UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2017~~2018

☐	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 001-33449

TOWERSTREAM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

20-8259086

(I.R.S. Employer Identification No.)

76 Hammarlund Way

Middletown, Rhode Island

(Address of principal executive offices)

02842

(Zip Code)

Registrant’s telephone number, including area code (401) 848-5848

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 (§232.405 of this chapter) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or 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 a 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 mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $2272,~~574,930~~139.

As of March 2325, ~~2018~~2019, there were 394,~~399~~409 shares of common stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report is incorporated by reference to the Form 10-K/A to be filed with the SEC within 120 days after the close of the fiscal year ended December 31, 2018.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

Table of Contents

		Page
PART I
Item 1	Business.	2
Item 1A	Risk Factors.	108
Item 1B	Unresolved Staff Comments.	2921
Item 2	Properties.	3022
Item 3	Legal Proceedings.	3022
Item 4	Mine Safety Disclosures.	3022
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	3123
Item 6	Selected Financial Data.	3224
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3224
Item 7A	Quantitative and Qualitative Disclosures About Market Risk.	4430
Item 8	Financial Statements and Supplementary Data.	4531
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	8660
Item 9A	Controls and Procedures.	8660
Item 9B	Other Information.	8760
PART III
Item 10	Directors, Executive Officers and Corporate Governance.	8861
Item 11	Executive Compensation.	9261
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	9861
Item 13	Certain Relationships and Related Transactions, and Director Independence.	~~100~~61
Item 14	Principal Accountant Fees and Services.	~~101~~61
PART IV
Item 15	Exhibits and Financial Statement Schedules.	~~102~~62
Item 16	Form 10-K Summary.	66

PART I

Forward-Looking Statements

~~Forward-looking~~This ~~statements~~report incontains ~~this~~forward-looking ~~report~~statements, including without limitation, statements related to Towerstream Corporation’s plans, strategies, objectives, expectations, intentions and adequacy of resources~~, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995~~. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, without limitation, the following: (i) Towerstream Corporation’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of Towerstream Corporation; (ii) Towerstream Corporation’s plans and results of operations will be affected by Towerstream Corporation’s ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time in Towerstream Corporation’s filings with the Securities and Exchange Commission (“SEC”).

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place too much reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this report.

Factors that might affect our forward-looking statements include, among other things:

● overall economic and business conditions; ● the demand for our services; ● competitive factors in the industries in which we compete; ● emergence of new technologies which compete with our service offerings; ● changes in tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); ● the outcome of litigation and governmental proceedings; ● interest rate fluctuations and other changes in borrowing costs; ● our ability to service or comply with the terms of our debt, or to negotiate amendments, forbearance agreements or waivers of restrictive covenants; ● other capital market conditions, including availability of funding sources; ● potential impairment of our indefinite-lived intangible assets and/or our long-lived assets; and ● changes in government regulations related to the broadband and Internet protocol industries.

Item 1 - Business.

Towerstream Corporation (“Towerstream”, “we”, “us”, “our” or the “Company”) is primarily a provider of fixed wireless services to businesses in twelve major urban markets across the U.S. During its first decade of operations, the Company's business activities were focused on delivering fixed wireless broadband services to commercial customers over a wireless network transmitting over both regulated and unregulated radio spectrum. Our fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. We provide services to business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, Las Vegas-Reno and Providence-Newport. Our "Fixed Wireless Services Business" ("Fixed Wireless" or "FW") has historically grown both organically and through the acquisition of five other fixed wireless broadband providers in various markets.

We offer fixed wireless business internet service in three product categories: Business Class Internet, Temporary Internet Solutions, and Wholesale Internet Service. This unique portfolio of bandwidth services is able to scale our existing target markets, from small businesses to ~~fortune~~Fortune 500 companies. Such service is as fast as fiber and equally as stable.

Under the Business Class Internet category, we offer two types of service: Single Tenant Service and On-Net Service. Under the Single Tenant Service offering, we deliver fixed wireless broadband to a single client through a radio receiver/transmitter on the client’s building dedicated solely to that client. We estimate an addressable market opportunity of approximately 392,000 buildings within four miles of the 175 Points-of-Presence (“PoP” ~~or “Company Locations”~~) located within the twelve major markets in which we provide service. Currently, we are offering bandwidth speeds ranging from 5Mbps (Megabits per second) to 10Gbps (Gigabits per second) in the Single Tenant Internet Service category with an increased focus on bandwidth speeds of 100Mbps or greater.

Under the On-Net Internet Service offering, we are able to connect, or “light”, an entire building at once and at a cost similar to what was traditionally required for one high bandwidth customer requiring point-to-point equipment. This can be accomplished, in part, because the capabilities of the equipment installed by us have improved even as the costs of the equipment have decreased. As a result, we are able to leverage the initial installation cost to serve an entire building’s tenant base. In place of a wireless install for every single customer in the building, we now only have to install the wireless portion of the install once. Subsequent customers are connected by simply running a wire to the common space in the building where the wireless service terminates. Additionally, instead of having multiple antennas on both the customer building and the PoP, there generally needs to be only one antenna on each location. We are offering 20Mbps to 1.5Gbps in this product category with an increased focus on bandwidth speeds of 100Mbps or greater.

Under the Temporary Internet Service offering, we are able to provide solutions for a client’s short-term connection requirements in locations where fiber, copper, and cable infrastructure does not exist or is cost prohibitive. With connections available for days, weeks, or months, this solution is ideal for concerts, special events, conferences, trade shows, television and movie productions, ~~constructions~~construction projects and more.

In August 2017, the Company created a new wholesale division that provides last-mile services to telecommunications carriers in North America. Under the Wholesale Internet Service offering, we are able to deliver both Dedicated Internet Access (DIA) and Point-to-Point Transport solutions with bandwidth options from 5Mbps to ~~10mbps~~10Gbps. By using our fixed wireless network, our wholesale partners bypass the extensive installation times of our fiber competitors. Our competitive advantages enable our partners to provide solutions their customers need quickly, reliably, and cost effectively. Sales and marketing efforts have been restructured to create a more ~~cost~~disciplined approach to identify and target prospective customers. By leveraging existing software tools, our sales and marketing organization can identify 392,000 buildings within four miles of our PoPs that house customers with the highest propensity to buy our services. This focused approach allows our sales force to target the subset of buildings that have confirmed line-~~effective~~of-sight and also lack fiber. This segmentation of our prospect database enables us to focus on prospects that align with prospective customers that are most likely to need and buy our services and continues to assist our sales professionals to shorten the sales cycle and achieve volume and velocity.

In March 2018, the Company announced that its ~~board~~Board of ~~directors~~Directors commenced an evaluation of strategic repositioning of the Company as it moves to leverage its existing key assets in major U.S. markets. In conjunction with such announcement, the Company isbegan ~~launching~~to ~~a concerted~~ focus on indirect and wholesale channels and ~~has~~ retained Bank Street Group LLC as its independent financial advisor to explore strategic alternatives, ~~with~~including ~~such~~the ~~broadband~~sale ~~carriers~~of some or all of the Company’s business or assets. The Company has not set a definitive timetable for the completion of its review of strategic alternatives and there can be no assurances that the process will result in a transaction. Any potential strategic alternative will be evaluated by the board. The Company does not intend to discuss developments with respect to the evaluation process unless a transaction is approved, or further disclosure becomes appropriate.

Our Network

The foundation of our network consists of PoPs which are generally located on very tall buildings in each urban market. We enter into long-term lease agreements with the owners of these buildings which provide us with the right to install communications equipment on the rooftop. We deploy this equipment in order to connect customers to the Internet. Each PoP is "linked" to one or more other PoPs to enhance redundancy and ensure that there is no single point of failure in the network. One or more of our PoPs are located in buildings where national Internet service providers such as Cogent or Level 3 are located, and we enter into IP transit or peering arrangements with these organizations in order to connect to the Internet. We refer to the core connectivity of all of our PoPs as a “Wireless Ring in the Sky.” Each PoP has a coverage area averaging approximately six miles although the distance can be affected by numerous factors, most significantly, how clear the line of sight is between the PoP and a customer location.

Our network does not depend on traditional copper wire or fiber connections which are the backbone of many of our competitors' networks. We believe this provides us with an advantage because we may not be significantly affected by events such as natural disasters and power outages. Conversely, our competitors are at greater risk as copper and fiber connections are typically installed at or below ground level and more susceptible to network service issues during disasters and outages.

Markets

We launched our fixed wireless business in April 2001 in the Boston and Providence markets. In June 2003, we launched service in New York City and followed that with our entry into the Chicago, Los Angeles, San Francisco, Miami and Dallas-Fort Worth markets at various times through April 2008. Philadelphia was our last market launch in November 2009. We entered the Seattle, Las Vegas-Reno, and Houston markets through acquisitions of service providers based in those markets. We also expanded our market coverage and presence in Boston, Providence, and Los Angeles through acquisitions.

3We determine which geographic markets to enter by assessing criteria in four broad categories. First, we evaluate our ability to deploy our service in a given market after taking into consideration our spectrum position, the availability of towers and other mounting structures. Second, we assess the market by evaluating the number of competitors, existing price points, demographic characteristics and distribution channels. Third, we evaluate the economic potential of the market, focusing on our forecasts of revenue opportunities and capital requirements. Finally, we look at market clustering opportunities and other cost efficiencies that might be realized. Based on this approach, as of December 31, 2018, we offer wireless broadband connectivity in 12 markets, of which 10 are in the top 20 metropolitan areas in the United States based on the number of small to medium businesses in each market. These 10 markets cover approximately 28% of small and medium businesses (5 to 249 employees) in the United States based on information obtained from AtoZDatabases.com.

We ~~determine~~believe ~~which~~there ~~geographic~~are ~~markets~~market toopportunities ~~enter~~beyond bythe ~~assessing~~12 ~~criteria~~markets in ~~four~~which ~~broad categories. First,~~ we ~~evaluate~~are ~~our~~currently ~~ability~~offering ~~to deploy~~ our ~~service~~services. inOur along-term ~~given~~plan ~~market~~is ~~after~~to ~~taking~~expand nationally into ~~consideration~~other ~~our~~top ~~spectrum~~metropolitan ~~position,~~markets in the ~~availability~~United ofStates. ~~towers~~We ~~and~~believe ~~other~~that ~~mounting~~acquisitions ~~structures.~~represent ~~Second,~~a wemore ~~assess~~cost ~~the~~effective ~~market~~manner byto ~~evaluating~~expand ~~the~~into ~~number~~new ofmarkets ~~competitors,~~rather ~~existing~~than ~~price~~to ~~points,~~build ~~demographic~~our ~~characteristics~~own ~~and distribution channels~~infrastructure. ~~Third~~Since 2010, we ~~evaluate~~have ~~the~~completed ~~economic~~five ~~potential~~acquisitions, of ~~the~~which ~~market,~~two ~~focusing~~were onin ~~our~~new ~~forecasts~~markets ~~of revenue opportunities~~ and ~~capital~~three ~~requirements.~~expanded ~~Finally,~~our wepresence ~~look~~in atexisting ~~market~~markets. ~~clustering~~We ~~opportunities~~have ~~and~~paid ~~other~~for ~~cost~~these ~~efficiencies~~acquisitions ~~that~~through ~~might~~a becombination ~~realized.~~of ~~Based~~cash onand ~~this approach~~equity, asand ofbelieve ~~December~~that ~~31,~~future ~~2017,~~acquisitions wewill ~~offer~~be ~~wireless~~paid ~~broadband connectivity~~ in 12a ~~markets,~~similar ofmanner. ~~which~~Our 10decision ~~are~~to inexpand ~~the~~into ~~top~~new 20markets ~~metropolitan~~will ~~areas~~depend inupon ~~the~~many ~~United~~factors ~~States~~including ~~based on~~ the ~~number~~availability of ~~small~~financing, tothe ~~medium~~timing ~~businesses~~and infrequency ~~each~~of ~~market.~~acquisitions, ~~These~~national 10and ~~markets~~local ~~cover~~economic ~~approximately~~conditions, ~~30% of small~~ and ~~medium~~the ~~businesses~~opportunity (5 to ~~249~~leverage ~~employees)~~existing incustomer ~~the~~relationships ~~United~~in ~~States~~new ~~based on information obtained from AtoZDatabases~~markets.~~com.~~

We believe there are market opportunities beyond the 12 markets in which we are currently offering our services. Our long-term plan is to expand nationally into other top metropolitan markets in the United States. We believe that acquisitions represent a more cost effective manner to expand into new markets rather than to build our own infrastructure. Since 2010, we have completed five acquisitions, of which two were in new markets and three expanded our presence in existing markets. We have paid for these acquisitions through a combination of cash and equity, and believe that future acquisitions will be paid in a similar manner. Our decision to expand into new markets will depend upon many factors including the timing and frequency of acquisitions, national and local economic conditions, and the opportunity to leverage existing customer relationships in new markets.

Sales and Marketing

We employ an inside direct sales force model to sell our services to business customers. As of December 31, ~~2017~~2018, we employed 8two direct sales people. We generally compensate these employees on a salary plus commission basis.

Sales through indirect channels comprised 3534% of our total revenues during the year ended December 31, ~~2017~~2018 compared with 3435% during the year ended December 31, ~~2016~~2017. Our channel program provides for recurring monthly residual payments ranging from 8% to 25%.

4In 2017, the Company began to implement new sales and marketing strategies to leverage the Company’s state-of-the-art fixed wireless network to serve both enterprise and service providers. The three main pillars of this strategy are price, speed to market, and reliability.

Effective January 24, 2017, the Company hired a new Chief Executive Officer who is a telecommunications industry veteran and has extensive experience developing markets and increasing revenue. Immediately thereafter, the Company began to implement new sales and marketing strategies to leverage the Company’s state-of-the-art fixed wireless network to serve both enterprise and service providers. The three main pillars of this strategy are price, speed to market, and reliability. Our sales organization has been recently restructured for 2017 and beyond to create a more disciplined approach to identify and target prospective customers. Included in this strategy is a new methodology, which includes professional sales and development training, which will assist our sales professionals with achieving both volume and velocity. Enterprise demands are routinely moving towards and exceeding 100Mbps speeds. 3

As the demand for high bandwidth speeds over 100Mbps is projected to increase by double digits by 2020, building scale and digitizing networks are key for enterprises to keep pace. To ensure we are prepared for increasing demands of our clients and prospects, our service offerings have been condensed and priced accordingly. We currently offer three speeds in the Single Tenants and On-Net categories with customized quotes for larger bandwidth needs between 100Mbps and 1Gbps.

Under the Temporary Internet Service offering, the Company is able to provide solutions for a client’s short-term connection requirements in locations where fiber, copper, and cable infrastructure does not exist or is cost prohibitive. With connections available for days, weeks, or months, this solution is ideal for special events, conferences, television and movie productions, constructions projects and more.

In August 2017, the Company created a new wholesale division that provides last-mile services to telecommunications carriers in North America. Sales and marketing efforts have been restructured to create a more disciplined approach to identify and target prospective customers. By leveraging existing software tools, our sales and marketing organization can identify 392,000 buildings within four miles of our PoPs that house customers with the highest propensity to buy our services. This focused approach allows our sales force to target the subset of buildings that have confirmed line-of-sight and also lack fiber. This segmentation of our prospect database enables us to focus on prospects that align with prospective customers that are most likely to need and buy our services, along with enhanced sales development training, and continues to assist our sales professionals to shorten the sales cycle and achieve volume and velocity.

Competition

The market for broadband services is highly competitive, and includes companies that offer a variety of services using a number of different technology platforms, including cable networks, digital subscriber lines (“DSL”), fiber Internet service providers, third, fourth, and fifth-generation cellular, satellite, wireless Internet service and other emerging technologies. We compete with these companies on the basis of ~~the~~ portability, ease of use, speed of installation and price. Competitors to our wireless broadband services include:

Incumbent Local Exchange Carriers and Competitive Local Exchange Carriers

We face competition from traditional wireline operators in terms of price, performance, discounted rates for bundles of services, breadth of service, reliability, network security, and ease of access and use. In particular, we face competition from Verizon Communications Inc. and AT&T Inc., which are referred to as “incumbent local exchange carriers”, as well as competitive local exchange carriers.

Cable Modem, DSL, and Fiber Services

We compete with companies that provide Internet connectivity through cable modems, DSL, and fiber services. Principal competitors include cable companies, such as Comcast Corporation (including their Xfinity product), Spectrum Communications (previously known as Charter Communications), Cox Communications and incumbent telecommunications companies, such as AT&T Inc. or Verizon Communications Inc. Both the cable and telecommunications companies deploy their services over wired networks initially designed for voice and one-way data transmission that have subsequently been upgraded to provide for additional two-way voice, video and broadband services.

Cellular and CMRS Services

Cellular and other Commercial Mobile Radio Service (“CMRS”) carriers are seeking to expand their capacity to provide data and voice services that are superior to ours. These providers have substantially broader geographic coverage than we have and, for the foreseeable future, than we expect to have. If one or more of these providers can deploy technologies that compete effectively with our services, the mobility and coverage offered by these carriers will provide even greater competition than we currently face. Moreover, more advanced cellular and CMRS technologies, such as fourth generation Long Term Evolution (“LTE”) mobile technologies, and fifth generation millimeter wave technology currently offer broadband service with packet data transfer speeds of up to 2,000,000 bits per second for fixed applications, and slower speeds for mobile applications. We expect that LTE technology will be improved to increase connectivity speeds to make it more suitable for a range of advanced applications.

Wireless Broadband Service Providers

We also face competition from other wireless broadband service providers that use licensed and unlicensed spectrum. In connection with our merger and acquisition activities, we have determined that most of our current and planned markets already have one or more locally based companies providing wireless broadband Internet services. In addition, many local governments, universities and other related entities are providing or subsidizing Wi-Fi networks over unlicensed spectrum, in some cases at no cost to the user. There exist numerous small urban and rural wireless operations offering local services that could compete with us in our present or planned geographic markets.

Satellite

Satellite providers, such as Hughes Network Systems, LLC, offer broadband data services that address a niche market, mainly less densely populated areas that are unserved or underserved by competing service providers. Although satellite offers service to a large geographic area, latency caused by the time it takes for the signal to travel to and from the satellite may challenge a satellite provider’s ability to provide some services, such as Voice over Internet Protocol (“VoIP”), which reduces the size of the addressable market. Satellite providers are currently seeking additional frequencies from the FCC that would enable them to provide more robust fixed wireless services.

Other

We believe other emerging technologies may also seek to enter the broadband services market. For example, we are aware that several power generation and distribution companies are seeking to develop or have already offered commercial broadband Internet services over existing electric power lines.

Competitive Strengths

Even though we face substantial existing and prospective competition, we believe that we have a number of competitive advantages that will allow us to retain existing customers and attract new customers over time.

Reliability

Our network was designed specifically to support wireless broadband services. The networks of cellular, cable and DSL companies rely on infrastructure that was originally designed for non-broadband purposes. We also connect our customers to our Wireless Ring in the Sky, which has no single point of failure. This ring is fed by multiple national Internet providers located at opposite ends of our service cities and connected to our national ring which is fed by multiple leading carriers. We believe that we are the only wireless broadband provider that offers true separate egress for true redundancy. With DSL and cable offerings, the wireline connection can be terminated by one backhoe swipe or switch failure. Our Wireless Ring in the Sky is not likely to be affected by backhoe or other below-ground accidents or severe weather. As a result, our network has historically experienced reliability rates of approximately 99%.

Flexibility

Our wireless infrastructure and service delivery enables us to respond quickly to changes in a customer’s broadband requirements. We offer bandwidth options ranging from 5 ~~megabits~~Mbps ~~per second up~~ to 10 ~~gigabits per second~~Gbps. We can usually adjust a customer’s bandwidth remotely and without having to visit the customer location to modify or install new equipment. Changes can often be made on a same -day basis.

Timeliness

We have demonstrated the capability to install approximately 20% of our services within 7 days and approximately 75% of our services within ~~thirty~~30 days from the customer contract date. Many of the larger telecommunications companies can take 30 to 60 days to complete an installation. The timeliness of service delivery has become more important as businesses conduct more of their business operations through the Internet.

Value

We own our entire network which enables us to price our services lower than most of our competitors. Specifically, we are able to offer competitive prices because we do not have to buy a local loop charge from the telephone company.

Efficient Economic Model

We believe our economic model is characterized by low fixed capital and operating expenditures relative to other wireless and wireline broadband service providers. We own our entire network, which eliminates costs involved with using leased lines owned by telephone or cable companies. Our network is modular. Coverage is directly related to various factors, including the height of the facility we are on and the frequencies we utilize. The average area covered by a PoP is a six-mile radius.

Prime Real Estate Locations

We have secured long term lease agreements for prime real estate locations in the ~~twelve~~12 markets in which we have built our fixed wireless network. These locations are some of the tallest buildings in each city, which facilitates our ability to deliver Internet connectivity to customer locations where line of sight is not available to our competitors.

Corporate History

We were organized in the State of Nevada in June 2005. In January 2007, we merged with and into a wholly-owned Delaware subsidiary for the sole purpose of changing our state of incorporation to Delaware. In January 2007, a wholly-owned subsidiary of ours merged with and into a private company formed in 1999, Towerstream Corporation, with Towerstream Corporation being the surviving company. Upon closing of the merger, we discontinued our former business and succeeded to the business of Towerstream Corporation as our sole line of business. At the same time, we also changed our name to Towerstream Corporation and our subsidiary, Towerstream Corporation, changed its name to Towerstream I, Inc.

Regulatory Matters

The Communications Act of 1934, as amended (the “Communications Act”), and the regulations and policies of the Federal Communications Commission (“FCC”) impact significant aspects of our wireless Internet service business, which is also subject to other regulation by federal, state and local authorities under applicable laws and regulations.

Spectrum Regulation

We provide wireless broadband Internet access services using both licensed and unlicensed fixed point-to-point systems. The FCC has jurisdiction over the management and licensing of the electromagnetic spectrum for all commercial users. The FCC routinely reviews its spectrum policies and may change its position on spectrum use and allocations from time to time. We believe that the FCC is committed to allocating spectrum to support wireless broadband deployment throughout the United States and will continue to modify its regulations to foster such deployment, which will help us implement our existing and future business plans.

Broadband Internet Service Regulation

Our wireless broadband network can be used to provide Internet access service and Virtual Private Networks (“VPNs”). On May 23, 2017, the FCC issued a notice of proposed rulemaking, the intention of which is to repeal the net neutrality protections adopted in the 2015 Open Internet Order and reclassify fixed and mobile broadband services as information services governed by Title I of the Communications Act. On December 14, 2017, the FCC released its Restoring Internet Freedom Report and Order, in which isreclassified ~~re-classified~~ Internet access service as an information and not a telecommunications service and removed all Title II obligations from Internet traffic arrangements. On June 11, 2018, the FCC adopted final rules repealing net neutrality protections. In response, a number of states have issued executive orders or proposed legislation requiring net neutrality. The impact of this Report and Order, final FCC rules and any state orders or legislation on the industry and competition is still unknown at this time.

In addition, Internet service providers are subject to a wide range of other federal regulations and statutes some of which are regulated by the Federal Trade Commission, including, for example, regulations and policies relating to low-income subsidies, consumer protection, consumer privacy, and copyright protections. State and local government authorities may also regulate limited aspects of our business by, for example, imposing consumer protection and consumer privacy regulations, zoning requirements, and requiring installation permits.

Regulatory Issues

Our antennas and equipment used to provide wireless broadband service are regulated by the FCC. As such, any changes in FCC regulations involving the use or deployment of wireless broadband service could have a positive or negative impact on our business.

~~Other - FAA Interference Issue~~6

In August 2013, the FCC released a Notice of Apparent Liability for Forfeiture ("NAL") alleging that Towerstream caused harmful interference to doppler weather radar systems in New York and Florida, and proposing a fine for the alleged rule violations. In November 2013, after consultation with regulatory counsel, Towerstream filed a response denying the FCC's allegations. In July 2016, Towerstream settled the matter with the FCC under a consent decree that required Towerstream to admit that it violated the laws and regulations that prohibit Unlicensed National Information Infrastructure transmission systems operators from causing interference to doppler weather radar systems, to comply with such rules in the future, and to pay a civil penalty. The Company paid such penalty during the year ended December 31, 2016 and that amount was not material to the operating results for that period.

Rights Plan

In November 2010, we adopted a rights plan (the “Rights Plan”) and declared a dividend distribution of one preferred share purchase right for each outstanding share of common stock as of the record date on November 14, 2010. Each right, when exercisable, entitles the registered holder to purchase one-hundredth (1/100th) of a share of Series A Preferred Stock, par value $0.001 per ~~shares~~share of the Company at a purchase price of $18.00 per one-hundredth (1/100th) of a share of the Series A Preferred Stock, subject to certain adjustments. The rights will generally separate from the common stock and become exercisable if any person or group acquires or announces a tender offer to acquire 15% or more of our outstanding common stock without the consent of our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our Rights Plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors. In addition, we are governed by provisions of Delaware law that may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us.

The provisions in our charter, bylaws, Rights Plan and under Delaware law, related to the foregoing, could discourage takeover attempts that our stockholders would otherwise favor, or otherwise reduce the price that investors might be willing to pay for our common stock in the future.

Employees

As of December 31, ~~2017~~2018, we had 8348 employees, of whom 8044 were full-time employees and 34 were part-time employees. As of March 2325, ~~2018~~2019, we had 5350 employees, of whom 5046 were full-time employees and 34 were part-time employees. We believe our employee relations are good. Three employees are considered members of executive management.

Reverse Split

On September 29, 2017, the Company effected a ~~one~~1-for-~~seventy-five~~75 reverse stock split of its common stock. Consequently, all earnings per share and other share related amounts and disclosures in this report have been retroactively adjusted for all applicable 2017 periods presented for the ~~splits~~split.

Corporate History

Our Corporate Information

Our principal executive offices are located at 76 Hammarlund Way, Middletown, Rhode Island, 02842. Our telephone number is (401) 848-5848. The Company’s website address is http://www.towerstream.com. Information contained on the Company’s website is not incorporated into this Annual Report on Form 10-K. Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available free of charge through the ~~Securities and Exchange Commission (“~~SEC”) website at http://www.sec.gov as soon as reasonably practicable after those reports are electronically filed with or furnished to the SEC. These reports are also available on the Company’s website.

Item 1A - Risk Factors.

Investing in our common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below and other information contained in this annual report, including our financial statements and related notes before purchasing shares of our common stock. There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occurs, our business, financial condition or results of operations may be materially adversely affected. In that case, the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment.

Risks Relating to Our Financial Condition

If we choose to raise additional capital, we may not be able to obtain additional financing to fund our operations on terms acceptable to us or at all.

If we choose to raise additional funds in the future, there can be no assurance that sufficient debt or equity financing will be available at all or, if available, that such financing will be aton terms and conditions acceptable to us. Should we fail to obtain additional debt financing or raise additional capital, we may not be able to achieve our longer term business objectives and may face other serious adverse consequences. If we raise additional funds by issuing equity securities or convertible debt, investors may experience significant dilution of their ownership interest, and the newly-issued securities may have rights senior to those of the holders of our common stock. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and may require us to provide collateral to secure the loan. In addition, in a liquidation, debtholders will be entitled to repayment before any proceeds can be paid to our stockholders.

We have a history of operating losses and expect to continue incurring losses for the foreseeable future.

Our net losses for the years ending December 31, ~~2017~~2018 and ~~2016~~2017 were $1210,~~469~~210,~~682~~453 and $2012,~~436~~469,~~496~~682, respectively. We cannot anticipate when, if ever, our operations will become profitable. We expect to incur significant net losses as we develop our network, expand our markets, undertake acquisitions, acquire spectrum licenses and pursue our business strategy. We intend to invest significantly in our business before we expect cash flow from operations to be adequate to cover our operating expenses. If we are unable to execute our business strategy and grow our business, either as a result of the risks identified in this section or for any other reason, our business, prospects, financial condition and results of operations will be adversely affected.

Cash and cash equivalents represent one of our largest assets and we may be at risk of being uninsured for a large portion of such assets.

As of December 31, ~~2017~~2018, we had approximately $74.62 million in cash and cash equivalents with one large financial banking institution. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If the institution at which we have placed our funds were to become insolvent or fail, we could be at risk for losing a substantial portion of our cash deposits, or incur significant time delays in obtaining access to such funds. In light of the limited amount of federal insurance for deposits, even if we were to spread our cash assets among several institutions, we would remain at risk for the amount not covered by insurance.

Our growth may be slowed if we do not have sufficient capital.

The continued growth and operation of our business ~~may~~will require additional funding for working capital, debt service, the enhancement and upgrade of our network, the build-out of infrastructure to expand our coverage, possible acquisitions and possible bids to acquire spectrum licenses. We may be unable to secure such funding when needed in adequate amounts or on acceptable terms, if at all. To execute our business strategy, we may issue additional equity securities in public or private offerings, potentially at a price lower than the market price at the time of such issuance. Similarly, we may seek debt financing and may be forced to incur significant interest expense. If we cannot secure sufficient funding, we may be forced to forego strategic opportunities or delay, scale back or eliminate network deployments, operations, acquisitions, spectrum bids and other investments.

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There is substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

The Company’s consolidated financial statements for the year ended December 31, ~~2017~~2018 have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Effective March 30, 2018 through April 15, 2018, the Company entered into an amended and restated ~~Forbearance~~forbearance agreement ~~with~~(the ~~its~~“Forbearance ~~lender~~Agreement”) ~~and has classified long term debt~~ with aMelody ~~net~~Business ~~carrying~~Financial ~~value~~LLC of(the ~~$33,868,700~~“Lender”) asunder ~~current~~the ~~liabilities~~Company’s asloan ofagreement ~~December~~(the ~~31,~~“Loan ~~2017~~Agreement”). AsBetween ofMarch ~~December~~2018 ~~31,~~and ~~2017~~January 2019, the Company ~~had~~entered ~~cash~~into ~~and~~a ~~cash~~series ~~equivalents~~ of ~~approximately~~amendments ~~$7.6~~to ~~million~~the ~~and~~Forbearance ~~working~~Agreement ~~capital~~extending ~~deficiency~~the offorbearance ~~approximately $31~~period.1 ~~million.~~ The ~~Company~~current ~~has incurred~~forbearance ~~significant~~period ~~operating losses~~expires ~~since~~April ~~inception~~30, ~~and~~2019 ~~continues~~(the to“Forbearance ~~generate~~Period’). ~~losses~~These ~~from~~amendments ~~operations~~also ~~and~~amended ascertain ofother ~~December~~terms ~~31,~~of ~~2017,~~ the ~~Company~~Loan ~~had~~Agreement anand ~~accumulated~~the ~~deficit~~Forbearance ~~of $189~~Agreement.1 ~~million.~~Under ~~These matters raise substantial doubt about~~ the ~~Company’s~~most ~~ability~~recent toamended ~~continue~~Forbearance asAgreement aexecuted ~~going~~in ~~concern~~January ~~within~~2019, ~~one~~the ~~year~~terms ~~after~~of the ~~date~~amendment ~~these~~include ~~financial~~the ~~statements~~Lender ~~are~~agreeing ~~issued.~~to ~~Management~~forbear ~~has~~from ~~also~~exercising ~~evaluated~~any ~~the significance~~ of ~~these~~its ~~conditions~~rights inwith ~~relation~~respect to ~~the~~an ~~Company's~~event ~~ability~~of todefault ~~meet~~related ~~its~~to ~~obligations.~~the ~~The~~$6,500,000 ~~consolidated~~minimum ~~financial~~cash ~~statements~~balance doand ~~not~~a ~~include~~“Qualified ~~any~~Auditor’s ~~adjustments~~Report” ~~relating~~as tolong as the ~~recoverability~~Company ~~and~~accrues ~~classification~~interest ofat ~~asset amounts or~~ the ~~classification~~default ofrate. ~~liabilities~~The ~~that~~Forbearance ~~might~~Period beshall ~~necessary~~terminate ~~should~~upon the Company’s befailure ~~unable~~ to ~~continue~~maintain asat aleast ~~going~~$2,000,000 ~~concern. Our~~minimum ~~independent~~in ~~registered~~deposit ~~public~~accounts ~~accounting~~or ~~firm~~securities ~~included~~accounts. anIn ~~explanatory~~addition, ~~paragraph~~the incash ~~its~~interest ~~report~~payment ondue ~~our financial statements included~~ in ~~this~~the ~~Annual~~first ~~Report~~quarter onof ~~Form~~2019 ~~10-K~~can ~~for~~be ~~the~~treated ~~fiscal~~as ~~year~~PIK ~~ended~~interest. ~~December~~The ~~31,~~scheduled ~~2017,~~maturity ~~describing~~date ~~the existence~~ of ~~substantial~~the ~~doubt~~short-term ~~about~~debt ~~our~~is ~~ability~~April to30, ~~continue as a going concern~~2019.

As of December 31, 2018, the Company had cash and cash equivalents of approximately $4.2 million and a working capital deficiency of approximately $36.9 million. The Company has incurred significant operating losses since inception and continues to generate losses from operations, and as of December 31, 2018, the Company had an accumulated deficit of $199.3 million. These matters raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the Company’s financial statements for the fiscal year ended December 31, 2018 were issued. Management has also evaluated the significance of these conditions in relation to the Company's ability to meet its obligations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2018, describing the existence of substantial doubt about our ability to continue as a going concern.

Historically, the Company has financed its operation through private and public placement of equity securities, as well as debt financing and capital leases. The Company’s ability to fund its longer term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings or through the potential sale of the Company’s assets in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, no assurance can be provided that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Recently enacted tax reform legislation in the U.S. could adversely affect our business and financial condition.

On December 22, 2017, the Tax Cuts and Jobs Act ~~of 2017~~ (“Tax Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes under the Tax Act include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, ~~a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings,~~ limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, ~~one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions),~~ immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits ~~(including reducing the business tax credit for certain clinical testing expenses incurred in the testing of orphan drugs)~~. The overall impact of the new federal tax law is uncertain, and our business and financial condition could be adversely affected. For example, because of the tax rate decrease, our deferred tax assets and our corresponding valuation allowance against these deferred tax assets have been reduced and may continue to be adversely impacted. In addition, it is uncertain if and to what extent various states will ~~conform~~make conforming changes to ~~Tax~~state ~~Act~~tax laws and regulations and what effect ~~that~~ legal challenges will have on the Tax Act, including litigation in the U.S. and international challenges brought at organizations such as the World Trade Organization. The impact of the Tax Act on holders of our common stock is also uncertain and could be adverse. Investors should consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.

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Risks Relating to Fixed Wireless Services and Our Strategy

If we engage in a strategic realignment, our ability to execute current business strategies will be adversely affected.

In March 2018, the Company retained an independent financial advisor to explore strategic alternatives, including the sale of some or all of the Company’s business or assets. If we enter into one or more strategic transactions that include the sale of significant assets, such transactions will likely cause us to exit one or more of our primary markets and forego licenses to operate in those markets, may involve a competitor that is strengthened by expansion in one of their current markets or into new markets, will reduce our customer base and may cause us reputational damage in markets in which we remain. As a result, our ability to execute on our business strategy will be adversely affected.

We may be unable to successfully execute any of our current or future business strategies.

In order to pursue business strategies, we will need to continue to build our infrastructure and strengthen our operational capabilities. Our ability to do these successfully could be affected by any one or more of the following factors:

●	the ability of our equipment, our equipment suppliers or our service providers to perform as we expect;

●	the ability of our services to achieve market acceptance;

●	our ability to manage third party relationships effectively;

●	our ability to identify suitable locations and then negotiate acceptable agreements with building owners so that we can establish PoPs on their rooftops;

●	our ability to work effectively with new customers to secure approval from their landlord to install our equipment;

●	our ability to effectively manage the growth and expansion of our business operations without incurring excessive costs, high employee turnover or damage to customer relationships;

●	our ability to attract and retain qualified personnel, especially individuals experienced in network operations and engineering;

●	equipment failure or interruption of service which could adversely affect our reputation and our relations with our customers;

●	our ability to accurately predict and respond to the rapid technological changes in our industry; and

●	our ability to raise additional capital to fund our growth and to support our operations until we reach profitability.

Our failure to adequately address any one or more of the above factors could have a significant adverse impact on our ability to execute our business strategy and the long-term viability of our business.

We depend on the continued availability of leases and licenses for our communications equipment.

We have constructed proprietary networks in each of the markets we serve by installing antennae on rooftops, communication towers and other structures pursuant to lease or license agreements to send and receive wireless signals necessary for the operation of our network. We typically seek initial five-year terms for our leases with three to five-year renewal options. Such renewal options are generally exercisable at our discretion before the expiration of the current term. If these leases are terminated or if the owners of these structures are unwilling to continue to enter into leases or licenses with us in the future, we would be forced to seek alternative arrangements with other providers. If we are unable to continue to obtain or renew such leases on satisfactory terms, our business would be harmed.

We may not be able to attract and retain customers if we do not maintain and enhance our brand.

We believe that our brand is a critical ~~part~~key to our success. Maintaining and enhancing our brand may require us to make substantial investments with no assurance that these investments will be successful. If we fail to promote and maintain the “Towerstream” brand, or if we incur significant expenses in this effort, our business, prospects, operating results and financial condition may be harmed. We anticipate that maintaining and enhancing our brand will become increasingly important, difficult and expensive, and we may not be able to do so.

Many of our competitors are better established and have significantly greater resources than we do, which may make it difficult for us to attract and retain customers.

The market for broadband and related services is highly competitive, and we compete with several other companies within each of our markets. Many of our competitors are well established with larger and better developed networks and support systems, longer relationships with customers and suppliers, greater name recognition and greater financial, technical and marketing resources than we have. Our competitors may subsidize competing services with revenue from other sources and, thus, may offer their products and services at prices lower than ours. Our competitors may also reduce the prices of their services significantly or may offer broadband connectivity packaged with other products or services. We may not be able to reduce our prices or otherwise combine our services with other products or services, which may make it more difficult to attract and retain customers. In addition, businesses which are presently focused on providing services to residential customers may expand their target base and begin offering service to business customers.

We expect existing and prospective competitors to adopt technologies or business plans similar to ours, or seek other means to develop competitive services, particularly if our services prove to be attractive in our target markets. This competition may make it difficult to attract new customers and retain existing customers.

14We may experience difficulties constructing, upgrading and maintaining our network, which could increase customer turnover and reduce our revenues.

We may experience difficulties constructing, upgrading and maintaining our network which could increase customer turnover and reduce our revenues.

Our success depends on developing and providing products and services that provide customers with high quality Internet connectivity. If the number of customers using our network increases, we will require more infrastructure and network resources to maintain the quality of our services. Consequently, we may be required to make substantial investments to improve our facilities and equipment, and to upgrade our technology and network infrastructure. If we do not complete these improvements successfully, or if we experience inefficiencies, operational failures or unforeseen costs during implementation, the quality of our products and services could decline.

We may experience quality deficiencies, cost overruns and delays in implementing network improvements and completing maintenance and upgrade projects. Portions of these projects may not be within our control or the control of our contractors. Our network requires the receipt of permits and approvals from numerous governmental bodies. Such bodies often limit the expansion of transmission towers and other construction necessary for our business. Failure to receive approvals in a timely fashion can delay system rollouts and raise the cost of completing projects. In addition, we are typically required to obtain rights from land, building or tower owners to install antennae and other equipment to provide service to our customers. We may not be able to obtain, on terms acceptable to us, or at all, the rights necessary to construct our network and expand our services.

We also face challenges in managing and operating our network. These challenges include operating, maintaining and upgrading network and customer premise equipment to accommodate increased traffic or technological advances, and managing the sales, advertising, customer support, billing and collection functions of our business while providing reliable network service at expected speeds and quality. Our failure in any of these areas could adversely affect customer satisfaction, increase customer turnover or churn, increase our costs and decrease our revenues.

We may be unable to operate in certain markets if we are unable to obtain and maintain rights to use licensed spectrum or if the FCC re-allocates “unlicensed” spectrum.

We provide our services in some markets by using spectrum obtained through licenses or long-term leases. Obtaining licensed spectrum can be a long and difficult process that can be costly and require substantial management resources. Securing licensed spectrum may subject us to increased operational costs, greater regulatory scrutiny and arbitrary government decision making and we may be unable to secure such licensed spectrum.

Licensed spectrum, whether owned or leased, poses additional risks, including:

●	inability to satisfy build-out or service deployment requirements upon which spectrum licenses or leases may be conditioned;

●	increases in spectrum acquisition costs or complexity;

15● unsuccessful efforts to win competitive bids and satisfy pre-bid qualifications and post-bid requirements for spectrum acquisitions, which may lead to, among other things, increased competition; ● adverse changes to regulations governing spectrum rights; ● the risk that acquired or leased spectrum will not be commercially usable or free of damaging interference from licensed or unlicensed operators in the licensed or adjacent bands; ● contractual disputes with, or the bankruptcy or other reorganization of, the license holders, which could adversely affect control over the spectrum; ● failure of the FCC or other regulators to renew spectrum licenses as they expire; and ● invalidation of authorization to use all or a significant portion of our spectrum.

●We ~~competitive~~utilize ~~bids,~~unlicensed ~~pre-bid qualifications and post-bid requirements for~~ spectrum ~~acquisitions,~~ in ~~which~~all weof ~~may~~our ~~not be successful leading to~~markets, ~~among~~which ~~other~~subject ~~things,~~us ~~increased competition; ● adverse changes~~ to ~~regulations~~intense governing spectrum rights; ● the risk that acquired or leased spectrum will not be commercially usable or free of damaging interference from licensed or unlicensed operators in the licensed or adjacent bands; ● contractual disputes withcompetition, orlow ~~the~~barriers ~~bankruptcy or other reorganization~~ of, ~~the~~entry ~~license holders which could adversely affect control over the spectrum; ● failure of the FCC or other regulators to renew spectrum licenses as they expire;~~ and ●slowdowns ~~invalidation~~due ~~of authorization~~ to ~~use~~multiple ~~all or a significant portion of our spectrum~~users.

We presently utilize unlicensed spectrum in all of our markets ~~which~~to provide our service offerings. Unlicensed or “free” spectrum is ~~subject~~available to ~~intense~~multiple ~~competition~~users and may suffer bandwidth limitations, interference and slowdowns if the number of users exceeds traffic capacity. The availability of unlicensed spectrum is not unlimited, and others do not need to obtain permits or licenses to utilize the same unlicensed spectrum that we currently utilize or may utilize in the future. The inherent limitations of unlicensed spectrum could potentially threaten our ability to reliably deliver our services. Moreover, the prevalence of unlicensed spectrum creates low barriers of entry ~~and~~in ~~slowdowns~~our ~~due~~industry, towhich ~~multiple~~naturally ~~users~~creates the potential for increased competition.

WeInterruption ~~presently~~or ~~utilize~~failure ~~unlicensed spectrum in all~~ of our ~~markets~~information totechnology ~~provide our service offerings. Unlicensed or “free” spectrum is available to multiple users~~ and ~~may~~communications ~~suffer~~systems bandwidth limitations, interference and slowdowns if the number of users exceeds traffic capacity. The availability of unlicensed spectrum is not unlimited and others do not need to obtain permits or licenses to utilize the same unlicensed spectrum that we currently utilize or may utilize in the future. The inherent limitations of unlicensed spectrum could ~~potentially~~impair ~~threaten~~ our ability to ~~reliably~~provide ~~deliver our~~ services~~. Moreover~~, ~~the~~which ~~prevalence~~could ofdamage ~~unlicensed spectrum creates low barriers of entry in~~ our ~~industry which naturally creates the potential for increased competition~~reputation.

~~Interruption~~Our orservices ~~failure~~depend on the continuing operation of our information technology and communications systems. ~~could~~We ~~impair~~have experienced service interruptions in the past and may experience service interruptions or system failures in the future. Any unscheduled service interruption adversely affects our ability to ~~provide~~operate ~~services~~our ~~which~~business and could ~~damage~~result in an immediate loss of revenues and adversely impact our operating results. If we experience frequent or persistent system or network failures, our reputation could be permanently harmed. We may need to make significant capital expenditures to increase the reliability of our systems. However, these capital expenditures may not achieve the results we expect.

Our services depend on the continuing operation of our information technology and communications systems. We have experienced service interruptions in the past and may experience service interruptions or system failures in the future. Any unscheduled service interruption adversely affects our ability to operate our business and could result in an immediate loss of revenues and adversely impact our operating results. If we experience frequent or persistent system or network failures, our reputation could be permanently harmed. We may need to make significant capital expenditures to increase the reliability of our systems, however, these capital expenditures may not achieve the results we expect.12

Excessive customer churn may adversely affect our financial performance by slowing customer growth, increasing costs and reducing revenues.

The successful implementation of our business plan depends upon controlling customer churn. Customer churn is a measure of customers who cancel their services agreement. Customer churn could increase as a result of:

● interruptions to the delivery of services to customers over our network; ● the availability of competing technology such as cable modems, DSL, third-generation cellular, satellite, and wireless Internet service and other emerging technologies, some of which may be less expensive or technologically superior to those offered by us; ● changes in promotions and new marketing or sales initiatives; ● new competitors entering the markets in which we offer service; ● a reduction in the quality of our customer service billing errors; ● a change in our fee structure; and ● existing competitors whose services may be less expensive.

An increase in customer churn can lead to slower customer growth, increased costs and a reduction in our revenues.

If our business strategy is unsuccessful, we will not be profitable and our stockholders could lose their investment.

Many fixed wireless companies have failed, and there is no guarantee that our strategy will be successful or profitable. If our strategy is unsuccessful, the value of our company may decrease and our stockholders could lose their entire investment.

We may not be able to effectively control and manage our growth, which would negatively impact our operations.

If our business and markets continue to grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. In addition, we may face challenges in managing expanding product and service offerings, and in integrating acquired increased demands, which could interrupt or adversely affect our operations and cause backlogs and administrative inefficiencies in ~~the~~our ~~businesses discussed below~~operations. Such events would increase demands on our existing management, workforce and facilities.

The success of our business depends on the contributions of key personnel and our ability to attract, train and retain highly qualified personnel.

We are highly dependent on the continued services of our key personnel across all facets of operations. We ~~do not have an employment agreement with any of these individuals except for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. We~~ cannot guarantee that any of these persons will stay with us for any definite period. Loss of the services of any of these individuals could adversely impact our operations. We do not maintain policies of "key man" insurance on our executives.

In addition, we must be able to attract, train, motivate and retain highly skilled and experienced technical employees in order to successfully introduce our services in new markets and grow our business in existing markets. Qualified technical employees often are in great demand and may be unavailable in the time frame required to satisfy our business requirements. We may not be able to attract and retain sufficient numbers of highly skilled technical employees in the future. The loss of technical personnel or our inability to hire or retain sufficient technical personnel at competitive rates of compensation could impair our ability to grow our business and retain our existing customer base.

We may pursue acquisitions that we believe complement our existing operations but which involve risks that could adversely affect our business.

Acquisitions involve risks that could adversely affect our business including the diversion of management time and focus from operations and difficulties integrating the operations and personnel of acquired companies. In addition, any future acquisition could result in significant costs, the incurrence of additional debt to fund the acquisition, and the assumption of contingent or undisclosed liabilities, all of which could materially adversely affect our business, financial condition and results of operations.

In connection with any future acquisition, we generally will seek to minimize the impact of contingent and undisclosed liabilities by obtaining indemnities and warranties from the seller. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to their limited scope, amount or duration, as well as the financial limitations of the indemnitor or warrantor.

We may continue to consider strategic acquisitions, some of which may be larger than those previously completed and which could be material transactions. Integrating acquisitions is often costly and may require significant attention from management. Delays or other operational or financial problems that interfere with our operations may result. If we fail to implement proper overall business controls for companies or assets we acquire or fail to successfully integrate these acquired companies or assets in our processes, our financial condition and results of operations could be adversely affected. In addition, it is possible that we may incur significant expenses in the evaluation and pursuit of potential acquisitions that may not be successfully completed.

18We could encounter difficulties integrating acquisitions, which could result in substantial costs, delays or other operational or financial difficulties.

Since 2010, we have completed five acquisitions. We ~~could~~may seek to acquire other fixed wireless businesses, including those operating in our current business markets or those operating in other geographic markets. We cannot accurately predict the timing, size and success of our acquisition efforts and the associated capital commitments that might be required. We expect to encounter ~~difficulties~~competition ~~integrating~~for acquisitions, which ~~could~~may ~~result~~limit inthe number of potential acquisition opportunities and may lead to higher acquisition prices. We may not be able to identify, acquire or profitably manage additional businesses or successfully integrate acquired businesses, if any, without substantial costs, delays or other operational or financial difficulties.

Since 2010, we have completed five acquisitions. We may seek to acquire other fixed wireless businesses, including those operating in our current business markets or those operating in other geographic markets. We cannot accurately predict the timing, size and success of our acquisition efforts and the associated capital commitments that might be required. We expect to encounter competition for acquisitions which may limit the number of potential acquisition opportunities and may lead to higher acquisition prices. We may not be able to identify, acquire or profitably manage additional businesses or successfully integrate acquired businesses, if any, without substantial costs, delays or other operational or financial difficulties.

In addition, such acquisitions involve a number of other risks, including:

●	failure to obtain regulatory approval for such acquisitions;

●	failure of the acquired businesses to achieve expected results;

●	integration difficulties could increase customer churn and negatively affect our reputation;

●	diversion of management’s attention and resources to acquisitions;

●	failure to retain key personnel of the acquired businesses;

●	disappointing quality or functionality of acquired equipment and personnel; and

●	risks associated with unanticipated events, liabilities or contingencies.

The inability to successfully integrate and manage acquired companies could result in the incurrence of substantial costs to address the problems and issues encountered.

Our inability to finance acquisitions could impair the growth and expansion of our business.

The extent to which we will be able or willing to use shares of our common stock to consummate acquisitions will depend on (i) the market value of our securities, which will vary, (ii) liquidity which can fluctuate, and (iii) the willingness of potential sellers to accept shares of our common stock as full or partial payment. Using shares of our common stock for acquisitions may result in significant dilution to existing stockholders. To the extent that we are unable to use common stock to make future acquisitions, our ability to grow through acquisitions may be limited by the extent to which we are able to raise capital through debt or equity financings. We may not be able to obtain the necessary capital to finance any acquisitions. If we are unable to obtain additional capital on acceptable terms, we may be required to reduce the scope of expansion or redirect resources committed to internal purposes. Our inability to use shares of our common stock to make future acquisitions may hinder our ability to actively pursue our acquisition program.

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We rely on a limited number of third party suppliers that manufacture network equipment, and install and maintain our network sites.

We depend on a limited number of third party suppliers to produce and deliver products required for our networks. If these companies fail to perform or experience delays, shortages or increased demand for their products or services, we may face a shortage of components, increased costs, and may be required to suspend our network deployment and our service introduction. We also depend on a limited number of third parties to install and maintain our network facilities. We do not maintain any long-term supply contracts with these manufacturers. If a manufacturer or other provider does not satisfy our requirements, or if we lose a manufacturer or any other significant provider, we may have insufficient network equipment for delivery to customers and for installation or maintenance of our infrastructure. Such developments could force us to suspend the deployment of our network and the installation of new customers, thus impairing future growth.

Customers may perceive that our network is not secure if our data security controls are breached, which may adversely affect our ability to attract and retain customers and expose us to liability.

Network security and the authentication of a customer’s credentials are designed to protect unauthorized access to data on our network. Because techniques used to obtain unauthorized access to, or to sabotage, networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate or implement adequate preventive measures against unauthorized access or sabotage. Consequently, unauthorized parties may overcome our encryption and security systems, and obtain access to data on our network. In addition, because we operate and control our network and our customers’ Internet connectivity, unauthorized access or sabotage of our network could result in damage to our network and to the computers or other devices used by our customers. An actual or perceived breach of network security, regardless of whether the breach is our fault, could harm public perception of the effectiveness of our security controls, adversely affect our ability to attract and retain customers, expose us to significant liability and adversely affect our business prospects.

The delivery of our services could infringe on the intellectual property rights of others, which may result in costly litigation, substantial damages and prohibit us from selling our services.

Third parties may assert infringement or other intellectual property claims against us. We may have to pay substantial damages, including for past infringement, if it is ultimately determined that our services infringe a third party’s proprietary rights. Further, we may be prohibited from selling or providing some of our services before we obtain additional licenses, which, if available at all, may require us to pay substantial royalties or licensing fees. Even if claims are determined to be without merit, defending a lawsuit takes significant time, may be expensive and may divert management’s attention from our other business concerns. Any public announcements related to litigation or interference proceedings initiated or threatened against us could cause our business to be harmed and our stock price to decline.

Risks Relating to Discontinued Operations

We may incur additional charges in connection with our decision to exit the shared wireless infrastructure business, and any additional costs would adversely impact our cash flows.

During the fourth quarter of 2015, we determined to exit the shared wireless infrastructure business and curtailed activity in our smaller markets. InDuring ~~connection~~the ~~with~~first ~~this~~quarter ~~decision~~of 2016, we ~~recognized~~sold ~~charges~~the inmajority ~~the~~of ~~fourth~~our ~~quarter~~network oflocations ~~2015~~in ~~aggregating~~New $5York City,~~359,000,~~ ~~consisting~~our oflargest $3market,~~284,000~~ ofto ~~estimated~~a ~~cost~~major tocable ~~settle~~company. We ~~our~~also ~~lease~~determined ~~obligations,~~that ~~$1,618,000~~we would not be able to ~~write-off~~sell our remaining network ~~assets~~locations ~~which~~in ~~could~~New ~~not~~York beCity. We ~~redeployed~~believe ~~into~~that ~~the~~we ~~fixed~~have ~~wireless~~recognized ~~network~~principally ~~and~~all ~~writing~~of ~~off~~the ~~$456~~costs required to exit this business,~~000~~ ofbut ~~deferred~~can ~~acquisition~~provide ~~costs~~no ~~and~~assurance ~~security~~that ~~deposits~~additional ~~which~~costs ~~are~~will not ~~expected~~be toincurred. beAny ~~recovered~~additional costs would adversely impact our operating results and cash flows, and our stock price could decline.

During the first quarter of 2016, we sold the majority of network locations in New York City, our largest market, to a major cable company. We also determined that we would not be able to sell the remaining network locations in New York City. As a result, we recognized charges totaling $1,585,319 in the first quarter of 2016 which included $453,403 representing the estimated cost to settle lease obligations, $528,364 to write off network assets which could not be redeployed into the fixed wireless network, $110,500 related to security deposits which are not expected to be recovered, and $493,052 related to the accelerated expensing of deferred acquisition costs. These costs were partially offset by a $1,244,284 reduction in the accrual for terminated lease obligations that was recorded in the fourth quarter of 2015. This reduction reflects the outcome of settlements negotiated in the first quarter of 2016 with certain landlords. As of December 31, 2016, and based upon negotiations, settlements, and experiences through that date, the Company had reduced that remaining estimated liability by $1,557,626 to $1,240,000 and reduced operating expenses for the year ended December 31, 2016 by the same amount. As of December 31, 2017, and based upon negotiations, settlements, and experiences through that date, the Company had reduced that remaining estimated liability by $210,978 to $1,029,022. We believe that we have recognized principally all of the costs required to exit this business but can provide no assurance that additional costs will not be incurred. Any additional costs would adversely impact our operating results and cash flows, and our stock price could decline.15

Risks Relating to the Wireless Industry

An economic or industry slowdown may materially and adversely affect our business.

Slowdowns in the economy or in the wireless or broadband industry may impact demand for our services. Customers may reduce the amount of bandwidth that they purchase from us during economic downturns which will directly affect our revenues and operating results. An economic or industry slowdown may cause other businesses or industries to delay or abandon implementation of new systems and technologies, including wireless broadband services. Further, political uncertainties, including acts of terrorism and other unforeseen events, may impose additional risks upon and adversely affect the wireless or broadband industry generally, and our business, specifically.

21We operate in an evolving industry, which makes it difficult to forecast our future prospects as our services may become obsolete, and we may not be able to develop competitive products or services on a timely basis or at all.

We operate in an evolving industry which makes it difficult to forecast our future prospects as our services may become obsolete and we may not be able to develop competitive products or services on a timely basis or at all.

The broadband and wireless services industries are characterized by rapid technological change, competitive pricing, frequent new service introductions, and evolving industry standards and regulatory requirements. We believe that our success depends on our ability to anticipate and adapt to these challenges, and to offer competitive services on a timely basis. We face a number of difficulties and uncertainties such as:

● competition from service providers using more efficient, less expensive technologies, including products not yet invented or developed; ● responding successfully to advances in competing technologies in a timely and cost-effective manner; ● migration toward standards-based technology, which may require substantial capital expenditures; and ● existing, proposed or undeveloped technologies that may render our wireless broadband services less profitable or obsolete.

As the services offered by us and our competitors develop, businesses and consumers may not accept our services as a commercially viable alternative to other means of delivering wireless broadband services. As a result, our services may become obsolete and we may be unable to develop competitive products or services on a timely basis, or at all.

We are subject to extensive regulation that could limit or restrict our activities.

Our business activities, including the acquisition, lease, maintenance and use of spectrum licenses, and use of unlicensed spectrum, are extensively regulated by federal, state and local governmental authorities. A number of federal, state and local privacy, security, and consumer laws also apply to our business. These regulations and their application are subject to continuous change as new legislation, regulations or amendments to existing regulations are periodically implemented by governmental or regulatory authorities, including as a result of judicial interpretations of such laws and regulations. Current regulations directly affect the breadth of services we are able to offer and may impact the rates, terms and conditions of our services. Regulation of companies that offer competing services such as cable and fiber providers, and telecommunications carriers also affects our business. If we fail to comply with ~~these~~applicable regulations, we may be subject to penalties, both monetary and nonmonetary, which may adversely affect our financial condition and results of operations.

On February 26, 2015, the FCC adopted an Open Internet order in which fixed and mobile broadband services are reclassified as telecommunications services governed by Title II of the Communications Act. This reclassification includes forbearance from applying many sections of the Communications Act and the FCC’s rules to broadband service providers. As part of the Title II reclassification, the FCC could adopt new regulations requiring broadband service providers to register and pay Universal Service Fund (“USF”) fees as well as submit to a significant amount of other common carrier regulations.

2216

The Open Internet order also adopted rules prohibiting broadband service providers from: (1) blocking access to legal content, applications, services or non-harmful devices; (2) impairing or degrading lawful Internet traffic on its basis, content, applications or services; or (3) favoring certain Internet traffic over other traffic in exchange for consideration. Depending on how the Open Internet rules are implemented, the Open Internet order could limit our ability to manage customers’ use of our networks, thereby limiting our ability to prevent or address customers’ excessive bandwidth demands. To maintain the quality of our network and user experience, we may manage the bandwidth used by our customers’ applications, in part by restricting the types of applications that may be used over our network. The FCC Open Internet regulations may constrain our ability to employ bandwidth management practices. Excessive use of bandwidth-intensive applications would likely reduce the quality of our services for all customers. Such decline in the quality of our services could harm our business.

On May 23, 2017, the FCC issued a notice of proposed rulemaking, the intention of which is to repeal the net neutrality protections adopted in 2015 and reclassify fixed and mobile broadband services as information services governed by Title I of the Communications Act. AtOn December 14, 2017, the ~~time~~FCC ofreleased ~~this~~its ~~filing~~Restoring Internet Freedom Report and Order, itwhich isreclassified ~~unknown~~Internet ifaccess service as an information and ~~when~~not a telecommunications service and removed all Title II obligations from Internet traffic arrangements. On June 11, 2018, the ~~proposed~~FCC adopted final rules ~~will~~repealing benet ~~adopted~~neutrality protections. In response, ~~and~~a itnumber isof ~~possible~~states ~~that~~have ~~wireless~~issued ~~broadband~~executive ~~services~~orders ~~may~~or ~~become~~proposed ~~subject~~legislation torequiring ~~less~~net ~~federal~~neutrality. ~~regulation~~In inearly 2019, the United States Congress formed a bi-partisan committee to explore future net neutrality legislation.

The breach of a license or applicable law, even if accidentally, can result in the revocation, suspension, cancellation or reduction in the term of a license or the imposition of fines. In addition, regulatory authorities may grant new licenses to third parties, resulting in greater competition in territories where we already have rights to licensed spectrum. In order to promote competition, licenses may also require that third parties be granted access to our bandwidth, frequency capacity, facilities or services. We may not be able to obtain or retain any required license, and we may not be able to renew a license on favorable terms, or at all.

Wireless broadband services may become subject to greater state or federal regulation in the future. The scope of the regulations that may apply to companies like us and the impact of such regulations on our competitive position are presently unknown and could be detrimental to our business and prospects.

Risks Relating to Our Secured Indebtedness

Our cash flows and capital resources may be insufficient to meet minimum balance requirements or to make required payments on our secured indebtedness, which is secured by substantially all of our assets.

In October 2014, we entered into a loan agreement which provided us with a five-year $35,000,000 term loan. The loan bears interest payable in cash at a rate equal to the greater of (i) the sum of the one month LIBOR rate on each payment date plus 7% or (ii) 8% per annum, and additional paid in kind (“PIK”), or deferred, interest that accrues at 4% per annum. As of December 31, ~~2017~~2018, we had $3438,~~657~~699,~~986~~307 of principal and interest outstanding under the terms of this loan. We have agreed to maintain a minimum balance of cash or cash equivalents equal to or greater than $6,500,000 at all times throughout the term of the loan. As of December 31, ~~2017~~2018, we had $74,~~568~~173,~~982~~070 in cash and cash equivalents with one large financing banking institution. ~~The~~A ~~loan~~failure ~~bears~~to ~~interest~~comply ~~payable~~with inthe ~~cash~~restrictive atcovenants constitutes a ~~rate~~default, ~~equal~~which towould allow the ~~greater~~lender ofto ~~(i)~~accelerate the ~~sum~~debt ofand ~~the~~exercise ~~one~~its ~~month~~remedies ~~LIBOR~~under ~~rate~~the onloan ~~each~~agreement. ~~payment~~Effective ~~date~~January ~~plus~~31, 7%2019, orthe ~~(ii)~~Company 8%entered ~~per~~into ~~annum,~~an amended and ~~additional~~restated ~~paid~~Forbearance Agreement in ~~kind~~which ~~(“PIK”)~~the Lender agreed to, oramong ~~deferred~~other things, ~~interest~~to ~~that~~forbear ~~accrues~~from exercising any of its rights with respect to an event of default related to the $6,500,000 minimum cash balance. The Forbearance Period shall terminate upon the Company’s failure to maintain at 4%least ~~per~~$2,000,000 ~~annum~~minimum in deposit accounts or securities accounts. In addition, the scheduled maturity date of the short-term debt is April 30, 2019.

In November 2016, $5,000,000 of principal and accrued interest obligations in connection with this loan was converted into our Series D Convertible Preferred Stock (“Series D Preferred Stock”). This had the effect of reducing principal by $4,935,834 and given interest rates we experienced during the year ended December 31, 2016, reduced annual interest expense by approximately $592,000 and annual cash interest payments by approximately $395,000.17

23We recorded interest expense of $6,077,223 and $4,142,046 for the years ended December 31, 2018 and 2017, respectively. Of those amounts, we paid to the lender $2,035,903 and $2,775,054 and, in accordance with the provisions of the loan agreement, added $4,041,320 and $1,366,992 to the principal amount of the loan during the years ended December 31, 2018 and 2017, respectively.

We recorded interest expense of $4,142,046 and $4,497,945 for the years ended December 31, 2017 and 2016, respectively. Of those amounts, we paid to the lender $2,775,054 and $2,998,630 and, in accordance with the provisions of the loan agreement, added $1,366,992 and $1,499,315 to the principal amount of the loan during the years ended December 31, 2017 and 2016, respectively.

Our indebtedness could have important consequences. For example, it could:

●	make it difficult for us to satisfy our debt obligations;

●	make us more vulnerable to general adverse economic and industry conditions;

●	limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other general corporate requirements;

●	expose us to interest rate fluctuations because the interest rate on our long-term debt is variable;

●	require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for operations and other purposes;

●	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

●	place us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources.

In addition, our ability to meet minimum balance requirements, make scheduled payments or refinance our obligations depends on our successful financial and operating performance, cash flows and capital resources, which in turn depend upon prevailing economic conditions and certain financial, business and other factors, many of which are beyond our control. These factors include, among others:

●	economic and demand factors affecting our industry;

●	pricing pressures;

●	increased operating costs;

●	competitive conditions; and

●	other operating difficulties.

If our cash flows and capital resources are insufficient to fund our minimum balance requirements or debt service obligations, as modified by the Forbearance Agreement, or if we are unable to extend the Forbearance Agreement as needed, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. In the event that we are required to dispose of material assets or operations to meet our debt service and other obligations, the value realized on such assets or operations will depend on market conditions and the availability of buyers. Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Our obligations pursuant to our long-term debt agreement are secured by a security interest in all of our assets, exclusive of capital stock of the Company, certain capital leases, certain contracts and certain assets secured by purchase money security interests. The foregoing encumbrances may limit our ability to dispose of material assets or operations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all.

2418

Our ~~long~~short-term debt agreement contains various covenants limiting the discretion of our management in operating our business.

Our ~~long~~short-term debt agreement contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating our business. In particular, these instruments limit our ability to, among other things:

● incur additional debt; ● grant liens on assets; ● issue capital stock with certain features; ● pay dividends; ● sell or acquire assets outside the ordinary course of business; and ● make fundamental business changes.

OnWe ~~June~~expect ~~14, 2017, the lender delivered~~ to usextend ~~a “Waiver to Loan Agreement” (~~the ~~“Waiver”)~~Forbearance ~~waiving~~Period ~~our~~beyond ~~obligations~~April ~~to provide a report of our auditors covering our December 31~~30, ~~2016~~2019 ~~audited~~but ~~financial~~there ~~statements~~is ~~“without~~no aguarantee ~~`going~~that ~~concern'~~we orwill ~~like~~be ~~qualification~~able orto ~~exception~~do ~~and~~so ~~without~~on ~~any~~terms ~~qualification~~acceptable ~~or exception as~~ to ~~the~~us ~~scope~~or ofat ~~such audit” as provided in the debt agreement~~all. ~~The~~We ~~effective~~are ~~date~~currently ofparty ~~the~~to ~~Waiver~~a isForbearance ~~March~~Agreement ~~31,~~pursuant ~~2017 and the Waiver only applies~~ to ~~our~~which ~~failure to deliver such report of our auditors for~~ the ~~December~~Lender ~~31,~~has ~~2016~~agreed ~~audited financial statements and not with respect~~ to ~~any~~forbear ~~future~~from ~~financial~~exercising ~~years. The~~certain ~~Waiver~~rights isunder ~~effective retroactive to~~ the ~~date~~Agreement onuntil ~~which~~April ~~our auditors’ report concerning the December 31~~30, ~~2016~~2019. ~~financial~~See ~~statements which included a~~ “~~going~~Item ~~concern” explanatory paragraph was issued~~7. ~~The~~Management’s ~~lender~~Discussion ~~has~~and ~~not~~Analysis ~~provided us any notice~~ of ~~Default~~Financial orCondition ~~any~~and ~~Event~~Results of ~~Default,~~Operations as– ~~such~~Loan ~~terms~~Agreement” ~~are defined in our agreements with the lender, and has waived~~ for ~~all~~more ~~purposes the December 31, 2016 going concern covenant requirement~~information. Notwithstanding such waiver, as a result of non-compliance with the non-financial covenant as of December 31, 2016, we reclassified long term debt with a net carrying value of $31,487,253 as current liabilities as of December 31, 2016.

~~Effective~~Although ~~January~~we ~~26,~~are ~~2018,~~currently ~~the~~in ~~Company~~compliance ~~entered into a Forbearance to Loan Agreement (the “Agreement”)~~ with the ~~lender,~~covenants ascontained ~~administrative~~in ~~agent to~~ the ~~lenders~~Loan ~~under the loan agreement entered into on October 16~~Agreement, ~~2014~~as modified by ~~and among~~ the ~~Company,~~Forbearance ~~certain~~Agreement ofas ~~its subsidiaries~~amended, ~~the~~if ~~lender~~we ~~and~~fail ~~the lender’s party thereto (the “Loan Agreement”). Pursuant~~ to ~~the~~comply ~~Agreement,~~with ~~the~~such ~~lender~~restrictions, ~~through~~a ~~March~~default ~~30,~~may ~~2018~~allow (the ~~“Forbearance~~lender ~~Period”),~~under ~~waived~~ the ~~Company’s~~relevant ~~requirement~~instruments to ~~maintain~~accelerate ~~at least $6,500,000 minimum in deposit accounts or securities accounts (~~the ~~“$6,500,000~~related ~~Minimum”)~~debt and ~~agreed~~ to ~~forbear~~exercise ~~from exercising any of~~ its ~~rights~~remedies ~~with~~under ~~respect~~these ~~to an event of default related to the $6~~agreements,~~500,000~~ ~~Minimum.~~which ~~The~~will ~~Forbearance~~typically ~~Period~~include ~~shall terminate upon~~ the ~~Company’s~~right ~~failure~~ to ~~maintain~~declare ~~at least $4,000,000 minimum in deposit accounts or securities accounts or upon~~ the ~~occurrence~~principal ofamount ~~certain events~~ of ~~default.~~that ~~The~~debt, ~~Forbearance~~together ~~agreement~~with ~~was~~accrued ~~amended~~ and ~~restated~~unpaid ~~effective~~interest ~~February~~and ~~28,~~other ~~2018~~related to also include a forbearance of Section 6.1(a)(i) of the agreement “Qualified Auditor’s Report” in the event that the Company’s audited consolidated financial statements for the year ended December 31amounts, ~~2017~~immediately ~~contained~~due ~~a going concern qualification. The agreement was further amended~~ and ~~restated effective March 30~~payable, ~~2018~~ to ~~extend~~exercise ~~the~~any ~~forbearance~~remedies ~~period~~the ~~until~~lender ~~April~~may ~~15,~~have ~~2018. We expect~~ to ~~extend~~foreclose ~~the~~on ~~Forbearance~~assets ~~Period beyond April 15, 2018 but there is no guarantee~~ that weare ~~will~~subject ~~be able~~ to doliens sosecuring onthat ~~terms~~debt ~~acceptable~~and to usterminate orany atcommitments ~~all.~~they Ashad amade ~~result~~to ofsupply ~~the~~further ~~Forbearance Period expiring April 15, 2018, the Company has classified long term debt with a net carrying value of $33,868,700 as current liabilities as of December 31, 2017~~funds.

Although we are currently in compliance with the covenants contained in the debt agreement, if we fail to comply with the restrictions in our long-term debt agreement, a default may allow the lender under the relevant instruments to accelerate the related debt and to exercise their remedies under these agreements, which will typically include the right to declare the principal amount of that debt, together with accrued and unpaid interest and other related amounts, immediately due and payable, to exercise any remedies the lender may have to foreclose on assets that are subject to liens securing that debt and to terminate any commitments they had made to supply further funds. The long-term debt agreement governing our indebtedness also contains various covenants that may limit our ability to pay dividends.

Risks Relating to Our Organization

Our certificate of incorporation allows for our Board of Directors to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors also has the authority to issue preferred stock without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to such holders (i) the preferred right to our assets upon liquidation, (ii) the right to receive dividend payments before dividends are distributed to the holders of common stock and (iii) the right to the redemption of the preferred shares, together with a premium, prior to the redemption of our common stock. In addition, our Board of Directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing common stockholders.

Any of the actions described in the preceding paragraph could significantly adversely affect the investment made by holders of our common stock. Holders of common stock could potentially not receive dividends that they might otherwise have received. In addition, holders of our common stock could receive less proceeds in connection with any future sale of the Company, whether in liquidation or on any other basis.

We ~~are~~have ~~subject~~suspended toour ~~extensive~~SEC ~~financial~~ reporting obligations, and ~~related requirements for which~~ our ~~accounting~~stockholders ~~and~~may ~~other~~not ~~management~~have ~~systems~~access ~~and~~to ~~resources~~information ~~may~~required ~~not~~by beSEC ~~adequately~~rules ~~prepared~~and regulations.

We ~~are~~had ~~subject~~fewer tothan ~~reporting~~300 ~~and~~stockholders ~~other obligations under the Securities Exchange Act~~ of ~~1934,~~record as ~~amended, including the requirements~~ of ~~Section~~January ~~404~~1, of2019, ~~the~~and ~~Sarbanes-Oxley~~as ~~Act.~~a ~~Section~~result, ~~404~~our ~~requires~~obligation us to ~~conduct~~file anreports ~~annual~~under ~~management~~the ~~assessment~~Securities ofExchange ~~the~~Act ~~effectiveness~~ of ~~our~~1934, ~~internal~~as ~~controls~~amended ~~over~~(the ~~financial~~“Exchange ~~reporting. These reporting and other obligations place significant demands on our management~~Act”), ~~administrative,~~was ~~operational~~automatically ~~and accounting resources~~suspended. InWe ~~order~~filed toa ~~maintain~~Form ~~compliance~~15 with ~~these~~the ~~requirements,~~SEC weproviding ~~may~~notice ~~need~~of tosuch ~~(i)~~automatic ~~upgrade~~suspension. ~~our systems~~Accordingly, ~~(ii)~~subsequent ~~implement~~to ~~additional~~this ~~financial~~Form ~~and management controls~~10-K, ~~reporting~~as ~~systems~~will ~~and~~be ~~procedures,~~amended ~~(iii)~~to ~~implement~~include anthe ~~internal~~Part ~~audit~~III ~~function,~~information ~~and~~required ~~(iv) hire additional accounting~~hereby, ~~internal~~our ~~audit~~stockholders ~~and~~may ~~finance~~not ~~staff.~~have Ifaccess ~~we are unable~~ to ~~accomplish~~the ~~these objectives in a timely and effective manner, our ability to comply with our~~ financial ~~reporting requirements~~ and other ~~rules~~information ~~that~~required ~~apply~~by toSEC ~~reporting~~rules ~~companies~~and ~~could~~regulations, bewhich ~~impaired.~~may ~~Any~~adversely ~~failure to maintain effective internal controls could have a negative~~ impact onthe ~~our~~trading ~~ability~~price toof, ~~manage our business~~ and onmarket for, our ~~stock~~common ~~price~~stock.

~~We may be at risk to accurately report financial results or detect fraud if we fail to maintain an effective system of internal controls.~~19

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report that contains an assessment by management on the Company’s internal control over financial reporting in their annual and quarterly reports on Form 10-K and 10-Q. We cannot assure you that significant deficiencies or material weaknesses in our disclosure controls and internal control over financial reporting will not be identified in the future. Also, future changes in our accounting, financial reporting, and regulatory environment may create new areas of risk exposure. Failure to modify our existing control environment accordingly may impair our controls over financial reporting and cause our investors to lose confidence in the reliability of our financial reporting which may adversely affect our stock price.

Risks Relating to Our Common Stock

Our common stock is quoted on the ~~OTCQB~~OTC Pink which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the ~~OTCQB~~OTC Pink. The ~~OTCQB~~OTC Pink is an automated quotation service operated by OTC Markets, LLC. The quotation of our shares on the ~~OTCQB~~OTC Pink may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, in part because of the inability or unwillingness of certain investors to acquire shares of common stock not traded on a national securities exchange, and could depress the trading price of our common stock and have a long-term adverse impact on our ability to raise capital in the future.

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in our ~~Common~~common ~~Stock~~stock cumbersome and may reduce the value of an investment in our ~~Common~~common ~~Stock~~stock.

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

A limited public trading market may cause volatility in the price of our common stock.

The quotation of our common stock on the ~~OTCQB~~OTC Pink marketplace does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is subject to this volatility. Sales of substantial amounts of common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate their holdings. Because our common stock does not trade on a national securities exchange, our common stock is subject to the securities laws of the various states and jurisdictions of the United States in addition to federal securities law. While we may register our common stock or qualify for exemptions for our common stock in one of more states, if we fail to do so, the investors in those states where we have not taken such steps may not be allowed to purchase our stock or those who presently hold our stock may not be able to resell their shares without substantial effort and expense. These restrictions and potential costs could be significant burdens on our stockholders.

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on an investment in our common stock is expected to be limited to an increase in the value of the common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on our earnings, financial condition, and other business and economic factors as our Board of Directors may consider relevant. If we do not pay dividends, our common stock may be considered less valuable because a return on a shareholder’s investment will only occur if our stock price appreciates.

~~We adopted a Rights Plan in 2010 which may discourage third parties from attempting to acquire control of our Company and have an adverse effect on the price of our common stock.~~20

We adopted a Rights Plan in 2010, which may discourage third parties from attempting to acquire control of our Company and have an adverse effect on the price of our common stock.

In November 2010, we adopted the Rights Plan and declared a dividend distribution of twenty preferred share purchase rights for each outstanding share of common stock as of the record date on November 24, 2010. Each right, when exercisable, entitles the registered holder to purchase one-hundredth (1/100th) of a share of Series A Preferred Stock, par value $0.001 per share, at a purchase price of $18.00 per one-hundredth (1/100th) of a share of Series A Preferred Stock, subject to certain adjustments. The rights will generally separate from the common stock and become exercisable if any person or group acquires or announces a tender offer to acquire 15% or more of our outstanding common stock without the consent of our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our Rights Plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors. In addition, we are governed by provisions of Delaware law that may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us.

The provisions in our charter, bylaws, Rights Plan and under Delaware law related to the foregoing could discourage takeover attempts that our stockholders would otherwise favor, or otherwise reduce the price that investors might be willing to pay for our common stock in the future.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144 or registration for resale, or issued upon the conversion of preferred stock, if any, or exercise of warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. As of December 31, ~~2017~~2018, we had 394,~~399~~409 shares of common stock issued and outstanding. As of December 31, ~~2017~~2018, we had ~~2,400 shares underlying warrants that have been registered for resale pursuant to an effective registration statement on Form S-3 (File No. 333-212437),~~ 71,734 shares of common stock underlying our Series G Convertible Preferred Stock (“Series G Preferred Stock”) ~~available for resale under Rule 144~~ and 53,440 shares of common stock underlying our Series H Convertible Preferred Stock (“Series H Preferred Stock”) ~~for resale under Rule 144~~. The existence of an overhang, whether or not sales have occurred or are occurring, also could make our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate more difficult.

The rights of our common stockholders are limited by and subordinate to the rights of the holders of Series G Preferred Stock, Series H Preferred Stock and Series HI Preferred Stock; these rights may have a negative effect on the value of shares of our ~~Common~~common ~~Stock~~stock.

The holders of our outstanding shares of Series G Preferred Stock, Series H Preferred Stock and Series HI Preferred Stock have rights and preferences generally superior to those of our holders of common stock. The existence of these superior rights and preferences may have a negative effect on the value of shares of our common stock. These rights are more fully set forth in the certificates of designations governing these instruments, and include, but are not limited to:

● the right to receive a liquidation preference, prior to any distribution of our assets to the holders of our common stock; and ● for the Series G Preferred Stock and Series H Preferred Stock holders, the right to convert into shares of our common stock at the conversion price set forth in the certificates of designations governing the respective Preferred Stock, which may be adjusted.

Item 1B - Unresolved Staff Comments.

None.

2921

Item 2 - Properties.

We do not own any real property.

Our executive offices are located in Middletown, Rhode Island, where we lease 16,569 square feet of space. Annual rent expense is approximately $183,000 and escalates by ~~approximately 3~~2.5% annually reaching approximately $213,000 for 2024. Our lease expires December 31, 2024 with an option to renew for an additional five year term. We believe that our offices are in good condition and suitable to our needs.

Item 3 - Legal Proceedings.

There are no ~~significant~~material legal proceedings pending, and we are not aware of any material proceeding contemplated by a governmental authority, to which we are a party or any of our property is subject.

Item 4 - Mine Safety Disclosures.

Not applicable

3022

PART II

Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

There is no established public trading market for our common stock. Our common stock was ~~listed~~quoted on the ~~NASDAQ~~OTCQB ~~Capital Market~~ under the symbol TWER from ~~May 31, 2007 until November 30, 2016. Effective~~ December 1, 2016, ~~the~~until ~~Company~~it ~~moved~~subsequently towas ~~trade~~downgraded onto ~~the~~OTC ~~OTCQB under the symbol TWER~~Pink. The following table sets forth the high and low ~~sales~~bid prices as reported on the ~~NASDAQ~~OTCQB ~~Capital Market for the period from January 1, 2016 through November 30, 2016~~ and ~~OTCQB~~OTC ~~for subsequent periods~~Pink. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. All stock prices ~~included in the following table are adjusted~~ for the 1first ~~for~~three 20quarters ~~reverse split~~ of ~~our~~2017 ~~common~~included ~~stock~~in ~~effected~~the onfollowing ~~July~~table 7,are ~~2016~~adjusted ~~and~~for the 1 -for -75 Listing Reverse Split implemented on September 29, 2017.

Fiscal Year 2017	HIGH		LOW
Fiscal Year 2018	High		Low
First Quarter	$	153.7570	$	102.5037
Second Quarter	$	143.2560	$	61.7580
Third Quarter	$	915.00	$	42.5020
Fourth Quarter	$	63.0051	$	32.00

Fiscal Year 2016	High		Low
Fiscal Year 2017	High		Low
First Quarter	$	~~600~~15.0075	$	~~150~~10.0050
Second Quarter	$	~~855~~14.0025	$	~~180~~6.0075
Third Quarter	$	~~312~~9.7500	$	884.50
Fourth Quarter	$	~~117~~6.00	$	133.5000

The last reported sales price of our common stock on the ~~OTCQB~~OTC Pink on December 2931, ~~2017~~2018 was $32.1510, and on March 2325, ~~2018~~2019, the last reported sales price was $31.6000. According to the records of our transfer agent, as of March 2325, ~~2018~~2019, there were 3859 holders of record of our common stock.

Dividend Policy

We have never declared or paid cash dividends on our common stock, and we do not intend to pay any cash dividends on our common stock in the foreseeable future. Rather, we expect to retain future earnings (if any) to fund the operation and expansion of our business and for general corporate purposes.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, ~~2017~~2018, securities issued and securities available for future issuance under our 2008 Non-Employee Directors Compensation Plan, our 2007 Equity Compensation Plan, our 2007 Incentive Stock Plan, our 2016 Equity Incentive Plan and our 2016 Non-Executive Incentive Plan were as follows:

Equity Compensation Plan Information

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans

Equity compensation plans approved by security holders

7672,~~601~~807

~~117~~116.4253

Equity compensation plans not approved by security holders

Total

7672,~~601~~807

~~117~~116.4253

Recent Sales of Unregistered Securities.

There were no unregistered securities sold by us during the year ended December 31, ~~2017~~2018 that were not otherwise disclosed by us during the year in a Quarterly Report on Form 10-Q, a current Report on Form 8-K, or within this Annual Report on Form 10-K.

Recent Repurchases of Securities.

None.

Item 6 - Selected Financial Data.

Not applicable

Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~Segment~~Overview ~~Information~~

~~Upon~~We ~~its~~provide formation in 2013, the Company determined that the Shared Wireless Infrastructure business represented a separate business segment which was reported as the "Shared Wireless Infrastructure" or "Shared Wireless" segment. The Company's existing business which provides fixed wireless broadband services to ~~businesses~~commercial ~~was~~customers ~~reported~~and asdeliver ~~the~~access ~~"Fixed~~over ~~Wireless" business segment. The Company also established~~ a ~~Corporate~~wireless ~~Group~~network sotransmitting ~~that~~over ~~centralized operating activities which supported~~ both ~~business~~regulated ~~segments~~and ~~could~~unregulated beradio ~~reported separately~~spectrum. ~~During~~Our ~~the~~service ~~fourth~~supports ~~quarter~~bandwidth ofon ~~2015~~demand, ~~the~~wireless ~~Company~~redundancy, ~~determined~~virtual toprivate ~~exit~~networks, ~~the~~disaster ~~Shared Wireless infrastructure business. As a result~~recovery, ~~the~~bundled ~~operating~~data ~~results~~and ofvideo ~~the Shared Wireless business are reported as discontinued operations in these financial statements~~services. ~~The Fixed Wireless operating results are reported as a single segment referred to as continuing operations. Costs associated with the Corporate Group are included in continuing operations.~~

32As of December 31, 2018, we provide service to business customers in 12 metropolitan markets consisting of New York, Boston, Los Angeles, Chicago, San Francisco, Miami, Seattle, Dallas-Fort Worth, Houston, Philadelphia, Las Vegas-Reno and Providence-Newport. Although we provide services in multiple markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets, including the nature of the services provided and the type of customers purchasing such services. The markets were launched at different times, and as a result, may have different operating metrics based on their size and stage of maturation. We incur significant up-front costs in order to establish a network presence in a new market. These costs include building PoPs and network costs. Other material costs include hiring and training sales and marketing personnel who will be dedicated to securing customers in that market. Once we have established a network presence in a new market, we are capable of servicing a significant number of customers in that market. The rate of customer additions varies from market to market, and we are unable to predict how many customers will be added in a market during any specific period.

~~Overview~~In -March ~~Fixed~~2018, ~~Wireless~~we announced that our Board of Directors had commenced an evaluation of strategic repositioning of the Company as we move to leverage existing key assets in major U.S. markets. In conjunction with such announcement, we launched a concerted focus on indirect and wholesale channels and retained Bank Street Group LLC as our independent financial advisor to explore strategic alternatives, including the sale of some or all of our business or assets. There can be no assurances that the process will result in a transaction. Any potential strategic alternative will be evaluated by the board. We do not intend to discuss developments with respect to the evaluation process unless a transaction is approved, or further disclosure becomes appropriate.

We provide fixed wireless broadband services to commercial customers and deliver access over a wireless network transmitting over both licensed and unlicensed radio spectrum. Our service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. We currently provide service to business customers in twelve metropolitan markets.

Characteristics of our Revenues and Expenses

We offer broadband services under agreements for periods normally ranging between one to three years. Pursuant to these agreements, we bill customers on a monthly basis, in advance, for each month of service. Payments received in advance of services performed are recorded as deferred revenues and recognized as revenue ratably over the service period. The Company also defers installation fees billed to the customer and commission costs associated with obtaining new contracts. The installation fees and commission costs are amortized over the average contract term of new contracts.

Infrastructure and access expenses relate directly to maintaining our network and providing connectivity to our customers. Infrastructure primarily relates to our Points-of-Presence ("PoPs") where we install a substantial amount of equipment, mostly on the ~~roof~~rooftops, which we utilize to connect numerous customers to the ~~internet~~Internet. We enter into long term lease agreements to maintain our equipment on these PoPs, and these rent payments comprise the majority of our infrastructure and access costs. Access expenses primarily consist of bandwidth connectivity agreements that we enter into with national service providers.

Network operations costs relate to the daily operations of our network and ensuring that our customers have connectivity within the terms of our service level agreement. We have employees based in our largest markets who are dedicated to ensuring that our network operates effectively on a daily basis. Other employees monitor network operations from our network operating center which is located at our corporate headquarters. Payroll comprises approximately 55% to 60% of network operations costs. Information technology systems and support comprises approximately 15% to 20% of network operations costs.24

~~Customer~~Network ~~support~~operations costs relate to the daily operations of our ~~continuing~~network ~~communications~~and ~~with~~ensuring that our customers ~~regarding~~have ~~their~~connectivity within the terms of our service level agreement. We have employees based in our largest markets who are dedicated to ensuring that our network operates effectively on a daily basis. Other employees monitor network operations from our network operating center, which is located at our corporate headquarters. Payroll comprises approximately 7855% to 8860% of ~~customer~~network ~~support~~operations costs. ~~Other~~Information ~~costs~~technology ~~include~~systems ~~travel~~and ~~expenses~~support tocomprises ~~service~~approximately ~~customer~~15% ~~locations,~~to ~~shipping,~~20% ~~troubleshooting,~~of ~~and~~network ~~facilities~~operations ~~related expenses~~costs.

Customer support costs relate to our continuing communications with customers regarding their service level agreement. Payroll comprises approximately 70% to 80% of customer support costs. Other costs include travel expenses to service customer locations, shipping, troubleshooting, and facilities related expenses.

Sales and marketing expenses primarily consist of the salaries, benefits, travel and other costs of our sales and marketing teams, as well as marketing initiatives and business development expenses.

General and administrative expenses include costs attributable to corporate overhead and the overall support of our operations. Salaries and other related payroll costs for executive management and finance personnel are included in this category. Other costs include accounting, legal and other professional services, and other general operating expenses.

33Reverse Stock Split

~~Overview~~On September 29, 2017, the Company effected a 1-for-75 ~~Shared~~reverse ~~Wireless~~stock ~~Infrastructure~~split. Consequently, all share related amounts and disclosures in this report have been retroactively adjusted for all 2017 periods impacted.

In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services. Hetnets built a carrier-class network which offered a shared wireless infrastructure platform, primarily for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fi access and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of 2015, the Company determined to exit this business and curtailed activities in its smaller markets. The remaining network, located in New York City, was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the NYC network.

As further described in Note 4 to our consolidated financial statements, on March 9, 2016, the Company completed a sale and transfer of certain assets to the major cable company (the “Buyer”). The asset purchase agreement provided that the Buyer would assume certain rooftop leases in NYC and acquire ownership of the Wi-Fi access points and related equipment associated with operating the network. The Company retained ownership of all backhaul and related equipment and the parties entered into a backhaul services agreement under which the Company will provide bandwidth to the Buyer at the locations governed by the leases. The agreement is for a three-year period with two, one year renewals and is cancellable by the Buyer on sixty days’ notice. The operating results and cash flows for Hetnets have been presented as discontinued operating results in these consolidated financial statements.

Reverse Stock Splits

On July 7, 2016, the Company effected a one-for-twenty reverse stock split of its common stock. Consequently, all earnings per share and other share related amounts and disclosures have been retroactively adjusted for all periods presented.

On September 29, 2017, the Company effected a one-for-seventy-five reverse stock split. Consequently, all earnings per share and other share related amounts and disclosures have been retroactively adjusted for all periods presented.

Results of Operations

Year Ended December 31, ~~2017~~2018 Compared to Year Ended December 31, ~~2016~~2017

~~Continuing~~Revenues. ~~Operations~~Revenues –totaled ~~Fixed~~$24,604,310 ~~Wireless~~during the year ended December 31, 2018 compared to $26,212,550 during the year ended December 31, 2017, representing a decrease of $1,608,240, or 6%. The decrease is due to fewer customers but is offset by new customers having a higher average rate per unit and a lower overall customer churn rate.

~~Revenues~~Customer Churn. ~~Revenues~~Customer ~~totaled~~churn, ~~$26~~calculated as a percent of revenue lost on a monthly basis from customers terminating service or reducing their service level,~~212,550~~ totaled 1.29% during the year ended December 31, ~~2017~~2018 compared to ~~$26,895,613~~1.31% during the year ended December 31, ~~2016~~2017. ~~representing~~Churn alevels ~~decrease~~can offluctuate ~~$683,063,~~from orperiod ~~3%.~~to ~~The~~period ~~decrease~~depending isupon ~~due~~whether ~~to fewer~~ customers ~~but~~move isto ~~offset~~a bylocation ~~new~~not ~~customers~~serviced ~~having~~by athe ~~higher~~Company, ~~average~~go ~~rate~~out ~~per~~of ~~unit~~business, ~~and~~or a ~~lower~~myriad ~~overall~~of ~~customer~~other ~~churn rate~~reasons.

~~Customer~~Infrastructure ~~Churn~~and Access. ~~Customer~~Infrastructure ~~churn,~~and ~~calculated~~access asexpenses atotaled ~~percent of revenue lost on a monthly basis from customers terminating service or reducing their service level~~$11,064,325 ~~totaled~~for ~~1.31% during~~ the year ended December 31, ~~2017~~2018 compared to ~~1.70%~~$10,670,673 ~~during~~for the year ended December 31, ~~2016.~~2017, ~~Churn~~representing ~~levels~~an ~~can~~increase ~~fluctuate~~of ~~from~~$393,652, ~~period~~or to4%. ~~period~~The ~~depending~~increase ~~upon~~primarily ~~whether~~relates ~~customers move~~ to ahigher ~~location~~tower ~~not~~rental ~~serviced~~costs byand ~~the~~maintenance ~~Company,~~activity gooffset ~~out~~by ~~of business, or~~ a ~~myriad~~reduction ofin ~~other~~bandwidth ~~reasons~~costs.

34Depreciation and Amortization. Depreciation and amortization expenses totaled $6,437,050 during the year ended December 31, 2018 compared to $6,734,987 during the year ended December 31, 2017, representing a decrease of $297,937, or 4%. Depreciation expense totaled $5,157,789 during the year ended December 31, 2018 compared to $5,324,969 during the year ended December 31, 2017, representing a decrease of $167,180, or 3%. The depreciation decrease is due to capital investment activity being lower than historical levels and a higher percentage of assets becoming fully depreciated.

~~Infrastructure~~Amortization ~~and~~expense ~~Access. Infrastructure and access~~ totaled $101,~~670~~279,~~673~~261 ~~for~~during the year ended December 31, ~~2017~~2018 compared to $101,~~366~~410,~~246~~018 ~~for~~during the year ended December 31, ~~2016~~2017, representing ana ~~increase~~decrease of $~~304~~130,~~427~~757, or 39%. ~~The~~Amortization ~~increase~~expense ~~primarily~~ relates to ~~higher~~customer ~~tower~~related ~~rental~~intangible ~~costs~~assets recorded in connection with acquisitions and ~~maintenance~~can ~~activity~~fluctuate ~~offset~~significantly byfrom aperiod ~~reduction~~to inperiod ~~bandwidth~~depending ~~costs~~upon the timing of acquisitions, the relative amounts of intangible assets recorded, and the amortization periods.

~~Depreciation~~Network ~~and Amortization~~Operations. ~~Depreciation~~Network ~~and~~operations ~~amortization~~expenses totaled $63,~~734~~210,~~987~~968 ~~during~~for the year ended December 31, ~~2017~~2018 compared to $104,~~875~~342,~~935~~392 ~~during~~for the year ended December 31, ~~2016~~ 2017, representing a decrease of $41,~~140~~131,~~948~~424, or 3826%. ~~Depreciation~~The ~~expense~~primary ~~totaled~~reasons ~~$5,324,969~~for ~~during~~ the ~~year~~decrease ~~ended~~are ~~December~~lower ~~31,~~payroll ~~2017~~costs ~~compared~~of to $9690,~~417~~071,~~612~~ ~~during~~or ~~the~~27%, ~~year~~due ~~ended~~primarily ~~December~~to 31staffing reductions, ~~2016~~and ~~representing~~information atechnology ~~decrease~~related cost reductions of $4229,~~092~~538,~~643,~~ or 4333%., ~~The depreciation decrease is~~ due to ~~capital~~decreased ~~investment~~third ~~activity~~party ~~being~~support ~~lower than historical levels~~ and asoftware ~~higher percentage of assets becoming fully depreciated~~licenses.

Amortization expense totaled $1,410,019 during the year ended December 31, 2017 compared to $1,458,323 during the year ended December 31, 2016 representing a decrease of $48,304, or 3%. Amortization expense relates to customer related intangible assets recorded in connection with acquisitions and can fluctuate significantly from period to period depending upon the timing of acquisitions, the relative amounts of intangible assets recorded, and the amortization periods. 25

~~Network~~Customer ~~Operations~~Support. ~~Network~~Customer ~~operations~~support expenses totaled $41,~~342~~475,~~392~~865 for the year ended December 31, ~~2017~~2018 compared to $51,~~113~~608,~~382~~526 for the year ended December 31, ~~2016~~2017, representing a decrease of $~~770~~132,~~990~~661, or 158%. The ~~primary~~decrease ~~reasons~~is ~~for~~due ~~the~~to ~~decrease are~~ lower payroll ~~costs~~related expenses of $~~334~~213,~~003~~647, or 1117%, due ~~primarily~~ to ~~staffing~~lower ~~reductions~~average headcount in the 2018 period, ~~and~~offset ~~information~~by ~~technology~~higher ~~related~~other ~~cost~~customer ~~reductions~~support costs of $~~221~~80,~~977~~986, or 2423%, primarily due to ~~decreased~~increased ~~third~~maintenance ~~party support and software licenses~~costs.

~~Customer~~Sales ~~Support~~and Marketing. ~~Customer~~Sales ~~support~~and marketing expenses totaled $1,~~608~~966,~~526~~369 ~~for~~during the year ended December 31, ~~2017~~2018 compared to $13,~~858~~883,~~314~~438 ~~for~~during the year ended December 31, ~~2016~~2017, representing a decrease of $~~249~~1,~~788~~917,069, or 1349%. The decrease isprimarily ~~due~~relates to ~~lower~~a ~~payroll~~decrease ~~related~~in payroll expenses ~~of $367,440, or 23%,~~ due to ~~lower~~employee ~~average~~ headcount ~~in the 2017 period as the Company consolidated departments and improved efficiencies, offset by higher other customer support costs of $117,652, or 51%, primarily due to increased maintenance costs~~reductions.

35General and Administrative. General and administrative expenses totaled $4,067,265 during the year ended December 31, 2018 compared to $6,324,084 during the year ended December 31, 2017, representing a decrease of $2,256,819, or 36%. Stock-based compensation expenses decreased $770,041 as there was a minimal number of options issued during the period, professional fees decreased $710,724, payroll costs decreased by $359,219 and public company fees decreased $225,082.

~~Sales~~Interest ~~and~~Expense, ~~Marketing~~Net. Interest ~~Sales~~expense, ~~and~~net ~~marketing expenses~~ totaled $36,~~883~~929,~~438~~519 during the year ended December 31, ~~2017~~2018 compared to $35,~~936~~201,~~915~~972 during the year ended December 31, ~~2016~~2017, representing aan ~~decrease~~increase of $531,~~477~~727,547, or ~~l.4~~33%. ~~Advertising~~Interest ~~expenses~~expense ~~have~~relates ~~decreased~~to our $~~161~~35,~~107~~000,000 orsecured ~~66%~~term loan, aswhich ~~the~~closed ~~Company has significantly reduced its Internet marketing initiatives~~ in ~~connection~~October ~~with~~2014, ~~its~~and ~~current~~capital ~~marketing~~lease ~~focus~~arrangements. onThe ~~specific~~increase ~~businesses~~is inprimarily ~~certain~~attributable ~~connected~~to ~~buildings~~the ~~rather~~interest ~~than~~rate ~~marketing~~change ~~broadly~~which tooccurred ~~all~~with ~~businesses~~the ~~within~~forbearance ~~a market~~agreements, ~~offset~~as bymore ~~increased~~fully ~~indirect~~described ~~channel~~in ~~commissions~~Note ~~of $135~~8,~~213,~~ “Short-Term ~~or 17%~~Debt,” to ~~associated~~our ~~with~~consolidated ~~the~~financial ~~Company’s~~statements ~~residual~~included ~~program~~elsewhere ~~which~~in ~~pays~~this ~~continuing commissions as long as the referred business is a customer~~report.

General and Administrative. General and administrative expenses totaled $6,324,084 during the year ended December 31, 2017 compared to $7,777,657 during the year ended December 31, 2016 representing a decrease of $1,453,573, or 19%. Public company costs decreased $872,353, or 77%, primarily due to the contract termination with certain investor relation firms in 2017, and Stock based compensation decreased $586,015, or 39%.

Loss on Extinguishment of Debt. Loss on extinguishment of debt totaled zero for the year ended December 31, 2017 compared to $500,000 for the year ended December 31, 2016 representing a decrease of $500,000, or 100%. This charge relates to the exchange of $5,000,000 in long-term debt for Series D Preferred Stock during the year ended December 21, 2016 as more fully described in Note 9, Long-Term Debt and Note 10(j), Capital Stock, in the financial statements.

Interest Expense, Net. Interest expense, net totaled $5,201,972 during the year ended December 31, 2017 compared to $6,605,222 during the year ended December 31, 2016 representing a decrease of $1,403,250, or approximately 21%. Interest expense relates to the $35,000,000 secured term loan which closed in October 2014 and capital lease arrangements. The decrease is primarily attributable to the $5,000,000 reduction of debt in the fourth quarter of 2016 as more fully described in Note 9, Long-Term Debt to the consolidated financial statements.

Discontinued Operations – Shared Wireless

Net loss from discontinued operations for the year ended December 31, 2016 was attributable to the Company’s decision to exit the Hetnets business and curtail activities in certain smaller markets. See Note 4 “Discontinued Operations” within the notes to our consolidated financial statements for additional information about our discontinued operations.

Liquidity and Capital Resources

Changes in capital resources during the years ended December 31, ~~2017~~2018 and ~~2016~~2017 are described below.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, ~~2017~~2018, we had cash and cash equivalents of approximately $74.62 million and a working capital deficiency of approximately $3136.19 million. We have incurred significant operating losses since inception and continue to generate losses from operations, and as of December 31, ~~2017~~2018, we have an accumulated deficit of $~~189~~199.13 million. These matters raise substantial doubt about our ability to continue as a going concern within one year after the date ~~these~~our consolidated financial statements ~~are~~included elsewhere in this report were issued. Management has also evaluated the significance of these conditions in relation to the Company's ability to meet its obligations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern.

Historically, we have financed our ~~operation~~operations through private and public placement of equity securities, as well as debt financing and capital leases. Our ability to fund our longer term cash requirements is subject to multiple risks, many of which are beyond our control. We intend to raise additional capital, either through debt or equity financings or through the potential sale of our assets in order to achieve our business plan objectives. Management believes that it can be successful in obtaining additional capital; however, no assurance can be provided that we will be able to do so. There is no assurance that any funds raised will be sufficient to enable us to attain profitable operations or continue as a going concern. To the extent that we are unsuccessful, we may need to curtail or cease our operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations, if any. There can be no assurance that such a plan will be successful.

38Net Cash Used In Operating Activities. Net cash used in operating activities for the year ended December 31, 2018 totaled $1,762,712 compared to $1,423,961 for the year ended December 31, 2017. The $338,751 increase in cash used in operations is primarily due to a $2,259,229 decrease in net loss and a $2,610,105 increase in cash outflows associated with operating assets and liabilities.

OnNet ~~June~~Cash 20Used in Investing Activities. Net cash used in investing activities for the year ended December 31, ~~2016~~2018 totaled $1,143,259 compared to $2,431,752 for the ~~Company~~year ~~raised~~ended December 31, 2017, representing a decrease of $1,288,493. Cash capital expenditures totaled $1,163,513 in the 2018 period compared to $2,~~280~~407,~~000~~877 in the 2017 period, representing a ~~private~~decrease ~~placement~~of ~~offering~~$1,244,364. Capital expenditures can fluctuate from period to period depending upon the number of ~~common~~customer ~~stock~~additions and ~~warrants~~upgrades, ~~and~~network ~~received~~construction ~~net~~activity ~~proceeds~~related ofto $2increasing capacity or coverage,~~236,250~~ and other related reasons.

~~On July 7, 2016, the Company raised $1,250,000 in a private placement offering of convertible preferred stock and warrants and received net proceeds of $1,194,737.~~26

OnNet ~~September~~Cash 12Used in Financing Activities. Net cash used in financing activities for the year ended December 31, ~~2016~~2018 totaled $465,992 compared to $868,749 for the ~~Company~~year ~~raised~~ended $4December 31,~~000~~ 2017,~~000~~ inrepresenting a ~~registered~~decrease ~~public~~of ~~offering~~$402,757. The majority of ~~common~~the ~~stock~~payments ~~and~~for ~~received~~both ~~net~~periods ~~proceeds~~relate ofto ~~$3,378,280~~capital leases.

OnLoan November 1, 2016, the underwriter of the September 12, 2016 registered public offering exercised an over-allotment option and the Company raised $600,000 from the sale of common stock and received net proceeds of $528,150.Agreement

OnIn ~~November~~October 82014, ~~2016,~~we ~~the Company~~ entered into a ~~series~~loan ofagreement ~~agreements wherein $5,000,000 of~~ (the ~~Company’s~~“Loan ~~senior~~Agreement”) ~~secured~~with ~~debt~~Melody ~~due~~Business toFinance, ~~Lender~~LLC ~~was canceled and~~ (the ~~Company~~“Lender”). ~~simultaneously~~The ~~issued~~Lender ~~1,000~~provided ~~shares~~us ofwith ~~Series~~a Dfive-year ~~Preferred Stock and warrants to purchase 4~~$35,000,000 ~~shares~~secured ofterm ~~common stock at an exercise price of $1~~loan.15 ~~per share.~~ The ~~cancellation~~loan ofwas ~~that~~issued ~~debt~~at ~~serves~~a to3% ~~reduce~~discount and the ~~balloon~~Company ~~payment~~incurred ~~due~~$2,893,739 in ~~October~~debt ~~2019~~issuance bycosts. ~~that~~Net ~~amount~~proceeds ~~and~~were ~~reduce interest payments by~~ $~~400~~31,~~000 on an annual basis~~056,260.

OnThe ~~November~~loan ~~22,~~bears ~~2016,~~interest at a rate equal to the ~~Company~~greater ~~raised~~of ~~$1,000,000~~(i) the sum of the most recently effective one month LIBOR as in aeffect ~~private~~on ~~placement~~each ~~offering~~payment ofdate ~~preferred~~plus ~~stock~~7% or (ii) 8% per annum, and ~~received~~additional ~~net~~paid ~~proceeds~~in ofkind ~~$827~~(“PIK”),~~635~~ or deferred, interest that accrues at 4% per annum. The Loan Agreement contains a number of restrictive covenants. See “Risk Factors—Risks Related to Our Secured Indebtedness” for further information regarding these restrictive covenants.

~~Continuing~~The ~~Operations~~aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company had the option of making principal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the Second Anniversary in minimum amount(s) of $5,000,000 plus multiples of $1,000,000.

~~Net Cash Used~~ In ~~Operating~~connection ~~Activities.~~with ~~Net~~the ~~cash~~Loan ~~used~~Agreement inand ~~operating~~pursuant ~~activities~~to ~~for~~a ~~the~~Warrant ~~year~~and ~~ended~~Registration ~~December~~Rights 31Agreement, ~~2017~~we ~~totaled~~issued ~~$1,423,961~~warrants ~~compared~~ to $6purchase 2,~~188,647~~400 ~~for~~shares ~~the~~of ~~year~~common ~~ended~~stock ~~December~~of ~~31,~~which ~~2016.~~two-thirds ~~The~~have ~~$4,764,686~~an ~~decrease~~exercise inprice ~~cash~~of ~~used~~$1,890.00 inand ~~operations~~one-third ishave ~~due~~an toexercise aprice of $715.00,~~725,039~~ ~~decrease~~subject into ~~net~~standard ~~loss,~~anti-dilution aprovisions. ~~$2,344,841 decrease~~The inwarrants ~~cash~~have ~~outflows~~a ~~associated~~term ~~with~~of ~~operating~~seven ~~assets~~ and ~~liabilities, offset by~~ a ~~$5,305,194 decrease~~half ~~in non-cash items~~years.

~~Net~~In ~~Cash~~November ~~Used~~2016, inthe ~~Investing~~Company ~~Activities.~~entered ~~Net~~into ~~cash~~a ~~used~~series inof ~~investing~~agreements ~~activities~~pursuant ~~for~~to ~~the~~which ~~year~~$5,000,000 ~~ended~~of ~~December~~the ~~31,~~Company’s ~~2017~~senior ~~totaled~~secured ~~$2,431,752~~debt ~~compared~~due to ~~$2,322,429~~Lender ~~for~~was ~~the~~canceled ~~year~~and ~~ended~~the ~~December~~Company ~~31,~~simultaneously ~~2016~~issued ~~representing~~to anthe ~~increase~~Lender ~~of $109~~1,~~323.~~000 ~~Cash~~shares ~~capital~~of ~~expenditures~~Series ~~totaled~~D ~~$2,407,877~~Convertible Preferred inStock ~~the~~and ~~2017~~warrants ~~period compared~~ to $2purchase 53,~~361,601~~334 inshares ~~the~~of ~~2016~~common ~~period~~stock ~~representing~~at an ~~increase~~exercise price of $~~46,276~~100.50 ~~Capital~~per ~~expenditures~~share. The ~~can~~cancellation ~~fluctuate~~of ~~from~~that ~~period~~debt toreduced ~~period depending upon~~ the ~~number~~balloon ofpayment ~~customer~~due ~~additions~~in ~~and~~October ~~upgrades,~~2019 ~~network~~by ~~construction~~the ~~activity~~same ~~related~~amount toand ~~increasing~~reduced ~~capacity~~interest orpayments ~~coverage~~by $400,000 ~~and~~on ~~other~~an ~~related~~annual ~~reasons~~basis.

~~Net~~Effective ~~Cash~~January 26, 2018, the Company entered into a Forbearance to Loan Agreement (~~Used~~the in“Agreement”) ~~Provided~~with bythe ~~Financing~~lender, ~~Activities. Net~~as ~~cash~~administrative ~~used~~agent into ~~financing~~the ~~activities~~lenders ~~for~~under the ~~year~~loan ~~ended~~agreement ~~December~~entered 31into on October 16, ~~2017~~2014 ~~totaled~~by ~~$868~~and among the Company,~~749~~ ~~compared~~certain of its subsidiaries, the lender and the lender’s party thereto (the “Loan Agreement”). Pursuant to ~~net~~the ~~provided~~Agreement, bythe ~~financing~~lender, ~~activities~~through ofMarch $730,~~213~~ 2018 (the “Forbearance Period”),~~677~~ ~~for~~waived the ~~year~~Company’s ~~ended~~requirement ~~December~~to 31maintain at least $6,500,000 ~~2016~~minimum ~~representing~~in adeposit ~~decrease~~accounts ofor securities accounts (the “$86,~~082~~500,~~426.~~000 ~~During~~Minimum”) ~~the~~and ~~2016~~agreed ~~period,~~to weforbear ~~completed~~from ~~three~~exercising ~~common~~any ~~stock~~of ~~offerings~~its ~~which~~rights ~~resulted~~with inrespect ~~net~~to ~~proceeds~~an event of default related to the $6,~~142~~500,~~680~~000 ~~and~~Minimum. ~~two~~The ~~preferred~~Forbearance ~~stock~~Period ~~offerings~~shall ~~which~~terminate ~~resulted~~upon the Company’s failure to maintain at least $4,000,000 minimum in ~~net~~deposit ~~proceeds~~accounts or securities accounts or upon the occurrence of $2certain events of default. The Forbearance agreement was amended and restated effective February 28,~~022~~ 2018 to also include a forbearance of Section 6.1(a)(i) of the agreement “Qualified Auditor’s Report” in the event that the Company’s audited consolidated financial statements for the year ended December 31,~~372~~ 2017 contained a going concern qualification. The agreement was further amended and restated effective March 30, 2018 to extend the forbearance period until April 15, 2018.

39Effective April 15, 2018, the Company entered into a second amended and restated Forbearance to Loan Agreement (the “Second Amended and Restated Agreement”) with the Lender and the majority lenders under the Loan Agreement. Pursuant to the Second Amended and Restated Agreement, the Lender and the majority lenders waived the Company’s requirement under Section 6.1(a)(i) of the Loan Agreement to deliver to the Lender an auditor’s report without a “going concern” qualification (the “Qualified Report”) through June 30, 2018. The Forbearance Period was extended through June 30, 2018 (the “Second Forbearance Period”). In addition, the Lender, through the Second Forbearance Period, waived the Company’s requirement to maintain the $6,500,000 Minimum in deposit accounts or securities accounts and agreed to forbear from exercising any of its rights with respect to an event of default related to the Qualified Report and the $6,500,000 Minimum through the Forbearance Period. The Second Forbearance Period shall terminate upon the Company’s failure to maintain at least $3,000,000 minimum in deposit accounts or securities accounts or upon the occurrence of certain events of default. The Company also agreed, among other things, (i) to change the scheduled maturity date from October 16, 2019 to December 31, 2018 (ii) to certain milestones in connection with a proposed sale of the Company, (iii) subject to applicable law, to cease filing periodic reports with the Securities and Exchange Commission and (iiv) to issue to the Lender a new series of preferred stock that will be entitled to receive upon a liquidation event a distribution as set forth in the Second Amended and Restated Agreement.

~~Discontinued Operations~~27

~~Net~~On ~~cash~~May ~~provided~~24, by2018, ~~discontinued~~the ~~operations~~parties ~~for~~amended the ~~year~~Second ~~ended~~Amended ~~December~~and ~~31,~~Restated ~~2017~~Forbearance ~~was~~to ~~$21,000~~Loan ~~compared~~Agreement to, ~~net~~among ~~cash~~other ~~used~~things, inextend ~~discontinued~~the ~~operations~~compliance ofperiod ~~$1,546,688~~ for ~~the~~certain ~~year~~covenants ~~ended~~to ~~December~~May 31, ~~2016~~2018 from April 30, ~~representing~~2018 anand ~~increase~~to ofrevise ~~$1,567,688.~~the ~~See~~milestones ~~Note~~for 4a ~~“Discontinued~~proposed ~~Operations”~~sale ~~within~~of the ~~notes~~Company toas ~~our~~set ~~consolidated~~forth ~~financial~~therein. ~~statements~~Such ~~for~~amendment ~~additional~~was ~~information~~effective ~~about~~as ~~our~~of ~~discontinued~~May ~~operations.~~15, 2018.

40On May 24, 2018, the Company effected an exchange of 2,400 warrants with the Lender for an aggregate of 100 shares of Series I Preferred Stock. See Note 10, “Capital Stock,” to our consolidated financial statements included elsewhere in this report for further information regarding the exchange of warrants.

~~Other~~Effective ~~Considerations~~August 20, 2018, the Company the parties amended the Forbearance Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the Lender and the majority lenders waived the Company’s requirement under Section 6.1(a)(i) of the Loan Agreement to deliver to the Lender a Qualified Report through September 30, 2018. The Second Forbearance Period was extended from June 30, 2018 through September 30, 2018 (the “Third Forbearance Period”). The Company also agreed, among other things, to certain milestone dates in connection with a proposed sale of the Company.

~~Debt~~On ~~Financing. In~~ October ~~2014~~24, we2018, ~~entered~~the ~~into~~parties amended the ~~Loan~~Forbearance Agreement ~~with~~(the ~~Lender~~“Third Amendment”). Pursuant ~~The~~to ~~Lender~~the ~~provided~~Third usAmendment, ~~with~~the aThird ~~five-year~~Forbearance ~~$35~~Period was extended from September 30,~~000,000~~ ~~secured~~2018 ~~term~~to ~~loan~~November 15, 2018 (the “~~Financing~~Fourth Forbearance Period”)., ~~The~~and ~~Financing~~the ~~was~~Company ~~issued~~agreed, atamong other things, to eliminate Sale Milestone dates as had been set forth in a 3%prior ~~discount~~amendment and the ~~Company~~Lenders ~~incurred~~agreed ~~$2,893,739~~to inpermit ~~debt~~the ~~issuance~~Company ~~costs.~~to ~~Net~~defer ~~proceeds~~payment ~~were~~of ~~$31~~the third quarter cash interest,~~056,260.~~ which would be treated as PIK interest.

OnEffective ~~November~~December 831, ~~2016~~2018, ~~and~~the inparties ~~connection~~amended ~~with~~the aForbearance ~~financing~~Agreement ~~transaction~~(the as“Fourth ~~more~~Amendment”). ~~fully~~Pursuant ~~discussed~~to inthe ~~Note~~Fourth 10Amendment, ~~Capital~~the ~~Stock,~~Fourth anForbearance ~~investor~~Period ~~acquired~~was ~~$5,000,000~~extended offrom ~~the~~November ~~Company's~~15, ~~obligations~~2018 to ~~the~~January ~~Lender~~31, ~~consisting~~2019 of(the ~~principal~~“Fifth Forbearance Period”), and ~~accrued~~the ~~interest~~Lenders ofagreed ~~$4,935,834~~to ~~and~~permit ~~$64,166,~~the ~~respectively.~~Company ~~The~~to ~~investor~~defer ~~then~~payment ~~immediately~~of ~~exchanged~~the ~~such~~fourth ~~obligations~~quarter ~~for~~cash 1interest,~~000 shares~~ ofwhich ~~the~~would ~~Company's~~be ~~Series~~treated Das ~~Preferred~~PIK ~~Stock~~interest. ~~and~~In ~~warrants~~addition, ~~for~~ the ~~purchase~~scheduled maturity date of upthe toNote 53was changed from December 31,~~334 shares~~ of2018 ~~the~~to ~~Company's~~January ~~common~~31, ~~stock~~2019.

~~The~~On ~~loan~~January ~~bears~~31, ~~interest~~2019, atthe aparties ~~rate~~amended ~~equal~~the Forbearance Agreement (the “Fifth Amendment”). Pursuant to the ~~greater~~Fifth ofAmendment, the Fifth Forbearance Period was extended from January 31, 2019 to April 30, 2019 (ithe “Sixth Forbearance Period”), the ~~sum~~Lender ofwaived the ~~most~~Company’s ~~recently~~requirement ~~effective~~to ~~one~~maintain ~~month~~the ~~LIBOR~~$6,500,000 asMinimum in ~~effect~~deposit onaccounts ~~each~~or ~~payment~~securities ~~date~~accounts ~~plus~~and 7%agreed to forbear from exercising any of its rights with respect to an event of default related to the Qualified Report and the $6,500,000 Minimum through the Sixth Forbearance Period. The Sixth Forbearance Period shall terminate upon the Company’s failure to maintain at least $2,000,000 minimum in deposit accounts or securities accounts or upon the occurrence of certain events of default. The Company also agreed, among other things, that (iii) 8%obligations ~~per~~under ~~annum~~the Note for interest payments for the quarter ended March 31, ~~and~~2019 ~~additional~~were revised to provide that interest may be paid in ~~kind~~cash (“or treated as PIK”) interest, orto ~~deferred~~be added to the outstanding loan balance due, ~~interest~~in ~~that~~the ~~accrues~~discretion atof 4%the ~~per~~Company, ~~annum~~and (ii) the scheduled maturity date of the Note be changed from January 31, 2019 to April 30, 2019.

The aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company has the option of making principal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the Second Anniversary in minimum amount(s) of $5,000,000 plus multiples of $1,000,000.

In connection with the Loan Agreement and pursuant to a Warrant and Registration Rights Agreement, we issued warrants (the “Warrants”) to purchase 2,400 shares of common stock of which two-thirds have an exercise price of $1,890 and one-third have an exercise price of $15, subject to standard anti-dilution provisions. The Warrants have a term of seven and a half years.

Impact of Inflation, Changing Prices and Economic Conditions

Pricing for many technology products and services ~~have~~has historically decreased over time due to the effect of product and process improvements and enhancements. In addition, economic conditions can affect the buying patterns of customers. While our customer base experienced a decline during ~~2017~~2018, our overall pricing increased during that same period. Customers continued to place a premium on value and performance. Pricing of services continued to be a focus for prospective buyers with multi-point and midrange product pricing remaining steady while competition for high capacity links intensified. In part, pressure on high capacity links was due to decreased costs for equipment and some competitors willing to sacrifice margins. We believe that our customers will continue to upgrade their bandwidth service. The continued migration of many business activities and functions to the Internet, and growing use of cloud computing should also result in increased bandwidth requirements over the long term. Inflation has remained relatively modest and has not had a material impact on our business in recent years.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, we utilize available information, including our ~~past~~ history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments, giving appropriate consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to other companies in our industry. We believe that, of our significant accounting policies, the following may involve a higher degree of judgment and estimation, or are fundamentally important to our business.

Revenue Recognition

We normally enter into contractual agreements with our customers for periods normally ranging between one to three years. We recognize the total revenue provided under a contract ratably over the contract period including any periods under which we have agreed to provide services at no cost. Deferred revenues are recognized as a liability when billings are issued in advance of the date when revenues are earned. We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Long-Lived Assets

Long-lived assets with definite lives consist primarily of property and equipment, and intangible assets such as acquired customer relationships. Long-lived assets are evaluated periodically for impairment or whenever events or circumstances indicate their carrying value may not be recoverable. Conditions that would result in an impairment charge include a significant decline in the fair value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value.

Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired in an acquisition. Goodwill is not amortized but rather is reviewed annually for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. We initially perform a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit. No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value.

Asset Retirement Obligations

The Financial Accounting Standards Board (“FASB”) guidance on asset retirement obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated costs. This guidance requires the recognition of an asset retirement obligation and an associated asset retirement cost when there is a legal obligation associated with the retirement of tangible long-lived assets. Our network equipment is installed on both buildings in which we have a lease agreement ~~(“Company Locations”)~~ and at customer locations. In both instances, the installation and removal of our equipment is not complicated and does not require structural changes to the building where the equipment is installed. Costs associated with the removal of our equipment at Company or customer locations are not material, and accordingly, we have determined that we do not presently have asset retirement obligations under the FASB’s accounting guidance.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, ~~financings~~changes in financial condition, revenues or ~~other~~expenses, ~~relationships~~results ~~with~~of ~~unconsolidated~~operations, ~~entities~~liquidity, ~~known~~capital asexpenditures ~~“Special~~or ~~Purposes~~capital ~~Entities~~resources that is material to investors.”

Recent Accounting Pronouncements

Recent accounting pronouncements applicable to our financial statements are described in Note 3, ~~to our financial statements titled~~ “Basis of Presentation and Summary of Significant Accounting Policies,” ~~which~~to isour consolidated financial statements included elsewhere in this ~~document~~report.

Item 7A - Quantitative and Qualitative Disclosures About Market Risk.

Market Rate Risk

Market risk is the potential loss arising from adverse changes in market rates and prices. Our primary market risk relates to interest rates. At December 31, ~~2017~~2018, all cash and cash equivalents are immediately available cash balances. A portion of our cash and cash equivalents are held in institutional money market funds.

Interest Rate Risk

Our interest rate risk exposure is to a decline in interest rates which would result in a decline in interest income. Due to our current market yields, a further decline in interest rates would not have a material impact on earnings.

Foreign Currency Exchange Rate Risk

We do not have any material foreign currency exchange rate risk.

4430

Item 8 - Financial Statements and Supplementary Data.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	4632
Consolidated Balance Sheets	4733
Consolidated Statements of Operations	4834
Consolidated Statements of Stockholders’ Deficit	4935
Consolidated Statements of Cash Flows	5036
Notes to Consolidated Financial Statements	5138

4531

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

of Towerstream Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Towerstream Corporation and Subsidiaries (the “Company”) as of December 31, ~~2017~~2018 and ~~2016~~2017, the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, ~~2017~~2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2018 and ~~2016~~2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2017~~2018, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum ~~llp~~LLP

Marcum llp

We have served as the Company’s auditor since 2007.

~~New~~Marcum ~~York, NY April 2, 2018~~ LLP

46New York, NY April 1, 2019

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2017			2016
	2018			2017
Assets
Current Assets
Cash and cash equivalents	$	74,~~568~~173,~~982~~070		$	127,~~272~~568,~~444~~982
Accounts receivable, net of reserves for uncollectable accounts of $95,884 and $64,824, respectively		912,333			505,074
Accounts receivable, net of reserves for uncollectable accounts of $154,114 and $95,884, respectively		538,103			912,333
Prepaid expenses and other current assets		~~242~~600,~~320~~482			~~434~~242,~~444~~320
Current assets of discontinued operations		-			231,978
Total Current Assets		5,311,655			8,723,635
Total Current Assets		8,723,635			13,443,940
Property and equipment, net		10,078,151			13,430,980
Property and equipment, net		13,430,980			15,252,357
Intangible assets, net		963,210			2,242,471
Intangible assets, net		2,242,471			3,652,490
Goodwill		1,674,281			1,674,281
Other assets		~~386~~391,~~047~~467			~~369~~386,~~769~~047
Total Assets	$	2618,~~457~~418,~~414~~764		$	3426,~~392~~457,~~837~~414
Liabilities and Stockholders’ (Deficit) Equity
Liabilities, Series I Preferred Stock and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	1175,~~150,861~~810		$	~~323~~1,~~625~~150,861
Accrued expenses		1810,~~622,036~~352			~~911~~1,~~210~~622,036
Accrued interest		~~722,629~~-			-722,629
Deferred revenues		~~934~~985,~~450~~914			1934,~~161,520~~450
Current maturities of capital lease obligations		~~382~~341,~~918~~975			~~791~~382,~~009~~918
Current liabilities of discontinued operations		1,~~029~~005,~~022~~073			1,~~240~~029,~~000~~022
Deferred rent		78159,~~048~~020			~~110~~78,~~738~~048
Long-term debt (callable), net of debt discounts and deferred financing costs of $789,287 and $1,803,742, respectively		33,868,700			31,487,253
Short-term debt (callable), net of debt discounts and deferred financing costs of $0 and $789,287, respectively		38,699,307			33,868,700
Total Current Liabilities		3942,~~788~~177,~~664~~451			3639,~~025~~788,~~355~~664
Long-Term Liabilities
Capital lease obligations, net of current maturities		~~305~~295,~~947~~747			~~158~~305,~~703~~947
Other		~~754~~386,~~203~~025			1754,~~062,237~~203
Total Long-Term Liabilities		1681,~~060,150~~772			1,~~220~~060,~~940~~150
Total Liabilities		4042,~~848~~859,~~814~~223			3740,~~246~~848,~~295~~814
Commitments (Note 15)
Commitments (Note 16)
Series I Preferred Stock
Series I Preferred – 100 and 0 shares issued and outstanding, respectively; (Liquidation value – Note 10)		-			-
Stockholders' Deficit
Preferred stock, par value $0.001; 5,000,000 shares authorized;
Series D Convertible Preferred - 0 and 1,233 shares issued and outstanding, respectively; Liquidation value of $0 and $1,233,000 as of December 31, 2017 and 2016		-			2
Series G Convertible Preferred - 538 shares issued and outstanding, respectively; Liquidation value of $538,000 as of December 31, 2018		1			1
Series E Convertible Preferred - 0 and 500,000 shares issued and outstanding, respectively; Liquidation value of $0 and $500 as of December 31, 2017 and 2016		-			500
Series H Convertible Preferred - 501 and 501 shares issued and outstanding, respectively; Liquidation value of $501,000 as of December 31, 2018		1			1
Series F Convertible Preferred – 0 and 1,233 shares issued and outstanding, respectively; Liquidation value of $0 and $1,233,000 as of December 31, 2017 and 2016		-			1
Common stock, par value $0.001; 200,000,000 shares authorized; 394,409 shares issued and outstanding as of December 31, 2018 and 2017, respectively		394			394
Series G Convertible Preferred - 538 and 0 shares issued and outstanding, respectively; Liquidation value of $538,000 and $0 as of December 31, 2017 and 2016		1			-
Additional paid-in-capital		174,894,507			174,733,113
Series H Convertible Preferred - 501 and 0 shares issued and outstanding, respectively; Liquidation value of $501,000 and $0 as of December 31, 2017 and 2016		1			-
Accumulated deficit		(199,335,362	)		(189,124,909	)
Common stock, par value $0.001; 200,000,000 shares authorized; 394,399 and 244,369 shares issued and outstanding as of December 31, 2017 and 2016, respectively		394			244
Total Stockholders' Deficit		(24,440,459	)		(14,391,400	)
Additional paid-in-capital		174,733,113			173,801,022
Total Liabilities, Series I Preferred Stock and Stockholders' Deficit	$	18,418,764		$	26,457,414
Accumulated deficit		(189,124,909	)		(176,655,227	)
Total Stockholders' Deficit		(14,391,400	)		(2,853,458	)
Total Liabilities and Stockholders' Deficit	$	26,457,414		$	34,392,837

The accompanying notes are an integral part of these consolidated financial statements

4733

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended December 31,
	2017			2016
	2018			2017
Revenues	$	2624,~~212~~604,~~550~~310		$	26,~~895~~212,~~613~~550
Operating Expenses
Infrastructure and access		1011,~~670~~064,~~673~~325			10,~~366~~670,~~246~~673
Depreciation and amortization		6,~~734~~437,~~987~~050			106,~~875~~734,~~935~~987
Network operations		43,~~342~~210,~~392~~968			54,~~113~~342,~~382~~392
Customer support		1,~~608~~475,~~526~~865			1,~~858~~608,~~314~~526
Sales and marketing		31,~~883~~966,~~438~~369			3,~~936~~883,~~915~~438
General and administrative		64,~~324~~067,~~084~~265			76,~~777~~324,~~657~~084
Total Operating Expenses		3328,~~564~~221,~~100~~842			3933,~~928~~564,~~449~~100
Operating Loss		(73,~~351~~617,~~550~~532	)		(137,~~032~~351,~~836~~550	)
Other Income/(Expense)
Other Expense
Interest expense, net		(56,~~201~~929,~~972~~519	)		(65,~~605~~201,~~222~~972	)
Loss on extinguishment of debt		-			(500,000	)
Total Other Expense		(6,929,519	)		(5,201,972	)
Loss before income taxes		(1210,~~553~~547,~~522~~051	)		(2012,~~138~~553,~~058~~522	)
(Provision) benefit for income taxes		83,840			(56,663	)
Benefit for income taxes		336,598			83,840
Loss from continuing operations		(12,469,682	)		(20,194,721	)
Net Loss		(10,210,453	)		(12,469,682	)
Loss from discontinued operations
Deemed dividend to Series D and F preferred stockholders		-			(1,905,570	)
Loss from discontinued operations		-			(1,419,517	)
Net loss attributable to common stockholders	$	(10,210,453	)	$	(14,375,252	)
Gain on sale of assets		-			1,177,742
Net loss per common share – Basic and diluted	$	(25.89	)	$	(43.01	)
Total loss from discontinued operations		-			(241,775	)
Weighted average common shares outstanding – Basic and diluted		394,409			334,234
Net Loss		(12,469,682	)		(20,436,496	)
Deemed dividend to Series D and F preferred stockholders		(1,905,570	)		(1,721,745	)
Net loss attributable to common stockholders	$	(14,375,252	)	$	(22,158,241	)
(Loss) income per share – basic and diluted
Continuing	$	(43.01	)	$	(274.06	)
Discontinued
Operating loss		-			(17.75	)
Gain on sale of assets		-			14.73
Total discontinued		-			(3.02	)
Net loss per common share – Basic and diluted	$	(43.01	)	$	(277.08	)
Weighted average common shares outstanding – Basic and diluted		334,234			79,969

The accompanying notes are an integral part of these consolidated financial statements.

4834

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

	Series B Convertible						Series C Convertible						Series D Convertible						Series E Convertible						Series F Convertible						Series G Convertible					Series H Convertible											Additional
	Series D Convertible						Series E Convertible						Series F Convertible						Series G Convertible						Series H Convertible
	Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						~~Preferred~~Common Stock					~~Preferred~~Additional ~~Stock~~Paid-In-			Accumulated			~~Common Stock~~					~~Paid-In-~~			~~Accumulated~~
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount		~~Shares~~Capital			~~Amount~~Deficit			~~Shares~~Total			~~Amount~~		~~Capital~~			~~Deficit~~			~~Total~~
Balance at January 1, 2016		-		$	-			-		$	-			-		$	-			-		$	-			-		$	-			-		$	-		-		$	-			44,567		$	45	$	158,764,373		$	(156,218,731	)	$	2,545,687
Balance at January 1, 2017		1,233		$	2			500,000		$	500			1,233		$	1			-		$	-			-		$	-			244,369		$	244	$	173,801,022		$	(176,655,227	)	$	(2,853,458	)
Issuance on June 20, 2016 of 10,000 units consisting of shares of common stock and warrants at $228.00 per unit for gross cash proceeds of $2,280,000, net of transaction costs of $43,750		-			-			-			-			-			-			-			-			-			-			-			-		-			-			10,000			10		2,236,240			-			2,236,250
Conversion on January 9, 2017 of Series E convertible preferred stock into common stock								(500,000	)		(500	)																				6,667			7		493						-
Issuance on July 7, 2016 of 892,857 units consisting of shares of Series B Convertible Preferred Stock and warrants at $1.40 per unit for gross cash proceeds of $1,250,000, net of transaction costs of $56,156		892,857			893			-			-			-			-			-			-			-			-			-			-		-			-			-			-		1,193,844			-			1,194,737
Conversion on various dates from January 26, 2017 to April 13,2017, inclusive, Series F convertible preferred stock into common stock														(590	)																	39,334			39		(39	)					-
Issuance on July 21 and July 26, 2016 of 5,953 shares of common stock in connection with the conversion of 892,857 shares of Series B Convertible Preferred Stock		(892,857	)		(893	)		-			-			-			-			-			-			-			-			-			-		-			-			5,953			6		887			-			-
Conversion on May 26, 2017 of Series D convertible preferred stock into Series G preferred stock, and the conversion of Series F convertible preferred stock into Series H convertible preferred stock		(1,233	)		(2	)								(643	)		(1	)		938			1			938			1								1						-
Issuance on September 12, 2016 of 680,000 shares of Series C Convertible Preferred Stock in exchange for certain outstanding warrants		-			-			680,000			680			-			-			-			-			-			-			-			-		-			-			-			-		(680	)		-			-
Conversion on various dates from May 30, 2017 to June 29,2017, inclusive, Series H convertible preferred stock into common stock																										(437	)		-			46,614			47		(47	)					-
Issuance on September 12, 2016 of 39,507 shares of common stock at $101.25 per share for gross cash proceeds of $4,000,000, net of transaction costs of $621,720		-			-			-			-			-			-			-			-			-			-			-			-		-			-			39,507			40		3,378,240			-			3,378,280
Conversion on various dates from June 30, 2017 to August 22,2017, inclusive, Series G convertible preferred stock into common stock																				(400	)											53,335			53		(53	)					-
Issuance on various dates between October 10 and October 18, 2016, inclusive, of 9,067 shares of common stock in connection with the conversion of 680,000 shares of Series C Convertible Preferred Stock		-			-			(680,000	)		(680	)		-			-			-			-			-			-			-			-		-			-			9,067			9		671			-			-
Additional shares issued as a result of the rounding provisions of the reverse stock split of September 29, 2017																																4,060			4		(4	)					-
Issuance on November 1, 2016 of 5,926 shares of common stock at $101.25 per share for gross cash proceeds of $600,000, net of transaction costs of $71,850		-			-			-			-			-			-			-			-			-			-			-			-		-			-			5,926			6		528,144			-			528,150
Stock-based compensation for options																																					931,382						931,382
Issuance on November 8, 2016 of 1,000 shares of Series D Convertible Preferred Stock with a value of $5,500,000 in exchange for the reduction of $5,000,000 in long-debt, net of transaction costs of $170,264		-			-			-			-			1,000			1			-			-			-			-			-			-		-			-			-			-		5,329,735			-			5,329,736
Issuance of common stock under employee stock purchase plan																																30			-		358						358
Recognition on November 8, 2016 of beneficial conversion feature of $1,375,000 related to the modification of the conversion terms of Series D Convertible Preferred Stock and recorded as a deemed dividend		-			-			-			-			-			-			-			-			-			-			-			-		-			-			-			-		-			-			-
Net loss																																								(12,469,682	)		(12,469,682	)
Issuance on various dates between November 10 and November 16, 2016, inclusive, of 43,044 shares of common stock in connection with the conversion of 378 shares of Series D Convertible Preferred Stock		-			-			-			-			(378	)		-			-			-			-			-			-			-		-			-			43,044			43		(43	)		-			-
Balance at December 31, 2017		-			-			-			-			-			-			538		$	1			501		$	1			394,409		$	394	$	174,733,113		$	(189,124,909	)	$	(14,391,400	)
Issuance on November 22, 2016 of 2,799 shares of Series D Convertible Preferred Stock in connection with a 5.5 for 1 forward split of that series of stock		-			-			-			-			2,799			3			-			-			-			-			-			-		-			-			-			-		(3	)		-			-
Stock based compensation for options																																					161,394						161,394
Issuance on November 22, 2016 of 1,000 shares of common stock at $1,000 per share for gross cash proceeds of $1,000,000, net of transaction costs of $172,366		-			-			-			-			1,000			1			-			-			-			-			-			-		-			-			-			-		827,634			-			827,635
Net loss																																								(10,210,453	)		(10,210,453	)
Recognition on November 22, 2016 of beneficial conversion feature of $346,745 related to the modification of the conversion terms of Series D Convertible Preferred Stock and recorded as a deemed dividend		-			-			-			-			-			-			-			-			-			-			-			-		-			-			-			-		-			-			-
Balance at December 31, 2018		-		$	-			-		$	-			-		$	-			538		$	1			501		$	1			394,409		$	394	$	174,894,507		$	(199,335,362	)	$	(24,440,459	)
Issuance on November 22, 2016 of 2,000,000 shares of Series E Convertible Preferred Stock in exchange for certain outstanding warrants		-			-			-			-			-			-			2,000,000			2,000			-			-			-			-		-			-			-			-		(2,000	)		-			-
Issuance on various dates between November 22 and November 29, 2016, inclusive, of 63,334 shares of common stock in connection with the conversion of 1,955 shares of Series D Convertible Preferred Stock		-			-			-			-			(1,955	)		(2	)		-			-			-			-			-			-		-			-			63,334			63		(61	)		-			-
Issuance on December 19, 2016 of 20,000 shares of common stock in connection with the conversion of 1,500,000 shares of Series E Convertible Preferred Stock		-			-			-			-			-			-			(1,500,000	)		(1,500	)		-			-			-			-		-			-			20,000			20		1,480			-			-
Issuance on December 30, 2016 of 1,233 shares of Series F Convertible Preferred Stock in exchange for 1,233 shares of Series D Convertible Preferred Stock		-			-			-			-			(1,233	)		(1	)		-			-			1,233			1			-			-		-			-			-			-		-			-			-
Issuance on various dates between February 1, and September 21, 2016, inclusive, of 2,573 shares of common stock at an average of $189.75 per share for services valued at $488,656		-			-			-			-			-			-			-			-			-			-			-			-		-			-			2,573			2		488,654			-			488,656
Issuance at the end of each quarter in connection with the employee stock purchase plan an aggregate total of 398 shares of common stock at an average price of $72.75 per share for proceeds of $28,952		-			-			-			-			-			-			-			-			-			-			-			-		-			-			398			-		28,952			-			28,952
Share-based compensation expense for options issued to directors, management, and employees during the current and previous years		-			-			-			-			-			-			-			-			-			-			-			-		-			-			-			-		1,024,955			-			1,024,955
Net loss		-			-			-			-			-			-			-			-			-			-			-			-		-			-			-			-		-			(20,436,496	)		(20,436,496	)
Balance at January 1, 2017		-			-			-			-			1,233			2			500,000			500			1,233			1			-			-		-			-			244,369			244		173,801,022			(176,655,227	)		(2,853,458	)
Conversion on January 9, 2017 of Series E convertible preferred into common shares														-			-			(500,000	)		(500	)		-			-			-			-		-			-			6,667			7		493			-			-
Conversion on various dates from January 26, 2017 to April 13,2017, inclusive, Series F convertible preferred into common shares														-			-			-			-			(590	)		-			-			-		-			-			39,334			39		(39	)		-			-
Conversion on May 26, 2017 of Series D Convertible Preferred Stock into Series G Preferred stock, and the conversion of Series F Convertible Preferred stock into Series H Convertible Preferred Stock														(1,233	)		(2	)		-			-			(643	)		(1	)		938			1		938			1			-			-		1			-			-
Conversion on various dates from May 30, 2017 to June 29,2017, inclusive, Series H convertible preferred into common shares														-			-			-			-			-			-			-			-		(437	)		-			46,614			47		(47	)		-			-
Conversion on various dates from June 30, 2017 to August 22,2017, inclusive, Series G convertible preferred into common shares																																(400	)		-								53,335			53		(53	)		-			-
Additional shares issued as a result of the rounding provisions of the reverse stock split of September 29, 2017														-			-			-			-			-			-			-			-		-			-			4,050			4		(4	)		-			-
Stock-based compensation for options														-			-			-			-			-			-			-			-		-			-			-			-		931,382			-			931,382
Issuance of common stock under employee stock purchase plan														-			-			-			-			-			-			-			-		-			-			30			-		358			-			358
Net Loss														-			-			-			-			-			-			-			-		-			-			-			-		-			(12,469,682	)		(12,469,682	)
Balance at December 31, 2017		-			-			-			-			-			-			-			-			-			-			538			1		501			1			394,399			394		174,733,113			(189,124,909	)		(14,391,400	)

The accompanying notes are an integral part of these consolidated financial statements.

4935

TOWERSTREAM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2017			2016
	2018			2017
Cash Flows Used In Operating Activities:
Cash Flows From Operating Activities
Net loss	$	(1210,~~469~~210,~~682~~453	)	$	(2012,~~436~~469,~~496~~682	)
Loss from discontinued operations		-			241,775
Adjustments to reconcile loss from continuing operations to net cash used in continuing operating activities:
Net loss from continuing operations		(12,469,682	)		(20,194,721	)
Benefit for income taxes		(336,598	)		(83,840	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Provision for doubtful accounts		141,000			122,000
Provision (benefit) for income taxes		(83,840	)		56,663
Depreciation for property and equipment		5,157,789			5,324,969
Provision for doubtful accounts		122,000			25,000
Amortization for intangible assets		1,279,261			1,410,018
Depreciation for property, plant and equipment		5,324,969			9,417,612
Amortization for debt discount and deferred financing costs		789,287			1,014,456
Amortization for intangible assets		1,410,019			1,458,323
Interest added to note principal		4,041,320			1,366,992
Interest added to note principal		1,366,992			1,499,315
Accrued interest		(722,629	)		722,629
Amortization of debt discount and deferred financing costs		1,014,456			1,609,588
Stock-based compensation - Options		161,394			931,382
Loss on extinguishment of debt		-			500,000
Stock-based compensation - Employee stock purchase plan		-			52
Write-off of debt discount and deferred financing costs in connection with extinguishment of debt		-			331,609
Loss on the sale of property, plant and equipment		42,152			-
Accrued interest		722,629			(21,389	)
Deferred rent		10,921			(256,886	)
Stock-based compensation - Options		931,382			1,024,955
Stock-based compensation – Stock issued for services		-			488,656
Stock-based compensation – Employee stock purchase plan		52			4,523
Deferred rent		(256,886	)		(537,888	)
Changes in operating assets and liabilities:
Accounts receivable		~~(529~~233,~~259~~230	)		(~~221~~529,~~523~~259	)
Prepaid expenses and other current assets		~~192~~(358,~~124~~162	)		39192,~~585~~124
Other assets		7(10,~~598~~674	)		~~(24~~7,~~584~~599	)
Account payable		827,236			(553,509	)
Accounts payable		(975,051	)		827,236
Accrued expenses		~~223~~(1,~~319~~095,434	)		~~(765~~223,~~628~~319	)
Deferred revenues		~~(227~~51,~~070~~464	)		(~~325~~227,~~234~~070	)
Total Adjustments		11,045,721			14,006,074
Other long-term liabilities		38,471			-
Net Cash Used In Continuing Operating Activities		(1,423,961	)		(6,188,647	)
Total Adjustments		8,447,741			11,045,721
Net Cash Provided By (Used In) Discontinued Operating Activities		21,000			(1,546,688	)
Net Cash Used In Continuing Operating Activities		(1,762,712	)		(1,423,961	)
Net Cash Used In Operating Activities		(1,402,961	)		(7,735,335	)
Net Cash (Used In) Provided By Discontinued Operating Activities		(23,949	)		21,000
Cash Flows Used In Investing Activities:
Net Cash Used In Operating Activities		(1,786,661	)		(1,402,961	)
Acquisitions of property and equipment		(2,407,877	)		(2,361,601	)
Cash Flows From Investing Activities
Payments (refund) of security deposits		(23,875	)		39,172
Acquisitions of property and equipment		(1,163,513	)		(2,407,877	)
Net Cash Used In Continuing Investing Activities		(2,431,752	)		(2,322,429	)
Proceeds from the sale of property, plant and equipment		15,000			-
Cash Flows (Used In) Provided By Financing Activities:
Change in security deposits		5,254			(23,875	)
Payments on capital lease obligations		(869,055	)		(975,804	)
Net Cash Used In Investing Activities		(1,143,259	)		(2,431,752	)
Net proceeds from the issuance of common stock and warrants		-			6,142,680
Cash Flows From Financing Activities
Net proceeds from the issuance of preferred stock		-			2,022,372
Repayments of capital lease obligations		(465,992	)		(869,055	)
Proceeds from the issuance of common stock under employee stock purchase plan		306			24,429
Issuance of common stock under employee stock purchase plan		-			306
Net Cash (Used In) Provided By Financing Activities		(868,749	)		7,213,677
Net Cash Used In Financing Activities		(465,992	)		(868,749	)
Net Decrease In Cash and Cash Equivalents
Net Decrease Cash and Cash Equivalents
Continuing Operations		(43,~~724~~371,~~462~~963	)		(14,~~297~~724,~~399~~462	)
Discontinued Operations		21(23,~~000~~949	)		(121,~~546,688~~000	)
Net Decrease In Cash and Cash Equivalents		(43,~~703~~395,~~462~~912	)		(24,~~844~~703,~~087~~462	)
Cash and Cash Equivalents – Beginning of year		12,272,444			15,116,531
Cash and Cash Equivalents - Beginning		7,568,982			12,272,444
Cash and Cash Equivalents – Ending of year	$	7,568,982		$	12,272,444
Cash and Cash Equivalents - Ending	$	4,173,070		$	7,568,982
Supplemental Disclosures of Cash Flow Information
Cash paid during the periods for:
Interest	$	2,104,720		$	3,113,805
Income taxes	$	16,436		$	13,909
Non-Cash Investing and Financing Activities:
Acquisition of property and equipment:
Under capital leases	$	285,603		$	-
Included in accrued expenses	$	320,043		$	118,139
Interest added to note principal	$	1,366,992		$	1,499,315
Conversion of Series D Convertible Preferred Stock into Series G Convertible Preferred Stock, and the conversion of Series F Convertible Preferred Stock into Series H Convertible Preferred Stock	$	3		$	-
Conversion of debt into Series D Convertible Preferred Stock	$	-		$	5,329,736
Exchange of intangible assets – discontinued operations (Note 4)	$	-		$	3,837,783

The accompanying notes are an integral part of these consolidated financial statements.

5036

	For the Years Ended December 31,
Supplemental Disclosures of Cash Flow Information	2018		2017
Cash paid during the periods for:
Interest	$	2,827,969	$	2,104,720
Income taxes	$	13,311	$	16,436
Acquisition of property and equipment:
Under capital leases	$	414,849	$	285,603
Included in accrued expenses	$	36,293	$	320,043
Interest added to note principal	$	4,041,320	$	1,366,992
Conversion of Series D Convertible Preferred Stock into Series G Convertible Preferred Stock, and the conversion of Series F Convertible Preferred Stock into Series H Convertible Preferred Stock	$	-	$	3

The accompanying notes are an integral part of these consolidated financial statements

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. - Organization and Nature of Business

Towerstream Corporation (referred to as “Towerstream” or the “Company”) was incorporated in Delaware in December 1999. During its first decade of operations, the Company’s business activities were focused on delivering fixed wireless broadband services to commercial customers over a wireless network transmitting over both licensed and unlicensed radio spectrum. The Company’s fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. The Company provides services to business customers in New York City, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Houston, Philadelphia, Las Vegas-Reno and Providence-Newport. The Company’s “Fixed Wireless" business has historically grown both organically and through the acquisition of five other fixed wireless broadband providers in various markets.

~~In January~~Note 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed to leverage its fixed wireless network in urban markets to provide other wireless technology solutions and services2. ~~Hetnets built a carrier-class network which offered a shared wireless infrastructure platform~~Liquidity, ~~primarily~~Going for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fi access and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of 2015Concern, ~~the Company determined to exit this business~~ and ~~curtailed~~Management activities in its smaller markets. The remaining network, located in New York City, was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the NYC network.Plans

~~On March~~The 9,accompanying ~~2016,~~consolidated ~~the~~financial ~~Company~~statements ~~completed~~have abeen ~~sale~~prepared ~~and~~on ~~transfer~~a ofgoing ~~certain~~concern ~~assets~~basis, ~~pursuant~~which tocontemplates anthe ~~asset~~realization ~~purchase~~of ~~agreement~~assets ~~with~~and athe ~~large~~satisfaction ~~cable~~of ~~company.~~liabilities ~~Under~~in the ~~terms~~normal course of ~~the~~business. ~~agreement,~~As ~~the~~of ~~Buyer~~December ~~assumed~~31, ~~certain~~2018, ~~rooftop~~the ~~leases~~Company had cash and ~~acquired~~cash ~~ownership~~equivalents of approximately $4.2 million and ~~the~~a ~~right~~working tocapital ~~operate~~deficiency ~~the~~of ~~Wi-Fi~~approximately ~~access~~$36.9 ~~points~~million and ~~related~~is ~~equipment~~subject ~~associated~~to ~~with~~forbearance ~~such~~agreements ~~leases~~under its loan agreement (Notes 8 and 17). The Company ~~retained~~incurred ~~ownership~~significant ofoperating ~~all~~losses ~~backhaul~~since inception and ~~related~~continues ~~equipment~~to generate losses from operations, and ~~the~~as ~~parties~~of ~~entered~~December ~~into~~31, 2018, the Company has an ~~agreement~~accumulated ~~under~~deficit ~~which~~of ~~the~~$199.3 ~~Company~~million. ~~provides~~These ~~backhaul~~matters ~~services~~raise tosubstantial doubt about the ~~Buyer.~~Company’s ~~The~~ability ~~agreement~~to iscontinue ~~for~~as a ~~three-year~~going ~~period~~concern ~~with~~within ~~two~~ one- year ~~renewals~~from ~~and~~the isdate ~~cancellable~~these byfinancial ~~the~~statements ~~Buyer~~are onissued. ~~sixty~~Management ~~days’~~has ~~notice.~~also ~~During~~evaluated the ~~first~~significance ~~quarter~~ of ~~2016,~~these ~~the~~conditions ~~Company~~in ~~determined~~relation ~~that~~to itthe ~~would~~Company’s ~~not~~ability ~~be able~~ to ~~sell~~meet ~~the~~its ~~remainder~~obligations. ofThe ~~the~~consolidated ~~NYC~~financial ~~network,~~statements ~~and~~do ~~accordingly,~~not ~~all~~include ~~remaining~~any ~~assets~~adjustments ~~were~~relating ~~redeployed~~to ~~into~~ the ~~fixed~~recoverability ~~wireless~~and ~~network~~classification orof ~~written~~asset ~~off.~~amounts ~~The~~or ~~operating~~the ~~results~~classification ~~and~~of ~~cash~~liabilities ~~flows~~that ~~for~~might ~~Hetnets~~be ~~have~~necessary ~~been~~should ~~presented~~the asCompany ~~discontinued~~be ~~operating~~unable ~~results~~to incontinue ~~these~~as ~~consolidated~~a ~~financial~~going ~~statements~~concern.

51The Company has monitored and reduced certain of its operating costs over the course of 2017 and 2018. Historically, the Company has financed its operations through private and public placement of equity securities, as well as debt financing and capital leases. The Company’s ability to fund its longer term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings or through the potential sale of the Company’s assets in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, no assurance can be provided that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. Our ability to generate cash in the future will be dependent upon, among other things, the financial performance of the Company, and general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. There can be no assurance that such a plan will be successful.

In March 2018, the Company announced that its Board of Directors had commenced an evaluation of strategic repositioning of the Company as it moves to leverage its existing key assets in major U.S. markets. In conjunction with such announcement, the Company began to focus on indirect and wholesale channels and retained Bank Street Group LLC as its independent financial advisor to explore strategic alternatives, including the sale of some or all of the Company’s business or assets. There can be no assurances that the process will result in a transaction. Any potential strategic alternative will be evaluated by the board. The Company does not intend to discuss developments with respect to the evaluation process unless a transaction is approved, or further disclosure becomes appropriate.

In May 2018, the Company adopted a management incentive plan pursuant to which it shall pay up to $2,000,000 in cash bonuses (subject to withholding and deductions) to officers, directors and employees upon either a sale of the Company or a sale of its assets in each case that results in the payment in full of the obligations due under the Loan Agreement (as defined in Note 8, Short-Term Debt) (a “Triggering Sale”). Payments under the management incentive plan shall pay participants an aggregate of $1,000,000 upon a Triggering Sale plus up to an additional aggregate of $1,000,000 to be earned proportionately for a Triggering Sale in which the implied enterprise value of the Company based on the consideration paid in such Triggering Sale increases from a minimum of $45,000,000 to a maximum of $55,000,000.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 23. -Basis ~~Liquidity,~~of ~~Going~~Presentation ~~Concern,~~ and ~~Management~~Summary ~~Plans~~of Significant Accounting Policies

~~The~~Basis ~~accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization~~ of ~~assets and the satisfaction of liabilities in the normal course of business~~Presentation. ~~As of December 31, 2017, the Company had cash and cash equivalents of approximately $7.6 million and working capital deficiency of approximately $31.1 million.~~ The ~~Company~~consolidated incurred significant operating losses since inception and continues to generate losses from operations and as of December 31, 2017, the Company has an accumulated deficit of $189.2 million. These matters raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements ~~are~~include ~~issued. Management has also evaluated~~ the ~~significance~~accounts of ~~these conditions in relation to~~ the Company's ~~ability~~and ~~to meet~~ its ~~obligations~~wholly-owned subsidiaries. ~~The~~All ~~consolidated~~intercompany ~~financial~~balances ~~statements do not include any adjustments relating to the recoverability~~ and ~~classification~~transactions ofhave ~~asset~~been ~~amounts~~eliminated orin ~~the classification of liabilities that might be necessary should the Company be unable to continue as a going concern~~consolidation.

~~The~~Retroactive ~~Company~~Adjustment ~~has~~For ~~monitored~~Reverse ~~and~~Stock ~~reduced certain of its operating costs over the course of the year~~Split. ~~Historically,~~On ~~the~~September ~~Company has financed its operation through private and public placement of equity securities~~29, ~~as well as debt financing and capital leases. The Company’s ability to fund its longer term cash requirements is subject to multiple risks~~2017, ~~many~~the ~~of which are beyond its control. The~~ Company ~~intends~~effected toa ~~raise~~1-for-75 ~~additional~~reverse ~~capital,~~stock ~~either~~split ~~through debt or equity financings or through the potential sale~~ of ~~the Company’s assets in order to achieve~~ its ~~business~~common ~~plan objectives~~stock. ~~Management believes that it can be successful in obtaining additional capital; however~~Consequently, noall ~~assurance~~earnings ~~can~~per beshare ~~provided~~and ~~that~~other ~~the~~share ~~Company~~related ~~will~~amounts be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and ~~implement~~disclosures ahave ~~plan~~been toretroactively ~~extend~~adjusted ~~payables~~for orall ~~reduce~~2017 ~~overhead~~periods ~~until sufficient additional capital is raised to support further operations~~presented. ~~There can be no assurance that such a plan will be successful.~~

~~Note~~Use 3of -Estimates. ~~Basis~~The preparation of ~~Presentation~~financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and ~~Summary~~assumptions that affect the reported amounts of ~~Significant~~assets ~~Accounting~~and ~~Policies~~liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses. Actual results could differ from those estimates. Key estimates include fair value of certain financial instruments, carrying value of intangible assets, reserves for accounts receivable and accruals for liabilities.

~~Basis~~Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity of ~~Presentation~~three months or less when purchased to be cash equivalents.

~~The~~Concentration ~~consolidated~~of ~~financial~~Credit ~~statements~~Risk. ~~include~~Financial instruments that potentially subject the ~~accounts~~Company to significant concentrations of credit risk consist of cash and cash equivalents. At times, the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company maintains its ~~wholly~~cash at high-~~owned~~quality ~~subsidiaries~~financial institutions and has not incurred any losses to date. ~~All~~As ~~intercompany~~of ~~balances~~December 31, 2018, the Company had cash and ~~transactions~~cash ~~have~~equivalent ~~been~~balances ~~eliminated~~of approximately $3.9 million in ~~consolidation~~excess of the federally insured limit of $250,000.

~~Retroactive~~Accounts ~~Adjustment~~Receivable, ~~For~~Net. ~~Reverse~~Accounts ~~Stock~~receivable ~~Splits~~are stated at amounts billed less an allowance for doubtful accounts which reflects the Company’s estimate of balances that will not be collected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additions include provisions for doubtful accounts and deductions include customer write-offs.

~~On July~~Property 7and Equipment, Net. ~~2016~~Property and equipment are stated at cost and include equipment, ~~the~~installation ~~Company~~costs ~~effected~~and materials less accumulated depreciation and amortization. Depreciation is calculated on a ~~one~~straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the useful lives or the term of the respective lease. Network, base station and customer premise equipment are depreciated over estimated useful lives of five years; furniture, fixtures and other from three to five years and information technology from three to five years. Expenditures for~~-twenty~~ ~~reverse~~maintenance ~~stock~~and ~~split~~repairs which do not extend the useful life of ~~its~~the ~~common~~assets ~~stock~~are charged to expense as incurred. Gains or losses on disposals of property and equipment are reflected in general and administrative expenses in the Company’s consolidated statements of operations.

~~On September~~FCC ~~29,~~Licenses. ~~2017,~~Federal Communications Commission (“FCC”) licenses are initially recorded at cost and are considered to be intangible assets with an indefinite life because the Company ~~effected~~is aable ~~one-for-seventy-five~~to ~~reverse~~maintain ~~stock~~the ~~split~~license ofindefinitely ~~its~~as ~~common~~long ~~stock~~as it complies with certain FCC requirements. ~~Consequently,~~The ~~all~~Company ~~earnings~~intends ~~per~~to ~~share~~and has demonstrated an ability to maintain compliance with such requirements. The Financial Accounting Standards Board’s (“FASB”) guidance on goodwill and other ~~share~~intangible ~~related~~assets ~~amounts~~states ~~and~~that ~~disclosures~~an ~~have~~asset ~~been~~with ~~retroactively~~an ~~adjusted~~indefinite ~~for~~useful ~~all~~life ~~periods~~is ~~presented~~not ~~for~~amortized. However, as further described in the ~~reverse~~next ~~stock~~paragraph, ~~splits~~these assets are reviewed annually for impairment.

5239

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~Use~~Long-Lived Assets. Long-lived assets with definitive lives consist primarily of ~~Estimates~~property and equipment, and certain intangible assets. Long-lived assets are evaluated periodically for impairment, or whenever events or circumstances indicate their carrying value may not be recoverable. Conditions that would result in an impairment charge include a significant decline in the fair value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. At times, the Company’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2017, the Company had cash and cash equivalent balances of approximately $7.3 million in excess of the federally insured limit of $250,000.

Accounts Receivable, Net

Accounts receivable are stated at cost less an allowance for doubtful accounts which reflects the Company’s estimate of balances that will not be collected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additions include provisions for doubtful accounts and deductions include customer write-offs.

Property and Equipment and depreciation

Property and equipment are stated at cost and include equipment, installation costs and materials. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the useful lives or the term of the respective lease. Network, base station and customer premise equipment are depreciated over estimated useful lives of five years; furniture, fixtures and other from three to five years and information technology from three to five years. Expenditures for maintenance and repairs which do not extend the useful life of the assets are charged to expense as incurred. Gains or losses on disposals of property and equipment are reflected in general and administrative expenses in the Company’s consolidated statements of operations.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FCC Licenses

Federal Communications Commission (“FCC”) licenses are initially recorded at cost and are considered to be intangible assets with an indefinite life because the Company is able to maintain the license indefinitely as long as it complies with certain FCC requirements. The Company intends to and has demonstrated an ability to maintain compliance with such requirements. The Financial Accounting Standards Board’s (“FASB”) guidance on goodwill and other intangible assets states that an asset with an indefinite useful life is not amortized. However, as further described in the next paragraph, these assets are reviewed annually for impairment.

Long-Lived Assets

Long-lived assets with definitive lives consist primarily of property and equipment, and certain intangible assets. Long-lived assets are evaluated periodically for impairment, or whenever events or circumstances indicate their carrying value may not be recoverable. Conditions that would result in an impairment charge include a significant decline in the fair value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value.

The FASB’s guidance on asset retirement obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated costs. This guidance requires the recognition of an asset retirement obligation and an associated asset retirement cost when there is a legal obligation associated with the retirement of tangible long-lived assets. The Company’s network equipment is installed on both buildings in which the Company has a lease agreement and at customer locations. In both instances, the installation and removal of the Company’s equipment is not complicated and does not require structural changes to the building where the equipment is installed. Costs associated with the removal of the Company’s equipment at company or customer locations are not material, and accordingly, the Company has determined that it does not presently have asset retirement obligations under the FASB’s accounting guidance.

Goodwill. Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired in an acquisition. Goodwill is not amortized but rather is reviewed annually in the fourth quarter for impairment, or whenever events or circumstances indicate that the carrying value may not be recoverable. The Company initially performs a qualitative assessment of goodwill which considers macro-economic conditions, industry and market trends, and the current and projected financial performance of the reporting unit. No further analysis is required if it is determined that there is a less than 50 percent likelihood that the carrying value is greater than the fair value. There were no indicators of impairment identified as of December 31, 2018 and 2017, respectively.

~~Goodwill~~Fair ~~represents~~Value ~~the~~of ~~excess~~Financial ofInstruments. ~~the~~The ~~purchase~~Company ~~price~~has ~~over~~categorized ~~the~~its ~~estimated~~financial assets and liabilities measured at fair value ofinto ~~identifiable~~a ~~net~~three-level ~~assets~~hierarchy ~~acquired~~ in anaccordance ~~acquisition~~with the FASB’s guidance. ~~Goodwill~~Fair value is ~~not~~defined ~~amortized~~as ~~but~~an ~~rather~~exit isprice, ~~reviewed~~the ~~annually~~amount ~~for~~that ~~impairment,~~would orbe ~~whenever~~received ~~events~~upon orthe ~~circumstances~~sale ~~indicate~~of ~~that~~an asset or paid upon the ~~carrying~~transfer ~~value may~~of ~~not~~a beliability ~~recoverable~~in an orderly transaction between market participants at the measurement date. The ~~Company~~degree ~~initially~~of ~~performs~~judgment autilized ~~qualitative~~in ~~assessment~~measuring the fair value of ~~goodwill~~assets ~~which~~and ~~considers~~liabilities ~~macro-economic~~generally ~~conditions,~~correlates ~~industry~~to the level of pricing observability. Financial assets and ~~market~~liabilities ~~trends~~with readily available, ~~and~~actively ~~the~~quoted ~~current~~prices ~~and~~or ~~projected~~for ~~financial~~which ~~performance~~fair ofvalue ~~the~~can ~~reporting~~be ~~unit.~~measured Nofrom ~~further~~actively ~~analysis~~quoted isprices ~~required~~in ifactive itmarkets isgenerally ~~determined~~have ~~that~~more ~~there~~pricing isobservability aand require less ~~than~~judgment 50in ~~percent~~measuring ~~likelihood~~fair value. Conversely, financial assets and liabilities that ~~the~~are ~~carrying~~rarely ~~value~~traded isor ~~greater~~not ~~than~~quoted ~~the~~have less price observability and are generally measured at fair value using valuation models that require more judgment. ~~The~~These ~~Company~~valuation ~~completed~~techniques ainvolve ~~qualitative~~some ~~assessment~~level ~~and~~of ~~determined~~management ~~that~~estimation ~~there~~and ~~was~~judgment, nothe ~~impairment~~degree of ~~goodwill~~which asis dependent on the price transparency of ~~December~~ 31the asset, ~~2017~~liability or market and ~~2016,~~the ~~respectively~~nature of the asset or liability.

54Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not to be sustained upon examination.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~Fair~~On ~~Value~~December 22, 2017, new tax legislation, known as the Tax Cuts and Jobs Ace (the “Act”) was signed into law. The law change will result in many tax accounting issues as its most significant change relates to a significant corporate rate reduction. The Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Under Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes”, the effects of ~~Financial~~new ~~Instruments~~legislation are recognized upon enactment, which is the date the president signs a bill into law. Accordingly, recognition of the tax effect of the rate reduction of the Act has been accounted for in the computation of the Company’s federal deferred tax asset and liability balances, which are computed utilizing the new rates in the period for which the tax law was enacted with a corresponding net adjustment to the deferred income tax expense of (or benefit) of $2,361,936 and the effect of the valuation allowance of $2,232,571. The change in the federal rate as a result of the Act is reflected as a discreet item within the rate reconciliation and the effect of the remeasurement of the deferred taxes is also included in the deferred tax and valuation allowance disclosure.

Deferred Rent. The Company ~~has~~records ~~categorized~~rent ~~its~~expense ~~financial~~on ~~assets~~operating ~~and~~leases ~~liabilities~~on ~~measured at fair value into~~ a ~~three~~straight-~~level~~line ~~hierarchy~~basis inover ~~accordance with~~ the ~~FASB’s~~minimum ~~guidance.~~lease Fair value is defined as an exit price, the amount that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement dateterm. The ~~degree~~Company ofbegins ~~judgment utilized in measuring the fair value of assets and liabilities generally correlates~~ to ~~the~~record ~~level~~rent ofexpense pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at ~~fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment,~~ the ~~degree~~time ~~of which is dependent on~~ the ~~price~~Company ~~transparency~~has of the ~~asset,~~right ~~liability~~to oruse ~~market and~~ the ~~nature of the asset or liability~~property.

~~Income~~Advertising ~~Taxes~~Costs. The Company charges advertising costs to expense as incurred. Advertising costs for the years ended December 31, 2018 and 2017 were approximately $40,000 and $84,000, respectively, and are included in sales and marketing expenses in the Company’s consolidated statements of operations.

~~Income~~Stock-Based ~~taxes are accounted for under the asset and liability method~~Compensation. ~~Deferred~~The ~~tax~~Company ~~assets~~accounts ~~and liabilities are recognized~~ for ~~the~~stock-based ~~future~~awards ~~tax~~issued ~~consequences attributable~~ to ~~differences~~employees ~~between~~in ~~the~~accordance ~~financial~~with ~~statement~~FASB ~~carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards~~guidance. ~~Deferred~~Such ~~tax~~awards ~~assets~~primarily ~~and~~consist ~~liabilities~~of ~~are~~options ~~measured using enacted tax rates expected~~ to ~~apply~~purchase toshares ~~taxable~~of ~~income~~common ~~in the years in which those temporary differences are expected to be recovered or settled~~stock. The ~~effect~~fair onvalue ~~deferred tax assets and liabilities~~ of astock-based ~~change~~awards ~~in tax rates~~ is ~~recognized~~determined inon ~~operations in~~ the ~~period~~grant ~~enacted.~~date Ausing ~~valuation allowance is provided when it is more likely than not that~~ a ~~portion~~valuation ~~or all of a deferred tax asset will not be realized~~model. The ~~ultimate~~fair ~~realization~~value ~~of deferred tax assets~~ is ~~dependent~~recognized ~~upon~~as ~~the~~compensation ~~generation~~expense, net of ~~future~~estimated ~~taxable~~forfeitures, ~~income~~on ~~and~~a ~~the~~straight-line ~~reversal~~basis ofover ~~deferred tax liabilities during~~ the service period in which ~~related~~is ~~temporary~~normally ~~differences become deductible. The benefit of tax positions taken or expected to be taken in~~ the ~~Company’s~~vesting ~~income tax returns are recognized in the consolidated financial statements if such positions are more likely than not to be sustained upon examination~~period.

~~On December~~Basic ~~22, 2017, new tax legislation known as the Tax Cuts~~ and ~~Jobs~~Diluted ~~Act~~Net ~~(the~~Loss ~~“Act”)~~Per ~~was signed into law~~Share. ~~The~~Basic ~~law~~and ~~change~~diluted ~~will~~net ~~result~~loss inper ~~many~~share tax accounting issues as its most significant change relates to a significant corporate rate reduction. The Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Under ASC 740, the effects of new legislation are recognized upon enactment, which is the date the president signs a bill into law. Accordingly, recognition of the tax effect of the rate reduction of the Act has been ~~accounted~~calculated ~~for~~by individing ~~the computation of the Company’s federal deferred tax asset and liability balances, which are computed utilizing the new rates in the period for which the tax law was enacted with a corresponding~~ net ~~adjustment~~loss toby ~~deferred income tax expense (or benefit) and~~ the ~~effect~~weighted toaverage ~~the~~number ~~valuation allowance. The change in the federal rate as a result~~ of ~~the~~shares ~~Act is reflected as a discreet item within the rate reconciliation and the effect~~ of ~~the~~common ~~remeasurement~~stock ofoutstanding ~~the~~during ~~deferred taxes is also included in~~ the ~~deferred tax and valuation allowance disclosure~~period.

~~Revenue~~The ~~Recognition~~following common stock equivalents were excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The exercise of these common stock equivalents would dilute earnings per share if the Company becomes profitable in the future.

The Company normally enters into contractual agreements with its customers for periods ranging between one to three years. The Company recognizes the total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provide services at no cost. The Company applies the revenue recognition principles set forth under the United States Securities and Exchange Commission Staff Accounting Bulletin 104, (“SAB 104”) which provides for revenue to be recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

	Years Ended December 31,
	2018		2017
Stock options		72,807		76,601
Warrants		-		2,400
Series G Convertible Preferred Stock		71,734		71,734
Series H Convertible Preferred Stock		53,440		53,440
Total		197,981		204,175

55Segments. The FASB has established standards for reporting information on operating segments of an enterprise in interim and annual financial statements. The Company operates in one segment which is the business of providing fixed wireless services. The Company’s chief operating decision-maker reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~Deferred~~Recent Accounting Pronouncements. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers”. The FASB has consolidated ASU 2014-19 and other revenue accounting standards for specialized transactions and industries into one ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has adopted ASC 606 as of January 1, 2018 and utilized the modified retrospective method of adoption. See Note 15, Revenues, for further information regarding the implementation and required disclosures related to the Company’s revenues.

~~Customers~~In ~~are~~February ~~billed~~2016, ~~monthly~~the inFASB ~~advance~~issued ASU No. ~~Deferred~~2016-02 ~~revenues~~(“ASU ~~are~~2016-02”), ~~recognized~~“Leases (Topic 842).” ASU 2016-02 requires lessees to recognize a lease liability for ~~that~~the ~~portion~~obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” to clarify how to apply certain aspects of ~~monthly~~the ~~charges~~new leases standard. In July 2018, the FASB also issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides a transition option to not ~~yet~~apply ~~earned~~the asnew leases standard to comparative periods presented in a company’s financial statements in the year of adoption. Under this option, a cumulative-effect adjustment to the ~~end~~opening balance of retained earnings would be recorded on the ~~reporting~~date ~~period~~of adoption. ~~Deferred~~The ~~revenues~~Company ~~are~~has ~~also~~adopted ~~recognized~~the ~~for~~requirements ~~certain~~of ~~customers~~the ~~who~~new ~~pay~~lease ~~for~~standard ~~their~~effective ~~services~~January 1, 2019. It has elected the optional transition method to apply the standard as of the effective date and therefore, the standard will not be applied to the comparative periods presented in ~~advance~~the Company’s consolidated financial statements. Upon adoption, the Company recorded a right-to-use asset and corresponding lease liability on the Company’s consolidated balance sheet. Adoption of the new lease standard will not have a significant impact on the Company’s consolidated statement of operations.

Deferred Rent

The Company records rent expense on operating leases on a straight-line basis over the minimum lease term. The Company begins to record rent expense at the time the Company has the right to use the property.

Advertising Costs

The Company charges advertising costs to expense as incurred. Advertising costs for the years ended December 31, 2017 and 2016 were approximately $84,000 and $245,000, respectively, and are included in sales and marketing expenses in the Company’s consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based awards issued to employees in accordance with FASB guidance. Such awards primarily consist of options to purchase shares of common stock. The fair value of stock-based awards is determined on the grant date using a valuation model. The fair value is recognized as compensation expense, net of estimated forfeitures, on a straight-line basis over the service period which is normally the vesting period.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share has been calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

The following common stock equivalents were excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The exercise of these common stock equivalents would dilute earnings per shares if the Company becomes profitable in the future.

	Years Ended December 31,
	2017		2016
Stock options		76,601		28,232
Warrants		2,400		2,400
Series D Convertible Preferred Stock		-		41,100
Series E Convertible Preferred Stock		-		6,667
Series F Convertible Preferred Stock		-		82,200
Series G Convertible Preferred Stock		71,734		-
Series H Convertible Preferred Stock		53,440		-
Total		204,175		160,599

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Segments

The Company determined that the Shared Wireless Infrastructure and Fixed Wireless businesses represented separate business segments. In addition, the Company established a Corporate Group so that centralized operating and administrative activities which supported both businesses could be reported separately. During the fourth quarter of 2015, the Company determined to exit the Shared Wireless Infrastructure business. As a result, its operating results for all periods presented are being reported as discontinued operations in these financial statements. The operating results of the Fixed Wireless business are being reported as continuing operations.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers”. ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, "Revenue Recognition - Construction-Type and Production-Type Contracts.” The core principle of ASU 2014-09 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 also requires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 provides two methods of retrospective application. The first method is the full retrospective method which would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method is the modified retrospective method which would require the Company to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the date of initial application. ASU 2014-09 will be effective for the Company beginning in fiscal 2018 as a result of ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which was issued by the FASB in August 2015 and extended the original effective date by one year. The Company has adopted ASU 2014-09 as of January 1, 2018 and will utilize the modified retrospective method of adoption. The Company has evaluated the impact of adopting the available methodologies of ASU 2014-09 and 2015-14 upon its financial statements and concluded that there is not a material difference in the accounting treatment of its 2017 revenue. While the Company will provide expanded disclosure as a result of ASU 2014-09, this standard will not have any impact on its consolidated balance sheet and statement of operations. There have been four new ASUs issued amending certain aspects of ASU 2014-09, ASU 2016-08, "Principal versus Agent Considerations (Reporting Revenue Gross Versus Net)," was issued in March,2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU 2016-10, "Identifying Performance Obligations and Licensing," issued in April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. ASU 2016-12, "Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients" provides amendments and practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectability, presentation of sales taxes received from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt ASU 2014-09. Finally, ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” was issued in December 2016, and provides elections regarding the disclosures required for remaining performance obligations in certain cases and also makes other technical corrections and improvements to the standard. With its evaluation of the impact of ASU 2014-09, the Company concluded that the updated guidance provided by these four new ASUs did not have a material impact on the 2017 financial statements.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In February 2016, the FASB issued ASU 2016-02 (“ASU 2016-02), “Leases (Topic 842).” ASU 2016-02 requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for the Company on January 1, 2019. Early adoption is permitted. While we continue to evaluate the impact of the standard on our consolidated financial statements, we expect that it will materially increase the assets and liabilities on our consolidated balance sheet as we recognize the rights and corresponding obligations related to operating leases.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard was effective for the Company on January 1, 2017 and did not have a material impact on the Company’s consolidated financial position and results of operations. As part of the adoption of this guidance, the Company elected to continue estimating forfeitures in its calculation of stock-based compensation.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 is intended to address how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this new guidance to have a material impact on its consolidated financial position, results of operations or related disclosures.

In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which removes Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company adopted ASU 2017-04 for the year ended December 31, 2017 and it does not have a material impact on its financial positions or results of operations.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In May 2017, the FASB issued ASU 2017-09: Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard is effective beginning after December 15, 2017; early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

In July 2017, FASB issued ASU No. 2017-11, Earnings per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 consists of two parts. The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

~~Note 4 - Discontinued Operations~~42

During the fourth quarter of 2015, the Company determined to exit the business conducted by Hetnets and curtailed activities in its smaller markets. The remaining network, located in New York City, was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the NYC network. On March 9, 2016, the Company completed a sale and transfer of certain assets pursuant to an asset purchase agreement with a large cable company. Under the terms of the agreement, the Buyer assumed certain rooftop leases and acquired ownership of and the right to operate the Wi-Fi access points and related equipment associated with such leases. The Company retained ownership of all backhaul and related equipment, and the parties entered into an agreement under which the Company provides backhaul services to the Buyer. The agreement is for a three-year period with two one-year renewals and is cancellable by the Buyer on sixty-days’ notice. In connection with the agreement, the Company transferred to the Buyer a net book value of network assets aggregating $2,660,041 in exchange for the backhaul agreement valued at $3,837,783. The backhaul agreement has been recorded as an intangible asset in the accompanying consolidated balance sheets. As a result, during the first quarter of 2016, the Company recognized a gain of $1,177,742 in its discontinued operations.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~The~~ Note ~~Company had determined that it would not be able to sell the remaining network locations in New York City~~4. AsDiscontinued a result, the Company recognized charges totaling $1,585,319 in the first quarter of 2016 which included $453,403 representing the estimated cost to settle lease obligations, $528,364 to write off network assets which could not be redeployed into the fixed wireless network, $110,500 related to security deposits which are not expected to be recovered, and $493,052 related to the accelerated expensing of deferred acquisition costs. These costs were partially offset by a $1,244,284 reduction in the accrual for terminated lease obligations that was recorded in the fourth quarter of 2015. This reduction reflects the outcome of settlements negotiated in the first quarter of 2016 with certain landlords. The operating results and cash flows for Hetnets have been reclassified and presented as discontinued operations in these consolidated financial statements for all periods presented.Operations

~~Operating~~During ~~Results~~the fourth quarter of 2015, the Company determined to exit the business conducted by Hetnets Tower Corporation and curtailed activities in its smaller markets. The remaining network, located in New York City, was the largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the New York City network. On March 9, 2016, the Company completed a sale and transfer of certain assets pursuant to an asset purchase agreement with the major cable company (the “Buyer”). Under the terms of the agreement, the Buyer assumed certain rooftop leases and acquired ownership of and the right to operate the Wi-Fi access points and related equipment associated with such leases. The Company retained ownership of all backhaul and related equipment, and the parties entered into an agreement under which the Company provides backhaul services to the Buyer. The agreement is for a three-year period with two one-year renewals and is cancellable by the Buyer on sixty-days’ notice. In connection with the agreement, the Company transferred to the Buyer a net book value of network assets aggregating $2,660,041 in exchange for the backhaul agreement valued at $3,837,783. The backhaul agreement has been recorded as an intangible asset in the accompanying consolidated balance sheets.

A more detailed presentation of loss from discontinued operations is set forth below. There has been no allocation of consolidated interest expense to discontinued operations.

	Year Ended
	December 31, 2016
Revenues	$	553,302
Operating expenses:
Infrastructure and access		965,596
Depreciation		638,681
Network operations		192,947
Customer support		69,804
Sales and marketing		246
General and administrative		105,545
Total operating expenses		1,972,819
Net operating loss		(1,419,517	)
Gain on sale of assets		1,177,742
Net Loss	$	(241,775	)

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The components of the balance sheet accounts presented as discontinued operations were as follows:

	As of December 31,
	2017		2016
	2018		2017
Assets:
Prepaid expenses and other current assets	$	-	$	231,978
Total Current Assets	$	-	$	231,978
Liabilities:
Accrued expenses - leases	$	1,~~029~~005,~~022~~073	$	1,~~240~~029,~~000~~022
Total Current Liabilities	$	1,~~029~~005,~~022~~073	$	1,~~240~~029,~~000~~022

Accrued expenses represents the estimated cost of terminating the leases associated with the Hetnets business. Accordingly, disbursements associated with such activity during the year ended December 31, ~~2017~~2018 were recorded as reductions to that estimated liability. ~~As of December 31, 2017 and based upon negotiations, settlements and experiences through that date, the Company had reduced that remaining estimated liability by $210,978 to $1,029,022.~~

62Note 5. Property and Equipment, Net

Property and equipment, net is comprised of:

	As of December 31,
	2018		2017
Network and base station equipment	$	44,684,728	$	43,573,869
Customer premise equipment		36,283,676		34,996,202
Information technology		4,893,652		4,881,332
Furniture, fixtures and other		1,715,524		1,715,524
Leasehold improvements		1,517,560		1,651,300
Accrual - equipment received not invoiced		36,293		605,646
		89,131,433		87,423,873
Less: accumulated depreciation		79,053,282		73,992,893
Property and equipment, net	$	10,078,151	$	13,430,980

Depreciation expense for the years ended December 31, 2018 and 2017 was $5,157,789 and $5,324,969, respectively.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 5 - Property and Equipment, net

Property and equipment is comprised of:

	As of December 31,
	2017		2016
Network and base station equipment	$	43,573,869	$	42,069,188
Customer premise equipment		34,996,202		33,528,328
Information technology		4,881,332		4,859,875
Furniture, fixtures and other		1,715,524		1,713,430
Leasehold improvements		1,651,300		1,631,322
Accrual - equipment received not invoiced		605,646		118,139
		87,423,873		83,920,282
Less: accumulated depreciation		73,992,893		68,667,925
Property and equipment, net	$	13,430,980	$	15,252,357

Depreciation expense for the years ended December 31, 2017 and 2016 was $5,324,969 and $9,417,612, respectively.

Property acquired through capital leases included within the Company’s property and equipment consists of the following:

	As of December 31,
	2017		2016
	2018		2017
Network and base station equipment	$	2,~~629~~680,~~526~~000	$	2,~~620~~629,~~898~~526
Customer premise equipment		1,~~269~~633,~~373~~748		~~669~~1,~~792~~269,373
Information technology		1,860,028		1,860,028
		5,758,927		5,150,718
		6,173,776		5,758,927
Less: accumulated depreciation		45,~~708~~122,~~697~~462		4,~~083~~708,~~274~~697
Property acquired through capital leases, net	$	1,~~050~~051,~~230~~314	$	1,~~067~~050,~~444~~230

63Note 6. Goodwill and Intangible Assets, Net

~~TOWERSTREAM~~Goodwill ~~CORPORATION~~and ~~AND~~intangible ~~SUBSIDIARIES~~assets, net consist of the following:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	As of December 31,
	2018		2017

Goodwill	$	1,674,281	$	1,674,281

Backhaul agreement		3,837,783		3,837,783
Less: accumulated amortization		3,624,573		2,345,312
Backhaul agreement, net		213,210		1,492,471

FCC licenses, net		750,000		750,000
Intangible assets, net	$	963,210	$	2,242,471

Amortization expense for the year ended December 31, 2018 and 2017 was $1,279,261 and $1,410,018, respectively. The fair value of the backhaul agreement acquired in the transaction with a large cable company, as described in Note 64, is being amortized on a straight-line ~~Goodwill~~basis ~~and~~over ~~Intangible~~the ~~Assets~~three-year term of the agreement. The Company’s licenses with the FCC are not subject to amortization as they have an indefinite useful life. Future amortization expense of $213,210 will be fully amortized during the year ending December 31, 2019.

~~Intangible~~Note ~~assets~~7. ~~consist~~Accrued ~~of the following:~~ Expenses

	As of December 31,
Accrued expenses consist of the following:	As of December 31,
	2017		2016
	2018		2017
Goodwill	$	1,674,281	$	1,674,281
Payroll and related	$	357,118	$	515,448
Customer relationships	$	11,856,126	$	11,856,126
Professional services		149,891		318,979
Less: accumulated amortization		11,856,126		11,725,369
Franchise taxes		130,000		177,384
Customer relationships, net		-		130,757
Network		79,609		188,192
Backhaul agreement		3,837,783		3,837,783
Other		57,441		101,990
Less: accumulated amortization		2,345,312		1,066,050
Property and equipment		36,293		320,043
Backhaul agreement, net		1,492,471		2,771,733
Total	$	810,352	$	1,622,036
FCC licenses, net		750,000		750,000
Intangible assets, net	$	2,242,471	$	3,652,490

Amortization expense for the year ended December 31, 2017 and 2016 was $1,410,019 and $1,458,323, respectively. The fair value of the backhaul agreement acquired in the transaction with a large cable company, as described in Note 4, is being amortized on a straight-line basis over the three-year term of the agreement. The customer contracts acquired in the Delos Internet acquisition were being amortized over a 50-month period which ended in April 2017. The Company’s licenses with the Federal Communications Commission (the “FCC”) are not subject to amortization as they have an indefinite useful life.

Years Ending December 31,
2018		1,279,261
2019		213,210
Total	$	1,492,471

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 7 - Accrued Expenses

Accrued expenses consist of the following:	As of December 31,
	2017		2016
Payroll and related	$	515,448	$	294,006
Professional services		318,979		263,928
Other		279,374		142,492
Property and equipment		320,043		118,139
Network		188,192		92,645
Total	$	1,622,036	$	911,210

Network represents costs incurred to provide services to the Company’s customers including tower rentals, bandwidth, troubleshooting and gear removal.

~~Note 8 - Other Long-Term Liabilities~~44

Other long-term liabilities consist of the following:	As of December 31,
	2017		2016
Deferred rent	$	417,605	$	641,799
Deferred taxes		336,598		420,438
Total	$	754,203	$	1,062,237

Note 9 - Long-Term Debt

Long-term debt (callable) consists of the following as of December 31, 2017 and 2016:

	2017			2016
Principal	$	34,657,987		$	33,290,995
Unamortized debt discount		(789,287	)		(1,803,742	)
Total	$	33,868,700		$	31,487,253

In October 2014, the Company entered into a $35,000,000 note ("Note") with Lender wherein the Company received net proceeds of $33,950,000 after a 3% original issue discount.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~This~~ Note ~~matures~~8. ~~on October 16, 2019 and accrues interest on the basis of a 360~~Short-~~day~~Term ~~year at:~~Debt

~~a) A rate equal to the greater of: i) the sum of the one~~Short-~~month~~term ~~Libor~~debt ~~rate on any given day plus 7% or ii~~(callable) 8%consists ~~per annum. The one-month Libor rate was 1.57% as~~ of ~~December 31, 2017. Interest accrued at this rate is paid in cash at~~ the ~~end of each quarter; plus~~following:

	As of December 31,
	2018		2017
Principal	$	38,699,308	$	34,657,987
Unamortized debt discount		-		(789,287	)
Total	$	38,699,308	$	33,868,700

In October 2014, the Company entered into a $35,000,000 note (the "Note") with Melody Business Finance, LLC (the “Lender”) wherein the Company received net proceeds of $33,950,000 after a 3% original issue discount.

This Note accrues interest on the basis of a 360-day year at:

a)	A rate equal to the greater of: i) the sum of the one-month Libor rate on any given day plus 7% or ii) 8% per annum. The one-month Libor rate was 2.50% as of December 31, 2018. Interest accrued at this rate is paid in cash at the end of each quarter; plus

b)	A rate of 4% per annum. Interest accrued at this rate is added to the principal amount at the end of each quarter.

This Note is secured by a first-priority lien and security interest in all of the assets of the Company and its subsidiaries, excluding the capital stock of the Company, and certain capital leases, contracts and assets secured by purchase money security interests.

The Note contains representations and warranties by the Company and the Lender, certain indemnification provisions in favor of the Lender and customary covenants (including limitations on other debt, liens, acquisitions, investments and dividends), and events of default (including payment defaults, breaches of covenants, a material impairment in the Lender’s security interest or in the collateral, and events relating to bankruptcy or insolvency). The Note contains several restrictive covenants and the most significant of which requires the Company to maintain a minimum cash balance of $6,500,000 at all times. Upon the occurrence of an event of default, an additional 5% interest rate will be applied to the outstanding loan balances, and the Lender may terminate its lending commitment, declare all outstanding obligations immediately due and payable, and take such other actions as set forth in the Note to secure its interests.

Effective January 26, 2018, the Company entered into a Forbearance to Loan Agreement (the “Agreement”) with the ~~lender~~Lender, as administrative agent to the lenders under the loan agreement entered into on October 16, 2014 by and among the Company, certain of its subsidiaries, the ~~lender~~Lender and the ~~lender’s~~lenders party thereto (the “Loan Agreement”). Pursuant to the Agreement, the ~~lender~~Lender, through March 30, 2018 (the “Forbearance Period”), waived the Company’s requirement to maintain at least $6,500,000 minimum in deposit accounts or securities accounts (the “$6,500,000 Minimum”) and agreed to forbear from exercising any of its rights with respect to an event of default related to the $6,500,000 Minimum provided that the interest on the Note shall accrue at the default rate. The Forbearance Period shall terminate upon the Company’s failure to maintain at least $4,000,000 minimum in deposit accounts or securities accounts or upon the occurrence of certain events of default. The ~~Forbearance~~Agreement ~~agreement~~ was amended and restated effective February 28, 2018 to also include a forbearance of Section 6.1(a)(i) of the ~~agreement~~Loan Agreement “Qualified Auditor’s Report” in the event that the Company’s audited consolidated financial statements for the year ended December 31, 2017 contained a going concern qualification. The ~~agreement~~Agreement was further amended and restated effective March 30, 2018 to extend the forbearance period until April 15, 2018. ~~The Company has classified long term debt within current liabilities as of December 31, 2017.~~

The Company has the option to prepay the Note in the minimum principal amount of $5,000,000 plus integral amounts of $1,000,000 beyond that amount subject to certain prepayment penalties. Mandatory prepayments are required upon the occurrence of certain events, including but not limited to: i) the sale, lease, conveyance or transfer of certain assets, ii) issuance or incurrence of indebtedness other than certain permitted debt, iii) issuance of capital stock redeemable for cash or convertible into debt securities; and iv) any change of control.45

A discount of $6,406,970 to the face value of the Note was recorded upon its issuance and that discount is being amortized over the term of the Note using the effective interest rate method. That discount consisted of:

a) $2,463,231 representing the fair value of warrants simultaneously issued to the Lender for the purchase of up to 1,600 and 800 shares of the Company's common stock at $1,890.00 and $15.00 per share, respectively, through April 2022. The fair value of these warrants was calculated utilizing the Black-Scholes option pricing model;

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

bEffective April 15, 2018, the Company entered into a second amended and restated Forbearance to Loan Agreement (the “Second Amended and Restated Agreement”) with the Lender and the majority lenders under the Loan Agreement. Pursuant to the Second Amended and Restated Agreement, the Lender and the majority lenders waived the Company’s requirement under Section 6.1(a)(i) of the Loan Agreement to deliver to the Lender an auditor’s report without a “going concern” qualification (the “Qualified Report”) through June 30, 2018. The Forbearance Period was extended through June 30, 2018 (the “Second Forbearance Period”). In addition, the Lender, through the Second Forbearance Period, waived the Company’s requirement to maintain the $26,~~893~~500,~~739~~000 Minimum in ~~costs~~deposit ~~incurred~~accounts ~~associated~~or securities accounts and agreed to forbear from exercising any of its rights with ~~obtaining~~respect ~~this~~to ~~financing~~an ~~arrangement~~event ~~which~~of ~~consisted~~default ~~primarily~~related to the Qualified Report and the $6,500,000 Minimum through the Forbearance Period. The Second Forbearance Period shall terminate upon the Company’s failure to maintain at least $3,000,000 minimum in deposit accounts or securities accounts or upon the occurrence of ~~professional~~certain ~~fees;~~events of default. The Company also agreed, among other things, (i) to change the scheduled maturity date from October 16, 2019 to December 31, 2018 (ii) to certain milestones in connection with a proposed sale of the Company, (iii) subject to applicable law, to cease filing periodic reports with the Securities and Exchange Commission and (iiv) to issue to the Lender a new series of preferred stock that will be entitled to receive upon a liquidation event a distribution as set forth in the Second Amended and Restated Agreement.

c)On $1May 24,~~050~~ 2018,~~000~~ ~~related~~the parties amended the Second Amended and Restated Forbearance to the Loan Agreement, among other things, extend the compliance period for certain covenants to May 31, 2018 from April 30, 2018 and to revise the milestones for a 3%proposed ~~original~~sale ~~issue~~of ~~discount~~the Company as set forth therein. Such amendment was effective as of May 15, 2018.

~~On November~~Effective 8August 20, ~~2016~~2018, ~~and~~the inparties ~~connection~~amended ~~with~~the aForbearance ~~financing~~Agreement ~~transaction~~(the as“Second ~~more~~Amendment”). Pursuant ~~fully~~to ~~discussed~~the inSecond ~~Note 10~~Amendment, ~~Capital~~the ~~Stock,~~Lender anand ~~investor~~the ~~acquired~~majority ~~$5,000,000~~lenders ofwaived the Company'’s ~~obligations~~requirement tounder Section 6.1(a)(i) of the ~~Lender~~Loan ~~consisting~~Agreement ofto ~~principal~~deliver ~~and~~to ~~accrued~~the ~~interest~~Lender ofa ~~$4,935,834~~Qualified ~~and~~Report ~~$64~~through September 30,~~166,~~ ~~respectively~~2018. The ~~investor~~Second ~~then~~Forbearance ~~immediately~~Period ~~exchanged~~was ~~such~~extended ~~obligations~~from ~~for~~June 130,~~000 shares~~ of2018 ~~the~~through ~~Company's~~September ~~Series~~30, D2018 ~~Preferred~~(the ~~Stock~~“Third ~~and~~Forbearance ~~warrants~~Period”), ~~for~~and the ~~purchase~~Company ofagreed, upamong toother 53things,~~334 shares~~ ofto ~~the~~certain ~~Company's~~milestone ~~common~~dates ~~stock.~~in In connection with ~~that~~a ~~exchange,~~proposed sale of the Company:.

a)On ~~Wrote-off~~October 24, 2018, the ~~portion~~parties ofamended the ~~unamortized~~Forbearance ~~debt~~Agreement ~~discount~~(the ~~and~~“Third ~~deferred~~Amendment”). Pursuant ~~financing~~to ~~costs~~the ~~associated~~Third ~~with~~Amendment, the ~~exchanged~~Third ~~principal~~Forbearance ~~and~~Period ~~recorded~~was aextended ~~charge~~from toSeptember ~~interest~~30, ~~expense~~2018 ofto ~~$331~~November 15,~~609.~~ ~~The~~2018 ~~accrued~~(the ~~interest~~“Fourth Forbearance Period”), and the ~~adjustment~~Company agreed, among other things, to ~~the~~eliminate ~~unamortized~~Sale ~~debt~~Milestone ~~discount~~dates ~~activity~~as ~~described~~had inbeen ~~this~~set ~~paragraph~~forth ~~are~~in ~~separate~~a ~~from~~prior amendment and ~~unrelated~~the Lenders agreed to permit the ~~amounts~~Company ~~appearing~~to indefer payment of the ~~following~~third ~~paragraphs;~~quarter ~~and~~cash interest, which would be treated as PIK interest.

b)Effective ~~Recorded~~December a31, ~~non-cash~~2018, ~~loss~~the onparties ~~extinguishment~~amended ofthe ~~debt~~Forbearance ~~charge~~Agreement of(the ~~$500,000~~“Fourth Amendment”). ~~This~~Pursuant ~~amount~~to ~~represents~~ the ~~difference~~Fourth ~~between~~Amendment, the ~~fair~~Fourth ~~value~~Forbearance ofPeriod ~~the~~was ~~Series~~extended Dfrom ~~Preferred~~November ~~Stock~~15, of2018 ~~$5,500,000~~to asJanuary ~~described~~31, in2019 ~~Note~~(the ~~10,~~“Fifth ~~Capital~~Forbearance ~~Stock~~Period”), and the ~~carrying~~Lenders ~~amount~~agreed ofto permit the ~~debt~~Company to defer payment of $5the fourth quarter cash interest,~~000,000~~ which would be treated as ofPIK interest. In addition, the scheduled maturity date of the ~~exchange~~Note was changed from December 31, 2018 to January 31, 2019.

The Company ~~recorded~~has ~~interest~~the ~~expense~~option to prepay the Note in the minimum principal amount of $45,~~142~~000,~~046~~000 ~~and~~plus integral amounts of $41,~~497~~000,~~945~~000 ~~for~~beyond ~~the~~that ~~years~~amount ~~ended December~~subject ~~31,~~to ~~2017~~certain ~~and~~prepayment ~~2016, respectively~~penalties. OfMandatory ~~those~~prepayments ~~amounts,~~are required upon the ~~Company~~occurrence ~~paid~~of certain events, including but not limited to: i) the ~~Lender~~sale, $2lease,~~775,054~~ ~~and~~conveyance ~~$2,998,630~~or ~~and~~transfer ~~added~~of $1certain assets,~~366,992~~ ~~and~~ii) ~~$1,499,315~~issuance toor ~~the~~incurrence ~~principal~~of ~~amount~~indebtedness other than certain permitted debt, iii) issuance of ~~the~~capital ~~Note~~stock ~~during~~redeemable ~~the~~for ~~years~~cash ~~ended December~~or ~~31,~~convertible ~~2017~~into debt securities; and ~~2016,~~iv) ~~respectively~~any change of control.

The Company recorded ~~amortization~~interest expense of $16,~~014~~077,~~456~~223 and $14,~~609~~142,~~588~~046 for the years ended December 31, ~~2017~~2018 and ~~2016~~2017, respectively. Of those amounts, the Company paid to the Lender $2,035,903 and ~~classified~~$2,775,054 ~~those~~and ~~amounts~~added as$4,041,320 and $1,366,992 of interest ~~expense~~to the principal amount of the Note for the years ended December 31, 2018 and 2017, respectively.

The interest rate for the fourth quarter of 2018 was 18.24% consisting of a cash interest rate of 9.24%, a default interest rate premium of 5.0%, and a 4.0% paid in kind interest rate. Under the new forbearance agreement entered into by the Company on October 24, 2018, the Company elected to add $2,605,320 to the outstanding balance due under the loan, which represents the cash interest and default interest rate premium. See Note 1017, Subsequent -Events, ~~Capital~~for ~~Stock~~further information related to the new forbearance agreement entered into in January 2019.

The Company isrecorded ~~authorized~~amortization toexpense ~~issue~~related up to ~~200,000,000~~the ~~shares~~debt ofdiscount ~~common stock at a par value~~ of $~~0.001.~~789,287 ~~The holders of common stock are entitled to one vote per share~~ and ~~are entitled to receive dividends~~$1, ~~if any~~014,456 ~~as may~~for ~~be declared by~~ the ~~Company's~~years ~~Board~~ended ofDecember ~~Directors. Upon liquidation~~31, ~~dissolution,~~2018 or winding-up of the Company, the holders of the Company's common stock are entitled to share ratably in all assets that are available for distribution. They have no preemptive, subscription, redemption, or conversion rights. Any rights, preferences, and ~~privileges of holders of the Company’s common stock are subject to~~2017, ~~and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of the Company's Board of Directors and issued in the future~~respectively.

6746

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 9. Other Long-Term Liabilities

Other long-term liabilities consist of the following:

	As of December 31,
	2018		2017
Deferred rent	$	347,554	$	417,605
Deferred taxes		-		336,598
Deferred revenues		38,471		-
Total	$	386,025	$	754,203

Note 10. Capital Stock

The Company is authorized to issue up to 200,000,000 shares of common stock at a par value of $0.001. The holders of common stock are entitled to one vote per share and are entitled to receive dividends, if any, as may be declared by the Company's Board of Directors. Upon liquidation, dissolution, or winding-up of the Company, the holders of the Company's common stock are entitled to share ratably in all assets that are available for distribution. They have no preemptive, subscription, redemption, or conversion rights. Any rights, preferences, and privileges of holders of the Company’s common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of the Company's Board of Directors and issued in the future.

The Company is authorized to issue up to 5,000,000 shares of "blank check" preferred stock at a par value of $0.001 which may be issued from time to time in one or more classes and in one or more series within a class upon authorization by our Board of Directors. The Board of Directors, without further approval of the shareholders, is authorized to fix the preferences, limitations and relative rights of the shares of each class or series within a class. The issuance of preferred stock could adversely affect the voting power, conversion or other rights of holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change in control of the Company or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock.

The Company had created Series A Preferred Stock during the year ended December 31, 2010, Series B through Series F Convertible Preferred Stock during the year ended December 31, 2016, ~~and~~ Series G through Series H Convertible Preferred Stock during the year ended December 31, 2017, and Series I Preferred Stock during the year ended December 31, 2018. The Company had shares of the following series of preferred stock issued and outstanding as of December 31, ~~2017~~2018 and ~~2016~~2017:

	Designated		Issued and Outstanding
			2017		2016
			2018		2017
Series A Preferred Stock		350,000		-		-
Series B Convertible Preferred Stock		892,857		-		-
Series C Convertible Preferred Stock		680,000		-		-
Series D Convertible Preferred Stock		4,421		-		~~1,233~~-
Series E Convertible Preferred Stock		2,000,000		-		~~500,000~~-
Series F Convertible Preferred Stock		1,233		-		~~1,233~~-
Series G Convertible Preferred Stock		938		538		-538
Series H Convertible Preferred Stock		938		501		-501
		3,930,387		1,039		502,466
Series I Preferred Stock		100		100		-
		3,930,487		1,139		1,039

The preferences, rights, and limitations of each series of preferred stock, and equity activity for the years ended December 31, 2017 and 2016, are discussed to the extent appropriate in the following paragraphs.47

a) On November 8, 2010, the Company adopted a shareholder rights plan under which the Company issued one "preferred share purchase right" for each share of the Company's common stock held by shareholders of record as of the close of business on November 24, 2010. Each holder of a right will be allowed to purchase one one-hundredth of a share of 350,000 shares of Series A Preferred Stock at an exercise price of $18.00. In general, the rights will become exercisable if a person or group acquires 15% or more of the Company’s outstanding common stock or announces a tender offer or exchange offer for 15% or more of the Company’s outstanding common stock. The rights will expire on November 8, 2020. The Company may redeem the rights for $0.001 each at any time until the tenth business day following public announcement that a person or group has acquired 15% or more of its outstanding common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

b)The ~~On June 20~~preferences, ~~2016~~rights, ~~the~~and ~~Company~~limitations ~~raised $2,280,000 through the issuance~~ of ~~10,000~~each ~~units~~series ~~(the “June Units”) at $228.00 per June Units. The June Units collectively consisted~~ of: i)preferred ~~10,000 shares of common~~ stock, and ~~ii)~~equity ~~warrants~~activity for the ~~purchase of 10,000 shares of the Company's common stock at $375.00 per share for a period of five~~ years. ~~The~~ended ~~shares~~December of31, ~~common~~2018 ~~stock~~ and ~~the warrants were immediately separable and were issued independently. Expenses associated with this transaction totaled $43~~2017,~~750~~ ~~resulting~~are indiscussed ~~net proceeds~~ to the ~~Company~~extent ofappropriate ~~$2,236,250. Such net proceeds were allocated to the shares and the warrants issued~~ in the ~~amounts~~following ~~of $1,677,188 and $559,062, respectively, in proportion to their relative fair value on the date of issuance~~paragraphs. The fair value of the shares of common stock was determined by utilizing the closing price on the day of the transaction and the fair value of the warrants was determined by using the Black-Scholes model as more fully described in Note 11, Stock Option Plans and Warrants.

ca) On ~~July~~January 79, ~~2016 and as previously indicated~~2017, the ~~Company~~holder ~~effected~~of a500,000 ~~1-for-20~~shares ~~reverse~~of ~~stock~~Series ~~split.~~E ~~Consequently,~~Preferred ~~all~~Stock ~~share~~elected ~~quantities,~~to ~~per~~convert ~~share~~them ~~amounts,~~into ~~and~~shares ~~any~~of ~~other~~common ~~appropriate~~stock. ~~amounts~~In oraccordance ~~disclosures~~with inthe ~~these~~conversion ~~financial~~terms ~~statements~~applicable ~~affected~~to bythe ~~that~~Series ~~reverse~~E ~~stock~~Preferred ~~split~~Stock, ~~have~~the ~~been~~Company ~~adjusted~~issued ~~for~~6,667 ~~that~~shares ~~reverse~~of ~~stock~~common ~~split~~stock.

db) On ~~July~~various 7,dates ~~2016,~~from ~~the~~January ~~Company raised $1~~26,~~250,000~~ ~~through~~2017 ~~the~~to ~~issuance~~April of13, ~~892~~2017,~~857~~ ~~units~~inclusive, (the ~~“July~~holder ~~Units”) at $1.40 per July Unit. The July Units collectively consisted~~ of: i)590 ~~892,857~~ shares of ~~newly created~~ Series BF ~~Convertible~~ Preferred Stock ~~("Series~~elected Bto ~~Preferred~~convert ~~Stock")~~them ~~which were convertible~~ into ~~5,953~~ shares of ~~the Company's~~ common stock~~, and ii) warrants for the purchase 2,977 shares of the Company's common stock at $225~~.00 ~~per~~In ~~share~~accordance ~~for a period of five years. The shares of common stock and the warrants were immediately separable and were issued independently. Expenses associated~~ with ~~this transaction totaled $56,156 resulting in net proceeds to~~ the ~~Company~~conversion ofterms ~~$1,193,844.~~applicable ~~Such net proceeds were allocated~~ to the ~~shares and the warrants issued in the amounts of $963,949 and $229,895, respectively, in proportion to their relative fair value on the date of issuance. The fair value of the shares of~~ Series BF Preferred Stock, ~~was determined by reference to~~ the ~~number~~Company ofissued 39,334 shares of common stock ~~which they were convertible into and the closing price for those shares on the day of the transaction~~. ~~The fair value of the warrants was determined by using the Black-Scholes model as more fully described in Note 11, Stock Option Plans and Warrants.~~

ec) On ~~July~~May ~~21 and July~~ 26, ~~2016~~2017, the ~~holders~~Company exchanged 1,233 shares of the ~~892,857~~outstanding Series D Preferred Stock and 643 shares of the outstanding Series BF Preferred Stock, ~~previously~~for ~~issued~~938 onshares ~~July~~of 7,newly ~~2016,~~created ~~converted~~Series ~~all~~G ~~such~~Preferred ~~shares~~Stock ~~into~~and ~~5,953~~938 shares of ~~common~~the ~~stock~~newly created Series H Preferred Stock.

f) On September 12, 2016, the Company effected an exchange with the holders of the warrants previously issued on June 20 and July 7, 2016 for the purchase of up to 10,000 and 2,977 shares of the Company's common stock described above, respectively. In that exchange, the holders surrendered those warrants and the Company issued 680,000 shares of newly created Series C Convertible Preferred Stock ("Series C Preferred Stock") which was convertible into the Company's common stock on a one-for-one basis. The Company accounted for this exchange by reducing additional paid-in capital by $1,031,999 for the book value of the warrants with a corresponding increasing Series C Preferred Stock par value by $680 and Series C Preferred Stock additional paid-in capital by $1,031,319.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

g) On September 12, 2016, the Company raised $4,000,000 through the issuance of 39,507 shares of common stock at $101.25 per share. Expenses associated with this transaction, including the 7% underwriters' commission of $280,000, totaled $621,720 resulting in net proceeds to the Company of $3,378,280. In connection with this transaction, the Company granted the underwriter an option through October 31, 2016 to purchase up to an additional 5,926 shares of the Company's common stock at $101.25 per share, subject to the same commission structure, to cover overallotments.

h) On various dates from October 10 through October 18, 2016, the holders of the 680,000 shares of Series C Preferred Stock, previously issued on September 12, 2016, exercised their conversion privileges and converted such shares into a like number of shares of common stock.

i) On November 1, 2016, the underwriter, which assisted the Company with the offering on September 12, 2016 described above, exercised its option and the Company raised $600,000 through the issuance of 5,926 shares of common stock at $101.25 per share. Expenses associated with this transaction, including the 7% underwriters' commission of $42,000, totaled $71,850 resulting in net proceeds to the Company of $528,150.

j) On November 8, 2016, an investor acquired, $5,000,000 of principal and accrued interest payable by the Company to the Lender in exchange for a payment of $5,500,000 from the investor to the Lender as more fully described in Note 9, Long-Term Debt.

The Company then exchanged such debt for 1,000 shares of newly created Series D Preferred Stock and warrants for the purchase of up to 53,334 shares of the Company's common stock at an exercise price of $100.50 for a period of five years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The key preferences, rights, and limitations of the Series D Preferred Stock, including subsequent documented agreements with the holder of the Series D shares, are as follows:

i) The Stated Value of each share of Series D Preferred Stock share is $5,500;

ii) Series D Preferred Stock may be converted into shares of common stock at any time. The number of shares of common stock issuable upon such conversion is determined by multiplying the number of Series D shares being converted by their stated value of $5,500 per share and then dividing by the conversion price of $48.30 per common share;

iii) Series D Preferred Stock may be converted into shares of common stock at any time in any amount provided that the holder or its affiliates would not beneficially own more than 9.99% of the Company's common stock;

iv) Series D Preferred Stock may vote as shares of common stock on an "as converted" basis subject to the conversion limitation described above;

v) The Company may only sell up to $15,000,000 of equity or equity linked securities and only at a price equal to or greater than $37.50 per common share through November 8, 2017. That restriction remains in effect so long as there are shares of Series D Preferred Stock outstanding with a Stated Value of at least $2,000,000; and

vi) The holder of Series D Preferred Stock had a right to participate up to 100% in the Company's equity financings through November 8, 2017.

The shares of Series D Preferred Stock and the warrants were immediately separable and were issued independently. Expenses associated with this transaction totaled $170,264 resulting in net effective proceeds to the Company of $5,329,736. Such net proceeds were allocated to the shares and the warrants issued in the amounts of $3,740,942 and $1,588,794, respectively, in proportion to their relative fair value on the date of issuance. The fair value of the shares of Series D Preferred Stock was determined by reference to the number of shares of common stock which they were convertible into and the closing price for those shares on the day of the transaction. The fair value of the warrants was determined by using the Black-Scholes model as more fully described in Note 11, Stock Option Plans and Warrants.

Additionally, upon the issuance of the shares of Series D Preferred Stock, the Company recorded a beneficial conversion feature and a deemed dividend in the amount of $1,375,000. This amount was calculated using the closing price per share of the Company’s common stock on the day of the transaction and subtracting the conversion price per share. This difference was then multiplied by the number of shares of common stock into which the shares of Series D Preferred Stock were convertible into on the date of the transaction.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

k) On various dates from November 10 through November 16, 2016, inclusive, the holder of 378 shares of Series D Preferred Stock, previously issued on November 8, 2016, elected to convert them into shares of common stock. In accordance with the terms applicable to that series of preferred shares, the Company issued 43,044 shares of common stock.

l) On November 22, 2016, the Company effected a 5.5 for 1 forward split of Series D Preferred Stock resulting in an increase of such shares outstanding from 622 to 3,421, a net increase of 2,799 shares. The purpose of this forward split was to increase the number of shares of Series D Preferred Stock to 3,421 and effectively adjust the stated value of each share of Series D Preferred Stock from $5,500 to $1,000 per share to facilitate record keeping purposes. Additionally, on that date, the Company amended the key preferences, rights, and limitations of the shares of Series D Preferred Stock to indicate that number of shares of common stock issuable upon their conversion is determined by: multiplying the number of Series D shares being converted by their stated value of $1,000 per share and then dividing by the conversion price per common share. Such conversion price is 75% of the prior day's closing bid but at no time shall be lower than $30.00 per share.

On November 22, 2016, the Company then raised $1,000,000 through the issuance of 1,000 shares of Series D Preferred Stock at $1,000 per share. Expenses associated with this transaction totaled $172,366 resulting in net proceeds to the Company of $827,634.

Additionally, on November 22, 2016 and as a result of the adjustment of the conversion price described above, the Company recorded a beneficial conversion feature and a deemed dividend in the amount of $346,745. This amount was calculated using the closing price per share of the Company’s common stock on the day of the transaction and subtracting the conversion price per share. This difference was then multiplied by the number of shares of common stock into which the shares of Series D Preferred Stock were convertible into on the date of the transaction.

Finally, on November 22, 2016, the Company effected an exchange with the holders of warrants, previously issued on November 8, 2016, for the purchase of up to 53,334 shares of the Company's common stock. In that exchange, the holders surrendered those warrants and the Company issued 2,000,000 shares of newly created Series E Convertible Preferred Stock ("Series E Preferred Stock").

The key preferences, rights, and limitations of the Series E Preferred Stock are as follows:

i) The Stated Value of each share of Series E Preferred Stock is $0.001;

ii) Shares of Series E Preferred Stock are convertible into the Company's common stocks on a one-for-one basis;

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

iii) Series E Preferred Stock may be converted into shares of common stock at any time in any amount provided that the holder or its affiliates would not beneficially own more than 9.99% of the Company's common stock; and

iv) Series E Preferred Stock may vote as shares of common stock on an "as converted" basis subject to the conversion limitation described above.

m) On various dates from November 22 through November 29, 2016, inclusive, the holder of 1,955 shares of Series D Preferred Stock, previously issued on November 8 and 22, 2016, elected to convert them into shares of common stock. In accordance with the terms applicable to that series of preferred shares, the Company issued 63,334 shares of common stock.

n) On December 19, 2016, the holder of 1,500,000 shares of Series E Preferred Stock, previously issued on November 22, 2016, elected to convert them into shares of common stock. In accordance with the terms applicable to that series of preferred shares, the Company issued 20,000 shares of common stock.

o) On December 30, 2016, the Company effected an exchange with the holder of 1,233 shares of Series D Preferred Stock previously issued on November 8 and 22, 2016. In that exchange, the holder surrendered those shares and the Company issued 1,233 shares of newly created Series F Convertible Preferred Stock ("Series F Preferred Stock") which was convertible into the Company's shares of common stock as described below.

The key preferences, rights, and limitations of the shares of Series F Preferred Stock are substantially the same as Series D Preferred Stock with the exception of the conversion price and are as follows:

i) The Stated Value of each share of Series F Preferred Stock is $1,000;

ii) Series F Preferred Stock may be converted into shares of common stock at the rate of 90% of the Company's volume-weighted average price ("VWAP") during the five trading days prior to the date of conversion. However, such VWAP may not be lower than $0.20 thus providing, in effect, a conversion floor of that amount;

iii) Series F Preferred Stock may be converted into shares of common stock at any time in any amount provided that the holder or its affiliates would not beneficially own more than 9.99% of the Company's common stock; and

iv) Series F Preferred Stock may vote as shares of common stock on an "as converted" basis subject to the conversion limitation described above.

There was no beneficial conversion feature triggered by this exchange.

p) On various dates during the year ended December 31, 2016, the Company issued 2,573 shares of common stock to third parties for professional services at an average price per share of $189.75 for a total value of $488,656. Pursuant to the terms of those service agreements, the value of those shares of common stock was immediately expensed and classified in general and administrative expenses in the Company’s statements of operations.

q) On January 9, 2017, the holder of 500,000 shares of Series E Preferred Stock elected to convert them into shares of common stock. In accordance with the conversion terms applicable to the Series E Preferred Stock, the Company issued 6,667 shares of common stock.

r) On various dates from January 26, 2017 to April 13, 2017, inclusive, the holder of 590 shares of Series F Preferred Stock elected to convert them into shares of common stock. In accordance with the conversion terms applicable to the Series F Preferred Stock, the Company issued 39,334 shares of common stock.

s) On May 26, 2017, the Company exchanged 1,233 shares of the outstanding Series D Preferred Stock and 643 shares of the outstanding Series F Preferred Stock for 938 shares of newly created Series G Preferred Stock and 938 shares of the newly created Series H Preferred Stock.

The key preferences, rights, and limitations of the Series G Preferred Stock and Series H Preferred Stock, are as follows:

The Stated Value of each share of Series G Preferred Stock and Series H Preferred Stock is $1,000;

ii.

Series G Preferred Stock and Series H Preferred Stock may be converted into shares of common stock at any time. The number of shares of common stock issuable upon the conversion of the Series G Preferred Stock is determined by multiplying the number of shares of Series G Preferred Stock being converted by their stated value of $1,000 per share and then dividing by the conversion price of $7.50 per common share. The number of shares of common stock issuable upon the conversion of the Series H Preferred Stock is determined by multiplying the number of shares of Series H Preferred Stock being converted by their stated value of $1,000 per share and then dividing by the conversion price of $9.38 per common share;

iii.

In the event of a liquidation event, each share of Series G Preferred Stock and Series H Preferred Stock will be entitled to a per share preferential payment equal to 100% of the stated value of such Series H Preferred Stock, plus all accrued and unpaid dividends, if any. All subsequent issuances and junior preferred issuances of our capital stock will be junior in rank to the Series G Preferred Stock and Series H Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. The holders of Series H Preferred Stock will be entitled to receive dividends if and when declared by the Company. The Series G Preferred Stock and Series H Preferred Stock shall participate on an “as converted” basis, with all dividends declared on our common stock. In addition, if the Company grants, issues or sells any rights to purchase securities pro rata to all of the Company’s record holders of its common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series G Preferred Stock and Series H Preferred Stock then held.

iv.

The Company is prohibited from effecting a conversion of the Series G Preferred Stock and Series H Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series G Preferred Stock and Series H Preferred Stock, which beneficial ownership limitation may be decreased by the holder at its option. Each holder is entitled to vote on all matters submitted to stockholders of the Company and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series G Preferred Stock and Series H Preferred Stock, but not in excess of the beneficial ownership limitations.

Additionally, upon the issuance of the Series G Preferred Stock and Series H Preferred Stock, the Company recorded a beneficial conversion feature and a deemed dividend in the amount of $1,905,570. This amount was calculated using the closing price per share of the Company’s common stock on the day of the transaction and subtracting the conversion price per share. This difference was then multiplied by the number of shares of common stock into which the shares of Series G Preferred Stock and Series H Preferred Stock were convertible into on the date of the transaction.

t) On various dates from May 30, 2017 to June 29, 2017, inclusive, the holder of 437 shares of Series H Preferred Stock elected to convert them into shares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 46,614 shares of common stock.48

u) On various dates from June 30, 2017 to August 22, 2017, inclusive, the holder of 400 shares of Series G Preferred Stock elected to convert them into shares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 53,335 shares of common stock.

v) On September 29, 2017 and as previously indicated, the Company effected a one-for-seventy-five reverse stock split of its common stock. Consequently, all share quantities, per share amounts, and any other appropriate amounts or disclosures in these financial statements affected by that reverse stock split have been adjusted for that reverse stock split.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~Note~~e) 11On -various dates from May 30, 2017 to June 29, 2017, inclusive, the holder of 437 shares of Series H Preferred Stock ~~Option~~elected ~~Plans~~to ~~and~~convert ~~Warrants~~them into shares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 46,614 shares of common stock.

f) On various dates from June 30, 2017 to August 22, 2017, inclusive, the holder of 400 shares of Series G Preferred Stock ~~Options~~elected ~~Plans~~to convert them into shares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 53,335 shares of common stock.

~~The 2007 Equity Compensation Plan (the “2007 Plan”~~g) ~~became~~On ~~effective~~September ~~in January~~29, ~~2007~~2017 and ~~provides~~as ~~for~~previously ~~the issuance of options~~indicated, ~~restricted~~the ~~stock~~Company ~~and~~effected ~~other~~a ~~stock~~1-~~based~~for-75 ~~instruments~~reverse tostock ~~officers~~split ~~and employees, consultants and directors~~ of ~~the~~its ~~Company~~common stock. ~~The~~Consequently, ~~total~~all ~~number~~share ofquantities, ~~shares~~per ofshare ~~common~~amounts, ~~stock~~and ~~issuable~~any ~~under~~other ~~the~~appropriate ~~2007~~amounts ~~Plan~~or isdisclosures ~~1,603.~~in Athese ~~total~~financial ofstatements ~~1,067~~affected ~~stock~~by ~~options~~that orreverse ~~common~~ stock split have been ~~issued~~adjusted ~~under~~for ~~the~~that ~~2007~~reverse ~~Plan~~stock ~~as of December 31, 2017~~split.

~~The~~h) ~~2007~~On ~~Incentive~~May ~~Stock~~24, ~~Plan~~2018, (the ~~“2007~~Company ~~Incentive~~effected ~~Stock~~an ~~Plan”)~~exchange ~~became~~of ~~effective~~warrants ~~in May~~with ~~2007~~the ~~and~~lenders ~~provided~~under ~~for~~ the ~~issuance~~Loan ofAgreement upwho toheld 1an aggregate of 2,~~667~~400 shares of common stock in(as adjusted for the ~~form~~Company’s of1:20 ~~options~~and or1:75 ~~restricted~~reverse ~~stock.~~splits ~~Shareholders~~effected ~~approved~~in anJuly ~~increase~~2016 inand ~~the~~September ~~number~~2017) for an aggregate of ~~authorized~~100 shares of ~~common~~the ~~stock~~Company’s ~~issuable~~newly ~~under~~authorized ~~the~~Series ~~2007~~I ~~Incentive~~Preferred Stock ~~Plan~~(the ~~from~~“Series ~~1,667~~I toPreferred ~~3,334 in November 2012~~Stock”). AThe ~~total~~difference ofin ~~2,635~~value ~~stock~~was ~~options,~~de ~~common~~minimis ~~stock~~and ortherefore ~~restricted~~no ~~stock~~deemed ~~have~~dividend ~~been~~was ~~issued under the 2007 Incentive Stock Plan as of December 31, 2017~~recorded.

~~Options~~i. ~~granted~~Shares ~~under~~of ~~both~~Series ~~the~~I ~~2007~~Preferred ~~Plan~~Stock ~~and the 2007 Incentive Plan have terms up to ten years and~~ are ~~exercisable at a price per share~~ not ~~less~~convertible ~~than~~into ~~the fair value of the underlying~~ common stock ~~on the date of grant~~. ~~The total number of shares of common stock that remain available for issuance as of December 31, 2017 under the 2007 Plan and the 2007 Incentive Stock Plan combined is 1,235 shares.~~

~~The~~ii. ~~2008~~In ~~Non-Employee~~the ~~Directors~~event ~~Compensation~~of ~~Plan~~a ~~(the~~liquidation ~~“2008~~or ~~Directors~~fundamental ~~Plan”)~~transaction, ~~became~~a ~~effective~~holder ~~in August~~of ~~2008~~Series ~~and~~I ~~provided~~Preferred ~~for~~Stock ~~the~~shall ~~issuance~~be ofredeemed upand shall be entitled to ~~667~~receive, ~~shares~~per share of ~~common~~Series ~~stock~~I Preferred Stock, in cash out of the ~~form~~assets of ~~options~~the Company, whether from capital or ~~restricted~~from ~~stock.~~earnings ~~In November~~available ~~2013,~~for distribution to its shareholders ~~approved~~(the an“Liquidation ~~increase~~Funds”), a one-time redemption payment in ~~the~~full ~~number~~satisfaction of ~~shares~~all ofobligations ~~common~~to ~~stock~~the ~~issuable~~holder ~~under~~and in cancellation of the ~~2008~~Series ~~Directors~~I ~~Plan~~Preferred Stock equal to ~~1,334.~~the Aquotient ~~total~~of (i) the product of ~~1,202~~(x) ~~stock~~the ~~options~~remainder orof ~~common~~Liquidation ~~stock~~Funds ~~have~~available ~~been~~for ~~issued~~distribution ~~under~~(including ~~the~~any ~~2008~~deferred ~~Directors~~amounts) ~~Plan~~minus: as(A) ~~of December~~distribution ~~31,~~or ~~2017.~~payment ~~Options~~in ~~granted~~full ~~under~~to the ~~2008~~holders ~~Directors~~of ~~Plan~~the ~~have~~Company’s ~~terms~~Series G Convertible Preferred Stock of upthe toliquidation ~~ten~~preference ~~years~~amount in accordance with the rights and ~~are~~designations ~~exercisable~~of atsuch aseries ~~price~~of ~~per~~Senior ~~share~~Preferred ~~equal~~Stock, (B) distribution or payment to the ~~fair~~holders ~~value~~ of the ~~underlying~~Company’s ~~common~~Series ~~stock~~H onConvertible ~~the~~Preferred ~~date~~Stock of ~~grant.~~the ~~The~~liquidation ~~total~~preference ~~number~~amount in accordance with the rights and designations of ~~shares~~such series of ~~common~~Senior ~~stock~~Preferred ~~that~~Stock; ~~remain~~(C) ~~available~~$1,025,437 to be reserved for ~~issuance~~junior stock holders as ~~of December~~their ~~31,~~interests ~~2017~~appear; and (D) up to $2 million in payments under the ~~2008~~2018 ~~Directors~~Management and Key Employee Incentive Plan isadopted ~~132~~by the Corporation (the Liquidation Funds less the amounts required under (A), (B), (C) and (D) hereof, the “Net Liquidation Funds”), multiplied by (y) 25% divided by (ii) the total number of outstanding shares of Series I Preferred Stock.

~~The~~iii. ~~2016~~All ~~Equity~~shares ~~Incentive~~of ~~Plan~~capital ~~(the~~stock ~~“2016~~of ~~Equity~~the ~~Incentive~~Company ~~Plan”)~~(when ~~became~~and ~~effective~~if ~~in September~~issued), ~~2016~~except ~~and~~for ~~provided~~shares ~~for~~of ~~the~~Series ~~issuance~~G ofConvertible upPreferred toStock ~~9,094~~and shares of ~~common~~Series ~~stock~~H inConvertible ~~the~~Preferred ~~form~~Stock ofoutstanding ~~equity~~as orof ~~equity-linked~~May ~~awards to officers~~24, ~~directors~~2018, ~~consultants~~shall ~~and~~be ~~other~~junior ~~personnel. Shareholders approved an increase~~ in ~~the~~rank ~~number~~to ofall ~~authorized~~ shares of ~~common~~Series ~~stock~~I ~~issuable~~Preferred ~~under~~Stock ~~the~~with ~~2016~~respect ~~Equity~~to ~~Incentive~~the ~~Plan~~preferences ~~from~~as ~~9,094~~ to 19dividends,~~134~~ ~~in December~~distributions ~~2016.~~and ~~In February~~payments ~~2017,~~upon the ~~Company’s shareholders approved an increase in the number of authorized shares of common stock issuable under the 2016 Equity Incentive Plan from 19~~liquidation,~~134~~ ~~to 33~~dissolution,~~618.~~ Awinding-up ~~total~~or offundamental ~~72,800~~transaction ~~stock~~(as ~~options~~defined ~~have~~in ~~been issued under~~ the ~~2016~~Series ~~Equity~~I ~~Incentive~~Certificate ~~Plan~~of asDesignations) of ~~December~~ ~~31,~~the ~~2017~~Company.

75iv. Holders of the Series I Preferred Stock shall have no voting rights except with respect to, and in each case each holder shall be entitled to one vote for each share of Series I Preferred Stock held by such holder: (i) amending, altering or repealing any provision of the Certificate of Incorporation (including the Certificate of Designation) of the Company, if the amendment, alteration or repeal of the Certificate of Incorporation would adversely affect the rights, preferences, powers or privileges of the Series I Preferred Stock or (ii) creating, authorizing, issuing or increasing the authorized or issued amount of any class or series of any of the Company’s equity securities, or any warrants, options or other rights convertible or exchangeable into any class or series of any of the Company’s equity securities, which would constitute senior preferred stock or parity stock or reclassify any authorized stock of the Company into any such stock, or create, authorize or issue any obligation or security convertible into, exchangeable or exercisable for, or evidencing the right to purchase any such stock. In each such case, at least a majority of the outstanding shares of Series I Preferred Stock shall vote in favor of such proposal.

The Series I Preferred Stock was accounted for under Section 480-10-S99 - Distinguishing Liabilities from Equity (FASB Accounting Standards Codification 480) as amended by ASU No. 2009-04 – Accounting for Redeemable Equity Instruments (“ASU 2009-04”). Under ASU 2009-04, a redeemable equity security is to be classified as temporary equity if it is conditionally redeemable upon the occurrence of an event that is not solely within the control of the issuer.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~The~~Note ~~2016~~11. ~~Non-Executive~~Stock ~~Equity~~Option ~~Incentive~~Plans ~~Plan (the “2016 Non-Employee Incentive Plan”) became effective in December 2016~~ and ~~provides~~Warrants for the issuance of up to 3,334 equity and equity-linked awards to non-executive employees and consultants of the Company. A total of 334 stock options have been issued under the 2016 Non-Employee Incentive Plan as of December 31, 2017.

Stock Options Plans

The 2007 Equity Compensation Plan (the “2007 Plan”) became effective in January 2007 and provides for the issuance of options, restricted stock and other stock-based instruments to officers and employees, consultants and directors of the Company. The total number of shares of common stock issuable under the 2007 Plan is 1,603. A total of 887 stock options or common stock have been issued under the 2007 Plan as of December 31, 2018.

The 2007 Incentive Stock Plan (the “2007 Incentive Stock Plan”) became effective in May 2007 and provided for the issuance of up to 1,667 shares of common stock in the form of options or restricted stock. Shareholders approved an increase in the number of authorized shares of common stock issuable under the 2007 Incentive Stock Plan from 1,667 to 3,334 in November 2012. A total of 2,563 stock options, common stock or restricted stock have been issued under the 2007 Incentive Stock Plan as of December 31, 2018.

Options granted under both the 2007 Plan and the 2007 Incentive Plan have terms up to ten years and are exercisable at a price per share not less than the fair value of the underlying common stock on the date of grant. The total number of shares of common stock that remain available for issuance as of December 31, 2018 under the 2007 Plan and the 2007 Incentive Stock Plan combined is 1,487 shares.

The 2008 Non-Employee Directors Compensation Plan (the “2008 Directors Plan”) became effective in August 2008 and provided for the issuance of up to 667 shares of common stock in the form of options or restricted stock. In November 2013, shareholders approved an increase in the number of shares of common stock issuable under the 2008 Directors Plan to 1,334. A total of 1,174 stock options or common stock have been issued under the 2008 Directors Plan as of December 31, 2018. Options granted under the 2008 Directors Plan have terms of up to ten years and are exercisable at a price per share equal to the fair value of the underlying common stock on the date of grant. The total number of shares of common stock that remain available for issuance as of December 31, 2018 under the 2008 Directors Plan is 160 shares.

The 2016 Equity Incentive Plan (the “2016 Equity Incentive Plan”) became effective in September 2016 and provided for the issuance of up to 9,094 shares of common stock in the form of equity or equity-linked awards to officers, directors, consultants and other personnel. Shareholders approved an increase in the number of authorized shares of common stock issuable under the 2016 Equity Incentive Plan from 9,094 to 19,134 in December 2016. In February 2017, the Company’s shareholders approved an increase in the number of authorized shares of common stock issuable under the 2016 Equity Incentive Plan from 19,134 to 33,618. A total of 69,184 stock options have been issued under the 2016 Equity Incentive Plan as of December 31, 2018.

The 2016 Non-Executive Equity Incentive Plan (the “2016 Non-Employee Incentive Plan”) became effective in December 2016 and provides for the issuance of up to 3,334 equity and equity-linked awards to non-executive employees and consultants of the Company. A total of 436 stock options have been issued under the 2016 Non-Employee Incentive Plan as of December 31, 2018.

Options granted under both the 2016 Equity Incentive Plan and the 2016 Non-Employee Incentive Plan have terms up to ten years and are exercisable at a price per share not less than the fair value of the underlying common stock on the date of grant.

The Company uses the Black-Scholes option pricing model to value options issued to employees, directors and consultants. Compensation expense, including the estimated effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock-based compensation for the amortization of stock options granted under the Company’s stock option plans totaled $931,382 and $1,024,955 for the years ended December 31, 2017 and 2016, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying consolidated statements of operations. 50

The unamortized amount of stock options expense was $230,212 as of December 31, 2017 which will be recognized over a weighted-average period of 2.3 years.

The fair values of stock option grants were calculated on the dates of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Years Ended December 31,
	2017				2016
Risk-free interest rate		1.6%	to	1.7%		0.9%	to	1.8%
Expected volatility		110%	to	113%		78%	to	11%
Expected life (in years)			4.2				4.2
Expected dividend yield			0%				0%
Estimated forfeiture rates			20%			1%	to	20%

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company uses the Black-Scholes option pricing model to value options issued to employees, directors and consultants. Compensation expense, including the estimated effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock-based compensation for the amortization of stock options granted under the Company’s stock option plans totaled $161,394 and $931,382 for the years ended December 31, 2018 and 2017, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying consolidated statements of operations.

The unamortized amount of stock options expense was $61,432 as of December 31, 2018 which will be recognized over a weighted-average period of 1.0 years.

The fair values of stock option grants were calculated on the dates of grant using the Black-Scholes option pricing model and the following weighted average assumptions:

	Years Ended December 31,
	2018	2017
Risk-free interest rate	2.7%	1.6%	to	1.7%
Expected volatility	105%	110%	to	113%
Expected life (in years)	4.2		4.2
Expected dividend yield	-		-
Estimated forfeiture rates	20%		20%

The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility was based upon the historical volatility for the Company’s common stock. The Company utilized historical data to determine the expected life of stock options. The dividend yield reflected the fact that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future. The Company reviews its forfeiture rate annually to update its assumption for recent experience.

Option transactions under the stock option plans during the years ended December 31, ~~2017~~2018 and ~~2016~~2017 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of January 1, 2016		3,014		$	3,700.88
Outstanding as of January 1, 2017		28,232		$	404.82
Granted during 2016		25,900			91.56
Exercised		-			-
Forfeited /expired		(682	)		3,823.56
Outstanding as of December 31, 2016		28,232			404.82
Granted during 2017		51,090			12.77
Exercised		-			-
Forfeited /expired		(2,721	)		1,134.23
Outstanding as of December 31, 2017		76,601		$	117.42
Exercisable as of December 31, 2017		37,643		$	222.46
Granted during 2018		102			2.40
Exercised		-			-
Forfeited /expired		(3,896	)		134.50
Outstanding as of December 31, 2018		72,807		$	116.53
Exercisable as of December 31, 2018		51,952		$	156.83

Grants under the stock option plans were as follows:

	For the Years Ended December 31,
	2017		2016
	2018		2017
Annual grants to outside directors		~~170~~102		~~3,936~~170
Executive grants		~~50,586~~-		650,~~036~~586
Non-employee grants		~~334~~-		~~1,101~~334
Employee grants		-		14,827
Total		102		51,090
Total		51,090		25,900

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Options granted during the reporting periods had terms ranging from five to ten years and were issued at an exercise price equal to the fair value on the date of grant. Director grants vesting periods range from vesting immediately upon issuance to vesting monthly or quarterly over a one year period from the date of issuance. Executive grants, except as noted below, have vesting periods ranging from vesting immediately upon issuance, vesting monthly or quarterly over a one or two-year period, annually for one year then quarterly over the next two year period, or annually for one year then quarterly over the next three year period from the date of issuance. Employee grants range from one half vesting immediately upon issuance with the remaining one half vesting quarterly over the next year to vesting annually over a three year period from the date of issuance. Non-employee grants vesting periods range from vesting immediately upon issuance, vesting over a six month period and vesting monthly over one year from the date of issuance.

On January 24, 2017, the Company entered into an employment agreement with Ernest Ortega wherein the Company issued options for the purchase of up to 27,162 shares of the Company's common stock at $12.75 per share for a period of ten years. Those options vest as follows: 4,178 will vest on January 24, 2018; 8,358 will vest in eight quarterly installments during the twenty-four months ending January 24, 2020; 7,313 will vest upon the achievement of three consecutive quarters of positive cash flow; and 7,313 will vest upon the sale of the Company's earth station assets in Miami, Florida for gross proceeds equal to or greater than $15,000,000.

77Certain stock options awarded to Ernest Ortega, Chief Executive Officer, in conjunction with his 2017 employment agreement contained performance based criteria. The fair value of the awards was determined based on the market value of the underlying stock price at the grant date and will be marked to market over the vesting period based on probabilities and projections of the underlying performance measures. The aggregate fair value of the performance based options granted was $140,708 for the year ended December 31, 2017. The Company has not recorded any expense associated with the performance based stock options issued for the years ended December 31, 2018 and 2017, respectively. The Company will continue to evaluate the probability of achieving the criteria associated with performance based stock options and will record any associated compensation expense at such time.

On February 3, 2017, the Company awarded options for the purchase of up to 15,868 shares of the Company's common stock at an exercise price of $13.50 per share for a period of ten years. Terms of such option awards conformed to the Company's standard form of option agreement which includes a provision for cashless exercise. The awards consisted of options for 6,676 shares to Mr. Philip Urso for his past service as Interim Chief Executive Officer, options for 5,854 shares to Mr. Arthur Giftakis, the Company's Chief Operating Officer, and options for 3,338 shares to Mr. Frederick Larcombe, the Company's former Chief Financial Officer. Mr. Urso's options vested 100% upon issuance and the options issued to Messrs. Giftakis and Larcombe vest ratably on a quarterly basis over the eight quarters immediately following the date of the awards. The options awarded to Mr. Larcombe were subsequently modified and fully expensed on May 15, 2017 to reflect immediate vesting and, unless exercised prior to May 15, 2018, to be forfeited. The options awarded to Mr. Larcombe were forfeited on May 15, 2018.

On May 15, 2017, the Company entered into an employment agreement with Laura Thomas, the Company’s former Chief Financial Officer, wherein she was issued options to purchase up to 2% of the Company’s common stock on a fully diluted basis as of May 15, 2017, or 7,556 options. The options vested 25% after one year of service and the remaining vested ratably over the following three years. The options awarded to Ms. Thomas were subsequently modified and fully expensed on January 5, 2018 to reflect immediate vesting.

Forfeited or expired options under the stock option plans were as follows:

	For the Years Ended December 31,
	2018		2017
Employee terminations		3,756		2,619
Expired		140		102
Total		3,896		2,721

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

~~Certain~~The ~~stock~~weighted-average ~~options~~fair ~~awarded~~values toof ~~Ernest~~the ~~Ortega,~~options ~~Chief~~granted ~~Executive~~during ~~Officer,~~2018 inand ~~conjunction with his~~ 2017 ~~employment~~were ~~agreement~~$1.76 ~~contained~~and ~~performance~~$9.65, ~~based criteria~~respectively. ~~The~~Outstanding ~~fair~~options ~~value~~ of ~~the~~72,807 ~~awards~~as ~~was determined based on the market value~~ of ~~the~~December ~~underlying~~31, ~~stock~~2018 ~~price~~had atexercise ~~the~~prices ~~grant~~that ~~date~~ranged ~~and~~from ~~will~~$2.40 ~~be marked~~ to ~~market~~$7,845.00 ~~over~~and ~~the~~had ~~vesting~~a ~~period~~weighted-average ~~based~~remaining oncontractual ~~probabilities~~life ~~and projections~~ of ~~the~~7.9 ~~underlying performance measures~~years. ~~The~~Exercisable ~~aggregate~~options ~~fair value~~ of ~~the performance based options granted was $140~~51,~~708~~952 ~~for~~as ~~the~~of ~~year ended~~ December 31, ~~2017.~~2018 ~~The~~had ~~Company~~exercise ~~has~~prices ~~not~~that ~~recorded~~ranged ~~any~~from ~~expense~~$2.40 ~~associated~~to ~~with the performance based stock options issued for the year ended December 31~~$7, ~~2017~~845.00 ~~The~~and ~~Company~~had ~~will~~a ~~continue~~weighted-average toremaining ~~evaluate~~contractual ~~the~~life ~~probability~~ of ~~achieving the criteria associated with performance based stock options and will record any associated compensation expense at such time~~7.9 years.

~~On February~~As 3of December 31, ~~2017~~2018, ~~the~~there ~~Company~~was ~~awarded~~no ~~options~~aggregate ~~for~~intrinsic value associated with the ~~purchase~~outstanding ofand upexercisable tooptions. ~~15,868~~The ~~shares~~closing price of the Company'’s common stock at anDecember ~~exercise~~31, ~~price~~2018, ofwas $132.5010 per share ~~for a period of ten years~~. ~~Terms~~The ofCompany ~~such~~calculates ~~option awards conformed to~~ the ~~Company's~~intrinsic ~~standard~~value ~~form~~ of ~~option~~stock ~~agreement which includes a provision for cashless exercise. The awards consisted of~~ options ~~for 6,676 shares to Mr. Philip Urso for his past service~~ as ~~Interim~~the ~~Chief~~difference ~~Executive~~between ~~Officer,~~the ~~options~~closing ~~for~~price ~~5,854~~of ~~shares to Mr. Arthur Giftakis,~~ the Company'’s ~~Chief~~common ~~Operating~~stock ~~Officer,~~at ~~and options for 3,338 shares to Mr. Frederick Larcombe,~~ the ~~Company's~~end ~~former~~of ~~Chief Financial Officer. Mr. Urso's options vested 100% upon issuance and~~ the ~~options~~reporting ~~issued~~period ~~to Messrs. Giftakis~~ and ~~Larcombe vest ratably on a quarterly basis over~~ the ~~eight~~exercise ~~quarters~~price ~~immediately following the date~~ of the ~~awards.~~stock ~~The~~ options ~~awarded to Mr. Larcombe were subsequently modified~~ and ~~fully expensed on May 15, 2017 to reflect immediate vesting and, unless exercised prior to May 15, 2018, shall be forfeited~~warrants.

On May 15, 2017, the Company entered into an employment agreement with Laura Thomas, Former Chief Financial Officer, wherein she was issued options to purchase up to 2% of the Company’s common stock on a fully diluted basis as of May 15, 2017, or 7,556 options. The options vest 25% after one year of service and the remaining will vest ratably over the following three years.

Forfeited or expired options under the stock option plans were as follows:

	For the Years Ended December 31,
	2017		2016
Employee terminations		2,619		652
Expired		102		30
Total		2,721		682

The weighted-average fair values of the options granted during 2017 and 2016 were $9.65 and $55.65, respectively. Outstanding options of 76,601 as of December 31, 2017 had exercise prices that ranged from $11.25 to $7,845.00 and had a weighted-average remaining contractual life of 8.9 years. Exercisable options of 37,643 as of December 31, 2017 had exercise prices that ranged from $12.00 to $7,845.00 and had a weighted-average remaining contractual life of 8.7 years.

As of December 31, 2017, there was no aggregate intrinsic value associated with the outstanding and exercisable options. The closing price of the Company’s common stock at December 31, 2017, was $3.15 per share. The Company calculates the intrinsic value of stock options and warrants as the difference between the closing price of the Company’s common stock at the end of the reporting period and the exercise price of the stock options and warrants.

Stock Warrants

Warrant transactions during the years ended December 31, ~~2017~~2018 and ~~2016~~2017 were as follows:

	Number			Weighted Average Exercise Price
Outstanding as of January 1, 2016		2,700		$	1,965.00
Outstanding as of January 1, 2017 and 2018		2,400		$	1,265.25
Granted during 2016		66,311			122.25
Exchanged during 2018		(2,400	)		1,265.25
Exchanged during 2016		(66,311	)		122.25
Outstanding and exercisable as of December 31, 2018		-		$	-
Expired during 2016		(300	)		7,500.00
Outstanding and exercisable as of December 31, 2016 and 2017		2,400		$	1,265.25

78On May 24, 2018, the Company effected an exchange of 2,400 warrants with the Lender for an aggregate of 100 shares of Series I Preferred Stock. See Note 10, Capital Stock, for further information regarding the exchange of warrants.

Note 12. Employee Benefit Programs

The Company has established a 401(k) retirement plan (“401(k) Plan”) which covers all eligible employees who have attained the age of twenty-one and have completed 30 days of employment with the Company. The Company can elect to match up to a certain amount of employees’ contributions to the 401(k) Plan. No employer contributions were made during the years ended December 31, 2018 and 2017.

Under the Company’s 2010 Employee Stock Purchase Plan (“ESPP Plan”), participants can purchase shares of the Company’s stock at a 15% discount. A maximum of 334 shares of common stock can be issued under the ESPP Plan of which all of the authorized shares have been issued. During the years ended December 31, 2018 and 2017, a total of zero and 30 shares were issued under the ESPP Plan with a fair value of zero and $358, respectively. The Company recognized zero and $52 of stock-based compensation related to the 15% discount for the years ended December 31, 2018 and 2017, respectively.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

AsNote ~~of December~~13. ~~31,~~Income ~~2017,~~Taxes ~~all warrants were exercisable and had a weighted average remaining contractual life of 4.3 years.~~

As of December 31, 2017, there was no aggregate intrinsic value associated with the outstanding and exercisable warrants. The closing price of the Company’s common stock at December 31, 2017 was $3.15 per share.

In connection with the June 20, 2016 offering, the Company issued warrants to purchase 10,000 shares of common stock. Each warrant expires five years from the date of issuance, had an exercise price of $375.00 per share, and are exercisable six months from the date of issuance. The Company utilized the Black-Scholes model to value these warrants and attributed a value to them of $791,290 which was accounted for as an addition to additional paid-in capital. Assumptions included an interest rate of 1.17%, a contractual term of 5 years, expected volatility of 81%, and a dividend yield of zero. The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility was based upon the historical volatility for the Company’s common stock. The dividend yield reflected the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future.

In connection with the July 7, 2016 offering, the Company issued warrants to purchase 2,977 shares of common stock. Each warrant expires five years from the date of issuance and had an exercise price of $225.00 per share. The Company utilized the Black-Scholes model to value these warrants and attributed a value to them of $240,709 which was accounted for as an addition to additional paid-in capital. Assumptions included an interest rate of 0.97%, a contractual term of 5 years, expected volatility of 78%, and a dividend yield of zero. The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility was based upon the historical volatility for the Company’s common stock. The dividend yield reflected the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future.

On September 12, 2016, warrants for the purchase of up to 12,977 shares of common stock were exchanged for 680,000 shares of preferred stock. See Note 10, Capital Stock, for further information regarding this transaction.

On November 8, 2016 and in connection with a financing transaction, an investor was issued warrants for the purchase of up to 53,334 shares of the Company's common stock. Each warrant expires five years from the date of issuance, had an exercise price of $100.50 per share, and are exercisable six months from the date of issuance. The Company utilized the Black-Scholes model to value these warrants and attributed a value to them of $2,920,000 which was accounted for as an addition to additional paid-in capital. Assumptions included an interest rate of 1.34%, a contractual term of 5 years, expected volatility of 100%, and a dividend yield of zero. The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility was based upon the historical volatility for the Company’s common stock. The dividend yield reflected the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future.

On November 22, 2016, warrants for the purchase of up to 53,334 shares of common stock were exchanged for 2,000,000 shares of preferred stock. See Note 10, Capital Stock, for further information regarding this transaction.

Note 12 - Employee Benefit Programs

Under the Company’s 2010 Employee Stock Purchase Plan (“ESPP Plan”), participants can purchase shares of the Company’s stock at a 15% discount. A maximum of 334 shares of common stock can be issued under the ESPP Plan of which all of the authorized shares have been issued as of December 31, 2017. During the years ended December 31, 2017 and 2016, a total of 30 and 398 shares were issued under the ESPP Plan with a fair value of $358 and $28,952, respectively. The Company recognized $52 and $4,523 of stock-based compensation related to the 15% discount for the years ended December 31, 2017 and 2016, respectively.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 13 - Income Taxes

Provision

The provision for income taxes consists of the following:

	Years Ended December 31,
	2017			2016
	2018			2017
Current
Federal	$	-		$	-
State		-			-
Total current		-			-
Deferred					-
Federal		(~~896~~2,~~114~~213,273	)		45(896,~~587,097~~114	)
State		(~~256~~632,~~033~~364	)		8(256,~~228,412~~033	)
Change in valuation allowance		12,~~068~~509,~~307~~039			~~(53~~1,~~758~~068,~~846~~307	)
Total deferred		(83336,~~840~~598	)		56(83,~~663~~840	)
Provision for income taxes	$	(83336,~~840~~598	)	$	56(83,~~663~~840	)

The provision for income taxes using the U.S. Federal statutory tax rate as compared to the Company’s effective tax rate is summarized as follows:

	Years Ended December 31,
	2017			2016
	2018			2017
U.S. Federal statutory rate		(34.0	)%		(34.0	)%
U.S. federal statutory rate		(21.0	)%		(34.0	)%
State taxes		(56.0	)%)		(45.90	)%
Permanent differences		~~0.1~~-	%		0.91	%
Rate Change		-	%		7.6	%
Change of federal deferred tax rate		-	%		29.7	%
Prior year Net Operating Loss write-off (Section 382 restriction)		-	%		263.2	%
Change in valuation allowance		23.8	%		8.5	%
Change of Federal Deferred Tax Rate		29.7	%		-	%
Effective tax rate		(3.2	)%		(0.7	)%
Current year Net Operating Loss write-off		-	%		34.5	%
Change in Valuation allowance	8.5		%		(267.0	)%
Effective tax rate		(0.7	)%		0.3	%

The Company files income tax returns for Towerstream Corporation and its subsidiaries in the U.S. federal and various state principle jurisdictions. As of December 31, ~~2017~~2018, the tax returns for Towerstream Corporation for the years ~~2014~~2015 through ~~2017~~2018 remain open to examination by the Internal Revenue Service and various state authorities. In addition, the years in which net operating losses are generated are open until the year in which they are later utilized expires. There are currently no audits by taxing authorities of federal or state income tax returns.

Impact of Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted. The TCJA revises the U.S. corporate income tax rate from a graduated rate system, to a flat rate of 21%, effective for tax years beginning after December 31, 2017. Deferred tax assets and liabilities are now being remeasured using these new rates. As such, the deferred tax assets and liabilities, along with the valuation allowance are impacted. The net effect as of December 31, 2017 was a reduction to the deferred tax assets of ($3,940,628) and a reduction to the deferred tax liability of $203,738. The reduction in the valuation allowance was ($3,791,030). SAB 118 allowed the Company to remeasure these items throughout 2018. The Company is done with the analysis and no material changes are needed.

8054

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Company’s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following:

	Years Ended December 31,
	2017			2016
	2018			2017
Deferred tax assets
Net operating loss carryforwards	$	4,~~345~~921,~~624~~264		$	24,~~948~~345,~~281~~624
Stock-based compensation		2,~~280~~324,~~815~~392			2,~~931~~280,~~251~~815
Intangible assets		1,~~094~~280,~~799~~812			1,~~261~~094,~~696~~799
Debt discount		~~831~~948,~~717~~572			~~984~~831,~~422~~717
Allowance for doubtful accounts		2541,~~889~~611			25,~~281~~889
Other		287,571			532,040
Interest expense limitation		1,515,513			-
Total deferred tax assets		8,866,415			8,682,971
Depreciation		316,797			-
Valuation allowance		(8,744,600	)		(7,676,293	)
Other		286,800			287,571
Deferred tax assets, net of valuation allowance		121,815			1,006,678
Total deferred tax assets		11,635,761			8,866,415
Valuation allowance		(11,253,638	)		(8,744,600	)
Deferred tax assets, net of valuation allowance		382,123			121,815
Deferred tax liabilities
Depreciation		~~(121,815~~-	)		(1121,~~006,678~~815	)
Intangible assets		(~~336~~382,~~597~~123	)		(~~420~~336,~~437~~597	)
Total deferred tax liabilities		(~~458~~382,~~412~~123	)		(1458,~~427,115~~412	)
Net deferred tax liabilities	$	~~(336,597~~-	)	$	(~~420~~336,~~437~~597	)

Accounting for Uncertainty in Income Taxes

ASC Topic 740 clarifies the accounting and reporting for uncertainties in income tax law. ASC Topic 740 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The guidance also provides direction on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

As of December 31, ~~2017~~2018 and ~~2016~~2017, the Company has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense, and penalties as general and administrative expenses. No interest and penalties were recorded during the years ended December 31, ~~2017~~2018 and ~~2016~~2017. The Company does not expect its unrecognized tax benefit position to change during the next twelve months.

NOL Limitations

The Company’s utilization of net operating loss (“NOL”) carryforwards is subject to an annual limitation due to ownership changes that have occurred previously or that could occur in the future as provided in Section 382 of the Internal Revenue Code, as well as similar state provisions. Section 382 limits the utilization of NOLs when there is a greater than 50% change of ownership as determined under the regulations. Since its formation, the Company has raised capital through the issuance of capital stock and various convertible instruments which, combined with the purchasing shareholders’ subsequent disposition of these shares, has resulted in an ownership change as defined by Section 382, and could result in an ownership change in the future upon subsequent disposition.

8155

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

AsThe NOLs as of December 31, ~~2015,~~2018 ~~the Company had approximately $140,517,000 of federal~~ and ~~state~~2017 ~~NOL~~reflect ~~carryovers.~~a Aslimitation ~~of November~~under 9,Section ~~2016,~~382 ~~the~~which ~~Company~~occurred ~~had~~as a ~~greater~~result ~~than~~of ~~50%~~an ~~change in~~ ownership ~~under~~change ~~Section~~during ~~382 of the Internal Revenue Code~~2016. ~~Based~~There onwere ~~the~~no ~~calculations~~ownership changes under Section 382, during the ~~NOL~~years ~~carryforward~~ended asDecember of31, ~~that~~2018 ~~date~~and ~~is limited to approximately $4,612,000~~2017. ~~After~~For the ~~ownership~~years ~~change~~ended ~~and through~~ December 31, ~~2016~~2018 and 2017, the Company had a taxable ~~loss~~losses of approximately $2,~~948~~132,000~~. For~~ ~~the~~and ~~year ended December 31, 2017, the Company had a taxable loss of approximately~~ $8,536,000, respectively. The total federal and state NOLs as of December 31, 2018 and 2017, of approximately $18,227,000 and $16,095,000, ~~as of December 31~~respectively, ~~2017~~ begin to expire starting in the year ending December 31, 2027. The federal net operating losses generated in 2018 of $2,132,000 do not expire and have an indefinite life.

Valuation Allowance

In assessing the realizability of deferred tax assets, the Company has considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial reporting standards, the Company has considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. Since both goodwill and the FCC licenses are considered to be assets with indefinite lives for financial reporting purposes, the related deferred tax liabilities cannot be used as a source of future taxable income for purposes of determining the need for a valuation allowance. Based upon this evaluation, a full valuation allowance has been recorded as of December 31, ~~2017~~2018 and ~~2016~~2017. The change in valuation allowance was $12,~~068~~509,~~307~~038 and ($531,~~664~~068,~~554)~~307, respectively, for the years ended December 31, ~~2017~~2018 and ~~2016 of which zero and $94,292, respectively, pertains to discontinued operations~~2017.

82Note 14. Fair Value Measurement

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Note 14 - Fair Value Measurement

The FASB’s accounting standard for fair value measurements establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Cash and cash equivalents are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The carrying value of the Company’s long-term debt is carried at cost as the related interest rate is at terms that approximate rates currently available to the Company. There were no changes in the valuation techniques during the year ended December 31, ~~2017~~2018.

	Total Carrying Value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2018	$	4,173,070	$	4,173,070	$	-	$	-
December 31, 2017	$	7,568,982	$	7,568,982	$	-	$	-
December 31, 2016	$	12,272,444	$	12,272,444	$	-	$	-

~~Note 15 - Commitments~~56

Operating Lease Obligations

The Company has entered into operating leases related to roof rights, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring on various dates through June 2024. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from one to fifteen years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Note 15. Revenues

In May 2014, the FASB issued ASC 606, “Revenue from Contracts with Customers.” The core principle of ASC 606 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has adopted ASC 606 as of January 1, 2018 and utilized the modified retrospective method of adoption which includes the deferral of commission costs associated with obtaining its customer contracts and revenues associated with customer installations. The impact to revenues for the year ended December 31, 2018, was a reduction of $131,877, as a result of applying Topic 606. The prior year information has not been restated as the application of Topic 606 did not have a material impact on the accounting treatment of 2017 revenues and continues to be reported under the accounting standards in effect for that period.

Revenue Recognition

Generally, the Company considers all revenues as arising from contracts with customers.

Prior to 2018, the Company applied the revenue recognition principles set forth under the United States Securities and Exchange Commission Staff Accounting Bulletin 104, which provides for revenue to be recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery or installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured.

Beginning in 2018, revenue is recognized based on the five-step process outlined in ASC 606:

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and (e) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company recognizes as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – When an asset is transferred and the customer obtains control of the asset (or the services are rendered), the Company recognizes revenue. At contract inception, the Company determines if each performance obligation is satisfied at a point in time or over time. For device sales, revenue is recognized at a point in time when the goods are transferred to the customer and they obtain control of the asset. For maintenance contracts, revenue is recognized over time as the performance obligations in the contracts are completed.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

AsDisaggregation of ~~December~~ ~~31, 2017, total future operating lease obligations were as follows:~~Revenue

Years Ending December 31,
2018	$	8,058,035
2019		6,002,286
2020		3,950,287
2021		2,094,184
2022		938,660
Thereafter		444,398
Total	$	21,487,850

We provide fixed wireless business internet service to companies ranging from small businesses to fortune 500 companies. The Company recognizes the total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provide services at no cost. The Company generally enters into contractual agreements with its customers for periods ranging between one to three years. The Company offers fixed wireless broadband as a single product offering and therefore no disaggregation of revenue is necessary.

Deferred Revenues

Customers are billed monthly in advance. Deferred revenues are recognized for that portion of monthly charges not yet earned as of the end of the reporting period. Deferred revenues are also recognized for certain customers who pay for their services in advance.

The Company also defers installation fees billed to the customer and commission costs associated with obtaining new contracts. The installation fees and commission costs are amortized over the average contract term of new contracts. As of December 31, 2018, the Company had $131,877 of deferred installation fees of which $93,406 was included in Deferred Revenues and $38,471 was included in Other Long-Term Liabilities on the Company’s consolidated balance sheet and $178,333 of deferred commission costs of which $136,410 was included in Other Current Assets and $41,923 was included in Other Assets on the Company’s consolidated balance sheet.

Note 16. Commitments

Operating Lease Obligations

The Company has entered into operating leases related to roof rights, cellular towers, office space, and equipment leases under various non-cancelable agreements expiring on various dates through March 2025. Certain of these operating leases include extensions, at the Company's option, for additional terms ranging from one to fifteen years. Amounts associated with the extension periods have not been included in the table below as it is not presently determinable which options, if any, the Company will elect to exercise.

As of December 31, 2018, total future operating lease obligations were as follows:

Years Ending December 31,
2019	$	7,286,466
2020		5,231,865
2021		3,134,185
2022		1,918,867
2023		681,014
Thereafter		311,412
Total	$	18,563,809

Rent expenses were as follows:

	Year Ended December 31,
	2017		2016
	2018		2017
Points of Presence	$	89,~~693~~071,~~892~~856	$	8,~~491~~693,~~235~~892
Corporate offices		~~220~~248,~~309~~045		~~335~~220,~~713~~309
Other		~~935~~966,~~293~~533		~~552~~935,~~177~~293
Total	$	910,~~849~~286,~~494~~434	$	9,~~379~~849,~~125~~494

Rent expenses related to Points of Presence were included in infrastructure and access in the Company’s ~~condensed~~ consolidated statements of operations. Rent expense related to our corporate offices was allocated between general and administrative, sales and marketing, customer support, and network operations expense in the Company’s ~~condensed~~ consolidated statements of operations. Other rent expenses were included in network operations within the Company’s ~~condensed~~ consolidated statements of operations.

In December 2014, the Company entered into a new lease agreement in Florida, primarily for a second sales center. The lease commenced in February 2015 for 38 months with an option to renew for an additional five-year period. Total annual rent payments started at $53,130 and escalated by 3% annually. In April 2016, the Company terminated the Florida lease. Under the terms of the agreement, the Company forfeited its security deposit of $26,648 and agreed to make a termination payment of $25,000. 58

In April 2017, the Company entered into a new lease agreement for its sales office located in Virginia. The lease commenced on April 15, 2017 and expires on December 31, 2017 with an automatic renewal equal to the original term. Total annual rent payments are fixed at $32,021 for the contract term. In June 2017, the Company leased additional office space in Virginia. The second lease commenced on June 1, 2017 and expires on December 31, 2017 with an automatic renewal equal to the original term. Total annual rent payments are fixed at $20,734 for the duration of the contract term. The company did not renew this location when the lease expired in December 2017.

In October 2017, the Company amended the lease agreement for its corporate offices and warehouse space located in Rhode Island. The amended lease commenced on January 1, 2018 and expires on December 31, 2024 with an option to renew for an additional five-year term through December 31, 2024. Total annual rent payments begin at $183,256 for 2018 and escalate by approximately 2.5% annually reaching $213,422 for 2024.

TOWERSTREAM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

In April 2017, the Company entered into a new lease agreement for its sales office located in Virginia. The lease commenced on April 15, 2017 and expired on December 31, 2017 with an automatic renewal equal to the original term. Total annual rent payments are fixed at $32,021 for the contract term. In June 2017, the Company leased additional office space in Virginia. The second lease commenced on June 1, 2017 and expired on December 31, 2017 with an automatic renewal equal to the original term. Total annual rent payments are fixed at $20,734 for the duration of the contract term. The Company did not renew these leases when they expired in December 2017.

In October 2017, the Company amended the lease agreement for its corporate offices located in Rhode Island. The amended lease commenced on January 1, 2018 and expires on December 31, 2024 with an option to renew for an additional five-year term through December 31, 2024. Total annual rent payments begin at $183,256 for 2018 and escalate by 2.5% annually reaching $213,422 for 2024.

Capital Lease Obligations

The Company has entered into capital leases to acquire property and equipment expiring through ~~August~~ ~~2020~~January 2021. As of December 31, ~~2017~~2018, total future capital lease obligations were as follows:

Years Ending December 31,
2018	$	436,000
2019	$	388,501
2019		261,552
2020		300,374
2020		72,000
2021		9,523
Sub-Total		~~769~~698,~~552~~398
Less: Interest expense		8060,~~686~~676
Total capital lease obligations	$	~~688~~637,~~866~~722
Current	$	~~382~~341,~~918~~975
Long-Term	$	~~305~~295,~~948~~747

Note 1617 - Subsequent Events

On January 531, ~~2018~~2019, the ~~Company~~parties ~~entered~~amended ~~into~~the aForbearance ~~separation~~Agreement ~~agreement~~(the ~~with~~“Fifth ~~Laura~~Amendment”). Pursuant ~~Thomas,~~to ~~who~~the ~~resigned~~Fifth asAmendment, the ~~Company's~~Fifth ~~Chief~~Forbearance ~~Financial~~Period ~~Officer.~~was ~~Pursuant~~extended from January 31, 2019 to April 30, 2019 (the ~~separation~~“Sixth ~~agreement~~Forbearance Period”), ~~Ms.~~the ~~Thomas~~Lender ~~will~~waived ~~receive~~the aCompany’s ~~severance~~requirement ~~payment~~to maintain the $6,500,000 Minimum in deposit accounts or securities accounts and agreed to forbear from exercising any of ~~(i)~~its ~~current~~rights ~~base~~with ~~salary~~respect to an event of default related to the Qualified Report and the $~~240~~6,500,000 Minimum through ~~January~~ 5,the ~~2018,~~Sixth ~~(ii)~~Forbearance ~~three~~Period. ~~months~~The ofSixth ~~current~~Forbearance ~~base~~Period ~~salary~~shall ofterminate upon the Company’s failure to maintain at least $~~240~~2,000,000 ~~payable~~minimum in ~~six~~deposit ~~bi-weekly~~accounts ~~payments~~or securities accounts or upon the occurrence of ~~$10,000,~~certain ~~less~~events ~~applicable~~of ~~statutory~~default. ~~deductions~~The ~~and~~Company ~~tax~~also ~~withholdings~~agreed, among other things, that (~~iii~~i) ~~$44,310~~obligations inunder ~~earned~~the ~~annual~~Note ~~bonus~~for interest payments for the ~~fiscal~~quarter ~~year~~ ended ~~December~~ March 31, ~~2017~~2019 were revised to provide that interest may be paid in cash or treated as PIK interest, to be added to the outstanding loan balance due, in the discretion of the Company, and (ivii) ~~$5,077~~the inscheduled ~~accrued~~maturity ~~but~~date ~~unused~~of ~~vacation~~the ~~time~~Note be changed from January 31, 2019 to April 30, 2019. InThe ~~addition~~Company has notified its lender that it may have a Material Adverse Change, ~~all~~as defined in the loan agreement, which it is in the process of Msinvestigating. ~~Thomas’~~The ~~outstanding~~ultimate ~~options~~outcome ~~shall~~of ~~vest~~this ~~immediately~~matter cannot be determined at this time.

Effective January 26, 2018, the Company entered into a Forbearance to the Loan Agreement with Lender, as administrative agent to the lenders under the Loan Agreement entered into on October 16, 2014 by and among the Company, certain of its subsidiaries, Lender and the lenders party thereto. Pursuant to the Agreement, Lender, through March 30, 2018 (the “Forbearance Period”), waived the Company’s requirement to maintain at least $6,500,000 minimum in deposit accounts or securities accounts (the “$6,500,000 Minimum”) and agreed to forbear from exercising any of its rights with respect to an event of default related to the $6,500,000 Minimum. The Forbearance Period shall terminate upon the Company’s failure to maintain at least $4,000,000 minimum in deposit accounts or securities accounts or upon the occurrence of certain events of default.

The agreement was amended and restated effective February 28, 2018 to also include a forbearance of Section 6.1(a)(i) of the agreement “Qualified Auditor’s Report” in the event that the Company’s audited consolidated financial statements for the year ended December 31, 2017 contained a going concern explanatory paragraph. The agreement was further amended and restated effective March 30, 2018 to extend the forbearance period until April 15, 2018.

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A - Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures ~~are~~were effective, as of December 31, 2017, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms2018.

During the second quarter of 2017, the Company had determined there was a material weakness in its system of internal control as it relates to monitoring compliance with covenants in its debt agreement. Management implemented a remediation plan, which was completed during the third quarter. The remediation plan included the following steps:

● A detail covenant worksheet is compiled to include all financial and non-financial covenants. The covenant worksheet will include all covenants associated with current debt arrangements and will be modified to reflect any amendments to current debt and/or new debt arrangements.

● The Company will ensure that the “Certificate of Financial Officer” certifying compliance with the covenants is provided to the lender concurrently with the delivery of the quarterly/annual financial statements.

The remediation was successfully tested as of December 31, 2017. On that basis, management concluded that the material weakness was remediated as of December 31, 2017.

Changes in Internal Control over Financial Reporting

There were no changes in our system of internal control over financial reporting during the fourth quarter of the year ended December 31, ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s Board of Directors, management and other personnel 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. Our internal control over financial reporting includes those policies and procedures that:

	●	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

	●	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

	●	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting can only provide reasonable assurance of achieving the desired control objectives and, as a result, may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

86Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework in 2013.

~~Our~~Based ~~management~~on ~~assessed~~our ~~the~~assessment, ~~effectiveness of~~ our ~~internal~~management ~~control~~has ~~over~~concluded ~~financial~~that, ~~reporting~~ as of December 31, ~~2017. In making this assessment~~2018, ~~management~~our ~~used~~internal ~~the~~control ~~criteria~~over ~~set~~financial ~~forth~~reporting bywas ~~the~~effective ~~Committee~~based ofon ~~Sponsoring~~those ~~Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework in 2013~~criteria.

Based on our assessment, our management has concluded that, as of December 31, 2017, our internal control over financial reporting is effective based on those criteria.

Item 9B - Other Information.

None.

8760

PART III

Item 10 - Directors, Executive Officers and Corporate Governance.

The ~~following~~information ~~table~~required ~~sets~~by ~~forth~~this ~~the~~item ~~names,~~will ~~ages,~~be ~~and~~set ~~positions~~forth ofin ~~the~~an ~~current~~amendment ~~directors~~to ~~and~~this ~~executive~~Annual ~~officers.~~Report ~~Our~~on ~~directors~~Form ~~hold~~10-K, ~~office~~which ~~for~~will ~~one-year~~be ~~terms~~filed ~~until~~with the ~~following~~SEC ~~annual~~not ~~meeting~~later ofthan ~~stockholders~~120 ~~and~~days ~~until~~after ~~his~~the orend ~~her~~of ~~successor has been elected and qualified or until~~ the ~~director’s~~fiscal ~~earlier~~year ~~resignation~~covered ~~or removal. Officers are elected annually~~ by ~~the~~this ~~Board~~Form of10-K, ~~Directors~~ and ~~serve~~is atincorporated ~~the~~by ~~discretion~~reference ofto ~~the~~such ~~Board of Directors~~amendment.

Name	Age	Position
Philip Urso	58	Chairman of the Board of Directors
Ernest Ortega	52	Chief Executive Officer and Director
Arthur G. Giftakis	51	Chief Operating Officer
John Macdonald	47	Chief Financial Officer
Howard L. Haronian, M.D.(1)(2)(3)	55	Director
William J. Bush(1)(2)	52	Director

(1) Member of our Audit Committee.

(2) Member of our Compensation Committee.

(3) Member of our Nominating Committee.

The biographies below include information related to service by the persons below to Towerstream Corporation and our subsidiary, Towerstream I, Inc. On January 4, 2007, we merged with and into a wholly-owned Delaware subsidiary for the sole purpose of changing our state of incorporation to Delaware. On January 12, 2007, a wholly-owned subsidiary of ours completed a reverse merger with and into a private company, Towerstream Corporation, with Towerstream Corporation (the private company) being the surviving company and becoming a wholly-owned subsidiary of ours. Upon closing of the merger, we discontinued our former business and succeeded to the business of Towerstream Corporation as our sole line of business. At the same time, we also changed our name to Towerstream Corporation and our newly acquired subsidiary, Towerstream Corporation, changed its name to Towerstream I, Inc.

Philip Urso co-founded Towerstream I, Inc. in December 1999. In February 2016, the Company appointed Mr. Urso to interim Chief Executive Officer. Mr. Urso resigned from his position as interim Chief Executive Officer with the appointment of Mr. Ortega to Chief Executive Officer in January 2017. Mr. Urso has served as a director and chairman since inception and as Chief Executive Officer from inception until November 2005. Mr. Urso has been the Company’s chairman and a director since it became public in 2007. In 1995, Mr. Urso co-founded eFortress and served as its president through 1999. From 1983 until 1997, Mr. Urso owned and operated a group of radio stations. In addition, Mr. Urso co-founded the regional cell-tower company, MCF Communications, Inc. Mr. Urso was appointed to the Board of Directors due to his significant experience in the wireless broadband and tower industries, his familiarity with the Company, as well as his extensive business management expertise.

Ernest Ortega has been our Chief Executive Officer since January 2017 and served on the Company’s Board of Advisors from January 2016 to January 2017. In January 2018, the Company appointed Mr. Ortega to serve as a director. Prior to his appointment as Chief Executive Officer, Mr. Ortega served as Chief Revenue Officer of Colt Technology Services from October 2015 to December 2016, as Chief Revenue Officer of Cogent Communications Holdings, Inc. (Nasdaq: CCOI) from August 2013 to October 2015 and as EVP Sales & Marketing of XO Communications from June 1999 to August 2013.

Arthur G. Giftakis has been our Chief Operating Officer since February 2016. Prior to his appointment to Chief Operating Officer, Mr. Giftakis served as the Company’s senior vice president of engineering and operations since January 2014. Prior to his position with the Company, Mr. Giftakis served as the director of sales engineering at Sockeye Networks and Navisite. In addition, Mr. Giftakis was the director of data communications at Bell Atlantic for ten years.

John Macdonald has been our Chief Financial Officer since January 2018. Mr. Macdonald joined the Company as Corporate Controller in March 2017. Prior to joining the Company, Mr. Macdonald was the Assistant Corporate Controller at KVH Industries, a leading provider of mobile connectivity products and guidance and stabilization solutions from February 2015 to February 2017. Prior to that, he was Director of Accounting at APC by Schneider Electric, a manufacturer of critical power products and solutions provider for data centers and other applications, from May 2010 to February 2015. He began his career with Ernst & Young LLP serving as an assurance manager. A licensed Certified Public Accountant (CPA) in Massachusetts, he holds a Master of Business Administration from Bryant University and a BS in Business Administration from the University of Rhode Island.

Howard L. Haronian, M.D., has served as a director of Towerstream I, Inc. since inception in December 1999. Dr. Haronian has been a director of the Company since it became public in 2007. Dr. Haronian is an interventional cardiologist and has been president of Cardiology Specialists, Ltd. of Rhode Island since 1994. Dr. Haronian has served on the clinical faculty of the Yale School of Medicine since 1994. Dr. Haronian graduated from the Yale School of Management Program for Physicians in 1999. Dr. Haronian has directed the Cardiac Catheterization program at The Westerly Hospital since founding the program in 2003. Dr. Haronian was appointed to the Board of Directors due to his extensive knowledge of the Company’s operations since its founding and his executive level experience at other organizations.

William J. Bush has been a director of the Company since January 2007. Since November 2016, Mr. Bush has served as the chief financial officer of Stem, Inc., which is building and operating the largest digitally connected energy storage network in the world. From January 2010 to November 2016, Mr. Bush served as the chief financial officer of Borrego Solar Systems, Inc., one of the nation’s leading financiers, designers and installers of commercial and government grid-connected solar electric power systems. From October 2008 to December 2009, Mr. Bush served as the chief financial officer of Solar Semiconductor, Ltd., a private vertically integrated manufacturer and distributor of quality photovoltaic modules and systems targeted for use in industrial, commercial and residential applications with operations in India helping it reach $100 million in sales in its first 15 months of operation. Prior to that, Mr. Bush served as chief financial officer and corporate controller for a number of high growth software and online media companies as well as being one of the founding members of Buzzsaw.com, Inc., a spinoff of Autodesk, Inc. Prior to his work at Buzzsaw.com, Mr. Bush served as corporate controller for Autodesk, Inc. (NasdaqGM: ADSK), one of the largest software applications company in the world. His prior experience includes seven years in public accounting with Ernst & Young, and PricewaterhouseCoopers. Mr. Bush holds a B.S. degree in Business Administration from U.C. Berkeley and is a certified public accountant. Mr. Bush was appointed to the Board of Directors because he has significant experience in finance.

Board Leadership Structure and Risk Oversight

Our Audit Committee is primarily responsible for overseeing our risk management processes on behalf of our Board of Directors. The Audit Committee receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our Company’s assessment of risks. In addition, the Audit Committee reports regularly to the full Board of Directors which also considers our risk profile. The Audit Committee and the full Board of Directors focus on the most significant risks facing our Company and our Company’s general risk management strategy, and also ensure that risks undertaken by our Company are consistent with the Board of Directors’ tolerance for risk. While the Board of Directors oversees our Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach to address the risks facing our Company.

Directorships

Except as otherwise reported above, none of our directors held directorships in other reporting companies or registered investment companies at any time during the past five years.

Family Relationships

Except for Howard L. Haronian, M.D. and Philip Urso, who are cousins, there are no family relationships among our directors or executive officers.

Involvement in Certain Legal Proceedings

To our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:

● Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

● Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.

● Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

● Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission (the “SEC”), or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

● Been the subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

There are no material proceedings to which any director, officer or affiliate, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, affiliate, or security holder is a party adverse to us or has a material interest adverse to the Company.

Board Committees

Since January 2007, the standing committees of our Board of Directors consist of an Audit Committee, a Compensation Committee and a Nominating Committee. Each member of our committees is “independent” as such term is defined under and required by the federal securities laws and the rules of the NASDAQ Stock Market. The charters of each of the committees have been approved by our Board of Directors and are available on our website at www.towerstream.com.

Audit Committee

The Audit Committee is comprised of two directors: William J. Bush and Howard L. Haronian, M.D. Mr. Bush is the Chairman of the Audit Committee. The Audit Committee’s duties include recommending to our Board of Directors the engagement of independent auditors to audit our financial statements and to review our accounting and auditing principles. The Audit Committee reviews the scope, timing and fees for the annual audit and the results of audit examinations performed by independent public accountants, including their recommendations to improve our system of accounting and our internal control over financial reporting. The Audit Committee oversees the independent auditors, including their independence and objectivity. However, the committee members are not acting as professional accountants or auditors, and their functions are not intended to duplicate or substitute for the activities of management and the independent auditors. The Audit Committee is empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors. Each of our Audit Committee members possesses an understanding of financial statements and generally accepted accounting principles. The Board of Directors has determined that Mr. Bush is an “audit committee financial expert” as defined in Item 407(d) (5) (ii) of Regulation S-K. The designation of Mr. Bush as an “audit committee financial expert” will not impose on him any duties, obligations or liability that are greater than those that are generally imposed on him as a member of our Audit Committee and Board of Directors, and his designation as an “audit committee financial expert” will not affect the duties, obligations or liability of any other member of our Audit Committee or Board of Directors.

Compensation Committee

The Compensation Committee is comprised of two directors: Howard L. Haronian, M.D., and William J. Bush. Dr. Haronian is the Chairman of the Compensation Committee. The Compensation Committee has certain duties and powers as described in its charter, including but not limited to periodically reviewing and approving our salary and benefits policies, compensation of executive officers, administering our stock option plans and recommending and approving grants of stock options under such plans.

Nominating Committee

The Nominating Committee is comprised of one director: Howard L. Haronian, M.D. Dr. Haronian is Chairman of the Nominating Committee. The Nominating Committee considers and makes recommendations on matters related to the practices, policies and procedures of the Board of Directors and takes a leadership role in shaping our corporate governance. As part of its duties, the Nominating Committee assesses the size, structure and composition of the Board of Directors and its committees, and coordinates the evaluation of Board of Directors performance. The Nominating Committee also acts as a screening and nominating committee for candidates considered for election to the Board of Directors.

Changes in Nominating Process

There are no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.

Compensation of Directors

In January 2017, Philip Urso, the Chairman of the Board of Directors, resigned from his position as Interim Chief Executive Officer. Effective February 1, 2017, the Company modified the terms of Mr. Urso’s compensation for a period of three months to assist in the transition of the new Chief Executive Officer. Mr. Urso received a monthly salary of $12,500, a car allowance of $1,000 per month and continued health insurance coverage for himself and his dependents. Beginning in May 2017, Mr. Urso received compensation as a director of the Company and paid his health insurance coverage.

The following table summarizes the compensation awarded during the fiscal year ended December 31, 2017 to our directors who are not named executive officers in the summary compensation table below:

Name	Fees Earned or Paid in Cash		Option Awards (3)(4)		Total
Philip Urso (1)	$	77,500	$	305	$	77,805
Howard L. Haronian, M.D.	$	60,000	$	305	$	60,305
Paul Koehler*	$	60,000	$	305	$	60,305
William J. Bush	$	60,000	$	305	$	60,305
Don MacNeil (2)	$	35,000	$	305	$	35,305

*Effective January 9, 2018 resigned from his position as a member of the Board of Directors.

(1) Represents compensation earned during the transition period of the new Chief Executive Officer from February 2017 through April 2017 and as the Chairman of the Board of Directors commencing on May 1, 2017.

(2) Effective May 22, 2017, the Company appointed Mr. MacNeil to serve as a member of its Board of Directors. On January 9, 2018, Mr. MacNeil resigned from his position as a director.

(3) Based upon the aggregate grant date fair value calculated in accordance with the Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are contained in Note 11 to our December 31, 2017 financial statements.

(4) Option awards relate to the issuance in 2017 of options to purchase 34 shares at an exercise price of $12.00 each for Messrs. Urso, Koehler, Bush and MacNeil, and Dr. Haronian.

Pursuant to the 2008 Non-Employee Directors Compensation Plan (the “Directors Plan”) in effect in 2015, each non-employee director was entitled to receive periodic grants of ten-year options to purchase 34 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant and that vests monthly over a one year period. An initial grant was made upon such non-employee director’s election or appointment to our Board of Directors and thereafter annually on the first business day in June, subject to such director remaining on the Board of Directors. Non-employee directors also receive $50,000 per annum in cash. As a result of the additional responsibilities associated with such positions, the Chairman of the Board of Directors was entitled to receive an additional $10,000 per year, and the Chairman of the Audit and Compensation Committees were each entitled to receive an additional $5,000 per year.

On December 18, 2016, the Company adjusted monthly cash compensation for its independent directors to $5,000 per month effective December 1, 2016.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the SEC. Based solely on our review of copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied with all Section 16(a) filing requirements during the year ended December 31, 2017, except that our Board of Directors (Messrs. Urso, Koehler, Bush and MacNeil, and Dr. Haronian) failed to file timely Form 4s for the grant of stock options to purchase shares of our common stock in June 2017.

Code of Ethics and Business Conduct

Our Board of Directors has adopted a code of ethics and business conduct that establishes the standards of ethical conduct applicable to all directors, officers and employees of Towerstream Corporation. The code of ethics and business conduct addresses, among other things, conflicts of interest, compliance with disclosure controls and procedures, and internal control over financial reporting, corporate opportunities and confidentiality requirements. The Audit Committee is responsible for applying and interpreting our code of ethics and business conduct in situations where questions are presented to it. There were no amendments or waivers to the code of ethics and business conduct in fiscal 2017. Our code of ethics and business conduct is available for review on our website at www.towerstream.com. We will provide a copy of our code of ethics and business conduct free of charge to any person who requests a copy. Requests should be directed by e-mail to John Macdonald, our Chief Financial Officer, at jmacdonald@towerstream.com, or by mail to Towerstream Corporation, 76 Hammarlund Way, Middletown, Rhode Island 02842, or by telephone at (401) 848-5848.

Item 11 - Executive Compensation.

~~Summary~~The ~~Compensation~~information ~~Table~~required by this item will be set forth in an amendment to this Annual Report on Form 10-K, which will be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated by reference to such amendment.

The following table summarizes the annual and long-term compensation paid to our chief executive officer and our other most highly compensated executive officers who were serving at the end of 2017, whom we refer to collectively in this Annual Report on Form 10-K as the “named executive officers”. In January 2017, Mr. Urso, the Chairman of the Board of Directors, resigned from his position as Interim Chief Executive Officer and the Company appointed Ernest Ortega as Mr. Urso’s successor. Mr. Larcombe resigned from his position with the Company in 2017 and the Company appointed Laura Thomas as Mr. Larcombe’s successor. Ms. Thomas resigned from her position in January 2018. In 2016, the Company adopted new compensation policies applicable to named executive officers under which they would receive lesser cash compensation amounts than previously paid plus equity incentives intended to align the interests of such executives with the interests of stockholders. Such policies reduced the obligation of the Company for payment of historical levels of cash compensation to executives, which the Company had been contractually obligated to pay pursuant to its employment agreements with executives.

Name and Principal Position	Year	Salary		Bonus			Option Awards(1)			Other			Total
Philip Urso	2017	$	25,385	$	-		$	68,005	(2)	$	-		$	93,390
Former Interim Chief Executive Officer*	2016	$	264,248	$	-		$	297,650	(3)	$	-		$	561,898
Ernest Ortega	2017	$	325,365	$	218,681	(4)	$	261,323	(5)	$	-		$	805,369
Chief Executive Officer
Arthur G. Giftakis	2017	$	230,000	$	83,828	(6)	$	59,632	(7)	$	-		$	373,460
Chief Operating Officer	2016	$	190,615	$	25,000		$	360,567	(8)	$	-		$	576,182
Laura Thomas	2017	$	152,308	$	44,310	(9)	$	64,871	(10)	$	-		$	261,489
Chief Financial Officer**
Frederick Larcombe	2017	$	104,608	$	-		$	34,002	(11)	$	35,840	(12)	$	174,450
Former Chief Financial Officer***	2016	$	148,480	$	-		$	-		$	-		$	148,480
Jeffrey M. Thompson	2016	$	63,939	$	-		$	-		$	277,083	(13)	$	341,022
Former President and Chief Executive Officer****
Joseph P. Hernon	2016	$	153,125	$	-		$	-		$	81,250	(14)	$	234,375
Former Chief Financial Officer*****

*Resigned as Interim Chief Executive Officer on January 24, 2017

**Resigned as Chief Financial Officer on January 5, 2018

***Resigned as Chief Financial Officer on May 15, 2017

****Resigned as President and Chief Executive Officer on February 12, 2016

*****Resigned as Chief Financial Officer on June 3, 2016

	(1)	Based upon the aggregate grant date fair value calculated in accordance with the Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are contained in Note 11 to our December 31, 2017 financial statements.
	(2)	On February 3, 2017, Mr. Urso received a ten-year option to purchase 6,676 shares of common stock at an exercise price of $13.50 per share in recognition of his past service as Interim Chief Executive Officer. These options vested immediately.

(3) In connection with his appointment to Interim Chief Executive Officer on February 16, 2016, Mr. Urso was granted a ten-year option to purchase 67 shares of common stock at an exercise price of $375.00 per share on March 4, 2016. These options vest immediately.

Mr. Urso was granted the following ten-year options as compensation for his appointment to Interim Chief Executive Officer:

a) 17 shares of common stock at an exercise price of $180.00 on March 31, 2016 which vest immediately; b) 17 shares of common stock at an exercise price of $240.00 on April 29, 2016 which vest immediately; c) 17 shares of common stock at an exercise price of $285.00 on May 31, 2016 which vest immediately; d) 17 shares of common stock at an exercise price of $255.00 on June 30, 2016 which vest immediately; and e) 7 shares of common stock at an exercise price of $187.50 on July 29, 2016 which vest immediately;

On August 19, 2016, Mr. Urso received a ten-year option to purchase 2,747 shares of common stock at an exercise price of $168.75 per share in recognition of services performed during 2016. These options vest quarterly over one year with the first tranche vesting on November 19, 2016.

(4) Per his employment agreement, Mr. Ortega is eligible for an annual bonus of $300,000. The Compensation Committee has determined that his bonus will be based on the following metrics: 30% on churn, 30% on EBITDA and 40% on cash flows. Bonuses will be paid on the achievement percentage attained. For the year ended December 31, 2017, Mr. Ortega was awarded a bonus of $218,681 based on the following (cash flows and EBITDA dollars are in thousands):

Metric	Actual			Objective			Achievement of Objective			Bonus Value		Total Payout
Churn		1.31	%	Less than 1.7		%		123.0	%	$	90,000	$	110,681
EBITDA	$	(607	)	$	1,100			-	%	$	90,000	$	-
Cash Flows	$	(4,703	)	$	(4,500	)		90.0	%	$	120,000	$	108,000

(5) In connection with his appointment to Chief Executive Officer on January 24, 2017, Mr. Ortega was issued options for the purchase of up to 27,162 shares of the Company's common stock at $12.75 per share for a period of ten years. Those options vest as follows: 4,178 will vest on January 24, 2018; 8,358 will vest in eight quarterly installments during the twenty-four months ending January 24, 2020; 7,313 will vest upon the achievement of three consecutive quarters of positive cash flow; and 7,313 will vest upon the sale of the Company's earth station assets in Miami, Florida for gross proceeds equal to or greater than $15,000,000.

(6) Per his employment agreement, Mr. Giftakis is eligible for an annual bonus of $115,000. The Compensation Committee has determined that his bonus will be based on the following metrics: 30% on churn, 30% on EBITDA and 40% on cash flows. Bonuses will be paid on the achievement percentage attained. For the year ended December 31, 2017, Mr. Giftakis was awarded a bonus of $83,828 based on the following (cash flows and EBITDA dollars are in thousands):

Metric	Actual			Objective			Achievement of Objective			Bonus Value		Total Payout
Churn		1.31	%	Less than 1.7		%		123.0	%	$	34,500	$	42,428
EBITDA	$	(607	)	$	1,100			-	%	$	34,500	$	-
Cash Flows	$	(4,703	)	$	(4,500	)		90.0	%	$	46,000	$	41,400

	(7)	On February 3, 2017, Mr. Giftakis received a ten-year option to purchase 5,854 shares of common stock at an exercise price of $13.50 per share in recognition of services performed in 2016. These options vest ratably on a quarterly basis over the eight quarters immediately following the grant date.
	(8)	In connection with his appointment to Chief Operating Officer on February 16, 2016, Mr. Giftakis was granted a ten-year option to purchase 400 shares of common stock at an exercise price of $375.00 per share on March 4, 2016. These options vest quarterly over a two year period with the first tranche vesting on June 4, 2016.

On August 19, 2016, Mr. Giftakis received a ten-year option to purchase 2,747 shares of common stock at an exercise price of $168.75 per share in recognition of services performed during 2016. These options vest quarterly over one year with the first tranche vesting on November 19, 2016.

(9) Ms. Thomas was awarded a discretionary bonus as a result of her contributions in 2017 in assisting the Company towards achieving its financial and operational goals.

(10) In connection with her appointment to Chief Financial Officer on May 15, 2017, Ms. Thomas was granted a ten-year option to purchase 7,556 shares of common stock at an exercise price of $11.25 per share. These options vest 25% after one year of service and the remaining to vest ratably over the following three years.

(11) On February 3, 2017, Mr. Larcombe received a ten-year option to purchase 3,338 shares of common stock at an exercise price of $13.50 per share in recognition of services performed in 2016. These options vest ratably on a quarterly basis over the eight quarters immediately following the grant date.

(12) As part of Mr. Larcombe’s separation agreement dated May 15, 2017, he received a severance payment of $35,840.

(13) As part of Mr. Thompson’s separation agreement dated February 12, 2016, he received a payment of an amount approximately equal to the remaining term of Mr. Thompson's employment agreement which was to expire in October 2016.

(14) As part of Mr. Hernon’s separation agreement dated June 3, 2016, he received a one-time payment equal to three months of his pay.

Grants of Plan-Based Awards

The following table summarizes the stock option awards granted to our named executive officers during the year ended December 31, 2017:

Name	Grant Date	All Other Option Awards: Number of Securities Underlying Options		Exercise or Base Price of Option Awards ($/Share)(1)		Grant Date Fair Value of Stock and Option Awards($)(2)
Ernest Ortega	1/24/17		12,536	$	12.75	$	120,608
	1/24/17		14,626	$	12.75	$	140,708
Arthur G. Giftakis	2/3/17		5,854	$	13.50	$	59,632
Laura Thomas*	5/15/17		7,556	$	11.25	$	64,871

* Resigned as Chief Financial Officer on January 5, 2018

(1) The exercise price of the stock options awarded was determined in accordance with the stock option plans, which provides that the exercise price for an option granted be the closing sale price for our common stock as quoted on the OTC Markets Group, Inc. on the date of grant.

(2) Based upon the aggregate grant date fair value calculated in accordance with the Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are contained in Note 11 to our December 31, 2017 financial statements.

There were no restricted stock awards granted to our named executive officers during the year ended December 31, 2017.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards to our named executive officers as of December 31, 2017.

	Option Awards
Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable			Option Exercise Price		Option Expiration Date
Ernest Ortega		34		−		$	525.00	12/31/25
		1,000		−		$	111.00	9/15/26
		334		−		$	15.00	1/2/27
		−		12,536	(1)	$	12.75	1/23/27
		−		14,626	(2)	$	12.75	1/23/27
Arthur G. Giftakis		5		−		$	2,715.00	5/31/20
		60		−		$	6,135.00	8/2/21
		40		−		$	3,465.00	8/28/23
		17		−		$	1,710.00	10/14/24
		20		−		$	1,965.00	9/10/25
		350		50	(3)	$	375.00	3/3/26
		2,747		−		$	168.75	8/18/26
		2,195		3,659	(4)	$	13.50	2/2/27
Laura Thomas*		-		7,556	(5)	$	11.25	5/14/27

*Resigned as Chief Financial Officer on January 5, 2018

(1) Such option vests 33% after one year from the grant date and the remaining to vest ratably over the following eight quarters.

(2) Such option vests one-half upon the achievement of three consecutive quarters of positive cash flow and one-half vests upon the sale of the Company's earth station assets in Miami, Florida for gross proceeds equal to or greater than $15,000,000.

(3) Such option vests quarterly over a two year period, with the first tranche vesting on June 4, 2016.

(4) Such option vests quarterly over a two year period, with the first tranche vesting on May 3, 2017.

(5) Such option vests 25% after one year of service and the remaining to vest ratably over the following three years.

Option Exercises and Stock Vested

There were no options exercised or restricted stock vested during fiscal 2017 with respect to our named executive officers.

Employment Agreements and Change-in-Control

On February 16, 2016, the Board of Directors appointed Philip Urso as Interim Chief Executive Officer of the Company, for which he also serves as Chairman of the Board of Directors. In relation to Mr. Urso’s appointment to Interim Chief Executive Officer, the Board of Directors modified his compensation to increase his cash compensation to $25,000 per month. Mr. Urso was also awarded a one-time grant of 67 fully vested, ten-year options to purchase shares of the Company’s common stock, at an exercise price equal to the price of the Company’s common stock at market close on the day of the grant, March 4, 2016. In addition, Mr. Urso received 17 fully-vested, ten-year stock options on the last day of each month of his service as Interim Chief Executive Officer for the first four months as Interim Chief Executive Officer, and 7 shares per month due on the last day of each month of service as Interim Chief Executive Officer through July 2017, with all such options having an exercise price equal to the price of the Company’s common stock at market close on the day of the grant. On January 24, 2017, Mr. Urso resigned from his position as Interim Chief Executive Officer of the Company. The Company did not enter into any severance agreement with Mr. Urso in connection with his resignation. Effective February 1, 2017, the Company entered into an employment agreement with Mr. Urso, pursuant to which he will provide support and transition services to the Company’s new Chief Executive Officer for a period of three months. Under the terms of the agreement, Mr. Urso's compensation will consist of a salary of $12,500 per month, a car allowance of $1,000 per month, and health insurance coverage for himself and his dependents.

On February 16, 2016, the Board of Directors appointed Arthur Giftakis as Chief Operating Officer of the Company, for which he was serving as the Senior Vice President of Engineering and Operations of the Company at the time of his appointment. In connection to his appointment as Chief Operating Officer, Mr. Giftakis received a one-time bonus of $25,000. He also received ten-year options to purchase 400 shares of the Company’s common stock having an exercise price equal to the price of the Company’s common stock at market close on March 4, 2016, and which options vest over the course of two years in equal quarterly installments. On November 23, 2016, the Company entered into an employment agreement with Mr. Giftakis to which he will serve as the Company’s Chief Operating Officer for a base salary of $230,000 per year. He is eligible for bonus compensation of up to $115,000 per year in cash, stock or options, as approved at the discretion of the Compensation Committee. His employment agreement has a term of two years and may automatically be renewed for additional one year terms unless earlier terminated by either party with three months prior notice. Upon termination for any reason, Mr. Giftakis is entitled to accrued but unpaid salary and bonus. Upon termination without cause by the Company, for good reason by Mr. Giftakis or within 180 days of a change of control, he will be entitled to the greater of his base salary through the balance of the employment period or twelve months base salary, continued participation in the Company’s benefits plans to be paid by the Company and immediate vesting of all stock option and other equity awards.

Effective June 14, 2016, Frederick Larcombe joined the Company as Chief Financial Officer. His agreement with the Company, as amended, provides for compensation of $5,120 per week for his services through June 30, 2018. Mr. Larcombe resigned from his position as Chief Financial Officer on May 15, 2017 upon the appointment of Laura Thomas as Chief Financial Officer. The Company entered into a separation agreement with Mr. Larcombe. Under the terms of the separation agreement, Mr. Larcombe, through June 30, 2017, provided consulting and support services to the Company. Mr. Larcombe will receive a severance payment of an aggregate of $35,840, payable in six weekly installments provided that Mr. Larcombe has provided the requested services under the separation agreement. In addition, all of Mr. Larcombe’s outstanding options vested immediately and, unless exercised prior to May 15, 2018, shall be forfeited.

On January 24, 2017, the Company entered into an employment agreement with Ernest Ortega pursuant to which he will serve as the Company’s Chief Executive Officer. The agreement has a term of eighteen months and automatically renews for additional one-year terms unless earlier terminated by either party within three months prior to the renewal date. Mr. Ortega will receive a base salary of $350,000 per year and is eligible for bonus compensation of up to $300,000 per year, as approved at the discretion of the Board of Directors. In addition, the Company issued options for the purchase of up to 27,162 shares of the Company common stock at $12.75 per share for a period of ten years. Those options vest as follows: 4,178 will vest on January 24, 2018; 8,358 will vest in eight quarterly installments during the twenty-four months ending January 24, 2020; 7,313 will vest upon the achievement of three consecutive quarters of positive cash flow; and 7,313 will vest upon the sale of the Company's earth station assets in Miami, Florida for gross proceeds equal to or greater than $15,000,000. Upon termination of employment for any reason, Mr. Ortega shall be entitled to: (i) all base salary earned through the date of termination, (ii) any annual bonuses earned through the date of termination, (iii) any and all reasonable expenses paid or incurred in connection with and related to the performance of his duties and responsibilities for the Company during the period ending on the termination date, (iv) any accrued but unused vacation time through the date of termination and (v) all share awards earned and vested prior to the date of termination. In the event of termination by the Company without cause, by Mr. Ortega for good reason or following a change of control, Mr. Ortega shall also be entitled to his continued base salary through the remainder of the term of employment.

On May 15, 2017, the Company entered into an employment agreement with Laura Thomas. Ms. Thomas received an annual base salary of $240,000 and will be eligible for an annual bonus of up to 50% of her base salary. In addition, she was issued options to purchase up to 2% of the Company’s common stock on a fully diluted basis as of May 15, 2017, 25% of which will vest after one year of service and the remaining to vest ratably over the following three years. In the event of resignation for Good Reason (as defined in the Employment Agreement) or termination other than for Cause (as defined in the Employment Agreement) within 180 days of a Change of Control, Ms. Thomas will be entitled to a severance payment equal to (i) the greater of her continued base salary through the balance of the term, as renewed, or 12 months of her then bases Salary, (ii) continued participation in Company welfare benefit plans (including health benefits) on the same terms as immediately prior to termination and to be paid in full by the Company for not less than 12 months of continuation of benefits and (iii) immediate vesting of all stock options and equity awards; provided, that she executes an agreement releasing Company and its affiliates from any liability. The agreement has an initial term of two years and may be extended for additional one year terms. On January 5, 2018, Laura Thomas resigned from her position as Chief Financial Officer and entered into a separation agreement with the Company. Pursuant to the separation agreement, Ms. Thomas will receive a severance payment of (i) current base salary of $240,000 through January 5, 2018, (ii) three months of current base salary of $240,000, payable in six bi-weekly payments of $10,000, less applicable statutory deductions and tax withholdings, (iii) $44,310 in earned annual bonus for the fiscal year ended December 31, 2017, and (iv) $5,077 in accrued but unused vacation time. In addition, all of Ms. Thomas’ outstanding options shall vest immediately.

Effective January 8, 2018, the Company entered into an employment agreement with John Macdonald pursuant to which he will serve as the Company’s Chief Financial Officer. The agreement has an initial term of two years and may be extended for additional one year terms. Mr. Macdonald will receive an annual base salary of $175,000 and be eligible for an annual bonus of up to 50% of his base salary. In addition, Mr. Macdonald is eligible for stock compensation in the future, at the Board of Director’s discretion. In the event of resignation for Good Reason (as defined in the Employment Agreement) or termination other than for Cause (as defined in the Employment Agreement) within 180 days of a Change of Control, Mr. Macdonald will be entitled to a severance payment equal to (i) the greater of his continued base salary through the balance of the term, as renewed, or 6 months of his then base salary, (ii) continued participation in Company welfare benefit plans (including health benefits) on the same terms as immediately prior to termination and to be paid in full by the Company for not less than 12 months of continuation of benefits and (iii) immediate vesting of all stock options and equity awards; provided, that he executes an agreement releasing Company and its affiliates from any liability.

In December 2007, we entered into an employment agreement, as amended through 2015, with Jeffrey M. Thompson, our former principal executive officer, which was terminated in February 2016. We entered into a separation agreement with Mr. Thompson on February 12, 2016 pursuant to which Mr. Thompson resigned from all positions with the Company and its subsidiaries, and as a member of the Board of Directors. Among other terms and conditions, the separation agreement provides for (i) the mutual release of claims, liabilities and causes of action by Mr. Thompson and the Company, (ii) payment of $277,083, an amount approximately equal to the remaining term of Mr. Thompson's employment agreement which was to expire in October 2016, (iii) vesting of option and other stock incentive awards held by Mr. Thompson and (iv) a three month non-competition period and a twelve month non-solicitation period.

In May 2008, Joseph P. Hernon joined the Company as Chief Financial Officer. We entered into a separation agreement with Mr. Hernon on June 3, 2016 pursuant to which Mr. Hernon resigned from all positions with the Company and its subsidiaries. Among other terms and conditions, the separation agreement provides for (i) the mutual release of claims, liabilities and causes of action by Mr. Hernon and the Company and (ii) payment of $81,250, an amount approximately equal to the three months of Mr. Hernon's base salary.

Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The ~~following~~information ~~table~~required ~~sets~~by this item will be set forth ~~information~~in ~~with~~an ~~respect~~amendment to this Annual Report on Form 10-K, which will be filed with the ~~beneficial~~SEC ~~ownership~~not oflater ~~our~~than ~~common~~120 ~~stock~~days asafter the end of ~~March~~the 23fiscal year covered by this Form 10-K, ~~2018~~and is incorporated by: reference to such amendment.

● each person known by us to beneficially own more than 5% of our common stock (based solely on our review of SEC filings);

● each of our directors;

● each of our named executive officers listed in the section entitled “Summary Compensation Table” under Executive Compensation; and

● all of our directors and executive officers as a group.

The percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of, with respect to the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Towerstream Corporation, 76 Hammarlund Way, Middletown, Rhode Island 02842, unless otherwise indicated. As of March 23, 2018, there were 394,399 shares of our common stock outstanding.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)			Percent of Class (1)
5% Stockholders:
HS Contrarian Investments, LLC (2)		43,822	(3)		9.99	%
68 Fiesta Way
Fort Lauderdale, FL 33301
Barry Honig		34,822	(4)		8.83	%
555 South Federal Highway #450
Boca Raton, FL 33432
Delaney Equity Group, LLC		31,897	(5)		8.09	%
2401 PGA Blvd, Suite 110
Palm Beach Gardens, FL 33410
Directors and Named Executive Officers:
Ernest Ortega		6,599	(6)		1.65	%
Philip Urso		10,682	(7)		2.64	%
William J. Bush		1,574	(8)		*
Howard L. Haronian, M.D.		2,253	(9)		*
Arthur G. Giftakis		6,949	(10)		1.73	%
John Macdonald		-			*
All directors and executive officers as a group (6 persons)		28,057			6.67	%
		(6)(7)(8)(9)(10)
Frederick Larcombe (11)		3,338	(12)		*
Laura W. Thomas (13)		7,556	(14)		1.88	%
Paul Koehler (13)		1,547	(15)		*
Donald MacNeil (13)		20	(16)		*

* Less than 1%.

(1) Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of March 23, 2018. Shares issuable pursuant to the exercise of stock options and warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person.

(2) John Stetson is the Managing Member of HS Contrarian Investments, LLC and in such capacity, is deemed to hold voting and dispositive power of the securities held by HS Contrarian Investments, LLC.

(3) Based on a Schedule 13G/A filed by the reporting person on February 13, 2018. Represents 43,822 shares of common stock underlying Series G Preferred Stock held by HS Contrarian Investments, LLC (“HSCI”). Excludes (i) 27,911 shares of common stock underlying Series G Preferred Stock held by HSCI and (ii) 53,440 shares of common stock underlying Series H Preferred Stock held by HSCI. Each of the foregoing series of preferred stock contains an ownership limitation such that the holder may not exercise any of such securities to the extent that such exercise would result in the holder’s beneficial ownership being in excess of 9.99% of the Issuer’s issued and outstanding common stock together with all shares owned by the holder and its affiliates. John Stetson is the Manager of HSCI and in such capacity has voting and dispositive power over the securities held by such entity.

(4)	Based on a Schedule 13G filed by the reporting person on February 14, 2018. Represents (ii) 11,825 shares of common stock held by Barry Honig and (ii) 22,997 shares of common stock held by 401K. Barry Honig is the trustee of 401K and in such capacity has voting and dispositive power over the securities held by such entity. Barry Honig may be deemed to hold sole voting and dispositive power over 11,825 shares of common stock and shared voting and dispositive power over 22,997 shares of common stock. 401K may be deemed to hold shared voting and dispositive power over 22,997 shares of common stock.
(5)	Based on a Schedule 13G filed on January 30, 2018. Represents shares of common stock held by Delaney Equity Group LLC. David Delaney is the Managing Member of Delaney Equity Group LLC and in such capacity has voting and dispositive power over the securities held by such entity.
(6)	Includes 6,599 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.
(7)	Includes 9,762 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. Excludes 70 shares of common stock held in a trust for the benefit of Mr. Urso’s minor children, of which Mr. Urso is not a trustee. Mr. Urso disclaims beneficial ownership of the shares held in that trust.
(8)	Includes 1,547 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.

(9) Includes 7 shares of common stock held by Dr. Haronian’s wife, for which Dr. Haronian has an indirect interest in, and 1,530 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.

(10) Includes 6,948 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.

(11)	Resigned from all positions with the Company in May 2017.
(12)	Consists of 3,338 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.
(13)	Resigned from all positions with the Company in January 2018.
(14)	Consists of 7,556 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.
(15)	Consists of 1,536 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.
(16)	Consists of 20 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days.

Item 13 - Certain Relationships and Related Transactions, and Director Independence.

~~Related~~The ~~parties~~information ~~can~~required ~~include~~by ~~any~~this ofitem ~~our~~will ~~directors~~be orset ~~executive~~forth officers, certain of our stockholders and their immediate family members. Each year, we prepare and require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions with us in ~~which the officer or director or their family members have~~ an ~~interest.~~amendment ~~This~~to ~~helps~~this usAnnual ~~identify~~Report ~~potential~~on ~~conflicts~~Form ~~of interest. A conflict of interest occurs when an individual’s private interest interferes~~10-K, orwhich ~~appears~~will tobe ~~interfere,~~filed ~~in any way~~ with the ~~interests~~SEC ofnot ~~the~~later ~~Company~~than as120 adays ~~whole.~~after ~~Our code of ethics and business conduct requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify our Audit Committee of~~ the ~~Board~~end of ~~Directors, which is responsible for considering and reporting to~~ the ~~Board~~fiscal ofyear ~~Directors~~covered ~~any~~by ~~questions~~this ofForm ~~possible conflicts of interest of Board of Directors members. Our code of ethics and business conduct further requires pre~~10-~~clearance before any employee~~K, ~~officer or director engages in any personal or business activity that may raise concerns about conflict, potential conflict or apparent conflict of interest. Copies of our code of ethics~~ and ~~business~~is ~~conduct~~incorporated ~~and~~by ~~the~~reference ~~Audit~~to ~~Committee~~such ~~charter are posted on the corporate governance section of our website at www~~amendment.~~towerstream.com.~~

100

At no time during the last fiscal year has any executive officer, director or any member of these individuals’ immediate families, any corporation or organization with whom any of these individuals is an affiliate or any trust or estate in which any of these individuals serves as a trustee or in a similar capacity or has a substantial beneficial interest been indebted to the Company or was involved in any transaction in which the amount exceeded $120,000 and such person had a direct or indirect material interest.

In evaluating related party transactions and potential conflicts of interest, our Chief Financial Officer and/or Chairman of the Audit Committee apply the same standards of good faith and fiduciary duty they apply to their general responsibilities. They will approve a related party transaction only when, in their good faith judgment, the transaction is in the best interest of the Company.

Director Independence

Each of William J. Bush and Howard L. Haronian, M.D. are independent directors, as provided in NASDAQ Marketplace Rule 5605(a)(2).

Item 14 - Principal Accountant Fees and Services.

The ~~following~~information ~~table~~required ~~sets~~by this item will be set forth ~~the~~in ~~fees~~an ~~that~~amendment to this Annual Report on Form 10-K, which will be filed with the ~~Company~~SEC ~~accrued~~not orlater ~~paid~~than to120 ~~Marcum~~days ~~LLP~~after ~~for~~the end of the fiscal ~~2017~~year covered by this Form 10-K, and ~~fiscal~~is ~~2016.~~incorporated by reference to such amendment.

	2017		2016
Audit Fees(1)	$	303,325	$	378,857
Audit-Related Fees(2)		−		−
Tax Fees(3)		−		−
All Other Fees		−		−
Total	$	303,325	$	378,857

(1)	Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.
(2)	Audit-related fees relate to professional services rendered in connection with assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including due diligence.
(3)	Tax fees relate to professional services rendered for tax compliance, tax advice and tax planning for the Company.

101

PART IV

Item 15 - Exhibits and Financial Statement Schedules.

Exhibit No.		Description
2.1		Agreement of Merger and Plan of Reorganization, dated January 12, 2007, by and among University Girls Calendar, Ltd., Towerstream Acquisition, Inc. and Towerstream Corporation (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
3.1		Certificate of Incorporation of University Girls Calendar, Ltd. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of University Girls Calendar, Ltd. filed with the Securities and Exchange Commission on January 5, 2007).
3.2		Certificate of Amendment to Certificate of Incorporation of University Girls Calendar, Ltd., changing the Company’s name to Towerstream Corporation (Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
3.3		Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 12, 2010).
3.4		By-Laws of Towerstream Corporation (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
3.5		Amendment No. 1 to the By-Laws of Towerstream Corporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on August 30, 2007).
3.6		Amendment No. 1 to the Certificate of Incorporation of Towerstream Corporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 8, 2012).
3.7		Certificate of Amendment to the Certificate of Incorporation of Towerstream Corporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on August 25, 2015).
3.8		Certificate of Amendment to the Certificate of Incorporation of Towerstream Corporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on July 6, 2016).
3.9		Certificate of Designation of Rights, Preferences and Privileges of Series B Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on July 8, 2016).
3.10		Certificate of Designation of Rights, Preferences and Privileges of Series C Preferred Stock (Incorporated by reference to Exhibit 3.10 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
3.11		Certificate of Designation of Rights, Preferences and Privileges of Series D Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 10, 2016).
3.12		Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 22, 2016).
3.13		Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 22, 2016).
3.14		Certificate of Designations, Preferences and Rights of Series F Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 3, 2017).
3.15		Certificate of Amendment to Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 3, 2017).

~~102~~62

3.10		Certificate of Designation of Rights, Preferences and Privileges of Series C Preferred Stock (Incorporated by reference to Exhibit 3.10 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
3.11		Certificate of Designation of Rights, Preferences and Privileges of Series D Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 10, 2016).
3.12		Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 22, 2016).
3.13		Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 22, 2016).
3.14		Certificate of Designations, Preferences and Rights of Series F Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 3, 2017).
3.15		Certificate of Amendment to Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 3, 2017).
3.16		Certificate of Designations, Preferences and Rights of Series G Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on May 26, 2017).
3.17		Certificate of Designations, Preferences and Rights of Series H Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on May 26, 2017).
3.18		Certificate of Amendment to the Certificate of Incorporation of Towerstream Corporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on September 28, 2017).
3.19		Certificate of Designations of Preferences, Rights and Limitations of Series I Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2018).
4.1		Rights Agreement dated as of November 9, 2010 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on November 12, 2010).
10.1*		Towerstream Corporation 2007 Equity Compensation Plan (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
10.2*		Form of 2007 Equity Compensation Plan Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
10.3*		Form of 2007 Equity Compensation Plan Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.19 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
10.4		Form of Directors and Officers Indemnification Agreement (Incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on January 19, 2007).
10.5*		Towerstream Corporation 2007 Incentive Stock Plan (Incorporated by reference to Exhibit B to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 6, 2012).
10.6		Office Lease Agreement dated March 21, 2007 between Tech 2, 3, & 4 LLC (Landlord) and Towerstream Corporation (Tenant) (Incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 18, 2009).
10.7		First Amendment to Office Lease dated August 8, 2007, amending Office Lease Agreement dated March 21, 2007 (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 18, 2009).
10.8**		2008 Non-Employee Directors Compensation Plan (Incorporated by reference to Exhibit B to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 14, 2010).
10.9**		2010 Employee Stock Purchase Plan (Incorporated by reference to Exhibit A to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 14, 2010).
10.10		Second Amendment to Office Lease Agreement dated September 12, 2013, amending Office Lease Agreement dated March 21, 2007 (Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 17, 2014).
10.11		Loan Agreement dated October 16, 2014 by and among Towerstream Corporation, Towerstream I, Inc. and Hetnets Tower Corporation, as Borrowers, the financial institutions named therein as Lenders and Melody Business Finance, LLC, as Administrative Agent (Incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.12		Security Agreement dated October 16, 2014 by and among Towerstream Corporation, Towerstream I, Inc., Hetnets Tower Corporation, Alpha Communications Corp., Omega Communications Corp., and Towerstream Houston, Inc., as Grantors, in favor of Melody Business Finance LLC, as Administrative Agent (Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).

~~103~~63

10.5*		Towerstream Corporation 2007 Incentive Stock Plan (Incorporated by reference to Exhibit B to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 6, 2012).
10.13		Warrant and Registration Rights Agreement dated October 16, 2014 by and among Towerstream Corporation and the warrant holders named therein (Incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.6		Office Lease Agreement dated March 21, 2007 between Tech 2, 3, & 4 LLC (Landlord) and Towerstream Corporation (Tenant) (Incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 18, 2009).
10.14		Form of A-Warrant Certificate (Incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.7		First Amendment to Office Lease dated August 8, 2007, amending Office Lease Agreement dated March 21, 2007 (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 18, 2009).
10.15		Form of B-Warrant Certificate (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.8**		2008 Non-Employee Directors Compensation Plan (Incorporated by reference to Exhibit B to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 14, 2010).
10.16**		Separation Agreement by and between Jeffrey M. Thompson and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 17, 2016).
10.9**		2010 Employee Stock Purchase Plan (Incorporated by reference to Exhibit A to the Proxy Statement on Schedule 14A of Towerstream Corporation filed with the Securities and Exchange Commission on September 14, 2010).
10.17		Asset Purchase Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner Cable Enterprises, LLC (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.10		Second Amendment to Office Lease Agreement dated September 12, 2013, amending Office Lease Agreement dated March 21, 2007 (Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 17, 2014).
10.18****		Backhaul Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner Cable Enterprises, LLC (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.11		Loan Agreement dated October 16, 2014 by and among Towerstream Corporation, Towerstream I, Inc. and Hetnets Tower Corporation, as Borrowers, the financial institutions named therein as Lenders and Melody Business Finance, LLC, as Administrative Agent (Incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.19		Mutual Termination Agreement dated March 9, 2016 by and between Time Warner Cable Enterprises, LLC and Hetnets Tower Corporation (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.12		Security Agreement dated October 16, 2014 by and among Towerstream Corporation, Towerstream I, Inc., Hetnets Tower Corporation, Alpha Communications Corp., Omega Communications Corp., and Towerstream Houston, Inc., as Grantors, in favor of Melody Business Finance LLC, as Administrative Agent (Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.20		Consent and Release dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc., Hetnets Tower Corporation, Alpha Communications Corp., Omega Communications Corp., Towerstream Houston, Inc., and Melody Business Finance, LLC (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.21		Amendment No. 1 to Warrant and Registration Rights Agreement dated March 9, 2016, by and between Towerstream Corporation and Melody Business Finance, LLC (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.22**		Engagement Letter by and between Frederick Larcombe and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2016).
10.23**		Separation Agreement by and between Joseph Hernon and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2016).
10.24		Form of Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
10.25		Form of Warrant (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
10.26		Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
10.27		Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
10.28		Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
10.29		Form of Amendment to Securities Purchase Agreements, dated June 17, 2016 (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
10.30		Form of June Warrant (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
10.31**		Consulting Agreement by and between Ernest Ortega and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 15, 2016).
10.32		Form of Warrant Exchange Agreement dated September 14, 2016 (Incorporated by reference to Exhibit 10.38 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
10.33		Registration Rights Agreement by and among Towerstream Corporation and the Signatories thereto dated September 14, 2016 (Incorporated by reference to Exhibit 10.39 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
10.34**		Employment Agreement by and between Arthur Giftakis and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 25, 2016).

~~104~~64

10.13		Warrant and Registration Rights Agreement dated October 16, 2014 by and among Towerstream Corporation and the warrant holders named therein (Incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.35**		Employment Agreement by and between Ernest Ortega and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 24, 2017).
10.14		Form of A-Warrant Certificate (Incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.36		Amendment No. 1 to Loan Agreement dated November 8, 2016 (Incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.15		Form of B-Warrant Certificate (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015).
10.37		Purchase Agreement dated November 8, 2016 (Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.16**		Separation Agreement by and between Jeffrey M. Thompson and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 17, 2016).
10.38		Exchange Agreement dated November 9, 2016 (Incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.17		Asset Purchase Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner Cable Enterprises, LLC (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.39		Form of Warrant issued November 9, 2016 (Incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.18****		Backhaul Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner Cable Enterprises, LLC (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.40		Registration Rights Agreement dated November 9, 2016 (Incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.19		Mutual Termination Agreement dated March 9, 2016 by and between Time Warner Cable Enterprises, LLC and Hetnets Tower Corporation (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.41		Stock Purchase Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.20		Consent and Release dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc., Hetnets Tower Corporation, Alpha Communications Corp., Omega Communications Corp., Towerstream Houston, Inc., and Melody Business Finance, LLC (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.42		Exchange Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.43		Registration Rights Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.44**		Employment Agreement by and between Laura W. Thomas and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 17, 2017).
10.45**		Separation Agreement by and between Frederick Larcombe and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 17, 2017).
10.46		Form of Exchange Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2017).
10.47		Office Lease Agreement dated October 24, 2017 by and between Brookwood Middletown Tech, LLC (Landlord) and Towerstream I, Inc. (Tenant) (Incorporated by reference to Exhibit 10.47 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on April 2, 2018).
10.48**		Employment Agreement by and between John Macdonald and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2018).
10.49**		Separation Agreement by and between Laura Thomas and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2018).
10.50		Forbearance to Loan Agreement with Melody Business Finance LLC dated January 26, 2018 (Incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on April 2, 2018).
10.51		Forbearance to Loan Agreement with Melody Business Finance LLC dated February 28, 2018 (Incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on April 2, 2018).
10.52		Forbearance to Loan Agreement with Melody Business Finance LLC dated March 30, 2018 (Incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on April 2, 2018).
10.53		Second Amended and Restated Forbearance to Loan Agreement dated April 15, 2018 (Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2018).
10.54		First Amendment to the Second Amended and Restated Forbearance to Loan Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2018).
10.55		Exchange Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2018).
10.56		Second Amendment to the Second Amended and Restated Forbearance to Loan Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Towerstream Corporation filed with the Securities and Exchange Commission on August 20, 2018).

~~105~~65

10.21	Amendment No. 1 to Warrant and Registration Rights Agreement dated March 9, 2016, by and between Towerstream Corporation and Melody Business Finance, LLC (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).
10.57	Third Amendment to Second Amended and Restated Forbearance to Loan Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 25, 2018).
10.22**	Engagement Letter by and between Frederick Larcombe and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2016).
10.58***	Fourth Amendment to Second Amended and Restated Forbearance to Loan Agreement dated December 31, 2018.
10.23**	Separation Agreement by and between Joseph Hernon and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2016).
10.59***	Fifth Amendment to Second Amended and Restated Forbearance to Loan Agreement dated January 31, 2019.
10.24	Form of Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
10.60*	2018 Management Incentive Plan (Incorporated by reference to Item 5.02 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2018).
10.25	Form of Warrant (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
14.1	Code of Ethics and Business Conduct (Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 17, 2011).
10.26	Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 20, 2016).
21.1***	Subsidiaries of the Registrant.
10.27	Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
31.1	Section 302 Certification of Principal Executive Officer. ***
10.28	Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
31.2	Section 302 Certification of Principal Financial Officer. ***
10.29	Form of Amendment to Securities Purchase Agreements, dated June 17, 2016 (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
32.1	Section 906 Certification of Principal Executive Officer. ***
10.30	Form of June Warrant (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2016).
32.2	Section 906 Certification of Principal Financial Officer. ***
10.31**	Consulting Agreement by and between Ernest Ortega and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 15, 2016).
101.INS*****		XBRL Instance
10.32	Form of Warrant Exchange Agreement dated September 14, 2016 (Incorporated by reference to Exhibit 10.38 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
101.SCH*****		XBRL Taxonomy Extension Schema
10.33	Registration Rights Agreement by and among Towerstream Corporation and the Signatories thereto dated September 14, 2016 (Incorporated by reference to Exhibit 10.39 to the Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission on September 15, 2016).
101.CAL*****		XBRL Taxonomy Extension Calculation
10.34**	Employment Agreement by and between Arthur Giftakis and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 25, 2016).
101.DEF*****		XBRL Taxonomy Extension Definition
101.LAB*****		XBRL Taxonomy Extension Labels
101.PRE*****		XBRL Taxonomy Extension Presentation

106

10.35**		Employment Agreement by and between Ernest Ortega and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 24, 2017).
10.36		Amendment No. 1 to Loan Agreement dated November 8, 2016 (Incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.37		Purchase Agreement dated November 8, 2016 (Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.38		Exchange Agreement dated November 9, 2016 (Incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.39		Form of Warrant issued November 9, 2016 (Incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.40		Registration Rights Agreement dated November 9, 2016 (Incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.41		Stock Purchase Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.42		Exchange Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.43		Registration Rights Agreement dated November 22, 2016 (Incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-3/A of Towerstream Corporation filed with the Securities and Exchange Commission on November 30, 2016).
10.44**		Employment Agreement by and between Laura W. Thomas and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 17, 2017).
10.45**		Separation Agreement by and between Frederick Larcombe and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 17, 2017).
10.46		Form of Exchange Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2017).
10.47***		Office Lease Agreement dated October 24, 2017 by and between Brookwood Middletown Tech, LLC (Landlord) and Towerstream I, Inc. (Tenant).
10.48**		Employment Agreement by and between John Macdonald and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2018).
10.49**		Separation Agreement by and between Laura Thomas and Towerstream Corporation (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2018).
10.50***		Forbearance to Loan Agreement with Melody Business Finance LLC dated January 26, 2018
10.51***		Forbearance to Loan Agreement with Melody Business Finance LLC dated February 28, 2018
10.52***		Forbearance to Loan Agreement with Melody Business Finance LLC dated March 30, 2018
14.1		Code of Ethics and Business Conduct (Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and Exchange Commission on March 17, 2011).
21.1***		Subsidiaries of the Registrant.
23.1		Consent of Independent Registered Public Accounting Firm. ***
31.1		Section 302 Certification of Principal Executive Officer. ***
31.2		Section 302 Certification of Principal Financial Officer. ***
32.1		Section 906 Certification of Principal Executive Officer. ***
32.2		Section 906 Certification of Principal Financial Officer. ***
99.1		Unaudited Pro Forma Condensed Financial Information (Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 15, 2016).

107

101.INS*****	XBRL Instance
101.SCH*****	XBRL Taxonomy Extension Schema
101.CAL*****	XBRL Taxonomy Extension Calculation
101.DEF*****	XBRL Taxonomy Extension Definition
101.LAB*****	XBRL Taxonomy Extension Labels
101.PRE*****	XBRL Taxonomy Extension Presentation

*	Management compensatory plan
**	Management contract
***	Filed herewith
****	A redacted version of this exhibit was filed with the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2016. An un-redacted version of this Exhibit has been separately filed with the Commission pursuant to an application for confidential treatment. The confidential portions of the Exhibit have been omitted and are marked as such.
*****	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

~~108~~Item 16 – Form 10-K Summary.

None.

SIGNATURES

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

	TOWERSTREAM CORPORATION
Date: April 2, 2018	By:	/s/ Ernest Ortega
Date: April 1, 2019	By:	/s/ Ernest Ortega
		Ernest Ortega
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ John Macdonald
		John Macdonald
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Capacity	Date
/s/ Philip Urso	Director - Chairman of Board of Directors	April 21, ~~2018~~2019
Philip Urso
/s/ Ernest Ortega	Chief Executive Officer	April 21, ~~2018~~2019
Ernest Ortega	(Principal Executive Officer)
/s/ John Macdonald	Chief Financial Officer	April 21, ~~2018~~2019
John Macdonald	(Principal Financial Officer and Principal Accounting Officer)
/s/ Howard L. Haronian, M.D.	Director	April 21, ~~2018~~2019
Howard L. Haronian, M.D.
/s/ William J. Bush	Director	April 21, ~~2018~~2019
William J. Bush

~~109~~67

Filing Compare · TOWERSTREAM CORP