NOTE

10:

COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating leases for its office locations and has several 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

December 31, 2018

are as follows:

Year	Payments
2019	$	655,901
2020		414,973
2021		340,029
2022		340,270
Thereafter		76,243
Total	$	1,827,416

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

$1,254,087

for the year ended

December 31, 2018

and

$1,125,147

for the year ended

December 31, 2017.

The Company’s 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 2020.

The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in

July 2019.

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 2019.

The Company currently operates its wholly-owned subsidiary, OmniComm eClinical Solutions Private Ltd. in India under the terms of a lease that expires in

May 2023.

The Company currently leases computer hardware for its operations under leases classified as capital leases. The leased equipment is amortized on a straight line basis over

five

years. The minimum future lease payments required under the Company’s capital leases at

December 31, 2018

are as follows:

Year	Payments
2019	$	131,067
2020		131,067
2021		52,398
Total minimum capital lease payments		314,532
Less: Amount representing interest		(23,682	)
Present value of minimum capital lease payments	$	290,850

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

December 31, 2018,

there were

pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

PATENT LITIGATION SETTLEMENT

Effective

April 2, 2009,

we entered into a Settlement and Licensing Agreement with DataSci, LLC (“DataSci”) which relates to a lawsuit filed on

June 18, 2008

in the United States District Court for the District of Maryland by DataSci against OmniComm alleging infringement of U.S. Patent

No.

6,496,827

entitled “Methods and Apparatus for the Centralized Collection and Validation of Geographically Distributed Clinical Study Data with Verification of Input Data to the Distributed System” (“Licensed Patent”) owned by DataSci. Pursuant to the Settlement and Licensing Agreement, the parties entered into a Stipulated Order of Dismissal of the lawsuit filed by DataSci and DataSci (i) granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent the subject of the claim for the Licensed Products and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis, and (ii) released us from any and all claims of infringement of the Licensed Patent which

may

have occurred prior to the effective date of the Settlement and Licensing Agreement. Licensed Products is defined as all products and services of OmniComm and of its subsidiaries in the field of electronic data capture, whether sold by OmniComm directly or through its affiliates, parents, subsidiaries, partners, vendors, agents and/or representatives, including TrialMaster, products and services or other products and services that perform the substantially equivalent function of TrialMaster, and any other products and services that OmniComm

may

develop in the future in the field of electronic data capture. The license expressly excludes the right to make, use, sell, import, market, distribute, oversee the operation of, or service systems covered by a claim (if any) of the Licensed Patent to the extent such systems are used for creating and managing source documentation and conducting remote data validation in clinical trial studies using a tablet PC with stylus, touch screen device, digitizing tablet, digitizer pen or similar mobile processing device (“Digitizing Device”), wherein the source documentation is electronic and is completed using a Digitizing Device. Under the terms of the license, we were obligated to pay royalties quarterly for sales of Licensed Products from

January 1, 2008

until

December 31, 2017

in the amount of the greater of

two

percent (

) of our annual gross revenues from Licensed Products or, alternatively, the annual minimum royalty payment(s). The Settlement and Licensing Agreement and the amendment thereto (described below) could be terminated on

thirty

(

) days’ notice by the licensor if we were in default on our obligations thereunder and failed to cure such default within the

thirty

(

) day period after notice is provided. In addition to the payment of royalties, the Settlement and Licensing Agreement imposed 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 was exercisable commencing on the

second

anniversary of the Settlement and Licensing Agreement,

April 2, 2011,

through the expiration date of the warrant on

December 31, 2017.

December 31, 2017

DataSci exercised

50%

of the warrant for

500,000

common shares and requested cash payment on

50%

of the warrant. As a result of the exercise, DataSci received

500,000

restricted common shares and a net cash payment of

$145,000.

Effective

December 31, 2017

we had

future liability or expense under the Settlement and Licensing Agreement.

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 Company recorded a credit to earnings of $-

- during the year ended

December 31, 2018

and a credit to earnings of

$108,702

during the year ended

December 31, 2017,

which amounts represent (

) the amount of additional license expense incurred above the stipulated minimum in the DataSci License Agreement during the years ended

December 31, 2018

and

December 31, 2017

and (

) 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

The Company has 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, Chief Executive Officer and President

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 cancelled by either the employee or the Company

ninety

days prior to the end of the term. Under the terms of the agreement, the Company

may

terminate the employee’s employment upon

days notice of a material breach and the employee

may

terminate the agreement under the same terms and conditions. The employment agreements provide for non-disclosure provisions and severance benefits for

months, including upon a change in control, as well as non-compete clauses.