OMNICOMM SYSTEMS INC (Form: 10-Q, Received: 08/11/2017 16:05:06)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

[Mark One]

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30 , 2017

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _______ to ________

Commission File Number: 0-25203

OmniComm Systems, Inc.
(Exact name of registrant as specified in its Charter)

Delaware	11-3349762
(State or other jurisdiction of Incorporation or organization)	(IRS Employer Identification Number)

2101 W. Commercial Blvd. Suite 3500, F ort Lauderdale, FL	33309
Address of principal executive offices	Zip Code

954.473.1254
(Registrant ’s Telephone Number including area code)

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [√] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [√] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “ large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

[ ]

Accelerated filer

[ ]

Non-accelerated filer

(Do not check if smaller reporting company)

[ ]

Smaller reporting company

[√ ]

Emerging growth company

[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mar k whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [√]

The number of shares outstanding of each of the issuer ’s classes of common equity as of August 10, 2017: 147,892,805 common stock $.001 par value.

Table of Contents to the Quarterly Report on Form 10-Q for the Six month period ended June 30 , 2017

*PART I. FINANCIAL INFORMATION*	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	52
ITEM 4. CONTROLS AND PROCEDURES	52
*PART II. OTHER INFORMATION*	52
ITEM 1. LEGAL PROCEEDINGS	52
ITEM 1A. RISK FACTORS	52
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	52
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	52
ITEM 4. MINE SAFETY DISCLOSURES	53
ITEM 5. OTHER INFORMATION	53
ITEM 6. EXHIBITS	53
*SIGNATURES*	54

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS

CURRENT ASSETS
Cash	$	1,116,615		$	1,439,332
Accounts receivable, net of allowance for doubtful accounts of $132,816 and $179,813, respectively		4,889,077			5,455,210
Prepaid expenses		231,097			195,915
Prepaid stock compensation, current portion		94,490			148,422
Other current assets		14,290			35,055
Total current assets		6,345,569			7,273,934

LONG TERM ASSETS
Property and equipment, net		588,572			637,552
Other assets
Intangible assets, net		104,765			108,880
Prepaid stock compensation		22,800			58,663
Other assets		45,756			51,321

TOTAL ASSETS	$	7,107,462		$	8,130,350

LIABILITIES AND SHAREHOLDERS' (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,068,032		$	2,123,073
Deferred revenue, current portion		6,505,895			7,250,061
Convertible notes payable, current portion		50,000			50,000
Patent settlement liability, current portion		627,765			862,500
Conversion feature liability, related parties		1,272,487			1,740,278
Conversion feature liability		450,525			585,452
Warrant liability, related parties		2,000,420			2,519,614
Warrant liability		1,065,594			1,479,748
Total current liabilities		14,040,718			16,610,726

LONG TERM LIABILITIES
Line of credit, long term		1,600,000			2,700,000
Notes payable, related parties, long term, net of current portion, net of discount of $184,850 and $237,664, respectively		265,150			212,336
Notes payable, long term, net of current portion, net of discount of $385,241 and $455,285, respectively		407,259			337,215
Deferred revenue, long term, net of current portion		2,084,541			2,289,169
Convertible notes payable, related parties, long term, net of current portion		5,825,000			5,825,000
Convertible notes payable, long term, net of current portion		1,075,000			1,175,000
Patent settlement liability, long term, net of current portion		-0-			108,702

TOTAL LIABILITIES		25,297,668			29,258,148

COMMITMENTS AND CONTINGENCIES (See Note 10)

SHAREHOLDERS' (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 3,772,500 shares undesignated
Series A convertible preferred stock, 5,000,000 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-0-			-0-
Series B convertible preferred stock, 230,000 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-0-			-0-
Series C convertible preferred stock, 747,500 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-0-			-0-
Series D preferred stock, 250,000 shares authorized, 250,000 and 250,000 issued and outstanding, respectively at $0.001 par value		250			250
Common stock, 500,000,000 shares authorized, 147,792,805 and 147,786,917 issued and outstanding, respectively, at $0.001 par value		147,794			147,788
Additional paid in capital - preferred		999,750			999,750
Additional paid in capital - common		53,598,081			53,425,956
Accumulated other comprehensive (loss)		(398,429	)		(410,505	)
Accumulated (deficit)		(72,537,652	)		(75,291,037	)

TOTAL SHAREHOLDERS' (DEFICIT)		(18,190,206	)		(21,127,798	)

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$	7,107,462		$	8,130,350

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the six months ended						For the three months ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues	$	12,930,309		$	9,822,270		$	7,272,133		$	4,930,261
Reimbursable revenues		529,578			638,729			452,224			373,227
Total revenues		13,459,887			10,460,999			7,724,357			5,303,488

Cost of goods sold		2,186,710			1,911,030			1,106,020			940,859
Reimbursable expenses-cost of goods sold		621,010			639,293			409,206			435,437
Total cost of goods sold		2,807,720			2,550,323			1,515,226			1,376,296

Gross margin		10,652,167			7,910,676			6,209,131			3,927,192

Operating expenses
Salaries, benefits and related taxes		6,512,378			5,443,425			3,221,795			2,710,513
Rent and occupancy expenses		549,049			501,058			270,097			244,458
Consulting services		120,734			48,000			61,105			24,000
Legal and professional fees		240,444			203,296			93,087			80,459
Travel		491,360			400,062			203,669			231,264
Telephone and internet		75,874			83,667			36,616			43,183
Selling, general and administrative		660,266			824,775			451,377			441,721
Bad debt expense		(46,997	)		33,307			(76,363	)		33,455
Depreciation expense		162,419			146,577			82,495			76,111
Amortization expense		10,875			20,253			5,472			10,164
Total operating expenses		8,776,402			7,704,420			4,349,350			3,895,328

Operating income/(loss)		1,875,765			206,256			1,859,781			31,864

Other income/(expense)
Interest expense, related parties		(465,197	)		(443,686	)		(233,738	)		(235,084	)
Interest expense		(214,752	)		(175,373	)		(106,754	)		(87,470	)
Interest income		586			2			585			1
Change in derivative liabilities		1,536,067			(2,458,836	)		1,142,727			(1,696,825	)
Transaction gain/(loss)		22,110			(510	)		16,810			(7,732	)
Income/(loss) before income taxes		2,754,579			(2,872,147	)		2,679,411			(1,995,246	)
Income tax (expense)		(1,194	)		(59	)		-0-			-0-
Net income/(loss)		2,753,385			(2,872,206	)		2,679,411			(1,995,246	)
Preferred stock dividends
Preferred stock dividends in arrears
Series A preferred		-0-			(1,870	)		-0-			-0-
Total preferred stock dividends		-0-			(1,870	)		-0-			-0-
Net income/(loss) attributable to common stockholders	$	2,753,385		$	(2,874,076	)	$	2,679,411		$	(1,995,246	)

Net income/(loss) per share
Basic	$	0.02		$	(0.02	)	$	0.02		$	(0.01	)
Diluted	$	0.02		$	(0.02	)	$	0.02		$	(0.01	)
Weighted average number of shares outstanding
Basic		147,778,391			144,029,335			147,771,240			146,978,378
Diluted		162,256,010			144,029,335			162,316,240			146,978,378

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(unaudited)

	For the six months ended					For the three months ended
	June 30,					June 30,
	2017		2016			2017		2016

Net income/(loss) attributable to common stockholders	$	2,753,385	$	(2,874,076	)	$	2,679,411	$	(1,995,246	)
Other comprehensive income/(loss)
Change in foreign currency translation adjustment		12,076		(17,787	)		14,544		(14,631	)

Other comprehensive income/(loss)		12,076		(17,787	)		14,544		(14,631	)

Comprehensive income/(loss)	$	2,765,461	$	(2,891,863	)	$	2,693,955	$	(2,009,877	)

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2016 AND THE SIX MONTHS ENDED JUNE 30, 2017

(unaudited)

	Preferred Stock													Common Stock
	5% Series A Convertible						Series D Preferred				Additional									Additional						Accumulated
	Number			$	0.001		Number		$	0.001	paid in capital			Number			$	0.001		paid in capital			Accumulated			other comprehensive			Total shareholders'
	of shares			Par value			of shares		Par value		preferred			of shares			Par value			common			(deficit)			(loss)			(deficit)
Balances at December 31, 2015		3,637,724		$	3,637			250,000	$	250	$	4,230,792			131,703,577		$	131,704		$	49,974,415		$	(75,392,917	)	$	(366,355	)	$	(21,418,474	)

Employee stock option expense																					35,046									35,046

Foreign currency translation adjustment																											(44,150	)		(44,150	)

Restricted stock issuance/(forfeiture)															360,000			360			68,040									68,400

Issuance of common stock, stock option exercise															1,100,000			1,100			128,400									129,500

Cashless issuance of common stock, stock option exercise															7,644			8			(8	)								-0-

Issuance of common stock, in exchange for Series A Preferred Stock		(3,637,724	)		(3,637	)						(3,231,042	)		14,615,696			14,616			3,220,063									-0-

Net income/(loss) for the year ended December 31, 2016		-0-			-0-			-0-		-0-		-0-			-0-			-0-			-0-			101,880			-0-			101,880

Balances at December 31, 2016		-0-			-0-			250,000		250		999,750			147,786,917			147,788			53,425,956			(75,291,037	)		(410,505	)		(21,127,798	)

Employee stock option expense																					174,965									174,965

Foreign currency translation adjustment																											12,076			12,076

Restricted stock issuance/(forfeiture)															(16,668	)		(17	)		(2,817	)								(2,834	)

Cashless issuance of common stock, stock option exercise															22,556			23			(23	)								-0-

Net income/(loss) for the period ended June 30, 2017		-0-			-0-			-0-		-0-		-0-			-0-			-0-			-0-			2,753,385			-0-			2,753,385

Balances at June 30, 2017		-0-		$	-0-			250,000	$	250	$	999,750			147,792,805		$	147,794		$	53,598,081		$	(72,537,652	)	$	(398,429	)	$	(18,190,206	)

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the six months ended
	June 30,
	2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	2,753,385		$	(2,872,206	)
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Change in derivative liabilities		(1,536,067	)		2,458,836
Interest expense from derivative instruments		122,858			35,209
Employee stock compensation		261,926			110,659
Provision for doubtful accounts		(46,997	)		33,307
Depreciation and amortization		173,294			166,830
Changes in operating assets and liabilities
Accounts receivable		613,130			(268,770	)
Prepaid expenses		(35,182	)		(11,514	)
Other current assets		20,765			4,703
Other assets		5,565			(6,789	)
Accounts payable and accrued expenses		(55,041	)		150,661
Patent settlement liability		(343,437	)		(272,678	)
Deferred revenue		(948,794	)		(244,655	)
Net cash provided by/(used in) operating activities		985,405			(716,407	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(107,348	)		(164,449	)
Net cash (used in) investing activities		(107,348	)		(164,449	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable		(100,000	)		-0-
Proceeds/(repayments) from revolving line of credit		(1,100,000	)		800,000
Proceeds from exercise of stock options		-0-			125,000
Net cash provided by/(used in) financing activities		(1,200,000	)		925,000

Effect of exchange rate changes on fixed and intangible assets		(12,850	)		(4,475	)
Effect of exchange rate changes on cash and cash equivalents		12,076			(17,787	)
Net increase/(decrease) in cash and cash equivalents		(322,717	)		21,882
Cash and cash equivalents at beginning of period		1,439,332			835,219

Cash and cash equivalents at end of period	$	1,116,615		$	857,101

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	1,194		$	59
Interest	$	534,238		$	774,746

Non-cash transactions:
Notes payable issued in exchange for existing notes payable	$	350,000		$	7,652,500
Restricted stock issuance/(forfeiture)	$	(2,834	)	$	68,400
Promissory notes issued for accrued interest	$	-0-		$	450,000
Common stock issued in exchange for 5% Series A Preferred Stock	$	-0-		$	3,637,724

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 1:

ORGANIZATION AND NATURE OF OPERATIONS

OmniComm Systems, Inc. (“OmniComm” or the “Company”) is a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, contract research organizations (“CROs”), and other clinical trial sponsors principally located in the United States, Europe and East Asia. Our proprietary EDC software applications; TrialMaster ^® , TrialOne ^® , eClinical Suite, and Promasys ^® (the “EDC Software”) allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

Our ability to compete within the EDC industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC Software and services. Our research and product development efforts are focused on developing new and complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. During the six month periods ended June 30, 2017 and June 30, 2016 we spent $1,484,356 and $1,315,524, respectively, on research and product development activities, which are primarily comprised of salaries to our developers and other research and product development personnel and related costs associated with the development of our software products.

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The Company ’s accounts include those of all its wholly-owned subsidiaries, which are more fully described in the Company’s 2016 Annual Report filed on Form 10-K with the Securities and Exchange Commission, and have been prepared in conformity with (i) accounting principles generally accepted in the United States of America; and (ii) the rules and regulations of the United States Securities and Exchange Commission. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

UNAUDITED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements of th e Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The results for the six month periods ended June 30, 2017 and June 30, 2016 are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

The operating results for the six month period ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year-ended December 31, 2017. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2016.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities , the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results may differ from those estimates.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

Reclassifications

Certain reclassifications have been made in the 2016 financial statements to conform to the 2017 presentation. These reclassifications did not have any effect on our net income/(loss) or shareholders’ deficit.

foreign currency translation

The financial statements of the Company ’s foreign subsidiaries are translated in accordance with Accounting Standards Codification (“ASC”) 830-30, Foreign Currency Matters—Translation of Financial Statements ("ASC 830-30"). The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s subsidiaries, OmniComm Europe GmbH in Germany, OmniComm Spain S.L. in Spain and OmniComm Systems B.V. in the Netherlands is the Euro. The functional currency of the Company’s subsidiary, OmniComm Ltd. in the United Kingdom, is the British Pound Sterling. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded a translation gain of $12,076 and a translation loss of $17,787 for the six month periods ended June 30, 2017 and June 30, 2016, respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products of fered by the Company: TrialMaster, TrialOne , eClinical Suite and Promas y s . Service revenues are derived principally from the Company's delivery of the hosted solutions of its TrialMaster and eClinical Suite software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the collection of fees is probable; and (4) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in one reportable segment which is the delivery o f EDC Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through four main activities , including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its TrialMaster and eClinical Suite software products as hosted application solutions delivered through a standard web-browser, with customer support and training services. The Company's TrialOne and Promasys solutions are presently available on a technology transfer or off-the shelf basis. To date, hosted applications revenues have been primarily related to TrialMaster and eClinical Suite .

Revenues resulting from TrialMaster and eClin i cal Suite application hosting services consist of three components of services for each clinical trial. The first component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The second component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The third component involves services required to close out, or lock, the database for the clinical trial.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

Fees charged for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work performed outside the original scope of work is contracted for separately as an additional fee and is general ly recognized ratably over the remaining term of the hosting period. Fees for the first and third stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the second stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the eClinical Suite products consist of installation and server configuration, application hosting and related support services. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf softw are. From time-to-time a client might require significant modification or customization subsequent to delivery to the customer. The Company generally enters into software term licenses for its EDC Software products with its customers for three to five year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net 30 days.

The Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and may, in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company may also enter into arrangements to prov ide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional services can be deemed to be as essential to the functionality of the software at inception and typically are for initial trial configuration, implementation planning, loading of software, building simple interfaces, running test data and documentation of procedures. Subsequent additions or extensions to license terms do not generally include additional professional services.

Maintenance Revenues

Maintenance includes telephone-based help desk support and software maintenance, including updates to the software through new software version releases. The Company generally bundles customer support with the software license for the entire term of the arrangement. As a result, the Company generally recognizes revenues for both maintenance and software licenses ratably over the term of the software license and support arrangement. The Company allocates the revenues recognized for these arrangements to the different elements based on management's estimate of the relative fair value of each element. The Company generally invoices each of the elements based on separately quoted amounts and thus has a fairly accurate estimate of the relative fair values of each of the invoiced revenue elements.

Pass -t hr ough Revenue and Expense

The Company accounts for pass-through revenue and expense (reimbursable revenue and reimbursable expense) in accordance with ASC 605-45, Principal Agent Considerations (“ASC 605-45”). In accordance with ASC 605-45 these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with third-party services provided to our customers by our service and product partners. These third-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

The fees associated with each business activity for the six month periods ended June 30, 2017 and June 30, 2016, respectively , are:

	For the six months ended
Revenue activity	June 30, 2017		June 30, 2016
Set-up fees	$	2,692,108	$	3,312,733
Change orders		701,506		669,899
Maintenance		2,378,694		2,337,965
Software licenses		5,506,624		2,202,288
Professional services		1,606,558		1,398,136
Hosting		574,397		539,978
Total	$	13,459,887	$	10,460,999

COST OF GOODS SOLD

Cost of goods sold primarily consists of costs related to hosting, maintaining and supporting the Company’s application suite and delivering professional services and support. These costs include salaries, benefits, and bonuses for the Company’s professional services staff. Cost of goods sold also includes outside service provider costs . Cost of goods sold is expensed as incurred.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid, short-term investments with maturities of 90 days or less. The carrying amount reported in the accompanying consolidated balance sheets approximates fair value.

A CCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary. The allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. The Company had recorded an allowance for uncollectible accounts receivable of $132,816 as of June 30, 2017 and $179,813 as of December 31, 2016.

The following table summarizes activity in the Company's allowance for doubtful accounts for the six month period ended June 30, 2017 and the year ended December 31, 2016.

	June 30, 2017			December 31, 2016
Beginning of period	$	179,813		$	116,834
Bad debt expense		(46,997	)		132,767
Write-offs		-0-			(69,788	)
End of period	$	132,816		$	179,813

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any one financial institution may be in excess of FDIC-insured limits. As of June 30, 2017, $909,251 was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

Except as follows, the Company has no significant off-balance-sheet risk or credit risk concentrations. Financial instruments that subject the Company to potential credit risks are principally cash equivalents and accounts receivable. Concentrated credit risk with respect to accounts receivable is limited to creditworthy customers. The Company's customers are principally located in the United States , Europe and East Asia. The Company is directly affected by the overall financial condition of the pharmaceutical, biotechnology and medical device industries and management believes that credit risk exists and that any credit risk the Company faces has been adequately reserved for as of June 30, 2017. The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses , when incurred , are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of June 30, 2017, the Company believes no additional credit risk exists beyond the amounts provided for in our allowance for uncollectible accounts. The Company evaluates its allowance for uncollectable accounts on a quarterly basis based on a specific review of receivable aging and the period that any receivables are beyond the standard payment terms. The Company does not require collateral from its customers in order to mitigate credit risk.

One customer accounted for 1 0% of our revenues during the six month period ended June 30, 2017 or approximately $1,300,000. One customer accounted for 20% of our revenues during the six month period ended June 30, 2016 or approximately $2,10 0,000. The following table summarizes the number of customers who individually comprise greater than 10% of total revenue and/or total accounts receivable and their aggregate percentage of the Company's total revenue and gross accounts receivable for the six month periods ended June 30, 2017 and June 30, 2016 and the year ended December 31, 2016.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
June 30, 2017		1		10%		2		35%
December 31, 2016		1		16%		2		21%
June 30, 2016		1		20%		1		13%

The table below provides revenues from European customers for the six month periods ended June 30, 2017 and June 30, 2016.

European revenues

For the six months ended

June 30, 2017

June 30, 2016

European revenues

% of Total revenues

European revenues

% of Total revenues

$1,710,724

13%

$899,293

The Company serves all of its hosting customers from third-party web hosting facilities located in the United States. The Company does not control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the third-party web hosting facilities become unavailable, although in such circumstances, the Company's service may be interrupted during the transition.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Additions and betterments are cap italized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the asset’s estimated useful life, which is 5 years for leasehold improvements, computers, equipment and furniture and 3 years for software. Gains or losses on disposal are charged to operations.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

ASSET IMPAIRMENT

Acquisitions and Intangible Assets

We account for acquisitions in accordance with ASC 805 , Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset ’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

OmniComm ’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815 , Derivatives and Hedging (“ASC 815”) . ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820 , Fair Value Measurements and Disclosures (“ASC 820”) .

DEFERRED REVENUE

Deferred revenue represents cash advances and amounts in accounts receivable as of the balance sheet date received in excess of revenue earned on on-going contracts. Payment terms vary with each contract but may include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation. As of June 30, 2017, the Company had $8,590,436 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 5 years. The Company had $6,505,895 in deferred revenues that are expected to be recognized in the next twelve fiscal months.

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $437,293 and $432,837 for the six month periods ended June 30, 2017 and June 30, 2016, respectively, and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

RESEARCH AND PRODUCT DEVELOPMENT EXPENSES

Software development costs are expensed as incurred. ASC 985-20, Software Industry Costs of Software to Be Sold, Leased or Marketed (“ASC 985-20”), requires the capitalization of certain development costs of software to be sold once technological feasibility is established, which the Company defines as completion to the point of marketability. The capitalized cost is then amortized on a straight-line basis over the estimated product life. To date, the period between achieving technological feasibility and the general availability of such software has been short and software development costs qualifying for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs under ASC 985-20. During the six month periods ended June 30, 2017 and June 30, 2016 we spent $1,484,356 and $1,315,524 , respectively, on research and product development activities, which include costs associated with the development of our software products and services for our clients’ projects and which are primarily comprised of salaries and related expenses for our software developers and consulting fees paid to third-party consultants . Research and product development costs are primarily included under Salaries, benefits and related taxes in our Statement of Operations.

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc. 2016 Equity Incentive Plan (the “ 2016 Plan”) was approved at our Annual Meeting of Shareholders on June 16, 2016. The 2016 Plan initially provides for the issuance of up to 10,000,000 shares of our common stock. In addition, the number of shares of common stock available for issuance under the 2016 Plan shall automatically increase on January 1st of each year for a period of nine (9) years commencing on January 1, 2017 and ending on (and including) January 1, 2025, in an amount equal to five percent (5%) of the total number of shares authorized under the 2016 Plan. As of June 30, 2017 10,500,000 shares of our common stock were authorized for issuance under the 2016 Plan.

The predecessor plan, t he OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) was approved at our Annual Meeting of Shareholders on July 10, 2009 and terminated on June 16, 2016 upon the approval of the 2016 Plan. The 2009 Plan provided for the issuance of up to 7,500,000 shares to employees, directors and key consultants. The 2016 and 2009 Plans are more fully described in “Note 13, Equity Incentive Plans”.

The Company accounts for its equity incentive plans under ASC 718, Compensation – Stock Compensation , (“ASC 718”) which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company currently uses the Black Scholes option pricing model to determine grant date fair value.

EARNINGS PER SHARE

The Company accounts for Earnings per Share using ASC 260 , Earnings per Share , (“ASC 260”) . Unlike diluted earnings per share basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities.

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxe s (“ASC 740”) . ASC 740 has as its basic objective the recognition of current and deferred income tax assets and liabilities based upon all events that have been recognized in the financial statements as measured by the provisions of the enacted tax laws.

Valuation allowances are established , when necessary , to reduce deferred tax assets to the estimated amount to be realized. Income tax expense represents the tax payable for the current period and the change during the period in the deferred tax assets and liabilities.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

IMPACT OF NEW ACCOUNTING STANDARDS

During the first six months of 2017, we adopted the following new accounting pronouncements:

No new applicable pronouncements during the six month period ended June 30, 2017.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.

NOTE 3.

EARNINGS / (LOSS) PER SHARE

Basic earnings /(loss) per share were calculated using the weighted average number of shares outstanding of 147,778,391 and 144 ,029,335 for the six month periods ended June 30, 2017 and June 30, 2016, respectively.

The outstanding share balance as of June 30, 2017 and June 30, 2016, respectively, includes 998,350 and 1,943,343 restricted shares that have been issued but are still at risk of forfeiture as the restrictions have not lapsed.

Antidilutive shares of 31,752,126 and 44,902,516 have been omitted from the calculation of dilutive earnings/(loss) per share for the six month periods ended June 30, 2017 and June 30, 2016, respectively, as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per shares. The table below provides a reconciliation of anti-dilutive securities outstanding as of June 30, 2017 and June 30, 2016, respectively.

Anti-dilutive security	June 30, 2017		June 30, 2016
Employee stock options		3,850,000		982,500
Warrants		27,020,000		27,860,000
Convertible notes		740,000		15,910,000
Shares issuable for accrued interest		142,126		150,016
Total		31,752,126		44,902,516

The employee stock o ptions are exercisable at prices ranging from $0.14 to $0.25 per share. The exercise prices on the warrants range from $0.25 to $0.60 per share. Shares issuable upon conversion of Convertible Debentures or accrued interest have conversion prices ranging from $0.25 to $1.25 per share.

Some of t he Company’s convertible debt and convertible preferred stock have an anti-dilutive effect on net income/(loss) per share and were not included in the computation of diluted earnings per share.

	For the six months ended
	June 30, 2017								June 30, 2016
	Income/(loss)			Shares		Per-share			Income/(loss)			Shares		Per-share
	numerator			denominator		amount			numerator			denominator		amount
Basic EPS	$	2,753,385			147,778,391	$	0.02		$	(2,874,076	)		144,029,335	$	(0.02	)

Effect of dilutive securities		(193,733	)		14,477,619		(0.01	)		-0-			-0-		-0-

Diluted EPS	$	2,559,652			162,256,010	$	0.02		$	(2,874,076	)		144,029,335	$	(0.02	)

	For the three months ended
	June 30, 2017								June 30, 2016
	Income/(loss)			Shares		Per-share			Income/(loss)			Shares		Per-share
	numerator			denominator		amount			numerator			denominator		amount
Basic EPS	$	2,679,411			147,771,240	$	0.02		$	(1,995,246	)		146,978,378	$	(0.01	)

Effect of dilutive securities		(205,560	)		14,545,000		(0.01	)		-0-			-0-		-0-

Diluted EPS	$	2,473,851			162,316,240	$	0.02		$	(1,995,246	)		146,978,378	$	(0.01	)

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 4:

PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	June 30, 2017						December 31, 2016
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	2,217,149	$	1,854,382	$	362,767	$	2,125,067	$	1,761,879	$	363,188		5
Leasehold improvements		117,664		94,671		22,993		114,719		89,789		24,930		5
Computer software		1,964,649		1,801,436		163,213		1,925,462		1,720,399		205,063		3
Office furniture		160,458		120,859		39,599		158,436		114,065		44,371		5
Total	$	4,459,920	$	3,871,348	$	588,572	$	4,323,684	$	3,686,132	$	637,552

Depreciation expense for the six month periods ended June 30, 2017 and June 30, 2016 was $162,419 and $146,577, respectively.

NOTE 5:

INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	June 30, 2017						December 31, 2016
Asset	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value		Estimated useful life (years)
eClinical Suite customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		112,953		27,611		85,342		104,163		21,990		82,173		15
Promasys B.V. software code		72,837		53,414		19,423		72,837		46,130		26,707		5
Promasys B.V. URLs/website		57,047		57,047		-0-		52,608		52,608		-0-		3
Total	$	1,635,538	$	1,530,773	$	104,765	$	1,622,309	$	1,513,429	$	108,880

Amortization expense was $10,875 and $20,253 for the six month periods ended June 30, 2017 and June 30, 2016, respectively.

Remaining amortization expense for the Company ’s intangible assets is as follows:

2017	$	11,049
2018		19,670
2019		7,530
2020		7,530
2021		7,530
Thereafter		51,456
Total	$	104,765

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 6 :

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	June 30, 2017		December 31, 2016
Accounts payable	$	966,863	$	697,060
Accrued payroll and related costs		780,478		886,334
Other accrued expenses		143,745		431,961
Accrued interest		176,946		107,718
Total accounts payable and accrued expenses	$	2,068,032	$	2,123,073

NOTE 7 :

LINE OF CREDIT , NOTES PAYABLE AND LIQUIDITY

On March 18, 2013, the Company enter ed into a $2,000,000 revolving Line of Credit (“Line of Credit”) with The Northern Trust Company guaranteed by our Executive Chairman, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. On February 3, 2015 the Company renewed the Line of Credit and increased the available balance to $5,000,000. On April 7, 2017 the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At June 30, 2017, $1 ,6 00,000 was outstanding on the Line of Credit at an interest rate of 3 .25% .

Our primary sources of working capital are funds from operations and borrowings under our revolving Line of Credit. In the event that the Line of Credit is called for any reason, Mr. Wit has pledged to replace the borrowing capacity under the Line of Credit with a promissory note that utilizes the same maturity date and interest rate as the Line of Credit.

To satisfy our capital requirements, we may seek additional financing. There can be no assurance that any such funding will be available to us on favorable terms or at all. If adequate funds are not available when needed, we may be required to delay, scale back or eliminate some or all of our research and product development and marketing programs. If we are successful in obtaining additional financings, the terms of such financings may have the effect of diluting or adversely affecting the holdings or the rights of the holders of our securities or result in increased interest expense in future periods.

At June 30, 2017, the Company owed $1,242 ,500 in notes payable all of which are unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		June 30, 2017		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	450,000	$	-0-	$	-0-		$	-0-	$	450,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		372,500		-0-		372,500			-0-		-0-
Discount on notes payable							-0-		(385,241	)		-0-		(184,850	)
Total				$	1,242,500	$	-0-	$	407,259		$	-0-	$	265,150

At December 31, 2016, the Company owed $1,242,500 in notes payable all of which were unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2016		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	450,000	$	-0-	$	-0-		$	-0-	$	450,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		372,500		-0-		372,500			-0-		-0-
Discount on notes payable							-0-		(455,285	)		-0-		(237,664	)
Total				$	1,242,500	$	-0-	$	337,215		$	-0-	$	212,336

On April 1, 2015 the Company issued a promissory note in the amount of $20,000 to our Executive Vice Chairman, Randall G. Smith ("Mr. Smith"), in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2018. The note was repaid in full on December 14, 2016.

On February 29, 2016, t he Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to our Executive Chairman, Cornelis F. Wit (“Mr. Wit”), in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019. On December 5, 2016 Mr. Wit sold 1,000,000 of the warrants to an employee of the Company.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $325,689 was calculated and allocated to the warrants and rec orded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $124,311. The warrant liability (discount) will be amortized over the 37 month duration of the note payable. The Company will continue to perform a fair value calculation quarterly on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

On June 30, 2016, the Company issued promissory notes in the principal amount of $372,500 and warrants to purchase 1,490,000 sha res of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 12% per annum and have a maturity date of April 1, 2020.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $246,921 was calculated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $125,579. The warrant liability (discount) will be amortized over the 45 month duration of the note payables. The Company will continue to perform a fair value calculation quarterly on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

On June 30, 2016, the Company issued promissory notes in the principal amount of $420,000 and warrants to purchase 1,680,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 10% per annum and have a maturity date of April 1, 2020.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $278,408 was calcul ated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $141,592. The warrant liability (discount) will be amortized over the 45 month duration of the note payables. The Company will continue to perform a fair value calculation quarterly on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 8 :

CONVERTIBLE NOTES PAYABLE

T he following table summarizes the convertible debt outstanding as of June 30, 2017 .

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		June 30, 2017		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2019		10%		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2020		10%		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	4/1/2020		12%		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2020		12%		4,055,000		-0-		-0-		4,055,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
9/30/2009	4/1/2020		12%		625,000		-0-		-0-		-0-		625,000
Total				$	6,950,000	$	-0-	$	50,000	$	5,825,000	$	1,075,000

The following table summarizes the convertible debt outstanding as of December 31, 2016 .

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2016		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2018		10%		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2020		10%		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	4/1/2018		12%		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2020		12%		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2020		12%		4,055,000		-0-		-0-		4,055,000		-0-
9/30/2009	4/1/2018		12%		100,000		-0-		-0-		-0-		100,000
9/30/2009	4/1/2020		12%		625,000		-0-		-0-		-0-		625,000
Total				$	7,050,000	$	-0-	$	50,000	$	5,825,000	$	1,175,000

10% Convertible Notes

During 1999, the Company issued 10% Convertible Notes payable in the amount of $862,500 pursuant to a Confidential Private Placement Memorandum. There were costs of $119,625 associated with this offering. The net proceeds to the Company were $742,875. T he notes bear interest at 10% annually, payable semi-annually. The notes were convertible after maturity, which was June 30, 2004, into shares of common stock of the Company at $1.25 per share. We are in default in the payment of principal and interest. As of June 30, 2017, $812,500 of the Convertible Notes had been repaid in cash or converted into 1,495,179 shares of common stock of the Company leaving an outstanding principal balance of $5 0,000. There was $9 0,689 of accrued interest at June 30, 2017 .

Sec ured Convertible Debentures

On September 30, 2009, the Company sold an aggregate of $1,400,000 principal amount 12% Secured Convertible Debentures (the “ Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to four accredited investors including our Executive Chairman, Cornelis F. Wit (“Mr. Wit”). The Company received net proceeds of $1,400,000. The Debentures, which bear interest at 12% per annum, matured on March 30, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share.

On M arch 30, 2011, the Company repaid $200,000 of the outstanding principal amounts owed and extended $1,200,000 of the convertible notes until April 1, 2013, including $1,100,000 in convertible notes held by Mr. Wit. The Company also extended the expiration date of the warrants associated with the September 2009 offering.

On February 22, 2013, the Company and two holders extended $1,200,000 of the convertible notes until January 1, 2016, including $1,100,000 in convertible notes held by Mr. Wit. Mr. Wit also waived all his rights to the security interest under his $1,100,000 convertible notes. The expiration date of the warrants associated with the September 2009 offering was also extended to January 1, 2016.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

On January 31, 2015 the Company and Mr. Wit ext ended the maturity date of $1,100,000 of convertible debentures to Mr. Wit. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015 Mr. Wit converted $475,000 of the convertible debentures into 1,900,000 shares of our common stock. On November 19, 2015 the Company and Mr. Wit agreed to cancel the 1,900,000 warrants related to the $475,000 in convertible debentures and $475,000 of unrelated promissory notes in exchange for 1,900,000 shares of our common stock. On November 23, 2015 Mr. Wit sold the remaining $625,000 of convertible debentures and the related warrants to two unrelated non-affiliate shareholders.

On April 1, 2015 the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On June 30, 2016 the Company and two holders extended the maturity date of $625,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2017 the Company repaid $100,000 of convertible debentures to a holder.

Convertible Debentures

August 2008

On August 29, 2008, the Company sold $2,270,000 of convertible debentures and warrants to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including our Executive Chairman, Cornelis F. Wit (“Mr. Wit”), and one of our Directors. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share.

On September 30, 2009, the Company and two Affiliates of the Company extended $1,920,000 of the convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the debentures was also extended to August 29, 2013.

On February 22, 2013 the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to our former Director, Guus van Kesteren (“ Mr. van Kesteren”) to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.

On April 21, 2014 the Company and Mr. van Kesteren, extended the maturity date of his $150,000 of convertible d ebentures to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party.

On January 31, 2015 the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2017. The expiration date of the warrants ass ociated with the debentures was also extended to April 1, 2017.

On June 30, 2015 the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the d ebentures was also extended to April 1, 2017.

On June 30, 2016 the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also ex tended to April 1, 2020.

On June 30, 2016 the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On June 30, 2017 the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2019. The expiration date of the warrants associated with the debentures was also extended to April 1, 2019.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

December 2008

On December 16, 2008, the Company sold $5,075,000 of convertible debentures and warrants to purchase an aggregate of 10,150,000 shares of common stock to eleven accredited investors including our Executive Chairman, Cornelis F. Wit (“Mr. Wit”), our President and Chief Executive Officer, Stephen E. Johnson (“Mr. Johnson”), our Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), our former Chief Financial Officer, Ronald T. Linares, and four of our Directors. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share.

On September 30, 2009 Affiliates of the Company extended $4,980,000 of Convertible Notes until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the debentures was also extended to December 16, 2013.

On February 22, 2013 the Company and the holders agreed to extend the maturity date of $4,505,000 of the convertible debentures including $4,475,000 due to Mr. Wit, $25,000 due to Mr. Johnson, and $5,000 due to Mr. Smith, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 27, 2013 the Company and Mr. Veatch extended the maturity date of $15,000 of convertible debentures issued to our former Director, Ma tthew Veatch, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On March 6, 2013, the Company and the holder agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2014. The expiration date of the warrants associated with the debentures was also extended to January 1, 2014.

On March 12, 2013, the Company and the holder agreed to extend the maturity date of $100,000 of convertible debentures to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.

In December 2013, the Company and two holders agreed to extend the maturity date of $360,000, including $160,000 due to our former Director, Guus van Kesteren (“Mr. van Kesteren”), of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party.

On April 28, 2014 the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016.

On January 31, 2015 the Company and Mr. Wit extended the maturity date of $4,475,000 of convertible debentures to Mr. Wit to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015 the Company and Mr. Wit agreed to cancel $420,000 of the debentures and 1,680,000 of unrelated warrants in exchange for 1,680,000 shares of our common stock.

On April 27, 2015, the Company and the holder extended the maturity date of $200,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On April 30, 2015, the Company and Mr. Johnson extended the maturity date of $25,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The convertible debentures were repaid in full on December 14, 2016.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

On May 1, 2015 the Company and Mr. van Kesteren extended the maturity date of $160,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On May 1, 2015 the Company paid $5,000 to Mr. Smith in exchange for $5,000 of convertible debentures originally issued in December 2008.

On May 7, 2015 the Company and our former Director, Matth ew Veatch, extended the maturity date of $15,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The convertible debentures were repaid in full on December 14, 2016.

On June 30, 2015 the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On June 30, 201 6 the Company and Mr. Wit extended the maturity date of $4,055,000 of convertible debentures to Mr. Wit to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016 the Company and Mr. van Kesteren extended the maturity date of $160,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The convertible debentures were repaid in full on December 14, 2016.

On June 30, 2016 the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2017, the Company and the holder agreed to extend the maturity date of $200,000 of convertible debentures to April 1, 2021. The expiration date of the warrants associated with the debentures was also extended to April 1, 2021.

The principal payments required at maturity under the Company’s outstanding convertible debt at June 30, 2017 are as follows:

2017	$	50,000
2018		-0-
2019		150,000
2020		6,550,000
2021		200,000
Total	$	6,950,000

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 9 :

FAIR VALUE MEASUREMENT

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

	●	Level 1 : Observable inputs such as quoted prices for identical assets or liabilities in active markets;

	●	Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

●

Level 3 : Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.

The valuation techniques that may be used to measure fair value are as follows:

Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

	B.	Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings methods

	C.	Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

The Company also adopted the provisions of ASC 825, Financial Instruments (“ASC 825”). ASC 825 allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to re-measure any of its existing financial assets or liabilities under the provisions of this Statement. The Company elected the fair value option for the issuance of warrants associated with the promissory notes issued in the six month period ended June 30, 2016.

The Company ’s financial assets or liabilities subject to ASC 820 as of June 30, 2017 include the conversion feature and warrant liability associated with convertible debentures issued during 2008 and 2009 and the warrants issued during 2011 and 2016 that are associated with notes payable. The conversion feature and warrants were deemed to be derivatives (the “Derivative Instruments”) since a fixed conversion price cannot be determined for either of the Derivative Instruments due to anti-dilution provisions embedded in the offering documents for the convertible debentures. The derivative instruments were not issued for risk management purposes and as such are not designated as hedging instruments under the provisions of ASC 815 , Disclosures about Derivative Instruments and Hedging Activities . See Note 8 – Convertible Notes Payable.

Following is a description of the valuation methodologies used to determine the fair value of the Company ’s financial liabilities including the general classification of such instruments pursuant to the valuation hierarchy.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

A summary as of June 30, 2017 of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	June 30, 2017		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,723,012	$	-0-	$	-0-	$	1,723,012
Warrant liability		3,066,014		-0-		-0-		3,066,014
Total of derivative liabilities	$	4,789,026	$	-0-	$	-0-	$	4,789,026

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the six month period ended June 30, 2017

(2) The fair value at the measurement date is equal to the carrying value on the balance sheet

Significant valuation assumptions for derivative instruments at June 30, 2017
Risk free interest rate	1.12%	to	1.48%
Dividend yield		0.00%
Expected volatility	111.4%	to	127.9%
Expected life (range in years)
Conversion feature liability	1.75	to	3.76
Warrant liability	0.75	to	3.76

A summary as of December 31, 2016 of the fair value of liabilities measured at fair value on a recurring ba s is follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	2,325,730	$	-0-	$	-0-	$	2,325,730
Warrant liability		3,999,362		-0-		-0-		3,999,362
Total of derivative liabilities	$	6,325,092	$	-0-	$	-0-	$	6,325,092

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the year ended December 31, 2016

(2) The fair value at the measurement date is equal to the carrying value on the balance sheet

Significant valuation assumptions for derivative instruments at December 31, 2016
Risk free interest rate	0.82%	to	1.45%
Dividend yield		0.00%
Expected volatility	117.3%	to	143.8%
Expected life (range in years)
Conversion feature liability	1.25	to	3.25
Warrant liability	0.25	to	3.25

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

A summary as of June 30, 2017 of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	December 31, 2016		June 30, 2017		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	82,173	$	85,342	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		26,707		19,423		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		-0-		-0-		-0-		-0-		68,814
Total	$	108,880	$	104,765	$	-0-	$	-0-	$	278,010

(3) The fair value of the acquired assets was estimated using the Income Approach with a discounted cash flow valuation methodology applied.

(4) The acquired Promasys B.V. software code, customer list and URLs/website are not measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

A summary as of December 31, 2016 of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	December 31, 2015		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	92,444	$	82,173	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		41,274		26,707		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		15,159		-0-		-0-		-0-		68,814
Total	$	148,877	$	108,880	$	-0-	$	-0-	$	278,010

(3) The fair value of the acquired assets was estimated using the Income Approach with a discounted cash flow valuation methodology applied.

Other identifiable intangible assets, which are subject to amortization, are being amortized using the straight-line method over their estimated useful lives ranging from 3 to 15 years. The Impairment or Disposal of Long-Lived Asset subsection of ASC 360, Property, Plant and Equipment requires us to test the recoverability of long-lived assets, including identifiable intangible assets with definite lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In testing for potential impairment, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of impairment, if any.

The table below presents the unrealized gains/(losses) for the six month periods ended June 30, 2017 and June 30, 2016 .

	Other income/(expense)
	For the six months ended
	June 30, 2017		June 30, 2016
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gain/(losses) from changes in derivative liabilities at the reporting date	$	1,536,067	$	(2,458,836	)

Total unrealized and realized gains/(losses) included in earnings	$	1,536,067	$	(2,458,836	)

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

The table s below set forth a summary of changes in fair value of the Company’s Level 3 financial liabilities at fair value for the six month period ended June 30, 2017 and the year ended December 31, 2016. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of June 30, 2017 and December 31, 2016 .

	Level 3 financial liabilities at fair value
								Net
								purchases,
	Balance,							issuances				Balance,
For the six months ended	beginning			Net realized		Net unrealized		and		Net transfers		end
June 30, 2017	of year			gains/(losses)		gains/(losses)		settlements		in and/or out		of period
Derivatives:
Conversion feature liability	$	(2,325,730	)	$	48,375	$	554,343	$	-0-	$	-0-	$	(1,723,012	)
Warrant liability		(3,999,362	)		-0-		933,348		-0-		-0-		(3,066,014	)
Total of derivative liabilities	$	(6,325,092	)	$	48,375	$	1,487,691	$	-0-	$	-0-	$	(4,789,026	)

	Level 3 financial liabilities at fair value
									Net
									purchases,
	Balance,								issuances					Balance,
For the year ended	beginning			Net realized		Net unrealized			and			Net transfers		end
December 31, 2016	of year			gains/(losses)		gains/(losses)			settlements			in and/or out		of year
Derivatives:
Conversion feature liability	$	(901,243	)	$	29,108	$	(1,453,595	)	$	-0-		$	-0-	$	(2,325,730	)
Warrant liability		(1,914,923	)		-0-		(1,233,423	)		(851,016	)		-0-		(3,999,362	)
Total of derivative liabilities	$	(2,816,166	)	$	29,108	$	(2,687,018	)	$	(851,016	)	$	-0-	$	(6,325,092	)

NOTE 1 0 :

COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating lease s for its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at June 30, 2017 are as follows:

2017	$	369,156
2018		566,431
2019		421,230
2020		297,570
2021		269,962
Thereafter		310,550
Total	$	2,234,899

In addition to annual base rental payments , the Company pays for the operating expenses associated with its leased office space and is responsible for any escalation in operating expenses as determined in the leases. Rent expense was $549,049 and $501,058 for the six month periods ended June 30, 2017 and June 30, 2016, respectively.

The Comp any’s Fort Lauderdale, Florida corporate office lease expires in February 2023. The Company’s lease on its New Jersey field office expires in March 2021. The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in September 2017. The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in July 2018. The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of a lease that expires in October 2018.

LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of June 30, 2017, there were no pending legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject that could reasonably be expected to have a material effect on the results of our operations.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

PATENT LITIGATION SETTLEMENT

Effective April 9, 2009, we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the Settlement and License Agreement, as amended, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from January 1, 2009 until the termination of the Settlement and License Agreement on December 31, 2017 equal to two percent (2%) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater. In addition to the payment of royalties, the Settlement and Licensing Agreement imposes certain obligations on us including commercialization, certain sublicensing, other payments, insurance, and confidentiality. In addition and as a license fee for past use of the Licensed Patent which may have occurred prior to the effective date of the Settlement and Licensing Agreement, we issued a warrant to DataSci to purchase 1,000,000 shares of our common stock at an exercise price of $.01 per share. The Settlement and Licensing Agreement provides that upon the expiration date of the warrant, at DataSci’s sole discretion, DataSci shall exercise its option under the warrant or licensee shall pay DataSci $300,000. The warrant is exercisable commencing on the second anniversary of the Settlement and Licensing Agreement, April 2, 2011, through the expiration date of the warrant, on the termination date of the Settlement and Licensing Agreement on December 31, 2017.

On June 23, 2009, we entered into an agreement to acquire the EDC assets of eResearch Technology. Concurrent with the consummation of that transaction we entered into the First Amendment to Settlement and Licensing Agreement with DataSci, (i) to include the eResearch Technology EDC assets acquired within the definition of Licensed Products, and as such subject to the royalty payment(s), under and in accordance with the Settlement and Licensing Agreement, and (ii) provide a release by DataSci of any and all claims of infringement of the Licensed Patent in connection with the eResearch Technology EDC assets acquired which may have occurred prior to the effective date of the First Amendment to Settlement and Licensing Agreement for an aggregate amount of $300,000.

The remaining minimum royalty payments per year are as follows:

2017		$	337,500
Total		$	337,500

During the six month periods ended June 30, 2017 and June 30, 2016 the Company recorded a charge to earnings of ($118 ,436) and $52,322 respectively, which amounts represent (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci Settlement and License Agreement during the six month periods ended June 30, 2017 and June 30, 2016 and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

We have employment agreements in place with the following members of our executive management team:

Cornelis F. Wit, Executive Chairman

Randall G. Smith, Executive Vice Chairman

Stephen E. Johnson, President and Chief Executive Officer

Thomas E. Vickers, Chief Financial Officer

The employment agreements provide, among other things, for participation in employee benefits available to employees and executives. Each of the agreements will renew for successive one-year terms unless the agreement is expressly terminated by either the employee or the Company prior to the end of the then current term as provided for in the employment agreement. Under the terms of the agreement, we may terminate the employee’s employment upon 30 or 60 days notice of a material breach and the employee may terminate the agreement under the same terms and conditions. The employment agreements contain non-disclosure provisions, as well as non-compete clauses. The agreements for Mr. Smith, Mr. Johnson and Mr. Vickers contain severance provisions which entitles the employee to severance pay equal to one (1) year's salary and benefits in the event of the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, or termination by the employee pursuant to a material breach of the agreement by the Company.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 1 1 :

RELATED PARTY TRANSACTIONS

On April 1, 2015 the Company issued a promissory note in the amount of $20,000 to our Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2018. The note was repaid in full on December 14, 2016.

On April 30, 2015, the Company and Stephen E. Johnson, our President and Chief Executive Officer (“Mr. Johnson”) extended the maturity date of $25,000 of convertible debentures to Mr. Johnson, originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The convertible debentures were repaid in full on December 14, 2016.

As of June 30, 2017, we have an aggregate of $5,825,000 of convertible debentures and $450,000 of promissory notes outstanding to our Executive Chairman, Cornelis F. Wit (“Mr. Wit”), and have issued certain warrants to Mr. Wit, as follows:

●

In June 2008, Mr. Wit invested $510,000 in convertible notes. On August 29, 2008, Mr. Wit converted the $510,000 and invested an additional $1,260,000 in a private placement of convertible debentures and warrants to purchase 3,540,000 shares of our common stock. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $1,770,000 of convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the debentures was also extended to August 29, 2013.On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On January 31, 2015 the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On June 30, 2016 the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

●

In February 2008, Mr. Wit invested $150,000 in promissory notes and from September 2008 to Dec ember 2008, Mr. Wit invested $4,200,000 in convertible notes. On December 16, 2008, Mr. Wit converted the $4,350,000 into a private placement of convertible debentures and warrants to purchase 8,700,000 shares of our common stock. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $4,350,000 of convertible debentures until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the debentures was also extended to December 16, 2013. In a private transaction on October 16, 2012, Mr. Wit purchased $125,000 of the December 2008 convertible debentures and the related 250,000 warrants from Mr. Ronald Linares, the Company’s former Chief Financial Officer. On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On January 31, 2015 the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015 the Company and Mr. Wit agreed to cancel $420,000 of the debentures and 1,680,000 of unrelated warrants in exchange for 1,680,000 shares of our common stock. On June 30, 2016 the Company and Mr. Wit extended the maturity date of the $4,055,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

●

On February 29, 2016, the Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800 ,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to Mr. Wit in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit (“ Line of Credit”) with The Northern Trust Company guaranteed by our Executive Chairman, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. On February 3, 2015 the Company renewed the Line of Credit and increased the available balance to $5,000,000. On April 7, 2017 the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At June 30, 2017, $1 ,600,000 was outstanding on the Line of Credit at an interest rate of 3.25%.

For the six month periods ended June 30, 2017 and June 30, 2016 we incurred $465,197 and $443,686 , respectively, in interest expense payable to related parties.

NOTE 1 2 :

STOCKHOLDERS’ (DEFICIT)

Our authorized capital stock consists of 500,000,000 shares of common stock, $.001 par value per share, and 10,000,000 shares of preferred stock, par value $.001 per share, of which 5,000,000 shares have been designated as 5% Series A Preferred Stock, 230,000 shares have been designated as Series B Preferred Stock, 747,500 shares have been designated as Series C Preferred Stock and 250,000 shares have been designated as Series D Preferred Stock.

At the 2016 Annual Meeting of Stockholders the proposed amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of common stock by 250,000,000 shares to an aggregate of 500,000,000 shares received an affirmative vote from the holders of a majority of the outstanding shares of Voting Securities and an affirmative vote from the holders of a majority of the outstanding shares of common stock. Based on the votes received, the proposed amendment was approved and the number of authorized shares of common stock of the Company was increased from 250,000,000 shares to 500,000,000 shares.

As of June 30, 2017 we had the following outstanding securities:

147 ,792 ,805 shares of common stock issued and outstanding;

27,020 ,000 warrants issued and outstanding to purchase shares of our common stock;

4,600,000 options issued and outstanding to purchase shares of our common stock

250,000 share of our Series D Preferred Stock issued and outstanding; and

$6 ,950,000 principal amount Convertible Debentures convertible into 15, 09 0,000 shares of common stock.

Common Stock

Holders of common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our voting securities do not have cumulative voting rights. Holders of common stock are e ntitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up each outstanding share of common stock entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemp tion provisions for the common stock. The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and if any preferred stock is outstanding. All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

Preferred S tock

Our Board of Directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, pri orities, preferences, qualifications, limitations and restrictions of the shares of each series. In addition, the Board of Directors may fix and determine all privileges and rights of the authorized preferred stock series including:

dividend and liquidation preferences;

voting rights;

conversion privileges; and

redemption terms .

Our Board of Directors may authorize the issuance of preferred stock which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations and restrictions, if any, upon the payment of dividends on our common stock to be effective while any shares of preferred stock are outstanding.

During the period from December 2015 through April 2016 all 5% Series A Preferred Stock shareholders accepted the Company’s Exchange Offer and converted a total of 4,125,224 Series A preferred shares into 16,565 ,696 common shares.

The following table presents the cumulative arrearage of undeclared dividends by class of preferred stock as of June 30, 2017 and June 30, 2016, respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share as of
	June 30,				June 30,
Series of preferred stock	2017		2016		2017		2016

Series A	$	-0-	$	-0-	$	-0-	$	-0-
Series B		609,887		609,887	$	3.05	$	3.05
Series C		1,472,093		1,472,093	$	4.37	$	4.37
Total preferred stock arrearage	$	2,081,980	$	2,081,980

The following table presents preferred dividends accreted for the six month periods ended June 30, 2017 and June 30, 2016, respectively, and the per share effect of the preferred dividends if their effect was not anti-dilutive.

	Dividends accreted				Dividends per share
	For the six months ended				For the six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Preferred stock dividends in arrears Series A	$	-0-	$	1,870	$	-0-	$	0.012
Preferred stock dividends in arrears Series B	$	-0-	$	-0-	$	-0-	$	-0-
Preferred stock dividends in arrears Series C	$	-0-	$	-0-	$	-0-	$	-0-

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

Warrants Issued in Capital Transactions

The following tables summarize all outstanding warrants for the six month period ended June 30, 2017 and the year ended December 31, 2016, and the related changes during these periods .

June 30, 2017									June 30, 2017
Warrants outstanding									Warrants exercisable
Range of exercise price			Number outstanding		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,020,000		2.34	$	0.42		27,020,000	$	0.42

December 31, 2016									December 31, 2016
Warrants outstanding									Warrants exercisable
Range of exercise price			Number outstanding		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,860,000		2.71	$	0.42		27,860,000	$	0.42

Warrants
Balance at December 31, 2015	22,900,000
Issued	4,970,000
Exercised	-0-
Expired/forfeited	(10,000	)
Balance at December 31, 2016	27,860,000
Issued	-0-
Exercised	-0-
Expired/forfeited	(840,000	)
Balance at June 30, 2017	27,020,000
Warrants exercisable at June 30, 2017	27,020,000

Weighted average fair value of warrants granted during 2017	n/a

Other Comprehensive (Loss)

Due to the availability of net operating losses and related deferred tax valuations, t here is no tax effect associated with any component of other comprehensive (loss). The following table lists the beginning balance, activity and ending balance of the components of accumulated other comprehensive (loss).

	Foreign currency translation			Accumulated other comprehensive (loss)
Balance at December 31, 2015	$	(366,355	)	$	(366,355	)
2016 Activity		(44,150	)		(44,150	)
Balance at December 31, 2016		(410,505	)		(410,505	)
2017 Activity		12,076			12,076
Balance at June 30, 2017	$	(398,429	)	$	(398,429	)

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

NOTE 1 3 :

EQUITY INCENTIVE PLANS

Stock Option Plan s

Description of 2016 Equity Incentive Plan

In 2016, the Company ’s Board of Directors and shareholders approved the OmniComm Systems, Inc. 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. The 2016 Plan initially provides for the issuance of up to 10,000,000 shares of our common stock for issuance upon awards granted under the 2016 Plan. In addition, the number of shares of common stock available for issuance under the 2016 Plan shall automatically increase on January 1st of each year for a period of nine (9) years commencing on January 1, 2017 and ending on (and including) January 1, 2025, in an amount equal to five percent (5%) of the total number of shares authorized under the 2016 Plan. As of June 30, 2017 10,500,000 shares of our common stock were authorized for issuance under the 2016 Plan. Unless earlier terminated by the Board, the 2016 Plan shall terminate on June 29, 2026.

The maximum term for any option grant under the 2016 Plan is ten years from the date of the grant; however, options granted under the 2016 Plan will generally expire five years from the date of grant. Options granted to employees generally vest either upon grant or in two installments. The first vesting, which is equal to 50% of the granted stock options, usually occurs upon completion of one full year of employment from the date of grant and the second vesting usually occurs on the second anniversary of the date of grant. The vesting period typically begins on the date of hire for new employees and on the date of grant for existing employees. The restrictions on restricted shares granted to employees generally lapse in three equal annual installments on the anniversary of the date of grant. Any unvested stock options or restricted shares with restrictions that have not lapsed that are granted under the 2016 Plan are forfeited and expire upon termination of employment.

As of June 30, 2017, there were 3,975,000 outstanding options and -0- restricted stock shares that have been granted under the 2016 Plan. At June 30, 2017, there were 6,525,000 shares available for grant as options or other forms of share-based compensation under the 2016 Plan.

Description of 2009 Equity Incentive Plan

In 2009, the Company ’s Board of Directors and shareholders approved the OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”). On June 16, 2016 the 2009 Plan terminated upon the approval of the 2016 Plan. The 2009 Plan provided for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. Pursuant to the 2009 Plan, 7,500,000 shares of the Company’s common stock were authorized for issuance.

The maximum term for any option grant under the 2009 Plan was ten years from the date of the grant; however, options granted under the 2009 Plan generally expired five years from the date of grant. Options granted to employees generally vested either upon grant or in two installments. The first vesting, which was equal to 50% of the granted stock options, usually occurred upon completion of one full year of employment from the date of grant and the second vesting usually occurred on the second anniversary of the date of grant. The vesting period typically began on the date of hire for new employees and on the date of grant for existing employees. The restrictions on restricted shares granted to employees generally lapsed in three equal annual installments on the anniversary of the date of grant. Any unvested stock options or restricted shares with restrictions that had not lapsed that were granted under the 2009 Plan were forfeited and expired upon termination of employment.

As of June 30, 2017, there were 625 ,000 outstanding options and 3 ,876,662 restricted stock shares that have been granted under the 2009 Plan. At June 30, 2017, there were -0- shares available for grant as options or other forms of share-based compensation under the 2009 Plan.

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

The following table summarizes the stock option activity for the Company ’s equity incentive plans:

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)		Aggregate intrinsic value

Outstanding at December 31, 2015		2,002,500		$	0.14		1.40	$	198,990
Granted		450,000			0.20
Exercised		(1,120,000	)		0.12
Forfeited/cancelled/expired		(107,500	)		0.29

Outstanding at December 31, 2016		1,225,000			0.17		2.62	$	83,425
Granted		3,725,000			0.25
Exercised		(50,000	)		0.10
Forfeited/cancelled/expired		(300,000	)		0.14

Outstanding at June 30, 2017		4,600,000		$	0.24		4.22	$	33,800


Vested and exercisable at June 30, 2017		600,000		$	0.17		1.05	$	31,800

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company ’s closing stock price at quarter-end and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2017.

The total number of shares vesting and the fair value of shares vesting for the six month periods ended June 30, 2017 and June 30, 2016, respectively, was:

Fair value of options vesting
for the six months ended

Number of options

vested

Fair value of

options vested

June 30, 2017

12,500

2,834

June 30, 2016

112,500

25,153

Cash received f or stock option exercises for the six month periods ended June 30, 2017 and June 30, 2016 was $-0- and $125,000, respectively. Due to the Company’s net loss position, no income tax benefit has been realized during the six month periods ended June 30, 2017 and June 30, 2016.

The following table summarizes information concerning options outstanding at June 30, 2017:

Awards breakdown by price range at June 30, 2017
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		550,000		1.42	$	0.16		475,000		0.98	$	0.16
0.21	to	0.30		4,050,000		4.60		0.25		125,000		1.33		0.22
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		4,600,000		4.22	$	0.24		600,000		1.05	$	0.17

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

The following table summarizes information concerning options outstanding at December 31, 2016:

		Awards breakdown by price range at December 31, 2016
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		850,000		2.15	$	0.15		625,000		1.32	$	0.14
0.21	to	0.30		375,000		3.70		0.23		112,500		1.67		0.21
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		1,225,000		2.62	$	0.17		737,500		1.38	$	0.15

The weighted average fair value (per share) of options granted during the six month period ended June 30, 2017 was $0.19 and $0.00 during the six month period ended June 30, 2016 as no options were granted during the six month period ending June 30, 2016. The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-B ased Payments

Based on analysis of its historical volatility, the Company expects that the future volatility of its share price is likely to be similar to the historical volatility the Company experienced since the Company ’s commercialization activities were initiated during the second half of 2000. The Company used a volatility calculation utilizing the Company’s own historical volatility to estimate its future volatility for purposes of valuing the share-based payments that have been granted. Actual volatility, and future changes in estimated volatility, may differ substantially from the Company’s current estimates.

The Company utilizes the historical data available regarding employee and director exercise activity to calculate an expected life of the op tions. The table below presents the weighted average expected life in years of options granted under the Plan as described above. The risk-free rate of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds with the expected term of the option granted.

Below are the assumptions for the fair value of share-based payments for the six month period ended June 30, 2017 and the year ended December 31, 2016.

	Stock option assumptions for the period ended
Stock option assumptions	June 30, 2017		December 31, 2016
Risk-free interest rate		1.48%		1.45%
Expected dividend yield		0.0%		0.0%
Expected volatility		144.6%		155.5%
Expected life of options (in years)		5		5

The following table summarizes weighted average grant date fair value activity for the Company ’s incentive stock plans:

	Weighted average grant date fair value
	for the six months ended June 30,
	2017		2016
Stock options granted during the period	$	0.19	$	-0-

Stock options vested during the period	$	0.23	$	0.22

Stock options forfeited during the period	$	0.13	$	0.11

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017 AND JUNE 30, 2016

(unaudited)

A summary of the status of the Company ’s non -vested shares underlying stock options as of June 30, 2017, and changes during the six month period ended June 30, 2017 is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2017		487,500	$	0.20

Nonvested shares at June 30, 2017		4,000,000	$	0.25

As of June 30, 2017, $591,657 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.7 years.

NOTE1 4 :

SUBSEQUENT EVENTS

Subsequent to June 30, 2017 the Company repaid $1,100,000 on its revolving Line of Credit.

On August 2, 2017 Thomas E. Vickers, our Chief Financial Officer, exercised stock options granted to him in 2012. As a result of the exercise 100,000 common shares were issued to him.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following information should be read in conjunction with the information contained in our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere herein and other information set forth in this report.

Forward-Looking Statements

Statements contained in this Form 10-Q that are not historical fact are "forward -looking statements". These statements can often be identified by the use of forward-looking terminology such as "estimate", "project", "believe", "expect", "may", "will", "should", "intends", or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We wish to caution the reader that these forward-looking statements, contained in this Form 10-Q regarding matters that are not historical facts, are only predictions and are based on information available at the time and/or management’s good faith belief with respect to future events. No assurance can be given that plans for the future will be consummated or that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these plans and projections and other forward-looking statements are based upon a variety of assumptions, which we consider reasonable, but which nevertheless may not be realized. Because of the number and range of the assumptions underlying our projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond our reasonable control, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this Form 10-Q. Therefore, our actual experience and results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward-looking statements should not be regarded as a representation by us or any other person that these plans will be consummated or that estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. Forward-looking statements speak only as of the date the statement was made. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.

Overview

We are a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”), and other clinical trial sponsors worldwide. Our proprietary EDC software applications: TrialMaster ^® ; TrialOne ^® ; eClinical Suite and Promasys ^® (the “EDC Software”), allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data electronically (“eClinical”) .

In 201 7, the primary focus of our strategy includes:

●

Increasing our penetration of the Phase I trial market with our dedic ated Phase I solution, TrialOne

●

Stimulating demand by providing clinical trial sponsors with high value eClinical applications and services

●

Expanding our penetration of the larg e pharmaceutical sponsor market

●

Broadening our suite of services and software applications on an organic research and product development basis and on a selective basis via the acquisition or licensing of complementary solutions

●

Expanding our business development efforts in Europe and East Asia to capitalize on our operational and clinical capabilities vis-à-vis our competition in those geographic markets

O ur operating focus is first, to increase our sales and marketing capabilities and penetration rate and secondly, to continue developing and improving our software solutions and services to ensure our services and products remain an attractive, high-value EDC choice. Our ability to compete within the EDC and eClinical industries is predicated on our ability to continue enhancing and broadening the scope of solutions we offer. Our research and product development efforts are focused on developing new, complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. We spent $1,484,356 and $1,315,524 on research and product development activities during the six months ended June 30, 2017 and June 30, 2016, respectively. The majority of these expenses represent salaries and related benefits to our developers which include the costs associated with the continued development of our EDC Software applications to meet current customer requirements and with our efforts at enhancing our suite of products by incorporating new features and services we believe will improve the products and consequently improve our market position . Our research and product development team is comprised of software programmers, engineers and related support personnel.

Our clients are able to partially or completely license our EDC solutions. The licensing business model provides our clients with a more cost effective means of deploying our EDC solutions on a large-scale basis. Our licensed products, falling under the auspices of either a Tech Transition (partial transfer with some services performed by OmniComm) or Tech Transfer, allows us to broaden our potential client base, provides us with a high-margin revenue source and affords us the ability to improve our competitive position within the EDC industry.

We feel that the momentum established from new client acquisitions in 2016 and year to date 2017 and our ability to retain clients for repeat engagements provide a good operating base from which to build during the remainder of 2017 . We increased the marketing and business development budget for our TrialOne product during 2016 and the first six months of 2017 as we place increased emphasis on increasing our penetration of the Phase I market in the Unites States, Europe and East Asia . We believe that the Phase I segment of the EDC market is the least penetrated and allows for the greatest potential increases in market share and in sales volumes. We expect to continue increasing the level of resources deployed in our sales and marketing efforts through the addition of sales personnel and by increasing the number of industry tradeshows and conferences that we attend. We feel that a combination of our existing infrastructure, broadened array of eClinical products and services and increased success in new client acquisition, coupled with our ability to retain our existing clients will allow us to compete effectively within the EDC market.

The six month s ended June 30 , 2017 compared to the six month s ended June 30 , 2016

Results of Operations

A summarized version of our results of operations for the six months ended June 30, 2017 and June 30, 2016 is included in the table below.

	Summarized Statement of Operations
	For the six months ended
	June 30,

				% of						% of			$			%
	2017			Revenues			2016			Revenues			Change			Change
Total revenues	$	13,459,887					$	10,460,999					$	2,998,888			28.7	%

Cost of goods sold		2,807,720			20.9	%		2,550,323			24.4	%		257,397			10.1	%

Gross margin		10,652,167			79.1	%		7,910,676			75.6	%		2,741,491			34.7	%

Salaries, benefits and related taxes		6,512,378			48.4	%		5,443,425			52.0	%		1,068,953			19.6	%
Rent		549,049			4.1	%		501,058			4.8	%		47,991			9.6	%
Consulting services		120,734			0.9	%		48,000			0.5	%		72,734			151.5	%
Legal and professional fees		240,444			1.8	%		203,296			1.9	%		37,148			18.3	%
Other expenses		693,531			5.2	%		683,866			6.5	%		9,665			1.4	%
Selling, general and administrative		660,266			4.9	%		824,775			7.9	%		(164,509	)		-19.9	%
Total operating expenses		8,776,402			65.3	%		7,704,420			73.6	%		1,071,982			13.9	%

Operating income/(loss)		1,875,765			13.9	%		206,256			2.0	%		1,669,509			809.4	%

Interest expense		(679,949	)		-5.1	%		(619,059	)		-5.9	%		(60,890	)		9.8	%
Interest income		586			0.0	%		2			0.0	%		584			29200.0	%
Change in derivatives		1,536,067			11.4	%		(2,458,836	)		-23.5	%		3,994,903			162.5	%
Transaction gain/(loss)		22,110			0.2	%		(510	)		0.0	%		22,620			4435.3	%

Income/(loss) before income taxes and dividends		2,754,579			20.5	%		(2,872,147	)		-27.5	%		5,626,726			195.9	%
Income tax (expense)		(1,194	)		0.0	%		(59	)		0.0	%		(1,135	)		1923.7	%
Net income/(loss)		2,753,385			20.5	%		(2,872,206	)		-27.5	%		5,625,591			195.9	%

Total preferred stock dividends		-0-			0.0	%		(1,870	)		0.0	%		1,870			100.0	%

Net income/(loss) attributable to common stockholders	$	2,753,385			20.5	%	$	(2,874,076	)		-27.5	%	$	5,627,461			195.8	%

The table below provides a comparison of our recognized revenues for the six months ended June 30, 2017 and June 30, 2016 .

	For the six months ended
Revenue activity	June 30, 2017				June 30, 2016				$ Change			% Change
Set-up fees	$	2,692,108	20.0	%	$	3,312,733	31.7	%	$	(620,625	)		-18.7	%
Change orders		701,506	5.2	%		669,899	6.4	%		31,607			4.7	%
Maintenance		2,378,694	17.7	%		2,337,965	22.3	%		40,729			1.7	%
Software licenses		5,506,624	40.9	%		2,202,288	21.0	%		3,304,336			150.0	%
Professional services		1,606,558	11.9	%		1,398,136	13.4	%		208,422			14.9	%
Hosting		574,397	4.3	%		539,978	5.2	%		34,419			6.4	%
Total	$	13,459,887	100.0	%	$	10,460,999	100.0	%	$	2,998,888			28.7	%

Overall revenue increased by $ 2,998,888 or 28.7% for the six months ended June 30, 2017 compared with revenue for the six months ended June 30, 2016. This increase is primarily the result of an increase in software licenses .

We recorded revenue of $ 10,106,711 including $2,692,108 from set-up fees, $3,312,595 from software licensing and $1,555,291 from maintenance revenues associated with our TrialMaster suite during the six months ended June 30, 2017 compared with revenue of $8,149,218 that included $3,312,733 in set-up fees, $1,450,151 from software licensing and $1,520,278 in maintenance revenues during the six months ended June 30, 2016.

We recorded $ 859,545 in revenues associated with clients using the eClinical Suite during the six months ended June 30, 2017 compared with revenue of $773,626 for the six months ended June 30, 2016. eClinical Suite revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.

We recorded $491,377 in revenues in maintenance and $133,467 from hosting activities associated with the eClinical Suite during the six months ended June 30, 2017 compared with revenue of $534,986 from maintenance and $115,717 from hosting activities for the six months ended June 30, 2016. Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing the eClinical Suite.

We recorded revenue of $ 2,252,148 including $1,892,498 from software licensing and $87,579 from professional services for clients utilizing our TrialOne EDC software for the six months ended June 30, 2017 compared with revenue of $1,030,733 including $582,073 from software licensing and $264,356 from professional services for the six months ended June 30, 2016. We are continuing to enhance our efforts at developing our sales and marketing campaign for the TrialOne application. TrialOne revenues are primarily comprised of license subscriptions, professional services and maintenance services.

We recorded revenue of $ 241,483 for the six months ended June 30, 2017 including $76,530 from software licensing and $150,955 from maintenance associated with clients utilizing the Promasys EDC solution as compared to revenue of $341,315 for the six months ended June 30, 2016 including $99,641 from software licensing and $168,396 from maintenance.

Our TrialMaster EDC application has historically been sold on an application service provider (“ ASP”) basis that provides EDC and other services such as an enterprise management suite which assists our clients in the pharmaceutical, biotechnology and medical device industries in accelerating the completion of clinical trials. During 2009 we completed the acquisition of the eResearch EDC Assets and TrialOne and in 2013 we acquired Promasys (collectively the “Acquired Software”). These software applications have historically been sold on a licensed or technology transfer basis. As we continue developing our software applications and our client relationships mature, we expect some of our clients to deploy TrialMaster on a licensed, rather than ASP hosted basis. We expect the Acquired Software applications to continue to be sold primarily on a licensed basis.

TrialMaster contracts for ASP services provide for pricing that is based on both the size and duration of the clinical trial. Size parameters include the number of case report forms used to collect data and the number of sites utilizing TrialMaster. The client will pay a trial setup fee at the beginning of a project based on the previously mentioned factors and then pay an on-going maintenance fee for the duration of the clinical trial that provides software, network and site support during the trial.

Generally, ASP contracts will range in duration from o ne month to several years. ASP setup fees are generally recognized in accordance with ASC 605, “Revenue Recognition” , which requires that the revenues be recognized ratably over the life of the contract. ASP maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

Li cense contracts are typically sold on a subscription basis that takes into account system usage both on a data volume and system user basis. Pricing includes additional charges for consulting services associated with the installation, validation, training and deployment of our eClinical software and solutions. Licensed contracts of the eClinical Suite have historically been sold both on a term and on a perpetual license basis with hosting and maintenance charges being paid quarterly. The Company expects any licenses it sells of its software products to be sold under three to five year term licenses.

Our top five customers accounted for approximately 37% of our revenues during the six months ended June 30, 2017 and approximately 40% of our revenues during the six months ended June 30, 2016. One customer accounted for approximately 1 0% of our revenues during the six months ended June 30, 2017. One customer accounted for approximately 20% of our revenues during the six months ended June 30, 2016. The loss of any of these contracts or these customers in the future could adversely affect our results of operations.

Our international customers, who are principally located in Europe and East Asia, accounted for approximately 21% of our total revenues for the six month period ended June 30, 2017 and approximately 16% of our total revenues for the six months ended June 30, 2016.

One customer accounted for approximately 22% and another customer accounted for approximately 13% of our accounts receivables as of June 30, 2017. One customer accounted for approximately 13% and another customer accounted for approximately 9% of our accounts receivable as of June 30, 2016.

Cost of goods sold increased approximately 10% or $ 257,397 for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. Cost of goods sold were approximately 21% of revenues for the six months ended June 30, 2017 compared to approximately 24% for the six months ended June 30, 2016. Cost of goods sold relates primarily to (i) salaries and related benefits associated with the programmers, developers and systems analysts producing clinical trials on behalf of our clients and (ii) the costs associated with pass-through revenues (reimbursable revenues). Cost of goods sold increased during the six months ended June 30, 2017 primarily due to an increase in salaries and related benefits. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin.

Overall, total operating expenses increased approximately 14% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The increase in operating expenses is primarily the result of an increase in salaries, benefits and related taxes.

Salaries and related expenses were our biggest operating expense at 74% of total operating expenses for the six months ended June 30, 2017 compared to 71% of total operating expenses for the six months ended June 30, 2016. Salaries and related expenses increased by approximately 20% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The table below provides a summary of the significant components of salary and related expenses by primary cost category.

	For the six months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change		% Change
OmniComm corporate operations	$	4,469,757	$	3,725,538	$	744,219		20.0	%
New Jersey operations office		558,425		523,556		34,869		6.7	%
OmniComm Europe, GmbH		316,014		305,637		10,377		3.4	%
OmniComm Ltd.		433,339		367,784		65,555		17.8	%
OmniComm Spain S.L.		175,595		134,254		41,341		30.8	%
OmniComm Systems B.V.		297,322		275,997		21,325		7.7	%
Employee stock compensation		261,926		110,659		151,267		136.7	%
Total salaries and related expenses	$	6,512,378	$	5,443,425	$	1,068,953		19.6	%

As of June 30, 2017, we employed 137 employees and consultants Company-wide as follows: 63 out of our headquarters in Fort Lauderdale, Florida, 10 out of a regional operating office in Somerset, New Jersey, 26 in remote locations throughout the United States and Canada. Our wholly-owned subsidiary, OmniComm Europe, GmbH, employs 18 in Bonn, Germany. Our wholly-owned subsidiary, OmniComm Ltd., employs 11 in Southampton, England. Our wholly-owned subsidiary, OmniComm Spain, S. L. employs 3 in Barcelona, Spain. Our wholly-owned subsidiary, OmniComm Systems B.V. employs 4 in the Netherlands and 2 in Japan. We believe that relations with our employees are good. None of our employees are represented by a collective bargaining agreement.

During the six months ended June 30, 2017 and the six months ended June 30, 2016 we incurred $261,926 and $110,659, respectively, in salary expense in connection with ASC 718 , Compensation – Stock Compensation , which establishes standards for transactions in which an entity exchanges its equity instruments for services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

Rent and re lated expenses increased by approximately 10% during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The table below details the significant portions of our rent expense. Our primary data site is located at a co-location facility in Cincinnati, Ohio and we will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We also utilize co-location and disaster recovery space in the Fort Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. In 2015 we added a third co-location facility in Frankfurt, Germany. We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH under a lease that expires in July 2018. We currently lease office space for a regional operating office in New Jersey under a lease that expires in March 2021. Our OmniComm Ltd. subsidiary leases office space in Southampton, UK under a lease that expires in September 2017. Our OmniComm Systems B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018. Our Fort Lauderdale corporate office lease expires in February 2023. The table below provides the significant components of our rent related expenses by location or subsidiary. Included in rent during the six months ended June 30, 2017 was a decrease in expense of $1,519 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to an increase in expense of $74,264 for the six months ended June 30, 2016.

	For the six months ended
Expense Category	June 30, 2017			June 30, 2016		$ Change			% Change
Corporate office	$	206,161		$	109,133	$	97,028			88.9	%
Co-location and disaster recovery facilities		243,556			212,768		30,788			14.5	%
New Jersey operations office		26,296			27,117		(821	)		-3.0	%
OmniComm Europe, GmbH		37,503			39,251		(1,748	)		-4.5	%
OmniComm Ltd.		28,642			31,604		(2,962	)		-9.4	%
OmniComm Spain S.L.		3,495			3,335		160			4.8	%
OmniComm Systems B.V.		4,915			3,586		1,329			37.1	%
Straight-line rent expense		(1,519	)		74,264		(75,783	)		-102.0	%
Total	$	549,049		$	501,058	$	47,991			9.6	%

Consulting services expense increased to $ 120,734 for the six months ended June 30, 2017 compared with $48,000 for the six months ended June 30, 2016. Consulting services are comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. Product development consulting expenses increased year over year as we utilized the services of additional consultants during the six month period ended June 30, 2017. The table provided below provides the significant components of the expenses incurred related to consulting services.

	For the six months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change			% Change
Sales and marketing	$	38,000	$	48,000	$	(10,000	)		-20.8	%
Product development		82,734		-0-		82,734			n/a
Total	$	120,734	$	48,000	$	72,734			151.5	%

Legal and professional fees increased approximately 18% for the six months ended June 30, 2017 compared with the six months ended June 30, 2016. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the six months ended June 30, 2017 and June 30, 2016, respectively.

	For the six months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change			% Change
Financial advisory	$	27,474	$	-0-	$	27,474			n/a
Audit and related		32,759		38,155		(5,396	)		-14.1	%
Accounting services		95,618		94,390		1,228			1.3	%
Legal-employment related		22,954		5,444		17,510			321.6	%
Legal-financial related		55,887		50,300		5,587			11.1	%
General legal		5,752		15,007		(9,255	)		-61.7	%
Total	$	240,444	$	203,296	$	37,148			18.3	%

Selling, general an d administrative expenses (“SG&A”) decreased by $164,509 or approximately 20% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. SG&A expenses relate primarily to costs incurred in running our offices in Fort Lauderdale, Florida, Somerset, New Jersey, Southampton, England, Barcelona, Spain, Bonn, Germany and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2016 we spent approximately $712,000 on marketing, sales and advertising. We expect that the 2017 marketing, sales and advertising expenses will be approximately $850,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

During the six months ended June 30, 2017 we recognized a credit for bad debt expense of $46,997 compared to an expense of $33,307 for bad debt for the six months ended June 30, 2016. This change was primarily the result of a decrease in aged receivable balances that enabled us to decrease our reserve. During the remainder of 2017 we will continue to carefully and actively manage our potential exposure to bad debt by closely monitoring our accounts receivable and proactively taking the action necessary to limit our exposure. We have been very successful in managing and collecting our outstanding accounts receivable. We believe that our current allowance for uncollectible accounts accurately reflects any accounts which may prove uncollectible during the remainder of 2017.

Interest expense was $67 9,949 for the six months ended June 30, 2017 compared to $619,059 for the six months ended June 30, 2016, an increase of $60,890 . Interest incurred to related parties was $465,197 during the six months ended June 30, 2017 and $443,686 for the six months ended June 30, 2016. Included in interest expense is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of the financings we undertook in 2008 and 2009 and relating to warrants issued during 2011 and 2016. Interest expense increased year over year primarily due to the accretion of the discount from the derivatives associated with debt that was issued. The table below provides detail on the significant components of interest expense for the six month periods ended June 30, 2017 and June 30, 2016.

	For the six months ended
Debt Description	June 30, 2017		June 30, 2016		$ Change			% Change
Accretion of discount from derivatives	$	122,858	$	35,209	$	87,649			248.9	%
August 2008 convertible notes		95,211		95,737		(526	)		-0.5	%
December 2008 convertible notes		259,152		272,551		(13,399	)		-4.9	%
September 2009 secured convertible debentures		43,142		43,381		(239	)		-0.6	%
General interest		76,276		96,091		(19,815	)		-20.6	%
Related party notes payable		83,310		76,090		7,220			9.5	%
Total	$	679,949	$	619,059	$	60,890			9.8	%

We evaluate the cost of capital available to us in combination with our overall capital structure and the prevailing market conditions in deciding what financing best fulfills our short and long-term capital needs. Given the overall economic climate and i n particular the difficulties nano-cap companies have experienced in obtaining financing, we believe the structure and terms of the transactions we entered into during 2016 and 2017 were obtained at the best terms available to the Company.

We record unrealized gains/losses related to changes in our derivative liabilities associated with the issuance of convertible debt that occurred during 2008 and 2009 and warrants associated with promissory notes issued in 2011 and 2016 . We recorded a net unrealized gain of $1,487,691 during the six months ended June 30, 2017 compared with a net unrealized loss of $2,458,836 during the six months ended June 30, 2016 . The unrealized gains/losses can be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities recorded by us at the time the convertible debt and promissory notes were issued. Accordingly the warrant and conversion feature liabilities are increased or decreased based on the fair value calculations made at each quarterly balance sheet date. These non-cash gains and losses have materially impacted our results of operations during the six months ended June 30, 2017 and June 30, 2016 and can be reasonably anticipated to materially affect our net loss or net income in future periods. The fair value calculations are heavily reliant on the value of our common stock and on the calculated volatility of the price of our common stock on the OTCQX Marketplace. Accordingly, significant changes in our stock price will create large unrealized gains and losses on our financial statements. We are, however, unable to estimate the amount of such income/expense in future periods as the income/expense is partly based on the market price of our common stock at the end of a future measurement date. In addition, if we issue securities in the future which are classified as derivatives we will incur expense and income items in future periods. Investors are cautioned to consider the impact of this non-cash accounting treatment on our financial statements.

The Company recorded arrearages of $-0- and $1,870 in its 5% Series A Preferred Stock dividends for the six month periods ended June 30, 2017, and June 30, 2016, respectively. The below table contains the cumulative arrearage for each series of preferred stock as of June 30, 2017.

Series of Preferred Stock	Cumulative Arrearage
Series A	$	-0-
Series B		609,887
Series C		1,472,093
Total preferred stock arrearages	$	2,081,980

The three months ended June 30, 2017 compared to the three months ended June 30, 2016

Results of Operations

A summarized version of our results of operations for the three months ended June 30, 2017 and June 30, 2016 is included in the table below.

Summarized Statement of Operations

For the three months ended

June 30,

				% of						% of			$			%
	2017			Revenues			2016			Revenues			Change			Change
Total revenues	$	7,724,357					$	5,303,488					$	2,420,869			45.6	%

Cost of goods sold		1,515,226			19.6	%		1,376,296			26.0	%		138,930			10.1	%

Gross margin		6,209,131			80.4	%		3,927,192			74.0	%		2,281,939			58.1	%

Salaries, benefits and related taxes		3,221,795			41.7	%		2,710,513			51.1	%		511,282			18.9	%
Rent		270,097			3.5	%		244,458			4.6	%		25,639			10.5	%
Consulting services		61,105			0.8	%		24,000			0.5	%		37,105			154.6	%
Legal and professional fees		93,087			1.2	%		80,459			1.5	%		12,628			15.7	%
Other expenses		251,889			3.3	%		394,177			7.4	%		(142,288	)		-36.1	%
Selling, general and administrative		451,377			5.8	%		441,721			8.3	%		9,656			2.2	%
Total operating expenses		4,349,350			56.3	%		3,895,328			73.4	%		454,022			11.7	%

Operating income/(loss)		1,859,781			24.1	%		31,864			0.6	%		1,827,917			5736.6	%

Interest expense		(340,492	)		-4.4	%		(322,554	)		-6.1	%		(17,938	)		5.6	%
Interest income		585			0.0	%		1			0.0	%		584			58400.0	%
Change in derivatives		1,142,727			14.8	%		(1,696,825	)		-32.0	%		2,839,552			167.3	%
Transaction gain/(loss)		16,810			0.2	%		(7,732	)		-0.1	%		24,542			317.4	%

Income/(loss) before income taxes and dividends		2,679,411			34.7	%		(1,995,246	)		-37.6	%		4,674,657			234.3	%
Income tax (expense)		-0-			0.0	%		-0-			0.0	%		-0-			n/a
Net income/(loss)		2,679,411			34.7	%		(1,995,246	)		-37.6	%		4,674,657			234.3	%

Total preferred stock dividends		-0-			0.0	%		-0-			0.0	%		-0-			n/a

Net income/(loss) attributable to common stockholders	$	2,679,411			34.7	%	$	(1,995,246	)		-37.6	%	$	4,674,657			234.3	%

The table below provides a comparison of our recognized revenues for the three months ended June 30, 2017 and June 30, 2016.

	For the three months ended
Revenue activity	June 30, 2017				June 30, 2016				$ Change			% Change
Set-up fees	$	1,310,127	17.0	%	$	1,793,399	33.8	%	$	(483,272	)		-26.9	%
Change orders		371,095	4.8	%		392,146	7.4	%		(21,051	)		-5.4	%
Maintenance		1,159,303	15.0	%		1,136,745	21.4	%		22,558			2.0	%
Software licenses		3,541,767	45.9	%		1,001,374	18.9	%		2,540,393			253.7	%
Professional services		1,047,478	13.5	%		745,816	14.1	%		301,662			40.4	%
Hosting		294,587	3.8	%		234,008	4.4	%		60,579			25.9	%
Total	$	7,724,357	100.0	%	$	5,303,488	100.0	%	$	2,420,869			45.6	%

Overall revenue increased by $ 2,420,869 or 45 .6% for the three months ended June 30, 2017 compared with revenue for the three months ended June 30, 2016. This increase is primarily the result of increases in software licenses.

We recorded revenue of $ 5,775,630 including $2,204,753 from software licensing, $1,310,127 from set-up fees, and $959,898 from professional services revenues associated with our TrialMaster suite during the three months ended June 30, 2017 compared with revenue of $4,311,780 that included $1,793,399 in set-up fees, $667,475 from software licensing and $755,910 in maintenance revenues during the three months ended June 30, 2016.

We recorded $ 478,643 in revenues associated with clients using the eClinical Suite during the three months ended June 30, 2017 compared with revenue of $365,181 for the three months ended June 30, 2016. eClinical Suite revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.

We recorded $217,121 in revenues in maintenance and $65,567 from hosting activities associated with the eClinical Suite during the three months ended June 30, 2017 compared with revenue of $244,964 from maintenance and $59,442 from hosting activities for the three months ended June 30, 2016. Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing the eClinical Suite.

We recorded revenue of $ 1,375,790 including $1,110,215 from software licensing with clients utilizing our TrialOne EDC software for the three months ended June 30, 2017 compared with revenue of $417,736 including $273,845 from software licensing and $54,800 from professional services for the three months ended June 30, 2016. We are continuing to enhance our efforts at developing our sales and marketing campaign for the TrialOne application. TrialOne revenues are primarily comprised of license subscriptions, professional services and maintenance services.

We recorded revenue of $ 94,294 for the three months ended June 30, 2017 including $30,844 from software licensing and $63,449 from maintenance associated with clients utilizing the Promasys EDC solution as compared to revenue of $139,165 for the three months ended June 30, 2016 including $27,029 from software licensing and $8 0,780 from maintenance.

Our TrialMaster EDC application has historically been sold on an application service provider (“ASP”) basis that provides EDC and other services such as an enterprise management suite which assists our clients in the pharmaceutical, biotechnology and medical device industries in accelerating the completion of clinical trials. During 2009 we completed the acquisition of the eResearch EDC Assets and TrialOne and in 2013 we acquired Promasys (collectively the “Acquired Software”). These software applications have historically been sold on a licensed or technology transfer basis. As we continue developing our software applications and our client relationships mature, we expect some of our clients to deploy TrialMaster on a licensed, rather than ASP hosted basis. We expect the Acquired Software applications to continue to be sold primarily on a licensed basis.

Generally, ASP contracts will range in duration from one month to several years. ASP setup fees are generally recognized in accordance with ASC 605, “Revenue Recognition” , which requires that the revenues be recognized ratably over the life of the contract. ASP maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

License contracts are typically sold on a subscription basis that takes i nto account system usage both on a data volume and system user basis. Pricing includes additional charges for consulting services associated with the installation, validation, training and deployment of our eClinical software and solutions. Licensed contracts of the eClinical Suite have historically been sold both on a term and on a perpetual license basis with hosting and maintenance charges being paid quarterly. The Company expects any licenses it sells of its software products to be sold under three to five year term licenses.

Our top five customers accounted for approximately 43% of our revenues during the three months ended June 30, 2017 and approximately 41% of our revenues during the three months ended June 30, 2016. One customer accounted for approximately 11% and another accounted for approximately 10% of our revenues during the three months ended June 30, 2017. One customer accounted for approximately 20% of our revenues during the three months ended June 30, 2016. The loss of any of these contracts or these customers in the future could adversely affect our results of operations.

Our international customers, who are principally located in Europe and East Asia, accounted for approximately 2 0% of our total revenues for the three month period ended June 30, 2017 and approximately 16% of our total revenues for the three months ended June 30, 2016.

Cost of goods sold increased approximately 10% or $1 38,930 for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. Cost of goods sold were approximately 2 0% of revenues for the three months ended June 30, 2017 compared to approximately 26% for the three months ended June 30, 2016. Cost of goods sold relates primarily to (i) salaries and related benefits associated with the programmers, developers and systems analysts producing clinical trials on behalf of our clients and (ii) the costs associated with pass-through revenues (reimbursable revenues). Cost of goods sold increased during the three months ended June 30, 2017 primarily due to an increase in salaries and related benefits. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin.

Overall, total operating expenses increased approximately 12% for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The increase in operating expenses is primarily the result of an increase in salaries, benefits and related taxes.

Salaries and related expenses were our biggest operating expense at approximately 74% of total operating expenses for the three months ended June 30, 2017 compared to approximately 70% of total operating expenses for the three months ended June 30, 2016. Salaries and related expenses increased by 19% for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The table below provides a summary of the significant components of salary and related expenses by primary cost category.

	For the three months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change			% Change
OmniComm corporate operations	$	2,228,545	$	1,849,517	$	379,028			20.5	%
New Jersey operations office		254,429		271,849		(17,420	)		-6.4	%
OmniComm Europe, GmbH		151,265		146,251		5,014			3.4	%
OmniComm Ltd.		201,030		187,614		13,416			7.2	%
OmniComm Spain S.L.		102,442		64,191		38,251			59.6	%
OmniComm Systems B.V.		156,137		144,024		12,113			8.4	%
Employee stock compensation		127,947		47,067		80,880			171.8	%
Total salaries and related expenses	$	3,221,795	$	2,710,513	$	511,282			18.9	%

As of June 30, 201 7, we employed 137 employees and consultants Company-wide as follows: 63 out of our headquarters in Fort Lauderdale, Florida, 10 out of a regional operating office in Somerset, New Jersey, 26 in remote locations throughout the United States and Canada. Our wholly-owned subsidiary, OmniComm Europe, GmbH, employs 18 in Bonn, Germany. Our wholly-owned subsidiary, OmniComm Ltd., employs 11 in Southampton, England. Our wholly-owned subsidiary, OmniComm Spain, S. L. employs 3 in Barcelona, Spain. Our wholly-owned subsidiary, OmniComm Systems B.V. employs 4 in the Netherlands and 2 in Japan. We believe that relations with our employees are good. None of our employees are represented by a collective bargaining agreement.

During the three months ended June 30, 2017 and the three months ended June 30, 2016 we incurred $127,947 and $47,067, respectively, in salary expense in connection with ASC 718 , Compensation – Stock Compensation , which establishes standards for transactions in which an entity exchanges its equity instruments for services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

Rent and related expenses increased by approximately 11% during the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The table below details the significant portions of our rent expense. Our primary data site is located at a co-location facility in Cincinnati, Ohio and we will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We also utilize co-location and disaster recovery space in the Fort Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. In 2015 we added a third co-location facility in Frankfurt, Germany. We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH under a lease that expires in July 2018. We currently lease office space for a regional operating office in New Jersey under a lease that expires in March 2021. Our OmniComm Ltd. subsidiary leases office space in Southampton, UK under a lease that expires in September 2017. Our OmniComm Systems B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018. Our Fort Lauderdale corporate office lease expires in February 2023. The table below provides the significant components of our rent related expenses by location or subsidiary. Included in rent during the three months ended June 30, 2017 was a decrease in expense of $1,332 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to an increase in expense of $61,934 for the three months ended June 30, 2016.

	For the three months ended
Expense Category	June 30, 2017			June 30, 2016		$ Change			% Change
Corporate office	$	103,693		$	35,950	$	67,743			188.4	%
Co-location and disaster recovery facilities		116,339			98,826		17,513			17.7	%
New Jersey operations office		13,148			8,765		4,383			50.0	%
OmniComm Europe, GmbH		19,282			19,442		(160	)		-0.8	%
OmniComm Ltd.		14,491			16,087		(1,596	)		-9.9	%
OmniComm Spain S.L.		1,887			1,677		210			12.5	%
OmniComm Systems B.V.		2,589			1,777		812			45.7	%
Straight-line rent expense		(1,332	)		61,934		(63,266	)		102.2	%
Total	$	270,097		$	244,458	$	25,639			10.5	%

Consulting services expense increased to $61,105 for the three months ended June 30, 2017 compared with $24,000 for the three months ended June 30, 2016. Consulting services are comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. Product development consulting expenses increased year over year as we utilized the services of consultants during the three month period ended June 30, 2017. The table provided below provides the significant components of the expenses incurred related to consulting services.

	For the three months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change			% Change
Sales and marketing	$	18,000	$	24,000	$	(6,000	)		-25.0	%
Product development		43,105		-0-		43,105			n/a
Total	$	61,105	$	24,000	$	37,105			154.6	%

Legal and professional fees increased approximately 16% for the three months ended June 30, 2017 compared with the three months ended June 30, 2016. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the three months ended June 30, 2017 and June 30, 2016, respectively.

	For the three months ended
Expense Category	June 30, 2017		June 30, 2016		$ Change			% Change
Financial advisory	$	2,474	$	-0-	$	2,474			n/a
Audit and related		5,759		5,865		(106	)		-1.8	%
Accounting services		48,739		41,337		7,402			17.9	%
Legal-employment related		10,643		830		9,813			1182.3	%
Legal-financial related		23,380		24,765		(1,385	)		-5.6	%
General legal		2,092		7,662		(5,570	)		-72.7	%
Total	$	93,087	$	80,459	$	12,628			15.7	%

Selling, general and adm inistrative expenses (“SG&A”) increased by $9,656 or approximately 2% for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. SG&A expenses relate primarily to costs incurred in running our offices in Fort Lauderdale, Florida, Somerset, New Jersey, Southampton, England, Barcelona, Spain, Bonn, Germany and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2016 we spent approximately $712,000 on marketing, sales and advertising. We expect that the 2017 marketing, sales and advertising expenses will be approximately $850,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

During the three months ended June 30, 2017 we recognized a credit for bad debt expense of $76,363 compared to $33,455 for bad debt expense for the three months ended June 30, 2016. This change was primarily the result of a decrease in aged receivable balances that enabled us to decrease our reserve. During the remainder of 2017 we will continue to carefully and actively manage our potential exposure to bad debt by closely monitoring our accounts receivable and proactively taking the action necessary to limit our exposure. We have been very successful in managing and collecting our outstanding accounts receivable. We believe that our current allowance for uncollectible accounts accurately reflects any accounts which may prove uncollectible during the remainder of 2017.

Interest expense was $340,492 for the three months ended June 30, 2017 compared to $322,554 for the three months ended June 30, 2016, an increase of $17,938 . Interest incurred to related parties was $233 ,738 during the three months ended June 30, 2017 and $235,084 for the three months ended June 30, 2016. Included in interest expense is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of the financings we undertook in 2008 and 2009 and relating to warrants issued during 2011 and 2016. Interest expense increased year over year primarily due to the accretion of the discount from the derivatives associated with debt that was issued. The table below provides detail on the significant components of interest expense for the three months ended June 30, 2017 and June 30, 2016.

	For the three months ended
Debt Description	June 30, 2017		June 30, 2016		$ Change			% Change
Accretion of discount from derivatives	$	61,429	$	26,407	$	35,022			132.6	%
August 2008 convertible notes		47,869		47,869		-0-			0.0	%
December 2008 convertible notes		130,292		136,275		(5,983	)		-4.4	%
September 2009 secured convertible debentures		21,690		21,691		(1	)		0.0	%
General interest		37,327		47,829		(10,502	)		-22.0	%
Related party notes payable		41,885		42,483		(598	)		-1.4	%
Total	$	340,492	$	322,554	$	17,938			5.6	%

We evaluate the cost of capital available to us in combination wit h our overall capital structure and the prevailing market conditions in deciding what financing best fulfills our short and long-term capital needs. Given the overall economic climate and in particular the difficulties nano-cap companies have experienced in obtaining financing, we believe the structure and terms of the transactions we entered into during 2016 and 2017 were obtained at the best terms available to the Company.

We record unrealized gains/losses related to changes in our derivative liabilities associated with the issuance of convertible debt that occurred during 2008 and 2009 and warrants associated with promissory notes issued in 2011 and 2016. We recorded a net unrealized gain of $1,094,351 during the three months ended June 30, 2017 compared with a net unrealized loss of $1,696,825 during the three months ended June 30, 2016. The unrealized gains/losses can be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities recorded by us at the time the convertible debt and promissory notes were issued. Accordingly the warrant and conversion feature liabilities are increased or decreased based on the fair value calculations made at each quarterly balance sheet date. These non-cash gains and losses have materially impacted our results of operations during the three months ended June 30, 2017 and June 30, 2016 and can be reasonably anticipated to materially affect our net loss or net income in future periods. The fair value calculations are heavily reliant on the value of our common stock and on the calculated volatility of the price of our common stock on the OTCQX Marketplace. Accordingly, significant changes in our stock price will create large unrealized gains and losses on our financial statements. We are, however, unable to estimate the amount of such income/expense in future periods as the income/expense is partly based on the market price of our common stock at the end of a future measurement date. In addition, if we issue securities in the future which are classified as derivatives we will incur expense and income items in future periods. Investors are cautioned to consider the impact of this non-cash accounting treatment on our financial statements.

The Company recorded arrearages of $ -0- and $ -0- in its 5% Series A Preferred Stock dividends for the three month periods ended June 30, 2017, and June 30, 2016, respectively.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its operating, investing and financing needs for cash. We have historically experienced negative cash flows and have relied on the proceeds from the sale of debt and equity securities to fund our operations. At June 30, 2017, we had working capital deficit of $7,695,149.

The table provided below summarizes key measures of our liquidity and capital resources:

	Liquidity and Capital Resources
	Summarized Balance Sheet Disclosure

	June 30, 2017			December 31, 2016			$ Change			% Change
Cash	$	1,116,615		$	1,439,332		$	(322,717	)		-22.4	%
Accounts receivable, net of allowance for doubtful accounts		4,889,077			5,455,210			(566,133	)		-10.4	%
Prepaid expenses		231,097			195,915			35,182			18.0	%
Prepaid stock compensation, current portion		94,490			148,422			(53,932	)		-36.3	%
Other current assets		14,290			35,055			(20,765	)		-59.2	%
Current assets		6,345,569			7,273,934			(928,365	)		-12.8	%

Accounts payable and accrued expenses		2,068,032			2,123,073			(55,041	)		-2.6	%
Patent litigation settlement liability, current portion		627,765			862,500			(234,735	)		-27.2	%
Deferred revenue, current portion		6,505,895			7,250,061			(744,166	)		-10.3	%
Convertible notes payable, current portion, net of discount		50,000			50,000			-0-			0.0	%
Conversion feature liability, related parties		1,272,487			1,740,278			(467,791	)		-26.9	%
Conversion feature liability		450,525			585,452			(134,927	)		-23.0	%
Warrant liability, related parties		2,000,420			2,519,614			(519,194	)		-20.6	%
Warrant liability		1,065,594			1,479,748			(414,154	)		-28.0	%
Current liabilities		14,040,718			16,610,726			(2,570,008	)		-15.5	%

Working capital (deficit)	$	(7,695,149	)	$	(9,336,792	)	$	1,641,643			17.6	%

Statement of Cash Flows Disclosure

	For the six months ended
	June 30, 2017			June 30, 2016			$ Change			% Change
Net cash provided by/(used in) operating activities	$	985,405		$	(716,407	)	$	1,701,812			-237.5	%
Net cash provided by/(used in) investing activities		(107,348	)		(164,449	)		57,101			34.7	%
Net cash provided by/(used in) financing activities		(1,200,000	)		925,000			(2,125,000	)		229.7	%

Net increase/(decrease) in cash and cash equivalents		(322,717	)		21,882			(344,599	)		-1574.8	%

Changes in operating accounts		(742,994	)		(649,042	)		(93,952	)		-14.5	%

Effect of non-cash transactions on cash and cash equivalents	$	(1,024,986	)	$	2,804,841		$	(3,829,827	)		-136.5	%

Cash and Cash Equivalents

Cash and cash equivalents decreased by $322,717 to $1,116,615 at June 30, 2017 from $1,439,332 at December 31, 2016. The decrease is primarily comprised of a net income of $2,753,385, changes in working capital accounts of ($742 ,994) and a decrease from non-cash transactions of $1,024,986. During the six months ended June 30, 2017 we had investing activities comprised of net purchases of property and equipment of $107,348. We had financing activities that included the repayment of $100,000 of notes payable and the repayment of $1,100,000 on our revolving line of credit during the six month period ended June 30, 2017.

Capital Expenditures

We are not currently bound by any long or short-term agreements for the purchase or lease of cap ital expenditures. Any amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately service any increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future.

Presently, we have approximately $ 4 00,000 planned for capital expenditures to further develop our infrastructure to allow for growth in our operations during the remainder of 2017 . We expect to fund these capital expenditure needs through a combination of vendor-provided financing, the use of operating or capital equipment leases and cash provided from operations.

Contractual Obligations

The following table sets forth our con tractual obligations as of June 30, 2017:

Contractual obligation			Payments due by period
	Total		Less than 1 year			1-2 Years			2-3 Years			3+ Years
Promissory notes (1)	$	1,242,500	$	-0-		$	450,000	(2)	$	792,500	(3)	$	-0-
Convertible notes (1)		6,950,000		50,000	(4)		150,000	(5)		6,550,000	(6)		200,000	(7)
Lines of credit (8)		1,600,000		-0-			-0-			1,600,000			-0-
Operating lease obligations (9)		2,234,899		679,228			513,153			312,610			729,908	(10)
Patent licensing fees (11)		637,500		637,500			-0-			-0-			-0-
Total	$	12,664,899	$	1,366,728		$	1,113,153		$	9,255,110		$	929,908

1.	Amounts do not include interest to be paid.
2.	Includes $450,000 in 12% notes payable that mature in April 2019.
3.	Includes $420,000 in 10% notes payable that mature in April 2020 and $372,500 in 12% notes payable that mature in April 2020.
4.	Includes $50,000 in 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the holder at a conversion rate of $1.25 per share.
5.	Includes $150,000 in 10% convertible notes that mature in April 2019.
6.	Includes $1,770,000 in 10% convertible notes that mature in April 2020 and $4,780,000 in 12% convertible notes that mature in April 2020.
7.	Includes $200,000 in 12% convertible notes that mature in April 2021.
8.	Includes $1,600,000 due on the revolving Line of Credit with The Northern Trust Company.
9.	Includes office lease obligations for our Corporate Office in Florida, our regional operating office in New Jersey, our co-location and disaster recovery locations in Ohio, Florida and Germany, our office in England, our office in the Netherlands and our European headquarters in Germany.
10.	Includes office lease obligations through 2023.
11.	Relates to guaranteed minimum payments owed in connection with our settlement of a patent infringement lawsuit brought against the Company by DataSci, LLC.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements t hat have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Debt Obligations

As of June 30, 2017 we were in default on principal and interest payments owed totaling $140,689 on our 10% Convertible Notes that were issued in 1999.

On February 29, 2016 the Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to Mr. Wit in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019.

On June 30, 2016 the Company and Mr. Wit extended the maturity date of $1,770,000 of convertible debentures to Mr. Wit originally issued in August 2008. The debentures carry an interest rate of 10% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016 the Company and Mr. Wit extended the maturity date of $4,055,000 of convertible debentures to Mr. Wit originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016 the Company and the holders extended the maturity date of $625,000 of convertible debentures originally issued in September 2009. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016 the Company and the holder extended the maturity date of $100,000 of convertible debentures originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016 the Company and our former director, Mr. van Kesteren ("Mr. van Kesteren") extended the maturity date of $150,000 of convertible debentures originally issued in August 2008. The debentures carry an interest rate of 10% and have a maturity date of April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On June 30, 2016 the Company issued promissory notes in the principal amount of $420,000 and warrants to purchase 1,680,000 shares of common stock of the Company at an exercise price of $0.25 per sh are with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 10% per annum and have a maturity date of April 1, 2020.

On June 30, 2016 the Company issued promissory notes in the principal amount of $372,500 and warrants to purchase 1,490,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 12% per annum and have a maturity date of April 1, 2020.

On April 7, 2017 the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At June 30, 2017, $1 ,600,000 was outstanding on the Line of Credit at an interest rate of 3.25%.

On June 30, 2017 the Company and our former director, Mr. van Kesteren ("Mr. van Kesteren") extended the maturity date of $150,000 of convertible debentures originally issued in August 2008. The debentures carry an interest rate of 10% and have a maturity date of April 1, 2019. The expiration date of the warrants associated with the debentures was also extended to April 1, 2019.

On June 30, 2017 the Company and the holder extended the maturity date of $200,000 of convertible debentures originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2021. The expiration date of the warrants associated with the debentures was also extended to April 1, 2021.

During the next twelve months we expect debt in the aggregate amount of $50,000 to mature as follows:

●

$50,000 of 10% convertible notes currently in defaul t and due that are convertible into shares of common stock at the option of the debenture holder at a conversion rate of $1.25 per share.

Sources of Liquidity and Capital Resources

Because of the losses we have experienced from operations we have needed to continue utilizing the proceeds from the issuance of debt and the sale of equity securities to fund our working capital needs. We have used a combination of equity financing, short-term bridge loans and long-term loans to fund our working capital needs. Other than our revenues, current capital and capital we may raise from future debt or equity offerings, the $5,000,000 revolving line of credit with The Northern Trust Company ($1 ,600,000 of which is outstanding as of June 30, 2017) or short-term bridge loans, we do not have any additional sources of working capital.

We may continue to require substantial funds to continue our research and product development activities and to market, sell and commercialize our technology. We may need to raise substantial additional capital to fund our future operations. Our capital requirements will depend on many factors, including the problems, delays, expenses and complications frequently encountered by companies developing and commercializing new technologies; the progress of our research and product development activities; the rate of technological advances; determinations as to the commercial potential of our technology under development; the status of competitive technology; the establishment of collaborative relationships; the success of our sales and marketing programs; the cost of filing, prosecuting, defending and enforcing intellectual property rights; and other changes in economic, regulatory or competitive conditions in our planned business. Estimates about the adequacy of funding for our activities are based upon certain assumptions, including assumptions that our research and product development programs relating to our technology can be conducted at projected costs and that progress towards broader commercialization of our technology will be timely and successful. There can be no assurance that changes in our research and product development plans or other events will not result in accelerated or unexpected expenditures.

While we have not sought capital from venture capital or private equity sources we believe that those sources of capital remain available although possibly under terms and conditions that might be disadvantageous to existing investors.

To satisfy our capital requirements, including ongoing futu re operations, we may seek to raise additional financing through debt and equity financings. There can be no assurance that any such funding will be available to us on favorable terms or at all. If adequate funds are not available when needed, we may be required to delay, scale back or eliminate some or all of our research and product development programs, and our business operations. If we are successful in obtaining additional financings, the terms of such financings may have the effect of diluting or adversely affecting the holdings or the rights of our stockholders or impose restrictive covenants that may adversely impact our business. Further, there can be no assurance that even if such additional capital is obtained or planned cost reductions are implemented, that we will achieve positive cash flow or profitability or be able to continue as a business.

While several of our officers and directors have historically, either personally or through funds with which they are affiliated, provided substantial capital either in the form of debt or equity financing there can be no assurance that they will continue to provide any such funding to us on favorable terms or at all.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclo sures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 2 of Notes to the Condensed Consolidated Financial Statements describes the significant accounting policies used in the preparation of the condensed consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounti ng policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimat es on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, our Management is periodically faced with uncertainties, the outcomes of which are not within our control and will not be known for prolonged periods of time. Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, our Management believes that our condensed consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States (GAAP), and present a meaningful presentation of our financial condition and results of operations.

Our Management believes that the following are our critical accounting policies:

ASSET IMPAIRMENT

Asset Acquisitions and Intangible Assets

We account for asset acquisitions in accordance with ASC 350, Intangibles- Goodwill and Other . The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of an asset acquisition.

Long Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be reco verable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

DEFERRED REVENUE

Deferred revenue represents cash advances and accounts receivable in excess of revenue earned on on-going contracts. Payment terms vary with each contract but may include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation.

REVENUE RECOGNITION POLICY

OmniComm ’s revenue model is transaction-based and can be implemented either as an ASP (application service provider) or licensed for implementation by a customer such as a pharmaceutical company. Revenues are derived from the set-up of clinical trial engagements; licensing arrangements, fees earned for hosting our clients’ data and projects, on-going maintenance fees incurred throughout the duration of an engagement; and fees for report writing and project change orders. The clinical trials that are conducted using our EDC applications can last from a few months to several years. Most of the fees associated with our product including post-setup customer support in the form of maintenance charges are recognized ratably over the term of clinical trial projects. Cost of sales is primarily comprised of programmer salaries and taxes and is expensed as incurred.

The Company recognizes revenues, for both fi nancial statement and tax purposes in accordance with SEC Staff Accounting Bulletin No. 104 “Revenue Recognition in Financial Statements (SAB 104)” (Codified within Accounting Standards Codification (ASC) Revenue Recognition ASC 605) and AICPA Statement of Position 97-2 (SOP 97-2) “Software Revenue Recognition” as amended by SOP 98-9 (Codified within ASC 605.985, Software Industry Revenue Recognition). SAB 104 requires that revenues be recognized ratably over the life of a contract. The Company will periodically record deferred revenues relating to advance payments in contracts. Under its licensing arrangements , the Company recognizes revenue pursuant to SOP 97-2. Under these arrangements , the Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer and/or delivery has occurred; (3) the collection of fees is probable; and (4) the fee is fixed or determinable. SOP 97-2, as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of the elements. We have analyzed each element in our multiple element arrangements and determined that we have sufficient vendor-specific objective evidence (“VSOE”) to allocate revenues to license updates and product support. License revenues are recognized on delivery if the other conditions of SOP 97-2 are satisfied. License updates and product support revenue is recognized ratably over the term of the arrangement. In arrangements where term licenses are bundled with license updates and product support and such revenue is recognized ratably over the term of the arrangement, we allocate the revenue to license revenue and to license updates and product support revenue based on the VSOE of fair value for license updates and product support revenue on perpetual licenses of similar products.

STOCK BASED COMPENSATION.

The Company accounts for its equity incentive plans under ASC 718, Compensation– Stock Compensation (“ASC 718”) which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions.

ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Income. The Company currently uses the Black-Scholes option pricing model to determine grant date fair value.

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

During the first six months of 2017, we adopted the following new accounting pronouncements:

No new applicable pronouncements during th e six month period ended June 30, 2017.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements that have been issued since the filing of our Form 10 -K for the year ended December 31, 2016 to determine their impact, if any, on our financial statements.

ITEM 3 . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4 . CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on thei r evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, being June 30, 2017, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) are effective such that the information relating to OmniComm, including our consolidating subsidiaries, required to be disclosed by the Company in reports that it files or submits under the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal con trol over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the second quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II . OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Form 10-Q, you should carefully conside r the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition, or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

	EXHIBIT NO.		DESCRIPTION
	4.3		Amended and restated master note to The Northern Trust Company dated April 7, 2017*
	4.4		Pledge Agreement between Northern Trust and Cornelis F. Wit dated April 7, 2017*
	4.5		Securities Account Control Agreement between Northern Trust and Cornelis F. Wit dated April 7, 2017*
	10.49* †		Form of Extension of Maturity Date of Convertible Debenture [and related warrants] and Schedule of Substantially Identical Extensions of Maturity Date of Convertible Debenture [and related warrants]
	10.54* †		Form of Common Stock Purchase Warrant and Schedule of Substantially Identical Common Stock Purchase Warrants
	31.1*		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2*		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1**		Certification of Principal Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS*		XBRL Instance Document
	101.SCH*		XBRL Taxonomy Extension Schema Document
	101.CAL*		XBRL Taxonomy Extension Calculation Document
	101.DEF*		XBRL Taxonomy Extension Definition Document
	101.LAB*		XBRL Taxonomy Extension Label Document
	101.PRE*		XBRL Taxonomy Extension Presentation Document

*	Filed herewith

**	Furnished herewith

†	Pursuant to Instruction 2 of Item 601(a) of Regulation SK, the Company has filed only the form of the contract, and other contracts substantially identical in all material respects, except as to the parties thereto and certain other details, are described in a Schedule to the exhibit.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly cau sed this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 11 , 201 7

OMNICOMM SYSTEMS, INC.

By: /s/ Cornelis F. Wit

Cornelis F. Wit, Executive Chairman

(Principal Executive Officer)

By: /s/ Thomas E. Vickers

Thomas E. Vickers, Chief Financial Officer

(Principal Financial Officer)

Exhibit 4.3

Obligator Name

OMNICOMM SYSTEMS, INC.

Obligor /Obligation Number

XXXXXXXXXX-XXXXX

Officer 43821/Werra

Amount

$5,000,000.00

Dated as of April 7, 2017

THIS AMENDED AND RESTATED MASTER NOTE FOR RENEWAL, RENEWS, EXTENDS, AND/OR MODIFIES THAT CERTAIN MASTER NOTE DATED AS OF FEBRUARY 3, 2015, EVIDENCING AN ORIGINAL PRINCIPAL AMOUNT OF $5,000,000.00 ("PRIOR INDEBTEDNESS") OF WHICH $2,305,812.04 IS THE BALANCE CURRENTLY OUTSTANDING AT THE TIME OF THIS RENEWAL. ALL STATE OF FLORIDA DOCUMENTARY STAMPS TAXES PAYABLE WITH RESPECT TO THE PRIOR INDEBTEDNESS HAVE BEEN PREVIOUSLY PAID.

AMENDED AND RESTATED MASTER NOTE FOR RENEWAL

This Note (as modified from time to time, the "Note") has been executed by OMNICOMM SYSTEMS, INC., a Foreign Profit Corporation organized under the law of the State of Delaware, ("Borrower"), with Borrower's principal residence or office at 2101 West Commercial Boulevard, Suite 3500, Fort Lauderdale, FL 33309. If more than one party executes this Note, "Borrower" refers to each of them individually and some or all of them collectively, and their obligations hereunder shall be joint and several. If any party comprising "Borrower" is a trustee(s), "Trust Agreement" means the governing trust agreement and/or instruments governing the trust, as modified from time to time, and all related documents and instruments, and "Borrower" also refers to the trustee(s) in its capacity as such and the trust individually and collectively. Various capitalized terms have the meanings set forth in the Section entitled "DEFINITIONS."

1. REVOLVING UNCOMMITTED LINE OF CREDIT LOANS.

(a) FOR VALUE RECEIVED, on or before April 7, 2020, (the "Scheduled Maturity Date"), Borrower promises to pay to the order of THE NORTHERN TRUST COMPANY, an Illinois banking corporation (hereafter, together with any subsequent holder hereof, called "Lender"), at its banking office at 600 Brickell Avenue Suite 2400, Miami, FL 33131, or at such other place as Lender may direct, the aggregate unpaid principal balance of each advance (together with portions thereof outstanding from time to time hereunder, as applicable, each a "Loan" and collectively the "Loans") made by Lender to Borrower hereunder. The total principal amount of Loans outstanding at any one time hereunder shall not exceed FIVE MILLION AND 00/100 UNITED STATES DOLLARS ($5,000,000.00). Subject to the other terms and conditions hereof, including Lender's right to decline to make any Loan as provided in (b) of this Section, Borrower may borrow, repay and reborrow hereunder until the Scheduled Maturity Date. Lender has no obligation to refinance this Note.

(b) By its acceptance of this Note, Lender shall be deemed to have agreed to make available to Borrower an uncommitted revolving line of credit. Borrower may request one or more Loans hereunder from time to time until the Scheduled Maturity Date, provided, however, that the making of any Loan hereunder shall remain in the sole and absolute discretion of Lender and Lender shall have no oblig ation whatsoever to make any Loan or otherwise to extend credit to Borrower hereunder. Lender shall have no obligation to give Borrower or any other person or entity notice of the existence of any Event of Default or Unmatured Event of Default or of any decision not to make any Loan or otherwise extend credit to Borrower hereunder. Lender has no obligation to refinance this Note.

(c) Without limiting any other rights of Lender under this Note or any Related Document, including Lender's right to determine, in its sole and absolute discretion, whether to make any Loan to Borrower hereunder, Lender may request that Borrower furnish to Lender certified copies of Constituent Documents, resolutions, legal opinions, and other documents and information in such form as Lender may request. Borrower's satisfaction of any such request shall not require Lender to make any Loan and any failure by Lender to request (or any delay in requesting) such documents and information from Borrower shall not be construed as a waiver of any of Lender's rights under this Note, any Related Document or applicable law.

(d) If a payment under this Note (principal, interest or other) is fifteen (15) or more days late, Borrower may be charged, and if charged Borrower agrees to pay immediately, a late fee of five percent (5%) of the unpaid portion of the payment.

2 . DEFINITIONS .

(a) As used in this Note the following terms shall have the indicated meanings:

"Anti-Terrorism Law" means any law relating to terrorism or money-laundering, including Executive Order No. 13224 and the USA Patriot Act.

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

"Constituent Documents" means the articles or certificate of incorporation, by-laws, partnership agreement, certificate of limited partnership, limited liability company operating agreement, limited liability company articles of organization or certificate of formation, trust agreement, and all other documents and instruments pertaining to the formation and ongoing existence of any person or entity which is not a natural person.

"Credit Support Party" means any person, or any persons severally, who now or hereafter guarantees payment or collection of all or any part of this Note or provides any collateral for this Note.

"Dollar" and "1" means lawful money of the United States of America, unless otherwise specified.

"Event of Default"-see Section entitled "EV ENTS OF DEFAULT."

"Executive Order No. 13224" means Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001.

"Lender Affiliate" means Northern Trust Corporation or any direct or indirect subsidiary of Northern Trust Corporation (other than Lender itself).

The term "margin stock" shall have the same meaning herein as in Federal Reserve Board Regulation U, or any successor regulation, as and if modified from time to time. The verbs "purchase" and " carry " when used with respect to margin stock shall have the same meaning as in such Regulation or successor and applicable authorities thereunder.

The term "person" means any individual, corporation, company, limited liability company, voluntary association, partnership, trust, estate, unincorporated organization, other entity, or government (or any agency, instrumentality, or political subdivision thereof).

"Prohibited Person" means: (i) a person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a person with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a person who commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order No. 13224; (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/tllsdn.pdf or at any replacement website or at any other official publication of such list; and (vi) a person who is affiliated with a person described in clauses (i) - (v) above.

"Related Document(s)" means this Note as well as any note, agreement, guaranty, Swap Agreement, or other document or instrument previously, now or hereafter delivered to Lender in connection with this Note.

"Related Party(ies)" means any Credit Support Party, any Subsidiary, and, in addition: (i) as to any Borrower which is a natural person, trusts for the benefit of Borrower; and (ii) as to any Borrower which is not a natural person, to the extent applicable, any general or limited partner, controlling shareholder, joint venturer, member or manager, of Borrower.

"Subsidiary" means any corporation, partnership, limited liability company, joint venture, trust, or other legal entity of which Borrower owns directly or indirectly 50% or more of the outstanding voting stock or interest, or of which Borrower has effective control, by contract or otherwise.

"Swap Agreement" means any agreement, document or instrument executed or delivered by Borrower or any Credit Support Party pertaining to any Swap Obligation.

"Swap Obligation" means, with respect to Borrower or any Credit Support Party, any obligation to pay or perform under any agreement, contract, or transaction that constitutes a "swap" within the meaning of section 1(a)(47) of the Commodity Exchange Act, as amended from time to time, if entered into with Lender or any Lender Affiliate.

"Unmatured Event of Default" means any event or condition that would become an Event of Default with notice or the passage of time or both.

"USA Patriot Act" means the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001" (Public Law 107-56, signed into law on October 26, 200I), as amended from time to time.

(b) As used in this Note, unless otherwise specified: the term "including" means "including without limitation;" the term "days" means "calendar days"; and terms such as "herein," "hereof' and words of similar import refer to this Note as a whole. Unless otherwise defined herein or the context requires otherwise, all terms (including those not capitalized) that are defined in the Uniform Commercial Code of Florida shall have the same meanings herein as in such Code, as such Code may be amended from time to time (the "UCC"); however, no amendment to the UCC after the date hereof shall limit any rights of Lender hereunder or in connection herewith. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the others. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to sections or provisions without reference to the document in which they are contained are references to this Note.

3. INTEREST; PAYMENTS & PREPAYMENTS .

(a) Borrower agrees to pay interest on the unpaid principal amount from time to time outstanding hereunder at the rate per year equal to the "Prime-Based Rate", which shall mean the greater of (i) one percent (1.000%) or (ii) the Prime Rate minus one percent (1.000%). For purposes hereof, "Prime Rate" means the rate announced from time to time by Lender called its prime rate, which at any time may not be the lowest rate charged by Lender, provided that if such prime rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Note. Changes in the rate of interest resulting from a change in the Prime Rate shall take effect on the date set forth in each announcement of a change in the Prime Rate. Borrower may prepay this Note without penalty or premium.

(b) Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, Borrower agrees to pay interest on the Loans at a rate equal to five percent (5%) per year in addition to the rate otherwise applicable under this Note. Notwithstanding the foregoing or any other provision hereof or of any Related Document, in no event shall the interest rate under this Note (i) be less than one percent (1%) per year at any time or (ii) exceed the maximum interest rate allowed under applicable law.

(c) Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days and days elapsed, including the date a Loan is made and excluding the date a Loan or any portion thereof is paid or prepaid. Calculating interest on the basis of a year other than a calendar year may result in a higher effective interest rate than any numeric rate stated in or determined pursuant to this Note.

(d) Borrower agrees to pay accrued interest monthly on the 7th day of each month, beginning May 7, 2017, with all accrued but unpaid interest being due and payable in full with the final principal payment due hereunder.

(e) After maturity, whether by acceleration or otherwise, interest shall be payable on demand.

(f) If Borrower wishes to obtain a Loan, Borrower shall notify Lender orally or in writing on a banking day of Lender at the office of Lender indicated above. Any such notice shall be irrevocable; if the notice is received after 11:00 A.M. at the office of Lender indicated above the Loan may not be available until the next banking day.

(g) Lender is hereby authorized by Borrower at any time and from time to time at Lender's sole option to attach a schedule (grid) to this Note and to endorse thereon notations with respect to each Loan specifying the date and principal amount thereof, the date and amount of each payment of principal and interest made by Borrower with respect to each such Loan, and other relevant details. Lender's endorsements as well as its records relating to Loans shall be presumptive evidence of the outstanding principal, interest and other relevant details, and, in the event of inconsistency, shall prevail over any records of Borrower and any written confirmations of Loans given by Borrower.

4. CROSS-REFERENCES.

(a) This Note amends, restates, and replaces in its entirety the note(s) dated February 3, 2015, in the amount of $5,000,000.00. All collateral and guaranties given for such prior note(s) shall secure or guarantee this Note. All amounts and (if applicable) Interest Periods outstanding under such previous note(s) shall be deemed automatically outstanding hereunder.

(b) This Note is secured without limitation as provided in the following and all related documents, in each case as increased, amended, modified, renewed, restated or replaced from time to time:

Pledge Agreement of even date.

(c) All State of Florida Documentary Stamps Taxes payable with respect to the prior indebtedness have been previously paid.

5. USE OF PROCEEDS. Borrower agrees not to use proceeds of Loans directly or indirectly to purchase or carry margin stock unless both: (a) Lender has consented thereto; and (b) if the Loans are secured directly or indirectly by margin stock, Borrower has indicated such in an FR U-1 statement furnished to Lender.

Borrower represents and warrants that the p roceeds of this Note will be used solely for business purposes, and not for personal, family or household use, within the meaning of Federal Truth-in-Lending and similar state laws and regulations.

6. REPRESENTATIONS AND WARRANTIES.

(a) Borrower represents and warrants to, and agrees in favor of, Lender that:

(i)

(A) If Borrower is an organization (including a trust that is a registered organization), then Borrower is an entity of the type, and is organized under the laws of the jurisdiction, specified in t he preamble hereto. Borrower's name as shown in the preamble hereto is the full exact name that appears in Borrower's organizational documents. If Borrower is a registered organization, Borrower's name as shown in the preamble hereto is as shown on the public organic record most recently filed with or issued or enacted by Borrower's jurisdiction of organization which purports to state, amend, or restate Borrower's name. If Borrower is an organization but not a registered organization, if it has only one place of business that place of business is at Borrower's address indicated in the preamble hereto, but if it has more than one place of business, its chief executive office is at such address.

		(B) If Borrower is a trust which is not itself a registered organization, then: (1) if the Trust Agreement specifies a name for the trust, Borrower's name as shown in the preamble hereto is the name so specified; (2) Borrower has provided the name of its settlor(s) or testator(s) to Lender; and (3) if Borrower has only one place of business, that place of business is at Borrower's address indicated in the preamble hereto, but if it has more than one place of business, its chief executive office is at such address.

		(C) If Borrower is a natural person, then:

(1) Borrower's principal residence is located at the address shown in the preamble hereto and

(2) i. if Borrower has a driver's license or alternative identification that has not expired and that was issued by the state of Borrower's principal residence, Borrower's name shown in the preamble hereto is exactly the same as shown on that driver's license or alternative identification card; or

ii. if Borrower does not have a driver's license or alternative identification card that has not expired and that was issued by the state of Borrower's principal residence, then: (x) Borrower's first given name and surname are as shown in the preamble hereto; and (y) if Borrower obtains a driver's license or alternative identification card from the state of Borrower's principal residence, then Borrower shall, within thirty (30) days of the issuance of such driver's license or alternative identification card, provide Lender with a true and accurate copy of such driver's license or alternative identification card, showing Borrower's name and address, the state of issuance and the expiration date thereof; and

(3 ) in any event, Borrower shall provide Lender notice within thirty (30) days of the happening of each of the following events :

i. Borrower's principal residence has changed;

ii. the name of Borrower on Borrower's driver's license or alternative identification card has changed in any manner, no matter how small;

iii. Borrower's driver's license or alternative identification has been surrendered, suspended, changed or terminated in any manner, no matter how small or for how short a time;

iv. Borrower's driver's license or alternative identification card has expired; or

v. Borrower has changed his or her first given name or surname, whether as a result of marriage, divorce, legal proceeding or otherwise.

(D) The representations and warranties made by Borrower in (A) (C) of this (i), as applicable, would have been accurate at all times during the five years and six months prior to the date hereof except as and if Borrower has specifically notified Lender in writing prior to Borrower's execution of this Agreement.

(ii) Borrower (if Borrower is not a natural person) and any Subsidiary are validly existing and in good standing under the laws of their state of organization or formation, and are duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would reasonably be expected to have a material adverse impact on the assets, condition or prospects of Borrower.

(iii) The execution, delivery and performance of this Note and all Related Documents: are within Borrower's powers and have been authorized by all necessary action required by law and (unless Borrower is a natural person) Borrower's Constituent Documents; have received any and all necessary governmental approval; and do not and will not contravene or conflict with any provision of law, any Constituent Document or any agreement affecting Borrower or its property. This Note and all Related Documents are enforceable against Borrower and/or the applicable Related Parties in accord with their terms, except to the extent, if any, that such enforceability may be limited by equitable principles, whether applied in a court of law or equity, or by bankruptcy, insolvency and other laws affecting creditors' rights generally.

(iv) There has been no material adverse change in the busi ness, financial condition, properties, assets, operations or _prospects of Borrower or any Related Party since the date of the latest financial statements or other documentation provided by or on behalf of Borrower or any Related Party to Lender.

(v) Borro wer has filed or caused to be filed all foreign, federal, state, and local tax returns that are required to be filed, and bas paid or has caused to be paid all of its taxes, including any taxes shown on such returns or on any assessment received by it, to the extent that such taxes have become due.

(vi) The execution, delivery and performance of this Note and all Related Documents are in Borrower's best interest in its current and future operations and will materially benefit Borrower. Borrower has received adequate, fair and valuable consideration, and at least reasonably equivalent value, to enter into and perform this Note and all Related Documents. Borrower's assets at fair valuation exceed the sum of Borrower's debts. Borrower is able to pay its debts as they become due. Borrower does not have unreasonably small capital with which to conduct its business.

(vii) This sub-subsection applies if and only if "Borrower" consists of two or more persons. Each person comprising "Borrower" acknowledges that by act ing together to borrow on a combined joint and several basis, each Borrower is able to and does obtain a larger amount of credit, better terms and conditions and at a lower cost of funds than would otherwise be available to each Borrower individually. Each Borrower acknowledges that it thereby receives fair, reasonable and equivalent value for the joint and several obligations undertaken under this Note. Each Borrower's obligations hereunder shall not be subject to any setoff, defense or counterclaim that is or would be available at law or in equity to a guarantor, surety or accommodation party, all of which setoffs, defenses or counterclaims each Borrower hereby expressly waives. Each pa1ty comprising Borrower shall be jointly and severally liable hereunder and under the Related Documents regardless of whether such Borrower has received the proceeds of any Loan or has benefited from any Loan.

(b) The request or application for any (the) Loan shall be a representation and warranty by Borrower as of the date of such request or application that: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of such date; and (ii) Borrower's representations and warranties herein and in any Related Document are true and correct as of such date as though made on such date .

7. EVENTS OF DEFAULT. Each of the following shall constitute an "Event of Default":

(a) (i) failure to pay, when and as due, any principal, interest or other amounts payable hereunder or under any Related Document; (ii) failure to comply with or perform any agreement or covenant of Borrower or any Related Party contained herein or in any Related Document, which failure does not otherwise constitute an Event ofDefault, subject to any applicable notice, grace or cure period; or (iii) if Borrower or any Related Party is a natural person, failure to furnish or cause to be furnished to Lender when and as requested by Lender, but not more often than once every twelve months, fully completed personal financial statements of Borrower or such Related Party on Lender's then-standard form together with such supporting information pertaining to creditworthiness of Borrower or such Related Party as Lender may reasonably request; or

(b) any default, event of default, or similar event shall occur or continue under any Related Document, and shall continue beyond any applicable notice, grace or cure period set forth in such Related Document; or

(c) there shall occur any default or event of default, any similar event, any event that requires the prepayment of borrowed money or permits the acceleration of the maturity thereof, or any event or condition that might become any of the foregoing with notice or the passage of time or both, under the terms of any evidence of indebtedness or other agreement issued or assumed or entered into by Borrower or any Related Party, or under the terms of any document or instrument under which any such evidence of indebtedness or other agreement is issued, assumed, secured, or guaranteed, and such event shall continue beyond any applicable notice, grace or cure period; or

(d) any representation, warranty, certificate, financial statement, report, notice, or other writing furnished by or on behalf of Borrower or any Related Party to Lender is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified; or

(e) this Note or any Related Document, including any guaranty of or pledge of collateral security for this Note, shall be repudiated or shall become unenforceable or incapable of performance in accord with its terms; or

(f) Borrower or any Related Party (in each case if not a natural person) shall fail to maintain their existence in good standing in their state of organization or formation or shall fail to be duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would reasonably be expected to have a material adverse impact 011 the assets, condition or prospects of Borrower or any Related Party; or

(g) Borrower or any Related Party shall die, be declared legally incompetent, dissolve, liquidate, merge, consolidate, or cease to be in existence for any reason; or, if Borrower is a partnership or joint venture, any general or limited partner or joint venturer of Borrower shall withdraw from Borrower, or any general partner shall become a limited partner; or the trust under the Trust Agreement shall terminate in whole or in part or be the subject of a distribution of other than income but, in the case of a distribution, only if such distribution would otherwise cause an Event of Default or Unmatured Event of Default to occur; or

(h) except for a successor trustee under the Trust Agreement, any person or entity presently not in control of a Borrower or Related Party which is not a natural person shall obtain control directly or indirectly of such a Borrower or Related Party, whether by purchase or gift of stock or assets, by contract, or otherwise; or

(i) any proceeding (judicial or administrative} shall be commenced against Borrower or any Related Party, or with respect to any of their assets, which would reasonably be expected to have a material and adverse effect on the ability of Borrower to repay this Note; or a judgment or settlement shall be entered or agreed to in any such proceeding which would reasonably be expected to have a material and adverse effect on the ability of Borrower to repay this Note; or any garnishment, summons, writ of attachment, citation, levy or the like is issued against or served upon Lender for the attachment of any property of Borrower or any Related Party in Lender's possession or control; or

(i) Lender shall not have a perfected security interes t in any collateral for this Note, of first priority, and enforceable in accord with the applicable Related Documents; or any notice of a federal tax lien against Borrower or any Related Party shall be filed with any public recorder; or

(k) there shall be any material loss or depreciation in the value of any collateral for this Note for any reason (except that the preceding part of this subsection shall not apply if Borrower and any Related Party are in compliance with any "Minimum Liquidity Balance" or other specific borrowing base or like requirement under all Related Documents); or Lender shall otherwise reasonably deem itself insecure; or, unless expressly permitted by this Note or the Related Documents, all or any part of any such collateral or any direct, indirect, legal, equitable or beneficial interest therein is assigned, transferred or sold without Lender's prior written consent; or

(1) any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against Borrower or any Related Party, and, if instituted against Borrower or any Related Party, shall not be dismissed or vacated within sixty (60) days after the filing or other institution thereof; or

(m) Borrower or any Related Party shall become insolvent, generally shall fail or be unable to pay its debts as they mature, shall admit in writing its inability to pay its debts as they mature, shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business.

8. DEFAULT REMEDIES.

(a) Upon the occurrence of any Event of Default specified in (a)-(k:) of the Section entitled "EVENTS OF DEFAULT," Lender at its option may declare this Note (principal, interest and other amounts) immediately due and payable without notice or demand of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY BORROWER (except as and if otherwise specifically set forth herein), whereupon the entire unpaid principal balance of this Note, all interest accrued thereon, and any other amounts payable hereunder shall thereupon at once mature and become due and payable. Upon the occurrence of any Event of Default specified in (1)-(m) of the Section entitled "EVENTS OF DEFAULT," this Note (principal, interest and other amounts) shall be immediately and automatically due and payable without notice, demand or other action of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY BORROWER. Upon the occurrence of any Event of Default, Lender may exercise any rights and remedies under this Note or any Related Document (including any Related Document pertaining to collateral), and at law or in equity. The time of payment of this Note is also subject to acceleration if an Event of Default occurs.

(b) Lender may, by written notice to Borrower, at any time and from time to time, waive any Event of Default or Unmatured Event of Default which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, Lender and Borrower shall be restored to their former position and rights hereunder, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to or impair any subsequent or other Event of Default or Unmatured Event of Default. No failure to exercise, and no delay in exercising, on the part of Lender of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of Lender herein provided are cumulative and not exclusive of any rights or remedies provided by law.

(c) Except as and if otherwise specifically set forth herein, Borrower irrevocably waives presentment, protest, notice of protest, notice of intent to accelerate, notice of acceleration, demand, diligence, grace, notice of dishonor or default, notice of nonpayment, notice of acceptance, notice of any loans made, extensions granted or other action taken in reliance hereon, and all other demands and notices of any kind in connection with this Note.

9. NO INTEREST OVER LEGAL RATE. It is the intent of Lender and Borrower in the execution of this Note and all other instruments now or hereafter securing this Note to contract in strict compliance with applicable usury law. In furtherance thereof, Lender and Borrower stipulate and agree that none of the terms and provisions contained in this Note, or in any other instrument executed in connection herewith, shall ever be construed to create a contract to pay for the use, forbearance or detention of money, interest at a rate in excess of the maximum interest rate permitted to be charged by applicable law; that neither the undersigned nor any guarantors, endorsers or other parties now or hereafter becoming liable for payment of this Note shall ever be obligated or required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully c harged under applicable law; and that the provisions of this paragraph shall control over all other provisions of this Note and any other instruments now or hereafter executed in connection herewith which may be in apparent conflict herewith. The holder of this Note expressly disavows any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of this Note is accelerated. If the maturity of this Note shall be accelerated for any reason or if the principal of this Note is paid prior to the end of the term of this Note, and as a result thereof the interest received for the actual period of existence of the Loans evidenced by this Note exceeds the applicable maximum lawful rate, the holder of this Note shall, at its option, either refund to the undersigned the amount of such excess or credit the amount of such excess against the principal balance of this Note then outstanding and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest. In the event that Lender or any other holder of this Note shall contract for, charge or receive any amount or amounts and/or any other thing of value which are determined to constitute interest which would increase the effective interest rate on this Note to a rate in excess of that permitted to be charged by applicable law, an amount equal to interest in excess of the lawful rate shall, upon such determination, at the option of the holder of this Note, be either immediately returned to the undersigned or credited against the principal balance of this Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. By execution of this Note Borrower acknowledges that it believes the Loans evidenced by this Note to be non-usurious and agrees that if, at any time, Borrower should have reason to believe that any such Loan is in fact usurious, it will give the holder of this Note notice of such condition and the undersigned agrees that said holder shall have ninety (90) days in which to make appropriate refund or other adjustment in order to correct such condition if in fact such exists. The term "applicable law" as used in this Note shall mean the laws of the State of Florida or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

10. PAYMENTS, ETC. All payments hereunder shall be made in immediately available funds, and shall be applied first to accrued interest and then to principal; however, if an Event of Default occurs, Lender may, in its sole discretion, and in such order as it may choose, apply any payment to interest, principal and/or lawful charges and expenses then accrued. Borrower shall receive immediate credit on payments received during Lender's normal banking hours if made in cash, immediately available funds, or by debit to available balances in an account at Lender; otherwise payments shall be credited after clearance through normal banking channels. Borrower authorizes Lender to charge any account of Borrower maintained with Lender for any amounts of principal, interest, taxes, duties, or other charges or amounts due or payable hereunder or under any Related Document, with the amount of such payment subject in Lender's discretion to availability of collected balances. Unless Borrower instructs otherwise, all Loans shall be credited to an account(s) of Borrower with Lender. All payments shall be made without deduction for or on account of any present or future taxes, duties or other charges levied or imposed on this Note, the proceeds, Lender, Borrower or any Related Party by any government or political subdivision thereof. Borrower shall upon request of Lender pay all such taxes, duties or other charges in addition to principal and interest, including all documentary stamp and intangible taxes, but excluding income taxes based solely on Lender's income.

11. SETOFF. If an Event of Default has occurred and is continuing, then, to the maximum extent permitted by law, any account, deposit or other indebtedness owing by Lender to Borrower, and any securities or other property of Borrower delivered to or left in the possession of Lender or any affiliate or subsidiary of Lender, or its or their nominee or bailee, may (at any time and without notice of any kind) be set off against and applied in payment of any obligation hereunder or under any Related Document.

12. NOTICES. Except as and if otherwise provided herein, all notices, requests and demands to or upon the respective parties hereto shall be in writing and shall be deemed to have been given or made five business days after a record has been deposited in the mail, postage prepaid, or one business day after a record has been deposited with a recognized overn ight courier, charges prepaid or to be billed to the sender, or on the day of delivery if delivered manually with receipt acknowledged, in each case addressed or delivered:

a. If to Lender to The Northern Trust Company, Attention: Credit Administration Team, XX-XX-XX-XX, 50 South LaSalle, Chicago, IL 60603, with a copy to Gregory J. Werra, Vice President, 600 Brickell Avenue Suite 2400, Miami, FL 33131; and

b. If to Borrower to its address indicated in the preamble hereto,

or to such other address as may be hereafter designated in writing by the respective parties hereto by a notice in accord with this Section. Notwithstanding the foregoing, unless otherwise provided herein to the contrary: Borrower may make requests for Loans (including directions to disburse Loan proceeds) and select among interest rate options (if this Note provides for more than one interest rate option) orally, by e-mail or such other means as Lender and Borrower may establish from time to time; and Lender may rely upon such requests and selections.

13. MISCELLANEOUS. Except as and if otherwise specifically agreed in any Related Document, and only as to such Related Document, and to the extent, if any, that the UCC or other law provides for the application of the law of a different state, this Note and the Related Documents shall be: (i) governed by and construed in accordance with the internal law of the State of Florida; and (ii) deemed to have been executed in the State of Florida. This Note shall bind Borrower, its(his)(her) heirs, trustees (including successor and replacement trustees), executors, personal representatives, successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any rights or obligations hereunder without the prior written consent of Lender. If an Event of Default has occurred and is continuing, Borrower agrees to pay upon demand all expenses (including reasonable attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Lender, in each case whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Lender in connection with the enforcement or preservation of its rights hereunder or under any Related Document. Time is of the essence in the performance of all obligations under this Note. This Note is, and is intended to take effect as, an instrument under seal. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity without invalidating the remainder of such provision, the applicability of such provision in any other instance, or the remaining provisions of this Note. To the maximum extent permitted by applicable law, Lender is hereby authorized by Borrower without notice to Borrower to fill in any blank spaces and dates herein or in any Related Document to conform to the terms of the transaction and/or understanding evidenced hereby. This Note may not be amended, waived or terminated without the prior written consent of Lender, and shall remain in effect notwithstanding that at any particular time there shall be no amounts outstanding hereunder. This Note shall continue to be effective or be automatically reinstated, as the case may be, if at any time a payment made to Lender hereunder is rescinded or otherwise must be restored or returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower, as though such payment had not been made. TIDS NOTE AND THE RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

14. NO PUNITIVE DAMAGES. NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENT. TIDS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN(S).

15. TELEPHONIC INSTRUCTIONS; AUTHORIZATION TO RECORD PHONE CALLS. LENDER AT ITS OPTION MAY MAKE LOANS HEREUNDER UPON TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED TO RELY SOLELY UPON INSTRUCTIONS, INCLUDING INSTRUCTIONS TO MAKE TRANSFERS TO THIRD PARTIES, REASONABLY BELIEVED BY LENDER TO HAVE BEEN GIVEN BY AN AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. FOR ITSELF AS WELL AS ANY RELATED PARTY AND ANY AGENT, DIRECTOR, EMPLOYEE, MANAGER, MEMBER, OFFICER, OR PARTNER OF BORROWER, AS APPLICABLE, BORROWER IRREVOCABLY CONSENTS TO LENDER'S RECORDING OF ANY TELEPHONE CONVERSATION PERTAINING TO LOANS UNDER THIS NOTE.

16. ANTI-TERRORISM LAW.

(a) By its acceptance of this Note as evidenced by its making of any Loan Lender hereby notifies Borrower and any Related Party that, pursuant to the requirements of the USA Patriot Act, Lender may be required to obtain, verify and record information that identifies Borrower and any Related Party, which information may include the name and address of Borrower and any Related Party and other information that will allow Lender to identify Borrower and any Related Party in accord with the USA Patriot Act. Borrower hereby agrees to take any action necessary to enable Lender to comply with the requirements of the USA Patriot Act:

(b) Borrower covenants, represents and warrants as follows:

(i) Neither Borrower nor any Related Party is or, to the best of Borrower's knowledge, will be in violation of any Anti-Terrorism Law.

(ii) Neither Borrower nor any Related Party is or, to the best of Borrower's knowledge, will be a Prohibited Person .

(iii) Neither Borrower nor any Related Party: (A) conducts any business or engages in any transaction or dealing with any Prohibited Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; or (C) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(iv) Neither Borrower nor any Related Party will engage in any of the activities described in (iii) of this subsection (b) in the future.

(v) Borrower and each Related Party will ensure that the proceeds of the Loans are not used to violate any foreign asset control regulations of the U.S. Office of Foreign Assets Control ("OFAC") or of any enabling statute or any Executive Order relating thereto.

(vi) Borrower will deliver to Lender any certification or other evidence requested from time to time by Lender in its sole reasonable discretion, confirming Borrower's and any Related Party's compliance with this Section:

(vii) Borrower has implemented procedures, and will consistently apply those procedures while this Agreement is in effect, to ensure that the representations and warranties in this Section remain true and correct while this Agreement is in effect .

17. JURISDICTION AND VENUE. Except as and if otherwise specifically agreed in any Related Document, and only as to suits, actions or other proceedings pertaining to such Related Document, Borrower and (by its acceptance hereof) Lender:

(a) agree irrevocably that all suits, actions or other proceedings with respect to, arising out of or in connection with this Note or any Related Document shall be subject to litigation in courts having situs within or jurisdiction over Miami Dade County, State of Florida;

(b) consent and submit to the jurisdiction of any such court; and

(c) waive any right to transfer or change the venue of any suit, action or other proceeding brought in accordance with this Section, or to claim that any such proceeding has been brought in an inconvenient forum.

18 . WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND (BY ITS ACCEPTANCE HEREOF) LENDER VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE, ANY RELATED DOCUMENT, OR ANY RELATIONSHIP BEYTWEEN LENDER AND BORROWER.

To the extent applicable under any state law, Borrower executed this Note as of the date stated at the top of the first page, intending to create an instrument executed under seal.

BORROWER:

OmniComm Systems, Inc.

By: / s / Cornelis F. Wit

Print Name: Cornelis F. Wit

Title: Chief Executive Officer

By: / s / Thomas E. Vickers

Print Name: Thomas E. Vickers

Title: Chief Financial Officer

P LEDGE AGREEMENT

(Securities Account-Standard -No Multi-Advisor Funds Allowed in Account)

(Credit Extended to Debtor/Collateral Owner and/or Third Party)

Dated as of April 7, 2017

This Pledge Agreement (as modified from time to time, the “ Agreement ”) has been executed by Cornelis F. Wit , not individually but as trustee under trust agreement dated April 24, 2012 , and known as the Cornelis F. Wit Revocable Living Trust , a trust organized under the laws of the State of Florida, as debtor (“ Debtor ”), with Debtor’s principal residence or office at 2101 West Commercial Blvd Suite 3500, Fort Lauderdale, FL 33309, in favor of THE NORTHERN TRUST COMPANY , an Illinois banking corporation (together with any successor, assign or subsequent holder, acting both for itself and as collateral agent for any “Secured Party Affiliate” (as defined below), referred to as “ Secured Party ”), with a banking office at 600 Brickell Avenue Suite 2400, Miami, FL 33131 . If more than one party executes this Agreement, “Debtor” refers to each of them individually and some or all of them collectively, and their obligations hereunder shall be joint and several. If any party comprising “Debtor” is a trustee(s), “ Trust Agreement ” means the governing trust agreement and/or instruments governing the trust, as modified from time to time, and all related documents and instruments, and “Debtor” also refers to the trustee(s) in its capacity as such and the trust individually and collectively. Various capitalized terms have the meanings set forth in the Section entitled “DEFINITIONS.”

In consideration of Secured Party's extension of new financial accommodations or continuation of existing financial accommodations to Debtor or to O MNICOMM SYSTEMS, INC., (such other person(s) or entity(ies), individually and collectively, “ Borrower ”), whose obligations to Secured Party are being supported by Debtor, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, Debtor agrees as follows:

1. DEFINITIONS.

(a) As used in this Agreement the following terms shall have the indicated meanings:

“ Anti-Terrorism Law ” means any law relating to terrorism or money-laundering, including Executive Order No. 13224 and the USA Patriot Act.

“ Collateral ,” “ Intermediary ” and “ Account ”—see Section entitled “PLEDGE.”

“ Commingled Funds ” means interests in so-called “common funds” and “collective funds,” which are maintained by a bank or trust company. Commingled Funds are not mutual funds.

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

“ Constituent Documents ” means the articles or certificate of incorporation, by-laws, partnership agreement, certificate of limited partnership, limited liability company operating agreement, limited liability company articles of organization or certificate of formation, trust agreement, and all other documents and instruments pertaining to the formation and ongoing existence of any person which is not a natural person.

“ Control Agreement ”—see Section entitled “CONTROL AGREEMENT.”

“ Credit Support Party ” means any person, or any persons severally, who now or hereafter guarantees payment or collection of all or any part of the Liabilities or provides any collateral to secure the Liabilities.

“ Dollar ” and “ $ ” means lawful money of the United States of America, unless otherwise specified.

“Event of Default”—see Section entitled “EVENTS OF DEFAULT.”

“ Excluded Swap Obligation ” means, with respect to Debtor or any Credit Support Party, any Swap Obligation if, and to the extent that, all or a portion of any guaranty thereof by such Debtor or Credit Support Party of, or the grant by such Debtor or Credit Support Party of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Debtor’s or Credit Support Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Debtor or Credit Support Party, or the grant of such security interest, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.

“ Executive Order No. 13224 ” means Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001.

“ Liabilities ”—see Section entitled “LIABILITIES.”

The term “ margin stock ” shall have the same meaning herein as in Federal Reserve Board Regulation U, or any successor regulation, as and if modified from time to time. The verbs “purchase” and “carry” when used with respect to margin stock shall have the same meaning as in such Regulation or successor and applicable authorities thereunder.

“ Minimum Liquidity Balance ” and various other terms dealing with Collateral shall have the meanings set forth in or determined pursuant to the Section entitled “CONTRACTUAL MINIMUM LIQUIDITY BALANCE.”

“ Multi-Advisor Fund Declaration ” means the Restated Declaration of Trust of Northern Trust Multi-Advisor Funds dated April 1, 2011, as amended, restated, or replaced from time to time, and related documents.

“ Multi-Advisor Funds ” means ownership interests in the Multi-Advisor Trust created pursuant to the Multi-Advisor Fund Declaration.

“ NT Corp Stock ” means stock or other equity interests in Northern Trust Corporation, a Delaware corporation.

“ Notice of Exclusive Control ”—see Section entitled “ACCOUNT ACTIVITY.”

The term “ person ” means any individual, corporation, company, limited liability company, voluntary association, partnership, trust, estate, unincorporated organization, other entity, or government (or any agency, instrumentality, or political subdivision thereof).

“ Prohibited Person ” means: (i) a person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a person with whom Secured Party is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a person who commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; (v) a person that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or at any other official publication of such list; and (vi) a person who is affiliated with a person described in clauses (i) – (v) above.

“ Related Document(s) ” means this Agreement as well as any note, agreement, guaranty, Swap Agreement, or other document or instrument previously, now or hereafter delivered to Secured Party or any Secured Party Affiliate in connection with the Liabilities or this Agreement.

“ Related Party(ies) ” means Borrower, any Credit Support Party, any Subsidiary, and, in addition: (i) as to any Debtor which is a natural person, trusts for the benefit of Debtor; and (ii) as to any Debtor which is not a natural person, to the extent applicable, any general or limited partner, controlling shareholder, joint venturer, member or manager, of Debtor.

“ Secured Party Affiliate ” means Northern Trust Corporation or any direct or indirect subsidiary thereof (other than Secured Party itself).

“ Subsidiary ” means any corporation, partnership, limited liability company, joint venture, trust, or other legal entity of which Debtor owns directly or indirectly 50% or more of the outstanding voting stock or interest, or of which Debtor has effective control, by contract or otherwise.

“ Swap Agreement ” means any agreement, document or instrument executed or delivered by Debtor, Borrower or any Credit Support Party pertaining to any Swap Obligation.

“ Swap Obligation ” means, with respect to Debtor, Borrower or any Credit Support Party, any obligation to pay or perform under any agreement, contract, or transaction that constitutes a “swap” within the meaning of section 1(a)(47) of the Commodity Exchange Act, as amended from time to time, if entered into with Secured Party or any Secured Party Affiliate.

“ Third Party Obligor ”--see Section entitled “OBLIGATIONS UNCONDITIONAL; WAIVER OF DEFENSES.”

“ Unmatured Event of Default ” means any event or condition that would become an Event of Default with notice or the passage of time or both.

“ USA Patriot Act ” means the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56, signed into law on October 26, 2001), as amended from time to time.

(b) As used in this Agreement, unless otherwise specified: the term “including” means “including without limitation”; the term “days” means “calendar days”; and terms such as “herein,” “hereof” and words of similar import refer to this Agreement as a whole. Unless otherwise defined herein or the context requires otherwise, all terms (including those not capitalized) that are defined in the Uniform Commercial Code of Florida shall have the same meanings herein as in such Code, as such Code may be amended from time to time (the “UCC”); however, no amendment to the UCC after the date hereof shall limit any rights or remedies of Secured Party hereunder or in connection herewith. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the others. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to sections or provisions without reference to the document in which they are contained are references to this Agreement.

2. PLEDGE. Subject to the Section hereof entitled “NT CORP STOCK AND COMMINGLED FUNDS,” Debtor hereby grants to Secured Party a continuing security interest in, for the benefit of Secured Party and any Secured Party Affiliate, the following, whether now owned or hereafter acquired, wherever located (any or all of such, the “ Collateral ”):

(a) Securities account(s) no(s). XX-XXXXX , XX - XXXXX with The Northern Trust Company (in its capacity as intermediary with respect thereto, “ Intermediary ”), in the name of Debtor or such other designation as may be required by Intermediary, any successor and/or replacement account(s), and any and all securities, security entitlements, financial assets, investment property, commodity contracts, money, instruments, documents, goods, chattel paper, accounts, general intangibles, deposit accounts, partnership and limited liability company interests, certificates of deposit, and other property and rights of any nature now or hereafter held in or constituting part of such account(s) (such account(s) and all successor and replacement accounts collectively, the “ Account ”).

(b) With respect to any Collateral referred to in (a), but without limiting (a):

(i) all stock and bond powers, certificates and instruments; and

(ii) all additions, replacements, substitutions, interest, cash and stock dividends, warrants, options, and other rights and amounts paid, accrued, received, receivable, or distributed with respect thereto from time to time.

(c) With respect to the foregoing, all products and proceeds thereof, including insurance proceeds and payments under the Securities Investor Protection Act of 1970, as amended.

3. LIABILITIES. The Collateral shall secure the payment and performance of all obligations and liabilities of Debtor or Borrower:

(a) to Secured Party howsoever created, evidenced or arising, whether direct or indirect, absolute or contingent, now due or to become due, or now existing or hereafter arising, joint, several or joint and several, including Swap Obligations, future advances and letters of credit issued by Secured Party for the account of or at the request of Debtor or Borrower and all reimbursement obligations arising therefrom;

(b) to any Secured Party Affiliate under or in connection with Swap Agreements and letters of credit issued or entered into by any Secured Party Affiliate for the account of or at the request of Debtor or Borrower and all reimbursement obligations and Swap Obligations arising therefrom; and

(c) to Secured Party or any Secured Party Affiliate under or in connection with: (i) Related Documents; (ii) any guaranty by Debtor or Borrower of any obligations of any other person to Secured Party or (as to obligations covered by (b)) any Secured Party Affiliate; (iii) any expenses (including attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Secured Party or any Secured Party Affiliate, in each case whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Secured Party or any Secured Party Affiliate in connection with the enforcement or preservation of its rights hereunder or under any Related Document; and (iv) interest accruing after filing of a petition in bankruptcy.

The obligations and liabilities described in the foregoing portion of this Section are sometimes referred to as the "Liabilities”. Notwithstanding the foregoing, the term “ Liabilities ” includes all Swap Obligations except for any Excluded Swap Obligations, which shall not be secured pursuant to the terms hereof. This Agreement shall continue and remain in effect notwithstanding that at any particular time there may be no Liabilities outstanding. Notwithstanding the foregoing: (x) if Debtor is a natural person the Collateral shall not secure any Liabilities subject to Regulation Z of the Consumer Financial Protection Bureau unless the Truth in Lending disclosure pertaining to such Liabilities discloses the Collateral as security for such Liabilities; and (y) proceeds of Liabilities may not be used directly or indirectly to purchase or carry margin stock unless both Secured Party has consented thereto and Debtor and/or Borrower has indicated such in an FR U-1 statement furnished to Secured Party.

4. CONTROL AGREEMENT. Debtor agrees to execute and deliver, and cause (each, if more than one) Intermediary to execute and deliver, to Secured Party a control agreement in the form supplied by Secured Party (individually and collectively, as and if amended, restated, renewed or replaced, the “ Control Agreement ”). Except as otherwise allowed hereby or by the Control Agreement, Intermediary shall act or not act with respect to the Account solely in accord with entitlement orders, instructions and other directions (including directions to sell or otherwise dispose of any Collateral and to deliver any Collateral to Secured Party) given from time to time by Secured Party.

5. MULTI-ADVISOR FUNDS. Debtor agrees not to hold any Multi-Advisor Funds in the Account.

6 . CONTRACTUAL MINIMUM LIQUIDITY BALANCE.

(a) For purposes of this Section:

“ Asset Backed Security Holding U.S. Government and/or U.S. Government Agency Bonds ” means an asset backed security issued in the U.S. the payments on which are derived from, and collateralized or otherwise backed by, a specific pool of U.S. Government Bonds and/or U.S. Government Agency Bonds.

“ Emerging Markets Equities ” means equities evidencing ownership in a for-profit entity which is located in a country undergoing rapid growth and industrialization, as identified by Secured Party, and which country is acceptable to Secured Party in its discretion.

“ Investment Grade ” means bearing a current rating of “BBB-” (BBB minus) or higher by Standard & Poor’s or Fitch Investors Service, “Baa3” or higher by Moody’s, or (in Secured Party’s discretion) an investment grade-level rating by another rating agency.

“ Listed ” means publicly traded on a nationally-recognized exchange or in a nationally-recognized over-the-counter market, in the U.S. or in a foreign jurisdiction which is acceptable to Secured Party in its discretion. “ U.S. Listed ” means Listed in the U.S; and “ Non-U.S. Listed ” means Listed in a foreign jurisdiction which is acceptable to Secured Party in its discretion (and not also Listed in the U.S.). For the avoidance of doubt, a security issued by an issuer located in a foreign jurisdiction is treated herein as “U.S. Listed” if it is traded on a nationally-recognized exchange located in the U.S., such as through the use of “ ADR’s ” (American Depositary Receipts).

“ Mutual Fund ” means mutual funds as well as so-called “Exchange-Traded Funds” (“ ETF’s ”).

“ Non-U.S. Cash ” means currencies other than United States dollars held in a securities account, which currencies are acceptable to Secured Party in its discretion.

“ Non-U.S. Money Market Mutual Funds ” means Non-U.S. Mutual Funds which primarily invest in highly-liquid, short-term, stable-value debt securities and deposits.

“ Non-U.S. Mutual Funds ” means Mutual Funds issued in a foreign jurisdiction which jurisdiction is acceptable to Secured Party in its discretion.

“ Real Estate ” means direct or indirect interests in real property.

“ Unrestricted ” means, as to a security, that it is not in any way subject to or covered by:

(i) Rules 144 or 145 of the United States Securities and Exchange Commission, as in effect from time to time, or any successor regulations;

(ii) other laws or regulations of the U.S. or any foreign jurisdiction which restrict or prohibit pledge, redemption, sale or transfer of securities by directors, officers or major equity holders, as opposed to the general public; or

(iii) any agreement or other consensual restriction on pledge, redemption, sale or transfer.

“ U.S . ” means the United States of America.

“ U. S. Cash ” means United States dollars held in a securities account.

“ U.S. Government Agency Bond ” means a security issued by an agency of the U.S., but payment of which is not backed by the full faith and credit of the U.S. national government.

“ U.S. Government Bond ” means a security payment of which is backed by the full faith and credit of the U.S. national government.

“ U.S. Money Market Mutual Funds ” means U.S. Mutual Funds which primarily invest in highly-liquid, short-term, stable-value debt securities and deposits.

“ U.S. Mutual Funds ” means Mutual Funds issued in the U.S.

Terms which are: (i) nouns shall have correlative meaning when used (with or without spelling modification) as adjectives, and vice versa; and (ii) defined in the singular shall have a correlative meaning in the plural and vice versa. For purposes of this Section, Secured Party shall in its discretion: (x) determine market values and the category into which a particular asset falls; and (y) convert the value of any assets denominated in foreign currencies into Dollars.

(b) Debtor agrees to take all steps, including placing additional assets in the Account, to ensure that the market value of the Account assets, as determined by Secured Party, at all times equals or exceeds the “Minimum Liquidity Balance” as defined below (such term also refers to the requirement to maintain such market value, as applicable). For purposes hereof “ Minimum Liquidity Balance ” means the greater of:

(i) the amount necessary in Secured Party’s discretion to comply with Regulation U of the Federal Reserve System as in effect from time to time, or any successor regulation; or

(ii) the amount necessary to ensure that the outstanding amount of the Liabilities as determined by Secured Party in its discretion does not exceed the sum of the below-indicated percentages of the market values of the below-indicated types of assets held in the Account (as and if modified as provided in (x) of this Section below, “ Eligible Assets ”):

Description	% of Market Value
U.S.
Banking deposits in Dollars with Secured Party held in the Account	100%
U.S. Cash; U.S. Money Market Mutual Funds	95%
U.S. Government Bonds and U.S. Government Agency Bonds	95%
Commercial paper issued in the U.S.	90%
Investment Grade non-convertible bonds issued in the U.S.	80%
Asset-Backed Securities Holding U.S. Government and /or U.S. Government Agency Bonds rated “AAA” or higher by S&P or “Aaa” or higher by Moody’s	85%
Asset-backed securities holding bonds issued in the U.S. (other than Asset-Backed Securities Holding U.S. Government and/or U.S. Government Agency Bonds), if such asset-backed securities are rated “AAA” or higher by S&P or “Aaa” or higher by Moody’s	75%
Investment Grade convertible bonds issued in the U.S.	70%
U.S. Listed Unrestricted equities with a minimum published market value of $10, if the market value of all equities and convertible bonds issued by the issuer thereof and its affiliates held in the Account DOES NOT constitute thirty percent (30%) or more of the total market value of all Eligible Assets in the Account	70%
U.S. Listed Unrestricted equities with a minimum published market value of $10, if the market value of all equities and convertible bonds issued by the issuer thereof and its affiliates held in the Account DOES constitute thirty percent (30%) or more of the total market value of all Eligible Assets in the Account (for the avoidance of doubt, this 50% advance rate shall apply to all U.S. Listed Unrestricted equities in the Account that are issued by the same issuer or its affiliate, not just to the portion of such equities in excess of the 30% concentration)	50%
U.S. Listed Unrestricted equities with a minimum published market value of $10 , if any Liabilities are used directly or indirectly to purchase or carry any margin stock (for the avoidance of doubt, if any Liabilities are used to purchase or carry margin stock, then this 50% advance rate shall take precedence over any otherwise-applicable higher percentage of market value)	50%
U.S. Mutual Funds holding non-convertible bonds which are NOT Investment Grade	50%
U.S. Mutual Funds holding equities, commodities, or Real Estate	70%
U.S. Mutual Funds holding Emerging Markets Equities	50%
Non-U.S.
Non-U.S. Cash; Non-U.S. Money Market Mutual Funds	90%
Investment Grade nonconvertible bonds issued by issuers located in foreign jurisdictions	50%
Investment Grade Unrestricted corporate convertible bonds issued by issuers located in foreign jurisdictions	40%
Non-U.S. Listed Unrestricted equities with a minimum published market value of one U.S. Dollar ($1) or the equivalent thereof in foreign currency	50%
Mutual Funds holding Investment Grade bonds issued in foreign jurisdictions	50%
Non-U.S. Mutual Funds holding equities, commodities, or Real Estate	50%

Notwithstanding the foregoing or any other provision hereof:

(x) Secured Party may in its discretion from time to time: include in the Minimum Liquidity Balance computation, and thus treat as “Eligible Assets,” other Account assets of types not described in the chart above, applying such percentages of market value as Secured Party in its discretion determines; determine that particular assets will no longer be treated as Eligible Assets, even if described in the chart above; and adjust applicable percentages of market value.

(y) All Collateral and Account assets, whether or not Eligible Assets, must at all times be acceptable to Secured Party in its discretion.

(c) For purposes of the Minimum Liquidity Balance, except as provided otherwise in the chart in (b) of this Section, each Mutual Fund will be allocated a percentage of market value corresponding to the type of assets which constitute the majority by market value of assets held in the Mutual Fund, as determined by Secured Party in its discretion.

(d) Assets in the Account which are not Eligible Assets are subject to this Agreement, but their market value is not included in determining compliance with the Minimum Liquidity Balance. Collateral placed or held in a securities lending program is not included in determining compliance with the Minimum Liquidity Balance. Collateral may not be placed or held in a securities lending program if an Event of Default or Unmatured Event of Default has occurred and is continuing or would be caused thereby (including failure to maintain the Minimum Liquidity Balance).

(e) For purposes of the Minimum Liquidity Balance, Debtor’s and any other party’s obligations under and with respect to any Swap Agreement shall be deemed to be in the amount(s) notified to Debtor by Secured Party in Secured Party’s discretion from time to time notwithstanding: (i) any other provision of this Agreement or any Related Document to the contrary; and (ii) the “notional amount” and other aspects of any Swap Agreement. Neither this subsection (e) nor any other provision of this Agreement or any other Related Document shall limit the obligations of Debtor, Borrower or any other party under any Swap Agreement.

(f) At Secured Party’s sole option from time to time, assets pledged as collateral by persons other than Debtor, or which are subject to agreements by other persons in favor of Secured Party, may be taken into account by Secured Party in determining compliance with the Minimum Liquidity Balance.

(g) The Minimum Liquidity Balance requirement hereunder is in addition to any requirement to maintain a “Minimum Liquidity Balance,” amounts or types of assets, or borrowing base under any other agreement or instrument previously, now or hereafter executed by Debtor or any other party, unless otherwise specifically provided herein or in such other agreement or instrument.

7 . ACCOUNT ACTIVITY.

(a) Until Secured Party delivers to Intermediary a Notice of Exclusive Control:

(i) Debtor will have full authority to exercise voting rights with respect to Collateral;

(ii) Debtor may trade assets within the Account; and

(iii) Debtor may receive and retain interest and regular cash dividends on Collateral.

Notwithstanding the foregoing portion of this (a), Debtor may not terminate or re-title the Account or (except as provided in (c) below) withdraw Collateral.

(b) If an Event of Default or Unmatured Event of Default (including failure to maintain the Minimum Liquidity Balance) has occurred and is continuing or would be caused by any action of Debtor, Secured Party may at any time give Intermediary a notice that Secured Party will exercise exclusive control over the Account (each, a “ Notice of Exclusive Control ”). Upon receipt of a Notice of Exclusive Control:

(i) Intermediary will stop: (A) complying with any exercise by Debtor of voting rights with respect to the Account; (B) complying with trading directions from Debtor with respect to the Account; and (C) distributing to Debtor interest and regular cash dividends on Collateral; and

(ii) without limiting any other right of Secured Party, Secured Party may exercise any and all trading, withdrawal, distribution, voting and other rights with respect to the Account.

(c) Unless an Event of Default or Unmatured Event of Default (including failure to maintain the Minimum Liquidity Balance) has occurred and is continuing or would be caused by any action of Debtor, Secured Party will:

(i) not give Intermediary a Notice of Exclusive Control; and

(ii) direct Intermediary to: (A) permit Debtor to make withdrawals from (including “free deliveries” out of) and trade assets within the Account, and to exercise voting rights with respect to assets in the Account; and (B) distribute to Debtor interest and regular cash dividends on assets in the Account.

(d) Intermediary will not be liable to Debtor for complying with a Notice of Exclusive Control, entitlement order or other direction originated by Secured Party, even if Debtor notifies Intermediary that Secured Party is not legally entitled to issue the entitlement order, Notice of Exclusive Control or other direction. Intermediary need not investigate whether Secured Party is entitled to give an entitlement order, Notice of Exclusive Control or other direction.

(e) Debtor shall promptly cause any interest, dividends, securities or other property received by Debtor itself with respect to any Collateral to be placed into the Account, but Debtor may thereafter withdraw any such property if otherwise allowed hereby.

8 . NT CORP STOCK AND COMMINGLED FUNDS.

(a) Notwithstanding any other provision hereof or of the Control Agreement to the contrary or inconsistent with this (a):

(i) the Collateral shall not include NT Corp Stock or (pursuant to applicable law) Commingled Funds; and

(ii) assets in the Account consisting of NT Corp Stock or Commingled Funds shall be excluded in determining compliance with the Minimum Liquidity Balance.

(b) Debtor agrees not to (or to direct or authorize Intermediary to) sell or otherwise dispose of any other securities or assets now or hereafter in the Account in order to purchase additional NT Corp Stock (whether or not held in the Account), unless after any such sale or other disposition Debtor will be in compliance with the Minimum Liquidity Balance and no Event of Default or Unmatured Event of Default will have occurred and be continuing. Additional NT Corp Stock may be added to the Account with funds not part of or proceeds of the Account if and only if at such time the Minimum Liquidity Balance is met and no Event of Default or Unmatured Event of Default has occurred and is continuing.

(c) Debtor agrees not to hold any Commingled Funds in the Account unless Secured Party (in its capacity as such) specifically consents to such holding in writing.

9 . REPRESENTATIONS AND WARRANTIES.

(a) Debtor represents and warrants to, and agrees in favor of, Secured Party, that:

(i) (A) If Debtor is an organization (including a trust that is a registered organization), then Debtor is an entity of the type, and is organized under the laws of the jurisdiction, specified in the preamble hereto. Debtor’s name as shown in the preamble hereto is the full exact name that appears in Debtor’s organizational documents. If Debtor is a registered organization, Debtor’s name as shown in the preamble hereto is as shown on the public organic record most recently filed with or issued or enacted by Debtor’s jurisdiction of organization which purports to state, amend, or restate Debtor’s name. If Debtor is an organization but not a registered organization, if it has only one place of business that place of business is at Debtor’s address indicated in the preamble hereto, but if it has more than one place of business, its chief executive office is at such address.

(B) If Debtor is a trust which is not itself a registered organization, then: (1) if the Trust Agreement specifies a name for the trust, Debtor’s name as shown in the preamble hereto is the name so specified; (2) Debtor has provided the name of its settlor(s) or testator(s) to Secured Party; and (3) if Debtor has only one place of business, that place of business is at Debtor’s address indicated in the preamble hereto, but if it has more than one place of business, its chief executive office is at such address.

(1) Debtor’s principal residence is located at the address shown in the preamble hereto; and

(2) i. if Debtor has a driver’s license or alternative identification that has not expired and that was issued by the state of Debtor’s principal residence, Debtor’s name shown in the preamble hereto is exactly the same as shown on that driver’s license or alternative identification card; or

ii. if Debtor does not have a driver’s license or alternative identification card that has not expired and that was issued by the state of Debtor’s principal residence, then: (x) Debtor’s first given name and surname are as shown in the preamble hereto; and (y) if Debtor obtains a driver’s license or alternative identification card from the state of Debtor’s principal residence, then Debtor shall, within thirty (30) days of the issuance of such driver’s license or alternative identification card, provide Secured Party with a true and accurate copy of such driver’s license or alternative identification card, showing Debtor’s name and address, the state of issuance and the expiration date thereof; and

(3) in any event, Debtor shall provide Secured Party notice within thirty (30) days of the happening of each of the following events:

i. Debtor’s principal residence has changed;

ii. the name of Debtor on Debtor’s driver’s license or alternative identification card has changed in any manner, no matter how small;

iii. Debtor’s driver’s license or alternative identification has been surrendered, suspended, changed or terminated in any manner, no matter how small or for how short a time;

iv. Debtor’s driver’s license or alternative identification card has expired; or

v. Debtor has changed his or her first given name or surname, whether as a result of marriage, divorce, legal proceeding or otherwise.

(D) The representations and warranties made by Debtor in (A)-(C) of this (i), as applicable, would have been accurate at all times during the five years and six months prior to the date hereof except as and if Debtor has specifically notified Secured Party in writing prior to Debtor’s execution of this Agreement.

(ii) Debtor (if Debtor is not a natural person) and any Subsidiary are validly existing and in good standing under the laws of their state of organization or formation, and are duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would reasonably be expected to have a material adverse impact on the assets, condition or prospects of Debtor.

(iii) The execution, delivery and performance of this Agreement and all Related Documents: are within Debtor's powers and have been authorized by all necessary action required by law and (unless Debtor is a natural person) Debtor’s Constituent Documents; have received any and all necessary governmental approval; and do not and will not contravene or conflict with any provision of law, any Constituent Document or any agreement affecting Debtor or its property. This Agreement and all Related Documents are enforceable against Debtor and/or the applicable Related Parties in accord with their terms, except to the extent, if any, that such enforceability may be limited by equitable principles, whether applied in a court of law or equity, or by bankruptcy, insolvency and other laws affecting creditors’ rights generally.

(iv) There has been no material adverse change in the business, condition, properties, assets, operations or prospects of Debtor or any Related Party since the date of the latest financial statements or other documentation provided by or on behalf of Debtor or any Related Party to Secured Party.

(v) No financing statement, mortgage, notice of judgment or any similar instrument (unless filed on behalf of Secured Party) covering any Collateral is on file in any public office, nor has Debtor entered into any agreement granting “control” (as defined in Articles 8 and 9 of the UCC) of any Collateral to any person other than Secured Party.

(vi) Debtor is the lawful owner of and has rights in or power to transfer all Collateral, free and clear of all liens, pledges, charges, mortgages, and claims other than any in favor of Secured Party, except liens for current taxes not delinquent.

(vii) Debtor has filed or caused to be filed all foreign, federal, state, and local tax returns that are required to be filed, and has paid or has caused to be paid all of its taxes, including any taxes shown on such returns or on any assessment received by it, to the extent that such taxes have become due.

(viii) Except for federal and state securities laws generally applicable to the pledge, redemption, sale, or transfer of marketable securities which are held by members of the general public, pledge, redemption, sale, and transfer of the Collateral by Secured Party: (A) are not prohibited or regulated by any federal or state law or regulation or any agreement binding upon Debtor, including any Constituent Document; and (B) require no registration or filing with, or consent or approval of, any governmental body, regulatory authority or securities exchange.

(ix) Debtor has not acquired any Collateral in a transaction not involving a public offering within the meaning of applicable federal and state securities laws. Debtor is not an executive officer, director or other “affiliate” (as contemplated by Rules 144 and 145 of the Federal Securities and Exchange Commission) of any issuer of any Collateral.

(x) To Debtor’s actual knowledge, all Collateral is duly and validly authorized and issued, non-assessable, fully paid and paid for, and outstanding.

(xi) The execution, delivery and performance of this Agreement and all Related Documents are in Debtor’s best interest in its current and future operations and will materially benefit Debtor. Debtor has received adequate, fair and valuable consideration, and at least reasonably equivalent value, to enter into and perform this Agreement and all Related Documents. Debtor’s assets at fair valuation exceed the sum of Debtor’s debts. Debtor is able to pay its debts as they become due. Debtor does not have unreasonably small capital with which to conduct its business.

(b) The request or application for any Liabilities by Debtor shall be a representation and warranty by Debtor as of the date of such request or application that: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing as of such date; and (ii) Debtor's representations and warranties herein and in any Related Document are true and correct as of such date as though made on such date.

10 . DIRECT HOLDINGS OF CERTIFICATED AND UNCERTIFICATED SECURITIES .

(a) This Section applies to: (i) certificated securities (if any) in the Account registered in the name of, payable to the order of, or specially indorsed to Debtor, and which have not been subsequently indorsed to Intermediary or in blank; and (ii) uncertificated securities (if any) therein which are registered in Debtor’s name on the issuer’s books. This Section supplements any actions by or rights of Intermediary pursuant to any agreement between Intermediary and Debtor governing the Account.

(b) As to any such certificated securities in the Account:

(i) Debtor agrees to deliver to Intermediary the related certificates and to execute and deliver to Intermediary stock or bond powers in blank plus other related documents, all in such form as Secured Party or Intermediary request.

(ii) Secured Party and Intermediary may at any time take such other actions as they deem necessary or appropriate, including: (A) appointment of sub-agents or depositories to retain physical possession of such certificates, which may in Secured Party’s discretion be held in the name of Secured Party, any such sub-agent or depository, or any nominee of the foregoing; (B) transferring such certificates into a “pledge position” or the like at any such sub-agent or depository; and (C) exchanging certificates for certificates of smaller or larger denominations.

(i) Debtor agrees to execute and deliver, and to cause the issuer of such uncertificated securities to execute and deliver, to Secured Party a control agreement in such form as Secured Party may require, in addition to the Control Agreement regarding the Account.

(ii) Secured Party and Intermediary may at any time cause such securities to be registered in Intermediary’s, Secured Party’s or street name, or the like.

(d) Without limiting Secured Party’s and Intermediary’s rights under (a)-(c) or any other provision hereof or of the Control Agreement regarding the Account: (i) Debtor agrees (and authorizes Secured Party and Intermediary) to take or cause to be taken such actions, and execute or cause to be executed such documents and instruments, in connection with Secured Party’s security interest in such certificated and uncertificated securities as Secured Party or Intermediary may reasonably require; and (ii) Debtor hereby appoints Secured Party and Intermediary as Debtor's attorneys-in-fact, which appointment is and shall be deemed to be irrevocable and coupled with an interest, for purposes of performing acts and signing and delivering any document or instrument on behalf of Debtor in order to effectuate this Section. Debtor immediately will reimburse Secured Party and Intermediary for all expenses so incurred. Debtor directs the issuers of, or any depository, registrar, transfer agent or similar party with respect to any of, such securities to accept the provisions hereof (without inquiry of any kind) as conclusive evidence of the right of Secured Party and Intermediary to take any action referenced above, and agrees to hold them harmless for doing so, notwithstanding any notice or direction to the contrary previously or hereafter given by Debtor or any other person.

(e) Debtor shall be deemed to have granted a security interest in such certificated and uncertificated securities pursuant hereto and such certificated and uncertificated securities shall be subject to the other terms hereof, as in the case of other Collateral, even if under the UCC or other applicable law Debtor is treated as holding such securities directly rather than as having a security entitlement with respect thereto.

(f) Notwithstanding any other provision hereof, at Secured Party’s option such certificated and uncertificated securities shall not be included in determining compliance with the Minimum Liquidity Balance until any actions required by Secured Party or Intermediary pursuant to this Section and corresponding provisions of the Control Agreement are completed to Secured Party’s satisfaction.

1 1. GENERAL COVENANTS. Debtor agrees that so long as this Agreement remains in effect, it will:

(a) NOTIFY SECURED PARTY IN WRITING AT LEAST SIXTY (60) DAYS IN ADVANCE OF: (i) ANY CHANGE WHATSOEVER IN THE NAME OF DEBTOR; (ii) ANY CHANGE WHATSOEVER IN THE STATE OR JURISDICTION IN WHICH DEBTOR IS ORGANIZED OR FORMED OR, IF DEBTOR IS A NATURAL PERSON, IN WHICH DEBTOR’S PRINCIPAL RESIDENCE IS LOCATED; (iii) ANY NEW NAMES UNDER WHICH DEBTOR INTENDS TO DO BUSINESS; AND (iv) ANY NEW ADDRESSES AT OR FROM WHICH DEBTOR INTENDS TO DO BUSINESS. IF DEBTOR IS A REGISTERED ORGANIZATION, SUCH AS A CORPORATION, LIMITED LIABILITY COMPANY, OR LIMITED PARTNERSHIP, DEBTOR AGREES TO NOTIFY SECURED PARTY IMMEDIATELY IF DEBTOR’S STATE OR JURISDICTION OF ORGANIZATION DISSOLVES, SUSPENDS OR TERMINATES DEBTOR’S EXISTENCE OR PRIVILEGES, OR NOTIFIES DEBTOR THAT IT IS NOT IN COMPLIANCE WITH ANY REQUIREMENTS OF SUCH STATE OR OTHER JURISDICTION. IF DEBTOR IS A NATURAL PERSON THE FOREGOING PORTION OF THIS (a) DOES NOT LIMIT DEBTOR’S AGREEMENTS IN SUBSECTION (a)(i)(C) OF THE SECTION ENTITLED “REPRESENTATIONS AND WARRANTIES.”

(b) Defend the Collateral against the claims and demands of all persons other than Secured Party and promptly pay all taxes, assessments, and charges upon the Collateral. Debtor agrees not to sign, file, or authenticate, or authorize or permit the signing, filing or authentication of, any financing statements or other documents creating or perfecting a lien upon or security interest in any Collateral except in favor of Secured Party, or otherwise create, suffer, or permit to exist any liens, claims or security interests upon any Collateral other than in favor of Secured Party, except tax liens if removed before related taxes become delinquent.

(c) Do such acts as Secured Party may request to establish and maintain a valid and perfected security interest in the Collateral free and clear of all other liens, claims, or security interests except as specifically permitted hereby.

(d) Keep at its address for notices set forth in the preamble hereto its records concerning the Account, which records shall be of such character as will enable Secured Party to determine at any time the status thereof; and permit Secured Party, during normal business hours and upon at least three days’ prior notice unless an Event of Default has occurred and is continuing, from time to time to inspect, audit, and make copies of, and extracts from, all records and all other papers in the possession or control of Debtor pertaining to the Account.

(e) Provide to Secured Party from time to time such financial statements of and other information concerning the Collateral, Debtor, and any Related Party as Secured Party shall reasonably request.

(f) Except if and to the extent permitted hereby, not sell, transfer, lease, grant a license or option or similar right with respect to, or otherwise dispose of, or agree to dispose of, any Collateral.

1 2. EVENTS OF DEFAULT. Each of the following shall constitute an " Event of Default ":

(a) (i) failure to pay, when and as due, any principal payable on any of the Liabilities; (ii) failure to pay, when and as due, any interest or other amounts payable on any of the Liabilities; or (iii) failure to comply with or perform any agreement or covenant of Debtor or any Related Party contained herein or in any Related Document, which failure does not otherwise constitute an Event of Default, subject to any applicable notice, grace or cure period; or

(b) any default, event of default, or similar event shall occur or continue under any Related Document, and shall continue beyond any applicable notice, grace or cure period set forth in such Related Document; or

(c) there shall occur any default or event of default, any similar event, any event that requires the prepayment of borrowed money or permits the acceleration of the maturity thereof, or any event or condition that might become any of the foregoing with notice or the passage of time or both, under the terms of any evidence of indebtedness or other agreement issued or assumed or entered into by Debtor or any Related Party, or under the terms of any document or instrument under which any such evidence of indebtedness or other agreement is issued, assumed, secured, or guaranteed, and such event shall continue beyond any applicable notice, grace or cure period; or

(d) any representation, warranty, certificate, financial statement, report, notice, or other writing furnished by or on behalf of Debtor or any Related Party to Secured Party is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified; or

(e) this Agreement or any Related Document, including any guaranty of or pledge of collateral security for the Liabilities, shall be repudiated or shall become unenforceable or incapable of performance in accord with its terms; or

(f) Debtor or any Related Party (in each case if not a natural person) shall fail to maintain their existence in good standing in their state of organization or formation or shall fail to be duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would reasonably be expected to have a material adverse impact on the assets, condition or prospects of Debtor or any Related Party; or

(g) Debtor or any Related Party shall die, be declared legally incompetent, dissolve, liquidate, merge, consolidate, or cease to be in existence for any reason; or, if Debtor is a partnership or joint venture, any general or limited partner or joint venturer of Debtor shall withdraw from Debtor, or any general partner shall become a limited partner; or the trust under any Trust Agreement shall terminate in whole or in part or be the subject of a distribution of other than income but, in the case of a distribution, only if such distribution would otherwise cause an Event of Default or Unmatured Event of Default to occur; or

(h) except for a successor trustee under any Trust Agreement, any person presently not in control of a Debtor or Related Party which is not a natural person shall obtain control directly or indirectly of such a Debtor or Related Party, whether by purchase or gift of stock or assets, by contract, or otherwise; or

(i) any proceeding (judicial or administrative) shall be commenced against Debtor or any Related Party, or with respect to any of their assets, which would reasonably be expected to have a material and adverse effect on the ability of Debtor to repay the Liabilities; or a judgment or settlement shall be entered or agreed to in any such proceeding which would reasonably be expected to have a material and adverse effect on the ability of Debtor to repay the Liabilities; or any garnishment, summons, writ of attachment, citation, levy or the like is issued against or served upon Secured Party for the attachment of any property of Debtor or any Related Party in Secured Party’s possession or control; or

(j) Debtor shall grant or any person (other than Secured Party) shall obtain or perfect a security interest in, or file any financing statement covering, any Collateral; Secured Party shall not have a perfected security interest in any Collateral or other assets constituting security for the Liabilities, of first-priority and enforceable in accord with this Agreement (as to the Collateral) or the related collateral documents (as to such other assets); or any notice of a federal tax lien against Debtor or any Related Party shall be filed with any public recorder; or

(k) there shall be any material loss or depreciation in the value of any Collateral or any other assets constituting security for the Liabilities for any reason (except that the preceding part of this subsection shall not apply if Debtor and any Related Party are in compliance with any Minimum Liquidity Balance or other specific borrowing base or like requirement under this Agreement and all Related Documents); or Secured Party shall otherwise reasonably deem itself insecure; or, unless expressly permitted by this Agreement or the Related Documents, all or any part of any Collateral or any other assets constituting security for the Liabilities, or any direct, indirect, legal, equitable or beneficial interest therein, is assigned, transferred or sold without Secured Party’s prior written consent; or

(l) any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against Debtor or any Related Party, and, if instituted against Debtor or any Related Party, shall not be dismissed or vacated within sixty (60) days after the filing or other institution thereof; or

(m) Debtor or any Related Party shall become insolvent, generally shall fail or be unable to pay its debts as they mature, shall admit in writing its inability to pay its debts as they mature, shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business.

1 3. DEFAULT REMEDIES.

(a) Upon the occurrence of any Event of Default specified in (a)-(k) of the Section entitled “EVENTS OF DEFAULT,” Secured Party at its option may declare the Liabilities (principal, interest and other amounts) immediately due and payable without notice or demand of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY DEBTOR (except as and if otherwise specifically set forth herein) , whereupon the entire unpaid principal balance of the Liabilities, all interest accrued thereon, and any other Liabilities shall thereupon at once mature and become due and payable. Upon the occurrence of any Event of Default specified in (l)-(m) of the Section entitled “EVENTS OF DEFAULT,” all Liabilities (principal, interest and other amounts) shall be immediately and automatically due and payable without notice, demand or other action of any kind, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY DEBTOR. Upon the occurrence of any Event of Default, Secured Party may exercise any rights and remedies under this Agreement or any Related Document (including any Related Document pertaining to collateral), and at law or in equity. The time of payment of the Liabilities is also subject to acceleration if an Event of Default occurs.

(b) If any Event of Default shall have occurred and be continuing, then, in addition to having the right to exercise any rights and remedies of a secured party upon default under the Uniform Commercial Code in effect in Florida and any state in which any Collateral is located, Secured Party may, in its sole discretion:

(i) without being required to give any prior notice to Debtor apply the cash (if any) then held by it hereunder toward the Liabilities in such order as Secured Party shall determine in its sole discretion; and

(ii) if there shall be no such cash or the cash so applied shall be insufficient to pay all obligations in full, sell the Collateral, or any part thereof, at any public or private sale, for cash, upon credit or for future delivery, as Secured Party shall deem appropriate, provided, however, that Debtor shall be credited with proceeds thereof only when the proceeds are actually received in cash by Secured Party, and such sale shall be deemed commercially reasonable. Secured Party shall be authorized at any such sale (to the extent it deems it advisable to do so, in its sole discretion) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral then being sold for their own account for investment and not with a view to the distribution or resale thereof, and upon consummation of any such sale Secured Party shall have the right to assign, transfer and deliver to the purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Debtor. Debtor hereby waives (to the extent permitted by law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Secured Party has no obligation to marshal Collateral or to clean up or otherwise prepare Collateral for sale, and may specifically disclaim any warranties as to the Collateral, including those of title, merchantability, and fitness for a particular purpose. Secured Party may comply with any applicable local, state or federal law requirements in connection with a disposition of Collateral, and compliance will not be considered to affect adversely the commercial reasonableness of any sale of Collateral. Debtor grants to Secured Party the right to enter into or on any premises where Collateral may be located for the purposes of exercising any remedies upon the occurrence of an Event of Default. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral if it takes such action for that purpose as Debtor requests in writing, but failure to do so shall not be deemed a failure to exercise ordinary care; no failure of Secured Party to preserve or protect any right with respect to Collateral against prior parties shall be deemed of itself a failure to exercise reasonable care in the custody or preservation of Collateral. To the extent that notice of sale shall be required to be given by law, Secured Party shall give Debtor at least ten days' written notice of any such public sale or the date after which any such private sale or sales will be held, and such notice shall be deemed commercially reasonable. Secured Party shall not be obligated to make any sale of Collateral if it shall determine not to do so, regardless of the fact that notice of sale of Collateral may have been given. Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by Secured Party until the sale price is paid by the purchaser thereof, but Secured Party shall not incur any liability in case any such purchaser shall fail to take up and pay for the Collateral so sold; in the case of any such failure, such Collateral may be sold again upon like notice. As an alternative to exercising the power of sale herein conferred upon it, Secured Party may proceed by a suit at law or in equity to foreclose this Agreement and to sell the Collateral, or any portion thereof, pursuant to a judgment or decree of a court of competent jurisdiction. Except as and if otherwise required by law, any proceeds of the Collateral sold or disposed of pursuant hereto shall be applied toward the Liabilities in such order as Secured Party shall determine in its sole discretion. Any balance remaining shall be returned to Debtor or the party lawfully entitled thereto.

(c) Secured Party may, by written notice to Debtor, at any time and from time to time, waive any Event of Default or Unmatured Event of Default, which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, Secured Party and Debtor shall be restored to their former position and rights hereunder, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to or impair any subsequent or other Event of Default or Unmatured Event of Default. No failure to exercise, and no delay in exercising, on the part of Secured Party of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of Secured Party herein provided are cumulative and not exclusive of any rights or remedies provided by law.

(d) As to any Liabilities owed to any Secured Party Affiliate, Secured Party shall act as collateral agent for such Secured Party Affiliate and shall take or refrain from taking action, and shall distribute proceeds of Collateral and other amounts recovered hereunder or under any Related Document between such Secured Party Affiliate and Secured Party, as they shall from time to time agree. Except as and if required by law Debtor shall have no obligation or right whatsoever to inquire into any agreements or arrangements between Secured Party and any Secured Party Affiliate as to Secured Party’s acting as collateral agent for any Secured Party Affiliate.

1 4. RIGHTS OF SECURED PARTY. Without limiting any other rights Secured Party has under the law, Secured Party may, from time to time, at its option (but shall have no duty to):

(a) perform any agreement of Debtor hereunder that Debtor shall have failed to perform;

(b) take any other action which Secured Party deems necessary or desirable for the preservation of the Collateral or Secured Party's interest therein and the carrying out of this Agreement, including: (i) any action to collect or realize upon the Collateral; (ii) the discharge of taxes, liens, security interests or other encumbrances at any time levied or placed on the Collateral; (iii) the discharge or keeping current of any obligation of Debtor having effect on the Collateral; (iv) receiving, endorsing and collecting all checks and other orders for the payment of money made payable to Debtor representing any dividend, interest payment or other distribution payable or distributable in respect of the Collateral or any part thereof, and giving full discharge for the same; and (v) causing any person having possession of any Collateral to acknowledge that such person holds such Collateral for the benefit of Secured Party; and

(c) sign, file and authenticate financing statements and related documents covering the Collateral in all public offices deemed necessary or appropriate by Secured Party.

Debtor hereby appoints Secured Party as Debtor's attorney in fact, which appointment is and shall be deemed to be irrevocable and coupled with an interest, for purposes of performing acts and signing and delivering any agreement, document, or instrument on behalf of Debtor in accordance with this Section. Debtor immediately will reimburse Secured Party for all expenses so incurred by Secured Party.

1 5. OBLIGATIONS UNCONDITIONAL; WAIVER OF DEFENSES. No fact or circumstance whatsoever which might at law or in equity constitute a discharge or release of, or defense to or offset against the obligations of, a co-signer, accommodation party, guarantor or surety shall limit or affect any obligations of Debtor under this Agreement or any Related Document. Without limiting the generality of the foregoing:

(a) Secured Party may at any time and from time to time, without notice to Debtor, take any or all of the following actions without affecting or impairing the liability of Debtor under this Agreement and any Related Document:

(i) renew or extend time of payment of the Liabilities;

(ii) accept, substitute, release or surrender any security for the Liabilities; and

(iii) release any person primarily or secondarily liable on the Liabilities (including Borrower, any Credit Support Party, and any other Related Party).

(b) No delay in enforcing payment of the Liabilities, nor any amendment, waiver, change, or modification of any terms of any Related Document, shall release Debtor from any obligation hereunder. The obligations of Debtor under this Agreement are and shall be primary, continuing, unconditional and absolute (notwithstanding that at any time or from time to time all of the Liabilities may have been paid in full), irrespective of the value, genuineness, regularity, validity or enforceability of any Related Documents. In order to hold Debtor liable or exercise rights or remedies hereunder, there shall be no obligation on the part of Secured Party, at any time, to resort for payment to Borrower or any Related Party or to any other security for the Liabilities. Secured Party shall have the right to enforce this Agreement irrespective of whether or not other proceedings or steps are being taken against any other property securing the Liabilities or any other party primarily or secondarily liable on any of the Liabilities.

(c) Except as and if otherwise specifically set forth herein, Debtor irrevocably waives presentment, protest, notice of protest, notice of intent to accelerate, notice of acceleration, demand, diligence, grace, notice of dishonor or default, notice of nonpayment, notice of acceptance, notice of any loans made, extensions granted or other action taken in reliance hereon, and all other demands and notices of any kind in connection with this Agreement or the Liabilities.

(d) Until all Liabilities have been paid and fulfilled in full and no committed or uncommitted credit facility has been extended to Debtor or Borrower by Secured Party or any Secured Party Affiliate, Debtor waives the exercise of any claim or other right which Debtor might now have or hereafter acquire against Borrower or any other person primarily or contingently liable on the Liabilities (including any Related Party) or that arises from the existence or performance of Debtor's obligations under this Agreement or any Related Document, including any right of subrogation, reimbursement, contribution, indemnification, or participation in any claim or remedy of Secured Party against Borrower or any other collateral security for the Liabilities, which Secured Party now has or hereafter acquires, however arising.

(e) If any person other than Debtor or Borrower (any such person, a “ Third Party Obligor ”) shall be obligated in respect of the Liabilities, as a pledgor, a guarantor or otherwise, and shall make any payment in respect of the Liabilities, Debtor agrees, after payment in full of the Liabilities and termination of all commitments by Secured Party and Secured Party Affiliates to extend credit to Debtor or Borrower, to make a contribution to any such Third Party Obligor. The amount of the contribution made by Debtor shall be an amount sufficient to cause the contributions for payments on the Liabilities made by Debtor and all such Third Party Obligors to be proportionate to the respective benefits received by Debtor and the Third Party Obligors. Nothing in this subsection (e) shall limit the obligations of Debtor to Secured Party and Secured Party Affiliates hereunder.

1 6. SECURED PARTY MAY ALSO BE INTERMEDIARY OR FIDUCIARY . Debtor hereby irrevocably waives, releases and forever relinquishes any claim or right of any nature whatsoever based upon the fact that Intermediary or a trustee or other fiduciary of any Debtor or Related Party is or may be Secured Party itself or a Secured Party Affiliate, and irrevocably consents to any such circumstance. The rights and powers of Secured Party shall not in any way be restricted by reason of any such present or future circumstance.

17 . ARM’S LENGTH TRANSACTIONS. Debtor acknowledges and agrees that:

(a) The transactions contemplated by the Related Documents are arm's length commercial transactions among Debtor, Secured Party and any other parties thereto.

(b) In connection with such transactions, Secured Party is acting solely as a principal and not as an agent or a fiduciary of Debtor or any Related Party.

(c) With respect to any advances of Liabilities or the process leading thereto (whether or not Secured Party or any Secured Party Affiliate has advised or is currently advising Debtor or any Related Party on other matters), Secured Party has not assumed a fiduciary responsibility in favor of Debtor or any Related Party or any other obligation of Debtor or any Related Party.

(d) Debtor and the Related Parties have consulted with their own legal and financial advisors to the extent they deem appropriate in connection with the transactions contemplated by the Related Documents.

1 8. FURTHER ASSURANCES. Debtor agrees to do (or cause to be done) such further acts and things, and to execute and deliver (or cause to be executed and delivered) such additional conveyances, assignments, agreements, and instruments, as Secured Party may at any time reasonably request in connection with the administration or enforcement of this Agreement or related to the Collateral or any part thereof or in order better to assure and confirm unto Secured Party its rights, powers and remedies hereunder.

1 9. INVESTMENT DECISIONS . Secured Party in its capacity as Secured Party shall have no duty or obligation to Debtor as to any adverse economic, investment, tax or other losses or consequences incurred due to actions or omissions by Secured Party with regard to purchasing, holding, redeeming or selling Collateral while the same shall be under Secured Party’s control.

20 . NOTICES. Except as and if otherwise provided herein, all notices, requests and demands to or upon the respective parties pursuant hereto shall be in writing and shall deemed to have been given or made five business days after a record has been deposited in the mail, postage prepaid, or one business day after a record has been deposited with a recognized overnight courier, charges prepaid or to be billed to the sender, or on the day of delivery if delivered manually with receipt acknowledged, in each case addressed or delivered:

(a) if to Secured Party to The Northern Trust Company, Attention: Credit Administration Team, XX - XX - XX - XX , 50 South LaSalle, Chicago, IL 60603, with a copy to Gregory J. Werra, Vice President, 600 Brickell Avenue Suite 2400, Miami, FL 33131; and

(b) if to Debtor to its address indicated in the preamble hereto,

or to such other address as may be hereafter designated in writing by the respective parties hereto by a notice in accord with this Section.

2 1. MISCELLANEOUS . Except as and if otherwise specifically agreed in any Related Document, and to the extent, if any, that the UCC or other law provides for the application of the law of a different state, this Agreement and the Related Documents shall be: (i) governed by and construed in accordance with the internal law of the State of Florida; and (ii) deemed to have been executed in the State of Florida. This Agreement shall bind Debtor, its(his)(her) heirs, trustees (including successor and replacement trustees), executors, personal representatives, successors and assigns, as well as all persons who become bound as a debtor to this Agreement, and shall inure to the benefit of Secured Party, its successors and assigns, except that neither Debtor nor any person who or which becomes bound as a debtor hereto may transfer or assign any rights or obligations hereunder without the prior written consent of Secured Party. If an Event of Default has occurred and is continuing, Debtor agrees to pay upon demand all expenses (including reasonable attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Secured Party, in each case whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Secured Party in connection with the enforcement or preservation of its rights hereunder or under any Related Document. This Agreement may be executed in two or more counterparts, and (if there is more than one party) by each party on separate counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement, whether with or without the remainder hereof, by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart hereof. Time is of the essence in the performance of all obligations under this Agreement. This Agreement is, and is intended to take effect as, an instrument under seal. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity without invalidating the remainder of such provision, the applicability of such provision in any other instance, or the remaining provisions of this Agreement. To the maximum extent permitted by applicable law, Secured Party is hereby authorized by Debtor without notice to Debtor to fill in any blank spaces and dates herein or in any Related Document to conform to the terms of the transaction and/or understanding evidenced hereby. This Agreement may not be amended, waived or terminated without the prior written consent of Secured Party, and shall remain in effect notwithstanding that at any particular time there shall be no Liabilities outstanding. This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time a payment made to Secured Party is rescinded or otherwise must be restored or returned by Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Debtor, as though such payment had not been made. THIS AGREEMENT AND THE RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

2 2. NO PUNITIVE DAMAGES. NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO SECURED PARTY TO EXTEND CREDIT SECURED BY THE COLLATERAL .

23 . AUTHORIZATI O N TO RECORD PHONE CALLS. FOR ITSELF AS WELL AS ANY RELATED PARTY AND ANY AGENT, DIRECTOR, EMPLOYEE, MANAGER, MEMBER, OFFICER, OR PARTNER OF DEBTOR , AS APPLICABLE, DEBTOR IRREVOCABLY CONSENTS TO SECURED PARTY ’ S RECORDING OF ANY TELEPHONE CONVERSATION PERTAINING TO THIS AGREEMENT .

2 4. ANTI-TERRORISM LAW.

(a) Secured Party hereby notifies Debtor and any Related Party that, pursuant to the requirements of the USA Patriot Act, Secured Party may be required to obtain, verify and record information that identifies Debtor and any Related Party , which information may include the name and address of Debtor and any Related Party and other information that will allow Secured Party to identify Debtor and any Related Party in accord with the USA Patriot Act. Debtor hereby agrees to take any action necessary to enable Secured Party to comply with the requirements of the USA Patriot Act.

(b) Debtor covenants, represents and warrants as follows:

(i) Neither Debtor nor any Related Party is or, to the best of Debtor’s knowledge, will be in violation of any Anti-Terrorism Law.

(ii) Neither Debtor nor any Related Party is or, to the best of Debtor’s knowledge, will be a Prohibited Person.

(iii) Neither Debtor nor any Related Party: (A) conducts any business or engages in any transaction or dealing with any Prohibited Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (B) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; or (C) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(iv) Neither Debtor nor any Related Party will engage in any of the activities described in (iii) of this subsection (b) in the future.

(v) Debtor and each Related Party will ensure that the proceeds of the Liabilities are not used to violate any foreign asset control regulations of the U.S. Office of Foreign Assets Control (“ OFAC ”) or of any enabling statute or any Executive Order relating thereto.

(vi) Debtor will deliver to Secured Party any certification or other evidence requested from time to time by Secured Party in its sole reasonable discretion, confirming Debtor’s and any Related Party’s compliance with this Section.

(vii) Debtor has implemented procedures, and will consistently apply those procedures while this Agreement is in effect, to ensure that the representations and warranties in this Section remain true and correct while this Agreement is in effect.

2 5. J URISDICTION AND VENUE . Except as and if otherwise specifically agreed in any Related Document, and only as to suits, actions or other proceedings pertaining to such Related Document, Debtor and (by its acceptance hereof) Secured Party :

(a)

agree irrevocably that all suits, actions or other proceedings with respect to, arising out of or in connection with this Agreement or any Related Document shall be subject to litigation in courts having situs within or jurisdiction over Miami Dade County, State of Florida; and

(b) consent and submit to the jurisdiction of any such court; and

2 6. AMENDMENT & RESTATEMENT. This Agreement amends, restates, and replaces in its entirety the Pledge Agreement dated February 3, 2015, among the same parties. All amounts outstanding under or secured by such prior Pledge Agreement shall be deemed automatically outstanding under and secured by this Agreement.

2 7. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, DEBTOR AND (BY ITS ACCEPTANCE HEREOF) SECURED PARTY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG DEBTOR AND SECURED PARTY ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT , ANY RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN SECURED PARTY AND DEBTOR .

To the extent applicable under any state law, Debtor executed and Secured Party accepted this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.

DEBTOR:

Cornelis F. Wit Revocable Living Trust

By: /s / Cornelis F. Wit

Print Name of Trustee: Cornelis F. Wit

Not i ndividually but as trustee under trust agreement dated April 24, 2012, and known as the

Cornelis F. Wit Revocable Living Trust

ACCEPTED:

THE NORTHERN TRUST COMPANY

By: /s/ Gregory J. Werra

Print Name: Gregory J. Werra

Title: Vice President

Exhibit 4.5

SECURITIES ACCOUNT CONTROL AGREEMENT

(No Multi-Advisor Funds Allowed in Account)

Dated as of April 7, 2017

This Control Agreement (as modified from time to time, the " Agreement "), is by and among:

Cornelis F. Wit , not individually but as trustee under trust agreement dated April 24, 2012 , and known as the Cornelis F. Wit Revocable Living Trust , a trust organized under the laws of the State of Florida, as debtor (" Debtor "), with debtor's principal address at 2101 West Commercial Boulevard, Suite 3500 Fort Lauderdale, FL 33309, (individually and collectively, whether one or more, " Debtor ");

The Northern Trust Company , an Illinois banking corporation, in its capacity as secured party, with an address at 600 Brickell Avenue Suite 2400, Miami, FL 33131, (" Secured Party "); and

The Northern Trust Company , in its capacity as intermediary with respect to the "Account" referenced below, with an address at 50 South LaSalle Street, Chicago, Il., 60603 (" Intermediary ").

For purposes hereof, " Party(ies) " means, individually and collectively, Debtor, Intermediary and Secured Party.

PREAMBLE:

Debtor has granted to Secured Party a security interest in a secur1t1es account and assets therein maintained by Intermediary for Debtor. The Parties are entering into this Agreement to perfect Secured Party's security interest in the securities account and assets therein pursuant to a pledge or other collateral agreement between Debtor and Secured Party only, as amended, restated, renewed or replaced from time to time (the " Pledge Agreement ").

For valuable consideration the receipt and adequacy of which are hereby ac knowledged, the Parties agree:

1. USE OF TERMS . Terms defined in the Uniform Commercial Code of the State of Florida, as amended from time to time (the " UCC "), shall have the same meanings in this Agreement as in the UCC, unless such terms are otherwise defined herein or the context requires otherwise. However, no amendment to the UCC after the date hereof shall limit any rights of intermediary or Secured Party hereunder or in connection herewith. This Agreement shall be governed by the internal laws of the State of Florida without reference to the conflict of laws principles of the laws of such State. Intermediary agrees that its jurisdiction for purposes of this Agreement is Florida. As used in this Agreement, unless otherwise specified: the term "person" means any individual, corporation, company, limited liability company, voluntary association, partnership, trust, estate, unincorporated organization, other entity, or government (or any agency, instrumentality, or political subdivision thereof); the term "including" means "including without limitation;" the term "days" means "calendar days"; and terms such as "herein," "hereof' and words of similar import refer to this Agreement as a whole. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the others. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to sections or provisions without reference to the document in which they are contained are references to this Agreement.

2. ACCOUNT . Intermediary represents, warrants and agrees in favor of Secured Party that:

(a) Intermediary maintains a securities account number(s) XX-XXXXX, XX-XXXXX for Debtor in Debtor's name or such other designation as Intermediary may require (together with any

successor or replacement account(s), individually and collectively, and also (unless the context requires otherwise) together with security entitlements, investment property, financial assets and other assets now or hereafter held in such account(s), the " Account ") (for convenience of reference, the term " Account Asset(s) " means the security entitlements, investment property, financial assets and other assets now or hereafter held in the Account).

(b) Intermediary is not aware: (i) of any claim to or interest in the Account except for claims and interests of the Parties hereto; or (ii) that any third party has a right to give an entitlement order regarding any Account Assets.

(c) Intermediary agrees to treat all property credited to the Account, and all other rights of Debtor against intermediary arising out of the Account, including any free credit balances, as "financial assets" under the UCC.

3. DIRECT HOLDINGS OF CERTIFICATED AND UNCERTIFICATED SECURITIES .

(a) This Section applies to: (i) certificated securities (if any) in the Account registered in the name of, payable to the order of, or specially indorsed to Debtor, and which have not been subsequently indorsed to Intermediary or in blank; and (ii) uncertificated securities (if any) therein which are registered in Debtor's name on the issuer's books. This Section supplements any actions by or rights of Intermediary pursuant to any agreement between Intermediary and Debtor governing the Account.

(b) As to any such certificated securities in the Account:

(ii) Secured Party and Intermediary may at any time take such other actions as they deem necessary or appropriate, including: (A) appointment of sub-agents or depositories to retain physical possession of such certificates, which may in Secured Party's discretion be held in the name of Secured Party, any such sub- agent or depository, or any nominee of the foregoing; (B) transferring such certificates into a "pledge position" or the like at any such sub-agent or depository; and (C) exchanging certificates for certificates of smaller or larger denominations.

(ii) Secured Party and intermediary may at any time cause such securities to be registered in Intermediary's, Secured Party's or street name, or the like.

(d) Without limiting Secured Party's and Intermediary's rights under (a)-(c) or any other provision hereof or of the Pledge Agreement regarding the Account: (i) Debtor agrees (and authorizes Secured Party and Intermediary) to take or cause to be taken such actions, and execute

or cause to be executed such documents and instruments, in connection with Secured Party's security interest in such certificated and uncertificated securities as Secured Party or Intermediary may reasonably require; and (ii) Debtor hereby appoints Secured Party and Intermediary as Debtor's attorneys-in-fact, which appointment is and shall be deemed to be irrevocable and coupled with an interest, for purposes of performing acts and signing and delivering any document or instrument on behalf of Debtor in order to effectuate this Section. Debtor immediately will reimburse Secured Party and Intermediary for all expenses so incurred. Debtor directs the issuers of, or any depository, registrar, transfer agent or similar party with respect to any of, such securities to accept the provisions hereof (without inquiry of any kind) as conclusive evidence of the right of Secured Party and Intermediary to take any action referenced above, and agrees to hold them harmless for doing so, notwithstanding any notice or direction to the contrary previously or hereafter given by Debtor or any other person.

(e) Even if under the UCC or other applicable law Debtor is treated as holding such certificated and uncertificated securities directly rather than as having a security entitlement with respect thereto: (i) Debtor shall be deemed to have directed Intermediary to, and Intermediary acknowledges and agrees that it does and will, hold all such securities and any certificates or other documents and instruments representing them for the benefit of Secured Party; and (ii) such securities shall be subject to the other terms hereof, as in the case of other Account Assets.

4. CONTROL . Subject to the Sections hereof entitled "MULTI-ADVISOR FUNDS" and "NT CORP STOCK AND COMMINGLED FUNDS," Intermediary agrees to comply with all entitlement orders originated by Secured Party as to the Account without further consent by Debtor. As to any commodities constituting part of the Account, Secured Party agrees to apply any value distributed on any commodity contract as directed by Secured Party without further consent of Debtor.

5. SUBORDINATION BY INTERMEDIARY; NO MARGIN OR THIRD-PARTY LOANS OR LIENS . Intermediary subordinates in favor of Secured Party any security interest, lien or right of setoff Intermediary may have, now or in the future, against the Account or Account Assets, except that Intermediary will retain its prior lien on the Account to secure payment for assets purchased for the Account and normal commissions and fees for the Account. Intermediary agrees not to consent to or effect or permit any margin or other borrowing against the Account except from Secured Party. Intermediary will not agree with any third party that Intermediary will comply with entitlement orders originated by the third party as to the Account.

6. ACCOUNT ACTIVITY .

(a) Until Secured Party delivers to Intermediary a " Notice of Exclusive Control " (as defined below):

(i) Debtor will have full authority to exercise voting rights with respect to Account Assets;

(ii) Debtor may trade Account Assets within the Account; and

(iii) Intermediary shall if Debtor requests remit to Debtor, and Debtor may receive and retain, interest and regular cash dividends on Account Assets.

Notwithstanding the foregoing portion of this (a), Debtor may not terminate or re-title the Account.

(b) Except with the prior consent of Secured Party, intermediary will not comply with any entitlement order, request for withdrawal or other direction originated by Debtor that would: (i) require Intermediary to make a free delivery of Account Assets to Debtor or any other person; or (ii) result in a withdrawal or distribution from the Account except of interest and regular cash dividends.

(c) Secured Party may at any time give Intermediary a notice that Secured Party will exercise exclusive control over the Account (each, a " Notice of Exclusive Control ") in the form of Exhibit A or another form acceptable to Intermediary. Upon receipt of a Notice of Exclusive Control:

(ii) without limiting the Section entitled "CONTROL," Secured Party may exercise any and all trading, withdrawal, distribution, voting and other rights with respect to the Account.

(d) As between Debtor and Secured Party only, Secured Party agrees that, unless an "Event of Default" or ''Unmatured Event of Default" (as defined in the Pledge Agreement) has occurred and is continuing or would be caused by any action of Debtor, Secured Party will :

(i) not give in termediary a Notice of Exclusive Control; and

(ii) direct Intermediary to: (A) permit Debtor to make withdrawals from (including "free deliveries" out of ) and trade Account Assets within the Account, and to exercise voting rights with respect to Account Assets; and (B) distribute to Debtor interest and regular cash dividends on Account Assets.

7. ACCOUNT INFO. Intermediary will send copies of statements for the Account simultaneously to Debtor and Secured Party, and will promptly provide Secured Party such other information concerning the Account as Secured Party may request. Intermediary will use reasonable efforts to notify Secured Party and Debtor promptly if any other person claims that it has a property or security interest in the Account.

8. INTERMEDIARY RESPONSIBILITY.

(a) Except for permitting a withdrawal, delivery or payment in violation of this Agreement, Intermediary will not be liable to Secured Party for complying with entitlement orders from Debtor that are received by intermediary before Intermediary receives and has a reasonable opportunity to act on a Notice of Exclusive Control. Intermediary will not be liable to Debtor for complying with a Notice of Exclusive Control, entitlement order or other direction originated by Secured Party, even if Debtor notifies Intermediary that Secured Party is not legally entitled to issue the entitlement order, Notice of Exclusive Control or other direction. intermediary need not investigate whether Secured Party is entitled to give an entitlement order, Notice of Exclusive Control or other direction.

(b) Intermediary shall not: (i) be deemed to have knowledge of an event that would entitle Secured Party to exercise exclusive control over the Account until Intermediary has received a

Notice of Exclusive Control and has had a reasonable opportunity to act on such Notice of Exclusive Control; (ii) be responsible for the use that Debtor or Secured Party make of any withdrawn assets or funds; or (iii) be required to monitor the value of the Account.

(c) Intermediary shall not be subject to, nor obliged to recognize, the Pledge Agreement or any other agreement governing the rights or duties of the other Parties hereto even though reference thereto may be made in this Agreement.

(d) Intermediary may disregard any and all notices or instructions received from any source except only such notices or instructions as are specifically provided for in this Agreement. If Intermediary believes in good faith that any property held pursuant to this Agreement is subject to any order, judgment, decree, injunction, notice of levy or other request for transfer of funds from a tax authority, or other judicial or administrative process (individually and collectively, " Government Order(s) "), Intermediary may comply with any such Government Order without liability to any person, even though: (i) such Government Order may later be cancelled, released, reversed, modified, vacated or the like; and (ii) Intermediary has received a Notice of Exclusive Control.

(e) Intermediary shall not be responsible for any losses incurred in, or tax or other consequences of, liquidating securities or other property to satisfy a distribution request hereunder, or in taking any other action permitted to Intermediary hereunder.

(f) Intermediary shall be fully protected in relying without investigation upon any notice, demand, certificate or other document it in good faith believes to be genuine, as to the truth and accuracy of the statements made therein, the identity and authority of the persons executing the same, and the validity of any signature thereon. Intermediary may consult inside or outside counsel of its own choosing regarding its duties in connection herewith, and reliance on the advice of such counsel shall fully protect Intermediary.

(g) Intermediary shall not be liable for any act taken or omitted by it under this Agreement in good faith and in the exercise of its own best judgment. Intermediary shall not be: (i) liable to any person for punitive, special, indirect or consequential damages of any kind, even if advised of the possibility thereof; or (ii) responsible for any delay in performance, or non-performance, of any obligation hereunder to the extent that the same is due to circumstances beyond its control or constitutes force majeure at law or in equity, including equipment or communication malfunction.

9. INDEMNITY. DEBTOR AGREES TO INDEMNIFY INTERMEDIARY, ITS OFFICERS, DIRECTORS EMPLOYEES, AND AGENTS AGAINST ALL CLAIMS, LOSSES, LIABILITIES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS), ARISING OUT OF TIDS AGREEMENT, EXCEPT TO THE EXTENT SUCH ARE CAUSED BY INTERMEDIARY'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT. SECURED PARTY AGREES TO INDEMNIFY INTERMEDIARY, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS AGAINST ALL CLAIMS, LOSSES, LIABILITIES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS) ARISING OUT OF ITS ACTIONS PURSUANT TO TIDS AGREEMENT, EXCEPT TO THE EXTENT SUCH ARE CAUSED BY INTERMEDIARY'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT.

10. TERMINATION . This Agreement shall remain in effect notwithstanding that at any particular time there shall be no obligations outstanding secured hereby. Secured Party may terminate this Agreement by notice to Intermediary and Debtor. Intermediary may terminate this Agreement and close the Account on at least thirty days' prior notice to Secured Party and Debtor, whereupon Intermediary

shall transfer all assets in the Account to Secured Party or as Secured Party directs in writing. The Sections hereof entitled "INTERMEDIARY RESPONSIBILITY" and "INDEMNITY" will survive any termination of this Agreement.

11. WHAT IS PARTIES' AGREEMENT; TIDS PREVAILS OVER ACCOUNT AGREEMENT. This Agreement is the entire agreement, and supersedes any prior agreements and contemporaneous oral agreements, of the Parties concerning its subject matter. No amendment hereto or waiver of a right hereunder will be binding unless it is in writing and signed by the Party to be charged. This Agreement shall prevail to the extent of any conflict or inconsistency over any account or other agreement between Intermediary and Debtor pertaining to the Account.

12. NOTICES . Except as and if otherwise provided herein, all notices, requests and demands to or upon the respective Parties pursuant hereto shall be in writing and shall deemed to have been given or made five business days after a record has been deposited in the mail, postage prepaid, or one business day after a record has been deposited with a recognized overnight courier, charges prepaid or to be billed to the sender, or on the day of delivery if delivered manually with receipt acknowledged, in each case addressed or delivered:

(a) if to Secured Party to The Northern Trust Company, Attention: Credit Administration Team, XX-XX-XX-XX, 50 South LaSalle, Chicago, IL 60603, with a copy to Gregory J. Werra, Vice President, 600 Brickell Avenue Suite 2400, Miami, FL 33131; and

(b) if to Debtor to its address indicated in the preamble hereto; and

or to such other address as may be hereafter designated in writing by the respective Parties hereto by a notice in accord with this Section.

13. MISCELLANEOUS . This Agreement shall bind and inure to the benefit of the Parties and their respective heirs, trustees (including successor and replacement trustees), executors, personal representatives, successors and assigns, except that neither Debtor nor intermediary may transfer or assign any rights or obligations hereunder without the prior written consent of Secured Party. If there shall be more than one person or entity constituting Debtor, each of them shall be primarily, jointly and severally liable for all obligations of Debtor hereunder. This Agreement may be executed in two or more counterparts, and by each Party on separate counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement, whether with or without the remainder hereof, by facsimile or in electronic (e.g., "pdf'' or "tif'') format shall be effective as delivery of a manually executed counterpart hereof . Time is of the essence in the performance of all obligations under this Agreement. This Agreement is, and is intended to take effect as, an instrument under seal. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity without invalidating the remainder of such provision, the applicability of such provision in any other instance, or the remaining provisions of this Agreement. To the maximum extent permitted by applicable law, Secured Party and intermediary are each hereby authorized by Debtor without notice to Debtor to fill in any blank spaces and dates herein or in any related document to conform to the terms of the transaction and/or understanding evidenced hereby. T HI S WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTJES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS ,

OR S UBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES .

14. MULTI-ADVISOR FUNDS . Notwithstanding any other provision hereof:

(a) For purposes of this Agreement:

" Multi-Advisor Funds " means the ownership interests of Debtor in the Multi-Advisor Trust existing pursuant to the Multi-Advisor Fund Declaration.

" Multi-Advisor Fund Declaration " means the Restated Declaration of Trust of Northern Trust Multi-Advisor Funds dated August 1, 2011, as amended, restated, or replaced from time to time, and related documents.

(b) Debtor agrees not to hold any Multi-Advisor Funds in the Account .

15. NT CORP STOCK AND COMMINGLED FUNDS . Notwithstanding any other provision hereof:

(a) For purposes of this Agreement; " NT Corp Stock " means stock or other equity interests in Northern Trust Corporation; and " Commingled Funds " means interests in so-called "common funds" and "collective funds," which are maintained by a bank or trust company. Commingled Funds are not mutual funds.

(b) The " Collateral " (as defined in the Pledge Agreement) shall not include NT Corp Stock or Commingled Funds.

(c) Debtor may not direct or authorize Intermediary to sell or otherwise dispose of any other securities or assets now or hereafter in the Account in order to purchase additional NT Corp Stock (whether or not held in the Account) except with the express prior written consent of Secured Party delivered to Intermediary. Likewise, additional NT Corp Stock may be added to the Account with funds not part of or proceeds of the Account only with the express prior written consent of Secured Party delivered to Intermediary. As between Debtor and Secured Party only, Secured Party agrees in each case to grant such consent if after such purchase or addition Debtor will be in compliance with any "Minimum Liquidity Balance" requirement set forth in the Pledge Agreement, and no Event of Default or Unmatured Event of Default will have occurred and be continuing.

(d) Debtor agrees not to hold any Commingled Funds in the Account unless Secured Party (in its capacity as such) specifically consents to such holding in writing.

16. NO PUNITIVE DAMAGES. NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH TIDS AGREEMENT OR ANY RELATED DOCUMENT. TIDS PROVISION IS A MATERIAL INDUCEMENT TO SECURED PARTY TO EXTEND CREDIT SECURED BY THE COLLATERAL.

17. AUTHORIZATION TO RECORD PHONE CALLS. FOR ITSELF AS WELL AS ITS AGENTS, DIRECTORS, EMPLOYEES, MANAGERS, MEMBERS, OFFICERS, OR PARTNERS, AS APPLICABLE, EACH PARTY IRREVOCABLY CONSENTS TO ANY

PARTY'S RECORDING OF ANY TELEPHONE CONVERSATION PERTAINING TO TIDS AGREEMENT.

18. ANTI-TERRORISM LAW.

(a) For purposes of this Section:

" Anti-Terrorism Law " means any law relating to terrorism or money-laundering, including Executive Order No. 13224 and the USA Patriot Act.

" Executive Order No. 13224 " means Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001.

" Prohibited Person " means: (i) a person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a person with whom Secured Party is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a person who commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order No. 13224; (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/tllsdn.pdf or at any replacement website or at any other official publication of such list; and (vi) a person who is affiliated with a person described in clauses (i)- (v) above.

" USA Patriot Act " means the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001" (Public Law 107-56, signed into law on October 26, 2001 ), as amended from time to time.

(b) Each Party hereby notifies the other Parties that, pursuant to the requirements of the USA Patriot Act, such Party may be required to obtain, verify and record information that identifies the other Parties, which information may include the name and address of such other Parties and ot her information that will allow such Party to identify the other Parties in accord with the USA Patriot Act. Each Party hereby agrees to take any action necessary to enable the other Parties to comply with the requirements of the USA Patriot Act .

(i) Such Party is not and, to the best of such Party's knowledge, will not be in violation ofany Anti-Terrorism Law.

(ii) Such Party is not, and, to the best of such Party's knowledge, will not be a Prohibited Person.

(iii) Such Party does not: (A) conduct any business or engage in any transaction or dealing with any Prohibited Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (B) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order

No. 13224; or (C) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(iv) Such Party will not engage in any of the activities described in (iii) of this subsection (c) in the future.

(vi) Such Party will deliver to the other Parties any certification or other evidence requested from time to time by the other Parties in their sole reasonable discretion, confirming such Party's compliance with this Section.

(vii) Such Party has implemented procedures, and will consistently apply those procedures while this Agreement is in effect, to ensure that the representations and warranties in this Section remain true and correct while this Agreement is in effect.

19. JURISDICTION AND VENUE. Except as and if otherwise specifically agreed in any related document (such as a mandatory arbitration provision in an agreement covering the Account between Debtor and Intermediary), and only as to suits, actions or other proceedings pertaining to such related document, the Parties hereto:

(a) agree irrevocably that all suits, actions or other proceedings with respect to, arising out of or in connection with this Agreement or any related document shall be subject to litigation in courts having situs within or jurisdiction over Miami Dade County, State of Florida; and

(b) consent and submit to the jurisdiction of any such court; and

20. AMENDMENT & RESTATEMENT. This Agreement amends, restates, and replaces in its entirety the Securities Account Control Agreement dated February 3, 2015, among the same Parties. All amounts outstanding under or secured by such prior Control Agreement shall be deemed automatically outstanding under and secured by this Agreement.

21. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, DEBTOR, SECURED PARTY AND INTERMEDIARY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THEM OR ANY OF THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.

To the extent applicable under any state law, each Party hereto executed this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.

DEBTOR:

Cornelis F. Wit Revocable Living Trust

By: /s/ Cornelis F. Wit

Print Name of Trustee: Cornelis F. Wit

Not individually but as trustee under trust agreement dated April 24, 2012, and known as the Cornelis F. Wit Revocable Living Trust

INTERMEDIARY:

THE NORTHERN TRUST COMPANY

By:

Print Name:

Title:

SECURED PARTY:

THE NORTHERN TRUST COMPANY

By : /s/ Gregory S. Werra

Print Name: Gregory J. Werra

Title: Vice President

EXHIBIT A

SAMPLE OF NOTICE OF EXCLUSIVE CONTROL

Date: April 7, 2017

To: The Northern Trust Company (" In termediary ")

50 South LaSalle Street

Chicago, IL 60603

Re: Account number XX-XXXXX, XX-XXXXX owned by Cornelis F. Wit Revocable Living Trust, (" Debtor ") and pledged to The Northern Trust Company (" Secured Party ")

Dear Sir/Ms.:

This is to notify in termediary that the above-referenced pledged securities account and all assets therein (" Account ") are now under the exclusive control of Secured Party. Intermediary is hereby instructed to stop: (A) complying with any exercise by Debtor of voting or other rights with respect to the Account; (B) complying with trading instructions from Debtor with respect to the Account; and (C) distributing to Debtor interest and regular cash dividends on assets in the Account. Secured Party warrants to intermediary that this Notice of Exclusive Control is authorized.

Very truly yours,

The Northern Trust Company, as Secured Party

By:

Print Name: Gregory J. Werra

Its: Vice President

cc: Cor n e l is F. Wit Revocable Living Trust

Exhibit 10. 4 9

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Extension of Maturity Date of Convertible Debenture [and related Warrants] although the Company has entered into various such Extension of Maturity Date of Convertible Debenture [and related Warrants] that are substantially identical in all material respects except as to the parties thereto and certain other details. The Schedule that follows the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] identifies each Extension of Maturity Date of Convertible Debenture [and related Warrants] that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed, and sets forth the material details in which the each omitted Extension of Maturity Date of Convertible Debenture [and related Warrants] differ from the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed.

EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE

This Extension of Maturity Date of Convertible Debenture (“Extension”) is by and between the individual or entity named on an executed counterpart of the signature page hereto (each such signatory is referred to as “Holder”) and OmniComm Systems, Inc., a Delaware corporation (“Maker”) and is entered into as of the day the last Holder executes a copy of this Extension.

WHEREAS , Maker has delivered to each Holder that certain % Convertible Debenture Series ( ) of the Maker (“Convertible Debenture”) dated in the aggregate to Holder in the principal of $ .

WHEREAS, the Maturity Date of the Convertible Debentures, as that term is defined in the Convertible Debenture, is , and all principal and interest due thereunder remain unpaid as of the date hereof.

WHEREAS, the parties have agreed to extend the Maturity Date.

WHEREAS , each holder has all requisite power, authority, and capacity to enter into this Extension and to extend the Maturity Date of the Convertible Debenture.

NOW, THEREFORE , in consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, each Holder and the Maker hereby agree as follows:

Recitals. The foregoing recitals are true and correct.

Extension of Maturity Date. The Maturity Date is hereby extended to .

No Other Changes. Except as specifically set forth herein, all other terms and conditions of the Convertible Debenture remain in full force and effect.

Warrants Extension. Maker hereby agrees to extend the expiration date on the Warrants issued in connection with the Convertible Debenture on ______________, which were originally expected to expire on . The new expiration date is .

IN WITNESS WHEREOF, this Extension of Maturity Date of Convertible Debenture is executed as of the day and date the last Holder executes a copy of this Extension.

OmniComm Systems, Inc.

By: ____________________

(name)

(title)

[HOLDERS SIGNATURE PAGE FOLLOWS]

[EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE SIGNATURE PAGE]

IN WITNESS WHEREOF , the undersigned represents that it has caused this extension of Maturity Date of Convertible Debenture and Warrants to be duly executed on its behalf (if an entity, by one of its officers thereunto duly authorized) as of the date written below.

HOLDER:

_________________________________

Printed Name of Holder

By: _________________________________

(Signature of Holder or Authorized Person)

_____________________________________

Printed Name and Title if Authorized Person

_____________________________________

Date

SCHEDULE OF SUBSTANTIAL LY IDENTICAL

EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE [AND RELATED WARRANTS]

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Extension of Maturity Date of Convertible Debenture [and related Warrants] although the Company has entered into various such Extension of Maturity Date of Convertible Debenture [and related Warrants] that are substantially identical in all material respects except as to the parties thereto and certain other details. The following schedule identifies each Extension of Maturity Date of Convertible Debenture [and related Warrants] that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed, and sets forth the material details in which each omitted Extension of Maturity Date of Convertible Debenture [and related Warrants] differ from the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed.

Date of Agreement	Name of Holder	Amount	Series of Convertible Debentures and Warrants (2)	Maturity Date and Expiration of Warrants	Amount Outstanding at June 30 , 201 7
June 30, 2016 (1)	Cornelis F. Wit	$4, 055,000 and 8,110,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2020	$4,05 5,000 and 8,110,000 warrants
June 30, 2016 (1)	Cornelis F. Wit	$1,770,000 and 3,540,000 warrants	August 2008	Changed from April 1, 2017 to April 1, 2020	$1,770,000 and 3,540,000 warrants
June 30, 2016 (1)	Guus van Kesteren	$160,000 and 320,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2018	$-0- and 320,000 warrants
June 30, 201 6 (1)	Noesis International Holdings	$100,000 and 200,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2020	$100,000 and 200,000 warrants
June 30, 201 6 (1)	Ad Klinkenberg	$400,000 and 1,600,000 warrants	September 2009	Changed from April 1, 2017 to April 1, 2020	$400,000 and 1,600,000 warrants
June 30, 201 6 (1)	Yolanda Dekker	$225,000 and 900,000 warrants	September 2009	Changed from April 1, 2017 to April 1, 2020	$225,000 and 900,000 warrants
June 30, 2017 (1)	Fernando Montero Incentive Savings Trust	$200,000 and 400,000 warrants	December 2008	Changed from April 1, 2018 to April 1, 2021	$200,000 and 400,000 warrants
June 30, 2017 (1)	Guus van Kesteren	$150,000 and 300,000 warrants	August 2008	Changed from April 1, 2018 to April 1, 2019	$150,000 and 300,000 warrants

(1)

This Extension of Maturity Date of Convertible Debenture [and related Warrants] supersedes and replaces a prior Extension of Maturity Date of Convertible Debenture [and related Warrants] to the holder, extends the maturity date of the Convertible Debenture and the expiration date of the Warrants of the prior Extension of Maturity Date of Convertible Debenture [and related Warrants ].

(2)

The form of Debenture and form of Warrant for each series is filed as an exhibit with the Company’s most recent Annual Report on Form 10-K.

Exhibit 10.5 4

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of the Common Stock Purchase Warrant although the Company has issued various such Common Stock Purchase Warrants that are substantially identical in all material respects except as to the parties thereto and certain other details. The Schedule that follows the form of Common Stock Purchase Warrant identifies each Common Stock Purchase Warrant that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Common Stock Purchase Warrant that is being filed, and sets forth the material details in which each omitted Common Stock Purchase Warrant differ from the form of Common Stock Purchase Warrant that is being filed.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No. X -X-X

OmniComm Systems, Inc.

COMMON STOCK PURCHASE WARRANT

CLASS 20 XX

1. Issuance . In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by OmniComm Systems, Inc. , a Delaware corporation (the “Company”), or registered assigns (the “Holder”) is hereby granted the right to purchase at any time, on or after the Issue Date (as defined below) until 5:00 P.M., New York City time, on the Expiration Date (as defined below), (XXX,XXX,) fully paid and non-assessable shares of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), at an initial exercise price per share (the “Exercise Price”) of $_____ per share, subject to further adjustment as set forth herein. This Warrant was originally issued to the Holder or the Holder’s predecessor in interest on (the “Issue Date”).

2. Exercise of Warrants .

2.1 General .

(a) This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by facsimile transmission) a completed and duly executed Notice of Exercise included herein. The date such Notice of Exercise is faxed to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder of this Warrant tenders this Warrant Certificate to the Company within five (5) Trading Days thereafter. The Notice of Exercise shall be executed by the Holder of this Warrant and shall indicate (i) the number of shares then being purchased pursuant to such exercise and (ii) whether the exercise is a cashless exercise.

(b) If the Notice of Exercise form elects a “cashless” exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (w) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then being exercised, divided by (x) the Market Price of the Common Stock. For the purposes of this Warrant, the terms (y) “Current Market Value” shall mean an amount equal to the Market Price of the Common Stock, multiplied by the number of shares of Common Stock specified in the applicable Notice of Exercise, and (z) “Market Price of the Common Stock” shall mean the average Closing Price of the Common Stock for the three (3) Trading Days ending on the Trading Day immediately prior to the Exercise Date.

(c) If the Holder provides on the Notice of Exercise form that the Holder has elected a “cash” exercise (or if the cashless exercise referred to in the immediately preceding paragraph (b) is not available in accordance with its terms), the Exercise Price per share of Common Stock for the shares then being exercised shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder.

(d) Upon the appropriate payment, if any, of the Exercise Price for the shares of Common Stock purchased, together with the surrender of this Warrant Certificate (if required), the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. The Company shall deliver such certificates representing the Warrant Shares in accordance with the instructions of the Holder as provided in the Notice of Exercise (the certificates delivered in such manner, the “Warrant Share Certificates”) within three (3) Trading Days (such third Trading Day, a “Delivery Date”) of (i) with respect to a “cashless exercise,” the Exercise Date or the Automatic Exercise Date, as the case may be, or, (ii) with respect to a “cash” exercise, the later of the Exercise Date or the date the payment of the Exercise Price for the relevant Warrant Shares is received by the Company.

(e) The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date.

2.2 Automatic Exercise. If any portion of this Warrant remains unexercised as of the Expiration Date and the Market Price of the Common Stock as of the Expiration Date is greater than the applicable Exercise Price as of the Expiration Date, then, without further action by the Holder, this Warrant shall be deemed to have been exercised automatically on the date (the “Automatic Exercise Date”) which is the day immediately prior to the close of business on the Expiration Date (or, in the event that the Expiration Date is not a Business Day, the immediately preceding Business Day) as if the Holder had duly given a Notice of Exercise for a “cashless” exercise as contemplated by Section 2.1(b) hereof, and the Holder (or such other person or persons as directed by the Holder) shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such Automatic Exercise Date. This Warrant shall be deemed to be surrendered to the Company on the Automatic Exercise Date by virtue of this Section 2.2 without any action by the Holder.

2.3 Certain Definitions . As used herein, the term “Expiration Date” means .

3. Reservation of Shares . The Company hereby agrees that, at all times during the term of this Warrant, there shall be reserved for issuance upon exercise of this Warrant, one hundred percent (100%) of the number of shares of its Common Stock as shall be required for issuance of the Warrant Shares for the then unexercised portion of this Warrant. For the purposes of such calculations, the Company should assume that the outstanding portion of these Warrants was exercisable in full at any time, without regard to any restrictions which might limit the Holder’s right to exercise all or any portion of this Warrant held by the Holder.

4. Mutilation or Loss of Warrant . Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

5. Rights of the Holder . The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

6. Protection Against Dilution and Other Adjustments .

6.1 Adjustment Mechanism . If an adjustment of the Exercise Price is required pursuant to this Section 6 (other than pursuant to Section 6.4), the Holder shall be entitled to purchase such number of shares of Common Stock as will cause (i) (v) the total number of shares of Common Stock Holder is entitled to purchase pursuant to this Warrant following such adjustment, multiplied by (w) the adjusted Exercise Price per share, to equal the result of (ii) (x) the total number of shares of Common Stock Holder is entitled to purchase before adjustment, multiplied by (y) the total Exercise Price before adjustment.

6.2 Capital Adjustments . In case of any stock split or reverse stock split, stock dividend, reclassification of the Common Stock, recapitalization, merger or consolidation (where the Company is not the surviving entity), the provisions of this Section 6 shall be applied as if such capital adjustment event had occurred immediately prior to the date of this Warrant and the original Exercise Price had been fairly allocated to the stock resulting from such capital adjustment; and in other respects the provisions of this Section shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to the purposes hereof. A rights offering to stockholders shall be deemed a stock dividend to the extent of the bargain purchase element of the rights. The Company will not effect any consolidation or merger, unless prior to the consummation thereof, the successor or acquiring entity (if other than the Company) and, if an entity different from the successor or acquiring entity, the entity whose capital stock or assets the holders of the Common Stock of the Company are entitled to receive as a result of such consolidation or merger assumes by written instrument the obligations under this Warrant (including under this Section 6) and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire.

6.3 Adjustment for Spin Off . If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or of a part of its assets in a transaction (the “Spin Off”) in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the “Spin Off Securities”) to be issued to security holders of the Company, then the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder’s unexercised Warrants outstanding on the record date (the “Record Date”) for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the “Outstanding Warrants”) been exercised as of the close of business on the Trading Day immediately before the Record Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants.

7. Transfer to Comply with the Securities Act. This Warrant has not been registered under the Securities Act of 1933, as amended, (the “1933 Act”) and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the 1933 Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the 1933 Act. Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section.

8. Supplements and Amendments; Whole Agreement . This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein.

9. Governing Law . This Warrant shall be deemed to be a contract made under the laws of the State of Florida for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the County of Broward or the state courts of the State of Florida sitting in the County of Broward in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens , to the bringing of any such proceeding in such jurisdictions. To the extent determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in enforcement of or protection of any of its rights under any of the Transaction Agreements.

10. JURY TRIAL WAIVER . The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with this Warrant.

11. Remedies . The Company stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

12. Counterparts . This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

13. Severability. If any one of the provisions contained in this Agreement, for any reason, shall be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall remain in full force and effect and be construed as if the invalid, illegal or unenforceable provision had never been contained herein.

14. Waiver . No waiver of any provision of this Agreement shall be effective unless it is in writing, signed by the party against whom it is asserted and any such written waiver shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver.

15. Descriptive Headings . Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

Dated:

OmniComm Systems, Inc.

By: ________________________________

Thomas E. Vickers

(Name)

Chief Financial Officer

(Title)

NOTICE OF EXERCISE OF WARRANT

TO:

OmniComm Systems, Inc

2101 W. Commercial Blvd., Suite 3500

Ft. Lauderdale, FL 33309

Attn: CFO

VIA FAX: (954) 473-1256

The undersigned hereby irrevocably elects to exercise the right, represented by the Common Stock Purchase Warrant Class 20XX, No. X-X-X dated as of , to purchase ___________ shares of the Common Stock, $0.001 par value (“Common Stock”), of OmniComm Systems, Inc. and tenders herewith payment in accordance with Section 2 of said Common Stock Purchase Warrant, as follows:

●

CASH: $ _________________________________ = (Exercise Price x Exercise Shares)

Payment is being made by:

	☐	enclosed check
	☐	wire transfer
	☐	other

●

CASHLESS EXERCISE:

Net number of Warrant Shares to be issued to Holder : _________*

* based on: Current Market Value - (Exercise Price x Exercise Shares)

Market Price of Common Stock

where:

Market Price of Common Stock [“MP”] = $_______________

Current Market Value [MP x Exercise Shares] = $_______________

As contemplated by the Warrant, this Notice of Exercise is being sent by facsimile to the telecopier number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Exercise.

The certificates representing the Warrant Shares should be transmitted by the Company to the Holder

☐ via express courier, or

☐ by electronic transfer

after receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:

_____________________________________

Dated: ______________________

Holder ’s Name

SCHEDULE OF SUBSTANTIAL LY IDENTICAL

COMMON STOCK PURCHASE WARRANTS

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Common Stock Purchase Warrant although the Company has issued various such Common Stock Purchase Warrants that are substantially identical in all material respects except as to the parties thereto and certain other details. The following Schedule identifies each Common Stock Purchase Warrant that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Common Stock Purchase Warrant that is being filed, and sets forth the material details in which each omitted Common Stock Purchase Warrant differ from the form of Common Stock Purchase Warrant that is being filed.

Original Date of Issuance	Name of Holder	Amount of Warrants	Exercise Price	Expiration of Warrants

December 31, 2011(1)	Randa ll G. Smith	2,000,000	$0.25 per share	January 1, 2019
December 31, 2011(2 )	Stephan E. Johnson	2,000,000	$0.25 per share	January 1, 2019
December 31, 2011(3)	Thomas E. Vickers	1,000,000	$0.25 per share	January 1, 2019
December 31, 2011(4 )	Keith Howells	1,000,000	$0.25 per share	January 1, 2019
February 29, 2016	Cornelis F. Wit	800,000	$0.25 per share	April 1, 2019
February 29, 2016 (5)	Abrey K. Light	1,000,000	$0.25 per share	April 1, 2019
June 30, 2016	Noesis International	550,000	$0.25 per share	April 1, 2020
June 30, 2016	Noesis International	400,000	$0.25 per share	April 1, 2020
June 30, 2016	Noesis International	180,000	$0.25 per share	April 1, 2020
June 30, 2016	Guus van Kesteren	360,000	$0.25 per share	April 1, 2020
June 30, 2016	Ad Klinkenberg	480,000	$0.25 per share	April 1, 2020
June 30, 2016	Wim Boegem	1,200,000	$0.25 per share	April 1, 2020

(1)

The Common Stock Purchase Warrants were issued to Cornelis F. Wit on December 31, 2011 and on December 17, 2015 Mr. Wit sold the Common Stock Purchase Warrants to Mr. Smith.

(2)

The Common Stock Purchase Warrants were issued to Cornelis F. Wit on December 31, 2011 and on November 23, 2015 Mr. Wit sold the Common Stock Purchase Warrants to Mr. Johnson.

(3)

The Common Stock Purchase Warrants were issued to Cornelis F. Wit on December 31, 2011 and on November 23, 2015 Mr. Wit sold the Common Stock Purchase Warrants to Mr. Vickers.

(4)

The Common Stock Purchase Warrants were issued to Cornelis F. Wit on December 31, 2011 and on November 23, 2015 Mr. Wit sold the Common Stock Purchase Warrants to Mr. Howells.

(5)

The Common Stock Purchase Warrants were issued to Cornelis F. Wit on February 29, 2016 and on December 5, 2016 Mr. Wit sold the Common Stock Purchase Warrants to Mr. Light.

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, CORNELIS F. WIT, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2017 of OmniComm Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements ma de, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant ’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant ’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial report ing which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 11 , 2017

By: /s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

(Principal Executive Officer)

[A signed original of this written statement required by Section 906 has been provided to OmniComm Systems, Inc. and will be retained by OmniComm Systems, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request. ]

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, THOMAS E. VICKERS, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2017 of OmniComm Systems, Inc.;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to pro vide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant ’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any chang e in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the regis trant’s internal control over financial reporting.

August 11 , 2017

By: /s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Om niComm Systems, Inc. (the “Company”) for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, being, Cornelis F. Wit, Executive Chairman of the Company, and Thomas E. Vickers, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 11 , 2017

/s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

(Principal Executive Officer)

August 11 , 2017

/s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

(Principal Financial Officer)

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.