NOTE

13:

EQUITY INCENTIVE PLANS

Stock Option Plans

Description of

2016

Equity Incentive Plan

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 automatically increases on

January

1st

of each year for a period of

nine

(

) years commencing on

January 1, 2017

and ending on (and including)

January 1, 2025,

in an amount equal to

five

percent (

) of the total number of shares authorized under the

2016

Plan. As of

March 31, 2018

11,025,000

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

March 31, 2018,

there were

3,020,000

outstanding options and -

- restricted stock shares that have been granted under the

2016

Plan. At

March 31, 2018,

there were

8,005,000

shares available for grant as options or other forms of share-based compensation under the

2016

Plan.

Description of

2009

Equity Incentive Plan

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

March 31, 2018,

there were

375,000

outstanding options and

3,876,662

restricted stock shares that have been granted under the

2009

Plan. At

March 31, 2018,

there were -

- shares available for grant as options or other forms of share-based compensation under the

2009

Plan.

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, 2016		1,225,000		$	0.17		2.62	$	83,425
Granted		4,650,000			0.26
Exercised		(300,000	)		0.13
Forfeited/cancelled/expired		(300,000	)		0.14

Outstanding at December 31, 2017		5,275,000			0.26		4.09	$	130,475
Granted		570,000			0.28
Exercised		-0-			0.00
Forfeited/cancelled/expired		(2,825,000	)		0.25

Outstanding at March 31, 2018		3,020,000		$	0.27		3.91	$	129,825


Vested and exercisable at March 31, 2018		900,000		$	0.22		2.67	$	70,988

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

March 31, 2018.

The total number of shares vesting and the fair value of shares vesting for the

three

month periods ended

March 31, 2018

and

March 31, 2017,

respectively, was:

Fair value of options vesting for the year ended	Number of options vested		Fair value of options vested
March 31, 2018		500,000	$	99,121
March 31, 2017		-0-	$	-0-

Cash received for stock option exercises for the

three

month periods ended

March 31, 2018

and

March 31, 2017

was $-

- and $-

-, respectively. Due to the Company’s net loss position,

income tax benefit has been realized during the

three

month periods ended

March 31, 2018

and

March 31, 2017.

The following table summarizes information concerning options outstanding at

March 31, 2018:

Awards breakdown by price range at March 31, 2018
			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		250,000		1.24	$	0.17		250,000		1.24	$	0.17
0.21	to	0.30		2,045,000		4.00		0.25		650,000		3.21		0.24
0.31	to	0.50		725,000		4.57		0.34		-0-		0.00		0.00
0.00	to	0.50		3,020,000		3.91	$	0.27		900,000		2.67	$	0.22

The following table summarizes information concerning options outstanding at

December 31, 2017:

Awards breakdown by price range at December 31, 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		300,000		1.93	$	0.18		250,000		1.48	$	0.17
0.21	to	0.30		4,250,000		4.12		0.25		150,000		1.30		0.22
0.31	to	0.50		725,000		4.82		0.34		-0-		0.00		0.00
0.00	to	0.50		5,275,000		4.09	$	0.26		400,000		1.42	$	0.19

The weighted average fair value (per share) of options granted during the

three

month period ended

March 31, 2018

was

$0.23

and

$0.19

during the

three

month period ended

March 31, 2017.

The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based 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 options. 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

three

month period ended

March 31, 2018

and the year ended

December 31, 2017.

	Stock option assumptions for the period ended
Stock option assumptions	March 31, 2018	December 31, 2017
Risk-free interest rate	2.36%	1.81%
Expected dividend yield	0.0%	0.0%
Expected volatility	115.0%	127.1%
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 three months ended March 31,
	2018		2017
Stock options granted during the period	$	0.23	$	0.19

Stock options vested during the period	$	0.20	$	-0-

Stock options forfeited during the period	$	0.19	$	0.13

A summary of the status of the Company’s non-vested shares underlying stock options as of

March 31, 2018

and changes during the

three

month period ended

March 31, 2018

is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2018		4,875,000	$	0.21

Nonvested shares at March 31, 2018		2,120,000	$	0.24

As of

March 31, 2018,

$436,366

of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of

2.2

years.