160.

This Amendment No. 2 is being filed by to report that on September 11, 2015, Star Equities, LLC, and entity in which Mr. Firer is the sole and managing member (“Star Equities,” and together with Mr. Firer, the “Reporting Persons”) acquired 2,142,857 restricted shares of Common Stock and 2,142,857 restricted shares of Common Stock issuable upon of exercise of an option (collectively, the “Shares”).

Item 2. Identity and Background

Item 2 is hereby amended and restated in its entirety by the following:

(a) – (c) This statement is being filed by Oleg Firer and Star Equities, LLC. Mr. Firer’s business address is c/o Net Element, Inc., 3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160. The address of Star Equities’ principal office is 3365 NE 167th Street, North Miami Beach, FL 33160. Mr. Firer’s principal occupation is Chief Executive Officer of the Company. He also serves as a Director of the Company and is Star Equities’ sole member and managing member. The agreement (the “Joint Filing Agreement”) between Star Equities and Mr. Firer to file this statement, and any amendment or amendments thereto, jointly in accordance with Rule 13d-1(k) promulgated under the Act, is attached hereto as Exhibit 99.1.

(d) – (e) During the past five years, neither Star Equities nor Mr. Firer has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction (1) as a result of which he or it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or (2) which found any violation with respect to federal or state securities laws.

(f) Star Equities, LLC is a Florida limited liability company and Mr. Firer is a citizen of the United States.

Item 3. Source and Amount of Funds and Other Consideration

Item 3 is hereby amended by the addition of the following:

All funds used by Star Equities to acquire the Securities in the Investment Transaction (as defined below) have come directly from the working capital of Star Equities. The aggregate amount of consideration paid or payable by Star Equities for the Securities in the Investment Transaction was $300,000.00.

Item 4. Purpose of Transaction

Item 4 is hereby amended by the addition of the following:

In connection with a private placement of securities by the Company, Star Equities entered into a Letter Agreement, dated as of September 11, 2015 (the “Investment Agreement”), pursuant to which, among other things, Star Equities agreed to, and did purchase, on the terms and conditions contained therein, (i) 7,142,857 restricted shares of Common Stock and (ii) an option that is immediately exercisable for up to 7,142,857 restricted shares of Common Stock at an exercise price of $0.22 per share of Common Stock, subject to adjustment as described below (the “Option”) (such transactions are referred to herein as the “Investment Transaction”). The Option expires on September 11, 2020. The Option also contains customary anti-dilution provisions in the event of stock dividends, stock splits, reorganizations or similar events. The Company will not issue shares of Common Stock upon exercise of the Option if the aggregate number of shares that would be issued to all investors that acquired options under the Investment Agreement at any time will exceed 19.99% of the total number of shares of Common Stock issued and outstanding or of the voting power unless the Company has obtained either (a) its stockholders’ approval of the issuance of more than such number of shares of Common Stock pursuant to NASDAQ Marketplace Rule 5635(d) or (b) a waiver from The NASDAQ Stock Market of the Company’s compliance with Rule 5635(d).

The foregoing description is qualified in its entirety by reference to the Investment Agreement and the Option. Copies of the Investment Agreement and Option are attached hereto as Exhibits 99.2 and 99.3, respectively, and the terms thereof are incorporated herein by reference.

Neither Star Equities nor Mr. Firer has any present plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, except, in the case of Mr. Firer, in his capacity as Chief Executive Officer and Director of the Company. Each of Star Equities and Mr. Firer reserves the right in the future to formulate any such plan or proposal and to take any action with respect to his or its investments in the Company, including any or all of the actions described in paragraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of Issuer

Items 5(a) through (c) of Schedule 13D are hereby amended and restated in their entirety by the following:

(a) – (b) As of the date hereof, Star Equities is the beneficial owner of 2,142,857 restricted shares of Common Stock and 2,142,857 restricted shares of Common Stock issuable upon exercise of the Option, representing approximately 4.2% of the outstanding shares of Common Stock (based on 100,857,828 shares (including all shares issuable upon exercise of all options sold in the Investment Transaction) as of September 15, 2015). Star Equities has shared voting power and shared dispositive power with respect to such shares. As of the date hereof, Mr. Firer is the beneficial owner of 3,380,655 restricted shares of Common Stock and, as the sole member of Star Equities, can be deemed to beneficially own the above-described shares of Common Stock beneficially owned by Star Equities, and such shares collectively represent approximately 7.6% of the outstanding shares of Common Stock (based on 100,857,828 shares (including all shares issuable upon exercise of all options sold in the Investment Transaction) as of September 15, 2015). Mr. Firer has sole voting power and sole dispositive power with respect to 3,380,655 restricted shares of Common Stock and shared voting power and shared dispositive power with respect to the above-described shares beneficially owned by Star Equities.

(c) Except as disclosed in Item 4, neither Star Equities nor Mr. Firer has effected any transaction in the Common Stock in the past 60 days.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 of Schedule 13D is hereby amended by the addition of the following:

The information contained in Item 4 above is incorporated by reference in this Item 6.

Item 7. Material to be Filed as Exhibits

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

EXHIBIT INDEX

Exhibit 99.1

JOINT FILING AGREEMENT

The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D may be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained herein and therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate.

Exhibit 99.2

LetTER Agreement

VIA EMAIL

Star Equities, LLC

3363 NE 163rd St., Suite 705

North Miami Beach, FL 33160

Steven Wolberg

3363 NE 163rd St., Suite 705

North Miami Beach FL 33160

William Healy

16W281 83rd Street, Suite B 
Burr Ridge, IL 60527

Kenges Rakishev

c/o SAT & Company 
241 Mukanova Street 
Almaty Kazakhstan 050008

Vladimir Sadovskiy

3363 NE 163 Street, Suite 705

North Miami Beach, FL 33160

David Rozinov

210 Central Park South

23A

New York, NY 10019

Re: Equity Investment for Funding of Net Element

This letter agreement is dated as of September 11, 2015 (the "Effective Date"). The parties hereby agree as follows:

[Signatures are on next page.]

Please indicate your consent to the terms of this letter agreement by signing and dating this letter agreement and returning it to the undersigned.

AGREED AND ACCEPTED BY:

INVESTORS:

STAR EQUITIES, LLC

ADDITIONAL INVESTORS SIGNATURE PAGE(S):

_______________________________

Name: _____________________

Amount of Investment in Dollars: ________________________

Amount of Restricted Shares corresponding to the above investment: _____________________

Amount of Restricted Options corresponding to the above investment: ____________________

Exhibit A

EXHIBIT B

Investors’ Representations and Warranties

As a condition to the issuance of the Restricted Shares and the Restricted Options (collectively, the “Restricted Securities”) to each Investor, such Investor hereby represents and warrants to NETE as follows:

Investor acknowledges that the issuance and transfer to it of the Restricted Securities has not been reviewed by the United States Securities and Exchange Commission or any state securities regulatory authority because such transaction is intended to be exempt from the registration requirements of the Securities Act and applicable state securities laws. Investor understands that each of NETE is relying upon the truth and accuracy of, and Investor’s compliance with, the representations, warranties, acknowledgments and understandings of Investor set forth in this letter agreement in order to determine the availability of such exemptions and the eligibility of Investor to acquire the Restricted Securities.

Investor represents that the Restricted Securities are being acquired by Investor for its own account, for investment purposes only and not with a view to or for distribution or resale to others in contravention of the registration requirements of the Securities Act or applicable state securities laws. Investor agrees that it will not sell or otherwise transfer any of the Restricted Securities unless such transfer or resale is registered under the Securities Act and applicable state securities laws or unless exemptions from such registration requirements are available.

Investor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of Investor’s investment in NETE through Investor’s acquisition of the Restricted Securities. Investor is able to bear the economic risk of its investment in NETE through Investor’s acquisition of the Restricted Securities for an indefinite period of time. At the present time, Investor can afford a complete loss of such investment and has no need for liquidity in such investment.

Investor recognizes that its acquisition of the Restricted Securities involves a high degree of risk in that: (a) an investment in NETE is highly speculative and only Investor who can afford the loss of their entire investment should consider investing in NETE and securities of NETE; (b) transferability of the Restricted Securities is limited; (c) NETE has experienced recurring losses and it must raise substantial additional capital in order to continue operating its business; (d) subsequent equity financings will dilute the ownership and voting interests of Investor and equity securities issued by NETE to other persons or entities may have rights, preferences or privileges senior to the rights of Investor; (e) any debt financing that may be obtained by NETE must be repaid regardless of whether NETE generates revenues or cash flows from operations and may be secured by substantially all of NETE’s assets; (f) there is absolutely no assurance that any type of financing on terms acceptable to NETE will be available to NETE or otherwise obtained by NETE; and (g) if NETE is unable to obtain additional financing or is unable to obtain additional financing on terms acceptable to it, then NETE may be unable to implement its business plans or take advantage of business opportunities, which could have a material adverse effect on NETE’s business prospects, financial condition and results of operations and may ultimately require NETE to suspend or cease operations.

Investor acknowledges that he has prior investment experience and that he recognizes and fully understands the highly speculative nature of Investor’s investment in NETE pursuant to its acquisition of the Restricted Securities. Investor acknowledges that he, either alone or together with its professional advisors, has the capacity to protect its own interests in connection with this transaction.

Investor acknowledges that it has carefully reviewed the this letter agreement and NETE’s filings with the United States Securities and Exchange Commission, which are available on the Internet at www.sec.gov, all of which documents and filings Investor acknowledges have been made available to it. Investor has been given the opportunity to ask questions of, and receive answers from, NETE concerning this letter agreement, the issuance to it of the Restricted Securities, and NETE’s business, operations, financial condition and prospects, and Investor has been given the opportunity to obtain such additional information, to the extent NETE possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of same as Investor reasonably desires in order to evaluate its investment in NETE pursuant its acquisition of the Restricted Securities. Investor fully understands all of such documents and filings and has had the opportunity to discuss any questions regarding any of such documents or filings with its legal counsel and tax, investment and other advisors. Notwithstanding the foregoing, Investor acknowledges and agrees that the only information upon which it has relied upon in executing this letter agreement is the information set forth in this letter agreement and NETE’s filings with the United States Securities and Exchange Commission. Investor acknowledges that it has received no representations or warranties from NETE, its employees, agents or attorneys in making this investment decision. Investor acknowledges that it does not desire to receive any further information from NETE or any other person or entity in order to make a fully informed decision of whether or not to execute this letter agreement and accept the Restricted Securities.

Investor acknowledges that the issuance to it of the Restricted Securities may involve tax consequences to Investor. Investor acknowledges and understands that Investor must retain its own professional advisors to evaluate the tax and other consequences of Investor’s receipt of the Restricted Securities.

Investor understands and acknowledges that NETE is under no obligation to register the resale of the Restricted Securities under the Securities Act or any state securities laws. Investor agrees that NETE may, if it desires, permit the transfer of the Restricted Securities out of Investor’s name only when Investor’s request for transfer is accompanied by an opinion of counsel reasonably satisfactory to NETE that the proposed transfer satisfies an applicable exemption from registration requirements under the Securities Act and applicable state securities laws.

Investor understands that the certificate(s) representing the Restricted Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the Restricted Securities):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

The legend set forth above will be removed, and NETE will issue a certificate without such legend to the holder of the Restricted Securities upon which it is stamped, only if (a) such Restricted Securities are being sold pursuant to an effective registration statement under the Securities Act, (b) such holder delivers to NETE an opinion of counsel, in a reasonably acceptable form to NETE, that the disposition of the Restricted Securities is being made pursuant to an exemption from federal and state registration requirements, or (c) such holder provides NETE with reasonable assurance that a disposition of the Restricted Securities may be made pursuant to Rule 144 under the Securities Act without any restriction as to the number of shares acquired as of a particular date that can then be immediately sold.

Investor acknowledges that he has a preexisting personal or business relationship with NETE or one or more of its officers, directors or controlling persons.

Investor represents and warrants that he was not induced to invest in NETE (pursuant to the issuance to it of the Restricted Securities) by any form of general solicitation or general advertising, including, but not limited to, the following: (a) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media (including via the Internet) or broadcast over the news or radio; and (b) any seminar or meeting whose attendees were invited by any general solicitation or advertising.

Each Investor’s current address is set forth on page 1 of the letter agreement.

Exhibit 99.3

THIS OPTION AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT.

NET ELEMENT, INC.

OPTION TO PURCHASE SHARES OF RESTRICTED COMMON STOCK

           September 11, 2015

Void After September 11, 2020

This Certifies That, for value received, Star Equities, LLC (the “Investor”), with its principal office located across from such party’s name on the first page of the Purchase Agreement (as defined below) or its assigns (the “Holder”), is entitled to subscribe for and purchase from Net Element, Inc., a Delaware corporation (the “Company”), with its principal office at 3363 NE 163 Street, Suite 705, North Miami Beach, FL 33160, those Exercise Shares (as defined below) at the Exercise Price (as defined below).

This option to purchase shares of restricted common stock of the Company is issued as part of a series of similar options (collectively, the “Options”) issued pursuant to the terms of that certain Letter Agreement, dated as of September 11, 2015, by and among the Company, the Investor and certain other parties thereto (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company is concurrently selling and issuing to Investor certain shares of the Company’s common stock and this option to purchase shares of restricted common stock of the Company (this “Option”).

1.           Definitions. As used herein, the following terms shall have the following respective meanings:

(a)           “Exercise Period” shall mean the period commencing on the date hereof and ending on September 11, 2020.

(b)           “Exercise Price” shall mean 110% of the closing trading price per one (1) share of the Company’s common stock (“Common Stock”) reported on The NASDAQ Capital Market on the date hereof, subject to adjustment pursuant to Section 5 below.

(c)           “Exercise Shares” shall mean 2,142,857 shares of the Common Stock (which shall be equal to the number of shares set forth opposite Investor’s name on Exhibit A to the Purchase Agreement under the column “Number of Restricted Options”).

2.           Exercise of Option. The rights represented by this Option may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):

(a)           An executed Notice of Exercise in the form attached hereto;

(b)           Payment of the Exercise Price either (i) in cash or by check, or (ii) by cancellation of indebtedness; and

(c)           This Option.

Upon the exercise of the rights represented by this Option, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, shall be issued and delivered to the Holder within a reasonable time after the rights represented by this Option shall have been so exercised. In the event that this Option is being exercised for less than all of the then-current number of Exercise Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company of the number of Exercise Shares for which this Option is then being exercised, issue a new Option of like tenor exercisable for the remaining number of Exercise Shares purchasable hereunder.

The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Option shall be deemed to have become the holder of record of such shares on the date on which this Option was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

Notwithstanding anything to the contrary contained in this Option or any other documents, this Option cannot be exercised, and at no time shall the Company issue shares of Common Stock in connection with any such exercise, if such exercise (counted together with all of the shares of Common Stock previously issued (i) pursuant to the Purchase Agreement to the Investor and certain other parties to the Purchase Agreement and (ii) as a result of all other Options’ exercises) would result in the issuance of more than 19.9% of the amount of issued and outstanding common stock of the Company unless (i) the Company’s stockholders shall have approved the issuance of shares of common stock in excess of 20%, or (ii) The NASDAQ has provided a waiver of Listing Rule 5635(d).

2.1           Net Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of one Exercise Share is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Option by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Option (or the portion thereof being canceled) by surrender of this Option at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:

X = Y * (A-B)

            A

3.           Covenants of the Company.

3.1           Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Option will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of Exercise Shares to provide for the exercise of the rights represented by this Option. If at any time during the Exercise Period the number of authorized but unissued Exercise Shares shall not be sufficient to permit exercise of this Option, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Exercise Shares to such number of shares as shall be sufficient for such purposes.

4.           Representations of Holder.

4.1           Acquisition of Option for Personal Account. The Holder represents and warrants that Holder is acquiring this Option and the Exercise Shares solely for Holder’s account for investment and not with a view to or for sale or distribution of said Option or Exercise Shares or any part thereof. The Holder also represents that the entire legal and beneficial interests of this Option and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, Holder’s account only.

4.2           Securities Are Not Registered.

(a)           The Holder understands that this Option and the Exercise Shares have not been registered under the Act on the basis of an applicable exemption from such registration. The Holder realizes that the basis for the exemption may not be present if, notwithstanding Holder’s representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention.

(b)           The Holder recognizes that this Option and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register this Option or the Exercise Shares of the Company, or to comply with any exemption from such registration.

(c)           The Holder is aware that neither this Option nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the requirements of Rule 144.

4.3           Economic Risk and Protection of Interest.

(a)           The Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that Holder is capable of evaluating the merits and risks of Holder’s investment in the Company and has the capacity to protect Holder’s own interests.

(b)           The Holder represents that by reason of Holder’s, or of Holder’s management’s, business or financial experience, the Holder has the capacity to protect Holder’s own interests in connection with the transactions contemplated herein. Further, the Holder is aware of no publication of any advertisement in connection with the transactions contemplated herein.

4.4           Accredited Investor. The Holder represents that Holder is an “accredited investor” within the meaning of Regulation D under the Act.

4.5           Corporate Information. The Holder has had the full and complete opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the full and complete opportunity to review the Company’s operations and facilities. The Holder has also had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions herein.

4.6           Residence. If the Holder is an individual, then the Holder resides in the state or province identified in the address of the Holder set forth below; if the Holder is a partnership, corporation, limited liability Company or other entity, then the office or offices of the Holder in which Holder’s investment decision was made is located at the address or addresses of the Holder set forth herein.

4.7           Disposition of Option and Exercise Shares.

(a)           The Holder further agrees not to make any disposition of all or any part of this Option or Exercise Shares in any event unless and until:

(i)           The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition;

(ii)           There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or

(iii)           The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if requested by the Company or its transfer agent, the Holder shall have furnished the Company and/or its transfer agent with an opinion of counsel for the Holder to the effect that such disposition will not require registration of such Option or Exercise Shares under the Act or any applicable state securities laws.

(b)           The Holder understands and agrees that all certificates evidencing the shares to be issued to the Holder may bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

5.           Adjustment of Exercise Price and Number of Exercise Shares. In the event of changes in the series of equity securities of the Company comprising the Exercise Shares by reason of stock dividends, splits, recapitalizations, reclassifications, combinations, conversions or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of Exercise Shares available under this Option in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of this Option, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had this Option been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment. The form of this Option need not be changed because of any adjustment in the number of Exercise Shares subject to this Option.

6.           Fractional Shares. No fractional shares shall be issued upon the exercise of this Option as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Option may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current fair market value of an Exercise Share by such fraction.

7.           Transfer of Option and Exercise Shares. Subject to applicable laws and the restriction on transfer set forth on the first page of this Option, this Option and all rights hereunder are transferable, by the Holder in person or by its duly authorized attorney, upon delivery of this Option and the form of assignment attached hereto to any transferee designated by Holder. The transferee shall sign an investment letter in form and substance satisfactory to the Company.

8.           No Stockholder Rights. This Option in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

9.           Lost, Stolen, Mutilated or Destroyed Option. If this Option is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Option, include the surrender thereof), issue a new Option of like denomination and tenor as the Option so lost, stolen, mutilated or destroyed. Any such new Option shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Option shall be at any time enforceable by anyone.

10.         Notices, etc. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile or electronic mail if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page and to Holder at Holder’s address listed in the first paragraph hereto, or at such other address as the Company or Holder may designate by ten (10) days advance written notice to the other parties hereto.

11.         Acceptance. Receipt of this Option by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

12.         Governing Law. This Option and all rights, obligations and liabilities hereunder shall be governed by and construed under the laws of the State of Delaware in all respects as such laws are applied to agreements among Delaware residents entered into and performed entirely within Delaware. THE COMPANY AND THE HOLDER HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY WITH RESPECT TO DISPUTES ARISING UNDER THIS OPTION AND CONSENT TO A BENCH TRIAL WITH THE APPROPRIATE JUDGE ACTING AS THE FINDER OF FACT.

[SIGNATURE PAGE FOLLOWS]

In Witness Whereof, the Company has caused this Option to Purchase Common Stock to be executed by its duly authorized officer as of the date first set forth above.

NOTICE OF EXERCISE

TO: Net Element, Inc.

(1)           ¨           The undersigned hereby elects to purchase ________ shares of the Common Stock of Net Element, Inc. (the “Company”) pursuant to the terms of the attached Option, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

¨           The undersigned hereby elects to purchase ________ shares of the Common Stock of Net Element, Inc. (the “Company”) pursuant to the terms of the net exercise provisions set forth in Section 2.1 of the attached Option, and shall tender payment of all applicable transfer taxes, if any.

(2)           Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

________________________

(Name)

________________________

________________________

(Address)

(3)           The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of the Option have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions set forth in Rule 144 are met; (vi) the undersigned is an “accredited investor” within the meaning of Regulation D under the Securities Act; and (vii) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company and its transfer agent with an opinion of counsel stating that such registration is not required.

ASSIGNMENT FORM

(To assign the foregoing Option, execute this form and supply required information. Do not use this form to purchase shares.)

For Value Received, the foregoing Option and all rights evidenced thereby are hereby assigned to

Name:                                                                                                                                                    

                                                                    (Please Print)

Address:                                                                                                                                                    

                                                                    (Please Print)

Dated: __________, 20__

Holder’s

Signature:                                                                                       

Holder’s

Address:                                                                                       

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Option, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Option.