TowerStream Corporation
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 WayMiddletown, 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 1934during 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 filingrequirements 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 requiredto 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 periodthat 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, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-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 oremerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growthcompany” 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 newor 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 commonequity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $2,574,930. As of March 23, 2018, there were 394,399 shares of common stock, par value $0.001 per share, outstanding.  TOWERSTREAM CORPORATION AND SUBSIDIARIES Table of Contents PagePART I Item 1Business.2 Item 1ARisk Factors.10 Item 1BUnresolved Staff Comments.29 Item 2Properties.30 Item 3Legal Proceedings.30 Item 4Mine Safety Disclosures.30 PART II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.31 Item 6Selected Financial Data.32 Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations.32 Item 7AQuantitative and Qualitative Disclosures About Market Risk.44 Item 8Financial Statements and Supplementary Data.45 Item 9Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.86 Item 9AControls and Procedures.86 Item 9BOther Information.87 PART III Item 10Directors, Executive Officers and Corporate Governance.88 Item 11Executive Compensation.92 Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.98 Item 13Certain Relationships and Related Transactions, and Director Independence.100 Item 14Principal Accountant Fees and Services.101 PART IV Item 15Exhibits and Financial Statement Schedules.102 i PART I Forward-Looking Statements Forward-looking statements in this report, 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 of1995. 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 TowerstreamCorporation; (ii) Towerstream Corporation’s plans and results of operations will be affected by Towerstream Corporation’s ability to manage growth andcompetition; and (iii) other risks and uncertainties indicated from time to time in Towerstream Corporation’s filings with the Securities and ExchangeCommission. 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 webelieve 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 dutyto 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; ●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. 1 Item 1 - Business. Towerstream Corporation (“Towerstream”, “we”, “us”, “our” or the “Company”) is primarily a provider of fixed wireless services to businesses in twelvemajor urban markets across the U.S. During its first decade of operations, the Company's business activities were focused on delivering fixed wirelessbroadband services to commercial customers over a wireless network transmitting over both regulated and unregulated radio spectrum. Our fixed wirelessservice supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. We provideservices 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 andthrough 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 WholesaleInternet Service. This unique portfolio of bandwidth services is able to scale our existing target markets, from small businesses to 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 Serviceoffering, we deliver fixed wireless broadband to a single client through a radio receiver/transmitter on the client’s building dedicated solely to thatclient. 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 from5Mbps (Megabits per second) to 10Gbps (Gigabits per second) in the Single Tenant Internet Service category with an increased focus on bandwidthspeeds 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 traditionallyrequired for one high bandwidth customer requiring point-to-point equipment. This can be accomplished, in part, because the capabilities of theequipment installed by us have improved even as the costs of the equipment have decreased. As a result, we are able to leverage the initial installationcost 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 thewireless portion of the install once. Subsequent customers are connected by simply running a wire to the common space in the building where the wirelessservice terminates. Additionally, instead of having multiple antennas on both the customer building and the PoP, there generally needs to be only oneantenna on each location. We are offering 20Mbps to 1.5Gbps in this product category with an increased focus on bandwidth speeds of 100Mbps orgreater. 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 forspecial events, conferences, television and movie productions, constructions projects and more. Under the Wholesale Internet Service offering, we are able to deliver both Dedicated Internet Access (DIA) and Point-to-Point Transport solutions withbandwidth options from 5Mbps to 10mbps. By using our fixed wireless network, our wholesale partners bypass the extensive installation times of ourfiber competitors. Our competitive advantages enable our partners to provide solutions their customers need quickly, reliably, and more cost-effective. In March 2018 the Company announced that its board of directors commenced an evaluation of strategic repositioning of the Company as it moves toleverage its existing key assets in major U.S. markets. In conjunction with such announcement, the Company is launching a concerted focus on indirectand wholesale channels and has retained Bank Street Group LLC as its independent financial advisor to explore strategic alternatives with suchbroadband carriers. The Company has not set a definitive timetable for the completion of its review of strategic alternatives and there can be noassurances that the process will result in a transaction. Any potential strategic alternative will be evaluated by the board. The Company does not intend todiscuss developments with respect to the evaluation process unless a transaction is approved, or disclosure becomes appropriate. 2 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 leaseagreements with the owners of these buildings which provide us with the right to install communications equipment on the rooftop. We deploy thisequipment 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 nosingle 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 Level3 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 coreconnectivity of all of our PoPs as a “Wireless Ring in the Sky.” Each PoP has a coverage area averaging approximately six miles although the distancecan 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 believethis provides us with an advantage because we may not be significantly affected by events such as natural disasters and power outages. Conversely, ourcompetitors are at greater risk as copper and fiber connections are typically installed at or below ground level and more susceptible to network serviceissues 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 andfollowed 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 serviceproviders based in those markets. We also expanded our market coverage and presence in Boston, Providence, and Los Angeles through acquisitions. 3 We determine which geographic markets to enter by assessing criteria in four broad categories. First, we evaluate our ability to deploy our service in agiven market after taking into consideration our spectrum position, the availability of towers and other mounting structures. Second, we assess the marketby evaluating the number of competitors, existing price points, demographic characteristics and distribution channels. Third, we evaluate the economicpotential of the market, focusing on our forecasts of revenue opportunities and capital requirements. Finally, we look at market clustering opportunitiesand other cost efficiencies that might be realized. Based on this approach, as of December 31, 2017, we offer wireless broadband connectivity in 12markets, 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. These10 markets cover approximately 30% of small and medium businesses (5 to 249 employees) in the United States based on information obtained fromAtoZDatabases.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 expandnationally into other top metropolitan markets in the United States. We believe that acquisitions represent a more cost effective manner to expand intonew markets rather than to build our own infrastructure. Since 2010, we have completed five acquisitions, of which two were in new markets and threeexpanded our presence in existing markets. We have paid for these acquisitions through a combination of cash and equity, and believe that futureacquisitions will be paid in a similar manner. Our decision to expand into new markets will depend upon many factors including the timing andfrequency 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, we employed 8 direct sales people. Wegenerally compensate these employees on a salary plus commission basis. Sales through indirect channels comprised 35% of our total revenues during the year ended December 31, 2017 compared with 34% during the yearended December 31, 2016. Our channel program provides for recurring monthly residual payments ranging from 8% to 25%. 4 Effective January 24, 2017, the Company hired a new Chief Executive Officer who is a telecommunications industry veteran and has extensiveexperience developing markets and increasing revenue. Immediately thereafter, the Company began to implement new sales and marketing strategies toleverage the Company’s state-of-the-art fixed wireless network to serve both enterprise and service providers. The three main pillars of this strategy areprice, speed to market, and reliability. Our sales organization has been recently restructured for 2017 and beyond to create a more disciplined approach toidentify 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 exceeding100Mbps speeds. As the demand for high bandwidth speeds over 100Mbps is projected to increase by double digits by 2020, building scale and digitizing networks arekey for enterprises to keep pace. To ensure we are prepared for increasing demands of our clients and prospects, our service offerings have been condensedand priced accordingly. We currently offer three speeds in the Single Tenants and On-Net categories with customized quotes for larger bandwidth needsbetween 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 locationswhere fiber, copper, and cable infrastructure does not exist or is cost prohibitive. With connections available for days, weeks, or months, this solution isideal 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. Salesand marketing efforts have been restructured to create a more disciplined approach to identify and target prospective customers. By leveraging existingsoftware tools, our sales and marketing organization can identify 392,000 buildings within four miles of our PoPs that house customers with the highestpropensity to buy our services. This focused approach allows our sales force to target the subset of buildings that have confirmed line-of-sight and alsolack fiber. This segmentation of our prospect database enables us to focus on prospects that align with prospective customers that are most likely to needand buy our services, along with enhanced sales development training, and continues to assist our sales professionals to shorten the sales cycle andachieve 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 technologyplatforms 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 ofinstallation 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 arereferred 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 cablecompanies, 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 andtelecommunications companies deploy their services over wired networks initially designed for voice and one-way data transmission that havesubsequently 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 aresuperior to ours. These providers have substantially broader geographic coverage than we have and, for the foreseeable future, than we expect to have. Ifone or more of these providers can deploy technologies that compete effectively with our services, the mobility and coverage offered by these carriers willprovide even greater competition than we currently face. Moreover, more advanced cellular and CMRS technologies, such as fourth generation LongTerm Evolution (“LTE”) mobile technologies, and fifth generation millimeter wave technology currently offer broadband service with packet datatransfer speeds of up to 2,000,000 bits per second for fixed applications, and slower speeds for mobile applications. We expect that LTE technology willbe improved to increase connectivity speeds to make it more suitable for a range of advanced applications. 5 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 andacquisition activities, we have determined that most of our current and planned markets already have one or more locally based companies providingwireless broadband Internet services. In addition, many local governments, universities and other related entities are providing or subsidizing Wi-Finetworks over unlicensed spectrum, in some cases at no cost to the user. There exist numerous small urban and rural wireless operations offering localservices 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 areasthat are unserved or underserved by competing service providers. Although satellite offers service to a large geographic area, latency caused by the time ittakes 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 InternetProtocol (“VoIP”), which reduces the size of the addressable market. Satellite providers are currently seeking additional frequencies from the FCC thatwould 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 generationand 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 toretain 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 infrastructurethat was originally designed for non-broadband purposes. We also connect our customers to our Wireless Ring in the Sky which has no single point offailure. This ring is fed by multiple national Internet providers located at opposite ends of our service cities and connected to our national ring which isfed by multiple leading carriers. We believe that we are the only wireless broadband provider that offers true separate egress for true redundancy. WithDSL 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 tobe affected by backhoe or other below-ground accidents or severe weather. As a result, our network has historically experienced reliability rates ofapproximately 99%. 6 Flexibility Our wireless infrastructure and service delivery enables us to respond quickly to changes in a customer’s broadband requirements. We offer bandwidthoptions ranging from 5 megabits per second up to 10 gigabits per second. We can usually adjust a customer’s bandwidth remotely and without having tovisit 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 thirtydays from the customer contract date. Many of the larger telecommunications companies can take 30 to 60 days to complete an installation. Thetimeliness 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 pricesbecause 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 broadbandservice providers. We own our entire network which eliminates costs involved with using leased lines owned by telephone or cable companies. Ournetwork is modular. Coverage is directly related to various factors including the height of the facility we are on and the frequencies we utilize. Theaverage 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 markets in which we have built our fixed wireless network. Theselocations are some of the tallest buildings in each city which facilitates our ability to deliver Internet connectivity to customer locations where line ofsight is not available to our competitors. 7 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 solepurpose of changing our state of incorporation to Delaware. In January 2007, a wholly-owned subsidiary of ours merged with and into a private companyformed in 1999, Towerstream Corporation, with Towerstream Corporation being the surviving company. Upon closing of the merger, we discontinued ourformer business and succeeded to the business of Towerstream Corporation as our sole line of business. At the same time, we also changed our name toTowerstream 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 CommunicationsCommission (“FCC”) impact significant aspects of our wireless Internet service business which is also subject to other regulation by federal, state andlocal 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 overthe management and licensing of the electromagnetic spectrum for all commercial users. The FCC routinely reviews its spectrum policies and may changeits position on spectrum use and allocations from time to time. We believe that the FCC is committed to allocating spectrum to support wirelessbroadband deployment throughout the United States and will continue to modify its regulations to foster such deployment, which will help us implementour 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 issueda notice of proposed rulemaking, the intention of which is to repeal the net neutrality protections adopted in 2015 Open Internet Order and reclassifyfixed and mobile broadband services as information services governed by Title I of the Communications Act. On December 14, 2017, the FCC released itsRestoring Internet Freedom Report and Order in which is re-classified Internet access service as an information and not a telecommunications service andremoved all Title II obligations from Internet traffic arrangements. The impact of this Report and Order on the industry and competition is still unknownat 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 FederalTrade Commission, including, for example, regulations and policies relating to low-income subsidies, consumer protection, consumer privacy, andcopyright protections. State and local government authorities may also regulate limited aspects of our business by, for example, imposing consumerprotection and consumer privacy regulations, zoning requirements, and requiring installation permits. 8 Regulatory Issues Our antennas and equipment used to provide wireless broadband service are regulated by the FCC. As such, any changes in FCC regulations involvingthe use or deployment of wireless broadband service could have a positive or negative impact on our business. Other - FAA Interference Issue In August 2013, the FCC released a Notice of Apparent Liability for Forfeiture ("NAL") alleging that Towerstream caused harmful interference to dopplerweather radar systems in New York and Florida, and proposing a fine for the alleged rule violations. In November 2013, after consultation with regulatorycounsel, Towerstream filed a response denying the FCC's allegations. In July 2016, Towerstream settled the matter with the FCC under a consent decreethat required Towerstream to admit that it violated the laws and regulations that prohibit Unlicensed National Information Infrastructure transmissionsystems operators from causing interference to doppler weather radar systems, to comply with such rules in the future, and to pay a civil penalty. TheCompany 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 eachoutstanding share of common stock as of the record date on November 14, 2010. Each right, when exercisable, entitles the registered holder to purchaseone-hundredth (1/100th) of a share of Series A Preferred Stock, par value $0.001 per shares 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 stockand become exercisable if any person or group acquires or announces a tender offer to acquire 15% or more of our outstanding common stock without theconsent of our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over withoutthe 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 ouroutstanding capital stock) without first negotiating with our Board of Directors. In addition, we are governed by provisions of Delaware law that mayprohibit 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 ourstockholders would otherwise favor, or otherwise reduce the price that investors might be willing to pay for our common stock in the future. 9 Employees As of December 31, 2017, we had 83 employees, of whom 80 were full-time employees and 3 were part-time employees. As of March 23, 2018, we had 53employees, of whom 50 were full-time employees and 3 were part-time employees. We believe our employee relations are good. Three employees areconsidered members of executive management. Reverse Split On September 29, 2017, the Company effected a one-for-seventy-five reverse stock split of its common stock. Consequently, all earnings per share andother share related amounts and disclosures have been retroactively adjusted for all periods presented for the splits. Our Corporate Information Our principal executive offices are located at 76 Hammarlund Way, Middletown, Rhode Island, 02842. Our telephone number is (401) 848-5848. TheCompany’s website address is http://www.towerstream.com. Information contained on the Company’s website is not incorporated into this Annual Reporton 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 areavailable free of charge through the Securities and Exchange Commission (“SEC”) website at http://www.sec.gov as soon as reasonably practicable afterthose 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 otherinformation contained in this annual report, including our financial statements and related notes before purchasing shares of our common stock. Thereare 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 andinvestors 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, ifavailable, that such financing will be at terms and conditions acceptable to us. Should we fail to obtain additional debt financing or raise additionalcapital, we may not be able to achieve our longer term business objectives and may face other serious adverse consequences. If we raise additional fundsby issuing equity securities or convertible debt, investors may experience significant dilution of their ownership interest, and the newly-issued securitiesmay 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 thosefinancing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and may requireus 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 ourstockholders. 10 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 and 2016 were $12,469,682 and $20,436,496, 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 operationsto 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 risksidentified 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, we had approximately $7.6 million in cash and cash equivalents with one large financial banking institution. At times, our cashand cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If theinstitution 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, orincur 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 spreadour 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 require additional funding for working capital, debt service, the enhancement and upgrade ofour network, the build-out of infrastructure to expand our coverage, possible acquisitions and possible bids to acquire spectrum licenses. We may beunable to secure such funding when needed in adequate amounts or on acceptable terms, if at all. To execute our business strategy, we may issueadditional equity securities in public or private offerings, potentially at a price lower than the market price at the time of such issuance. Similarly, we mayseek debt financing and may be forced to incur significant interest expense. If we cannot secure sufficient funding, we may be forced to forego strategicopportunities or delay, scale back or eliminate network deployments, operations, acquisitions, spectrum bids and other investments. 11 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 have been prepared on a going concern basis, whichcontemplates 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 agreement with its lender and has classified long term debt with a net carrying value of$33,868,700 as current liabilities as of December 31, 2017. As of December 31, 2017, the Company had cash and cash equivalents of approximately $7.6million and working capital deficiency of approximately $31.1 million. The Company has incurred significant operating losses since inception andcontinues to generate losses from operations and as of December 31, 2017, the Company had an accumulated deficit of $189.1 million. These mattersraise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.Management has also evaluated the significance of these conditions in relation to the Company's ability to meet its obligations. The consolidatedfinancial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilitiesthat might be necessary should the Company be unable to continue as a going concern. Our independent registered public accounting firm included anexplanatory paragraph in its report on our financial statements included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2017,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 capitalleases. The Company’s ability to fund its longer term cash requirements is subject to multiple risks, many of which are beyond its control. The Companyintends to raise additional capital, either through debt or equity financings or through the potential sale of the Company’s assets in order to achieve itsbusiness plan objectives. Management believes that it can be successful in obtaining additional capital; however, no assurance can be provided that theCompany 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 orcontinue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement aplan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such aplan 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 afterDecember 31, 2017, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings, limitation of the tax deduction forinterest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of currentyear taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether theyare repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investmentsinstead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including reducing thebusiness 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 ourcorresponding valuation allowance against these deferred tax assets have been reduced and may continue to be adversely impacted. In addition, it isuncertain if and to what extent various states will conform to Tax Act and what effect that legal challenges will have on the Tax Act, including litigationin the U.S. and international challenges brought at organizations such as the World Trade Organization. The impact of the Tax Act on holders of ourcommon stock is also uncertain and could be adverse. Investors should consult with their legal and tax advisors with respect to this legislation and thepotential tax consequences of investing in or holding our common stock. 12 Risks Relating to Fixed Wireless Services 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 dothese 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 theirrooftops; ●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 ordamage 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 businessstrategy and the long-term viability of our business. 13 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 structurespursuant to lease or license agreements to send and receive wireless signals necessary for the operation of our network. We typically seek initial five-yearterms for our leases with three to five-year renewal options. Such renewal options are generally exercisable at our discretion before the expiration of thecurrent 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 satisfactoryterms, 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 critical part to our success. Maintaining and enhancing our brand may require us to make substantial investments with noassurance that these investments will be successful. If we fail to promote and maintain the “Towerstream” brand, or if we incur significant expenses in thiseffort, our business, prospects, operating results and financial condition may be harmed. We anticipate that maintaining and enhancing our brand willbecome 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 which may make it difficult for us to attract and retaincustomers. The market for broadband and related services is highly competitive, and we compete with several other companies within each of our markets. Many ofour 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 withrevenue from other sources and, thus, may offer their products and services at prices lower than ours. Our competitors may also reduce the prices of theirservices significantly or may offer broadband connectivity packaged with other products or services. We may not be able to reduce our prices or otherwisecombine our services with other products or services which may make it more difficult to attract and retain customers. In addition, businesses which arepresently 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 competitiveservices, particularly if our services prove to be attractive in our target markets. This competition may make it difficult to attract new customers and retainexisting customers. 14 We may experience difficulties constructing, upgrading and maintaining our network which could increase customer turnover and reduce ourrevenues. Our success depends on developing and providing products and services that provide customers with high quality Internet connectivity. If the number ofcustomers 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. Ifwe 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 upgradeprojects. Portions of these projects may not be within our control or the control of our contractors. Our network requires the receipt of permits andapprovals from numerous governmental bodies. Such bodies often limit the expansion of transmission towers and other construction necessary for ourbusiness. Failure to receive approvals in a timely fashion can delay system rollouts and raise the cost of completing projects. In addition, we are typicallyrequired to obtain rights from land, building or tower owners to install antennae and other equipment to provide service to our customers. We may not beable 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 customerpremise equipment to accommodate increased traffic or technological advances, and managing the sales, advertising, customer support, billing andcollection functions of our business while providing reliable network service at expected speeds and quality. Our failure in any of these areas couldadversely 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 anddifficult process that can be costly and require substantial management resources. Securing licensed spectrum may subject us to increased operationalcosts, 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 ●competitive bids, pre-bid qualifications and post-bid requirements for spectrum acquisitions, in which we may not be successful leading to, amongother 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 thelicensed 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 utilize unlicensed spectrum in all of our markets which is subject to intense competition, low barriers of entry and slowdowns due to multiple users. We presently utilize unlicensed spectrum in all of our markets to provide our service offerings. Unlicensed or “free” spectrum is available to multipleusers and may suffer bandwidth limitations, interference and slowdowns if the number of users exceeds traffic capacity. The availability of unlicensedspectrum is not unlimited and others do not need to obtain permits or licenses to utilize the same unlicensed spectrum that we currently utilize or mayutilize in the future. The inherent limitations of unlicensed spectrum could potentially threaten our ability to reliably deliver our services. Moreover, theprevalence of unlicensed spectrum creates low barriers of entry in our industry which naturally creates the potential for increased competition. Interruption or failure of our information technology and communications systems could impair our ability to provide services which could damageour reputation. Our services depend on the continuing operation of our information technology and communications systems. We have experienced service interruptionsin the past and may experience service interruptions or system failures in the future. Any unscheduled service interruption adversely affects our ability tooperate our business and could result in an immediate loss of revenues and adversely impact our operating results. If we experience frequent or persistentsystem or network failures, our reputation could be permanently harmed. We may need to make significant capital expenditures to increase the reliabilityof our systems, however, these capital expenditures may not achieve the results we expect. 16 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 canceltheir 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, wireless Internet service and other emergingtechnologies, 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, thevalue 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 oradversely affect our operations and cause backlogs and administrative inefficiencies in the businesses discussed below. Such events would increasedemands on our existing management, workforce and facilities. 17 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 withany of these individuals except for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. We cannot guarantee that any ofthese 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 notmaintain 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 introduceour services in new markets and grow our business in existing markets. Qualified technical employees often are in great demand and may be unavailablein the time frame required to satisfy our business requirements. We may not be able to attract and retain sufficient numbers of highly skilled technicalemployees in the future. The loss of technical personnel or our inability to hire or retain sufficient technical personnel at competitive rates ofcompensation 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 difficultiesintegrating the operations and personnel of acquired companies. In addition, any future acquisition could result in significant costs, the incurrence ofadditional debt to fund the acquisition, and the assumption of contingent or undisclosed liabilities, all of which could materially adversely affect ourbusiness, 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 obtainingindemnities and warranties from the seller. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to their limitedscope, 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 materialtransactions. Integrating acquisitions is often costly and may require significant attention from management. Delays or other operational or financialproblems that interfere with our operations may result. If we fail to implement proper overall business controls for companies or assets we acquire or fail tosuccessfully integrate these acquired companies or assets in our processes, our financial condition and results of operations could be adversely affected. Inaddition, it is possible that we may incur significant expenses in the evaluation and pursuit of potential acquisitions that may not be successfullycompleted. 18 We 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 may seek to acquire other fixed wireless businesses, including those operating in our currentbusiness markets or those operating in other geographic markets. We cannot accurately predict the timing, size and success of our acquisition efforts andthe associated capital commitments that might be required. We expect to encounter competition for acquisitions which may limit the number of potentialacquisition opportunities and may lead to higher acquisition prices. We may not be able to identify, acquire or profitably manage additional businessesor 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 andissues 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 oursecurities which will vary, (ii) liquidity which can fluctuate, and (iii) the willingness of potential sellers to accept shares of our common stock as full orpartial payment. Using shares of our common stock for acquisitions may result in significant dilution to existing stockholders. To the extent that we areunable 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 toraise 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 obtainadditional capital on acceptable terms, we may be required to reduce the scope of expansion or redirect resources committed to internal purposes. Ourinability to use shares of our common stock to make future acquisitions may hinder our ability to actively pursue our acquisition program. 19 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 orexperience delays, shortages or increased demand for their products or services, we may face a shortage of components, increased costs, and may berequired to suspend our network deployment and our service introduction. We also depend on a limited number of third parties to install and maintainour network facilities. We do not maintain any long-term supply contracts with these manufacturers. If a manufacturer or other provider does not satisfyour requirements, or if we lose a manufacturer or any other significant provider, we may have insufficient network equipment for delivery to customersand for installation or maintenance of our infrastructure. Such developments could force us to suspend the deployment of our network and the installationof 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 andretain 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. Becausetechniques 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 partiesmay overcome our encryption and security systems, and obtain access to data on our network. In addition, because we operate and control our networkand our customers’ Internet connectivity, unauthorized access or sabotage of our network could result in damage to our network and to the computers orother devices used by our customers. An actual or perceived breach of network security, regardless of whether the breach is our fault, could harm publicperception of the effectiveness of our security controls, adversely affect our ability to attract and retain customers, expose us to significant liability andadversely 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 andprohibit 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 pastinfringement if it is ultimately determined that our services infringe a third party’s proprietary rights. Further, we may be prohibited from selling orproviding 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 attentionfrom our other business concerns. Any public announcements related to litigation or interference proceedings initiated or threatened against us couldcause our business to be harmed and our stock price to decline. 20 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 wouldadversely 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. Inconnection with this decision, we recognized charges in the fourth quarter of 2015 aggregating $5,359,000, consisting of $3,284,000 of estimated cost tosettle our lease obligations, $1,618,000 to write-off network assets which could not be redeployed into the fixed wireless network and writing off$456,000 of deferred acquisition costs and security deposits which are not expected to be recovered. 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 alsodetermined that we would not be able to sell the remaining network locations in New York City. As a result, we recognized charges totaling $1,585,319in the first quarter of 2016 which included $453,403 representing the estimated cost to settle lease obligations, $528,364 to write off network assetswhich 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 forterminated lease obligations that was recorded in the fourth quarter of 2015. This reduction reflects the outcome of settlements negotiated in the firstquarter of 2016 with certain landlords. As of December 31, 2016, and based upon negotiations, settlements, and experiences through that date, theCompany 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 hadreduced that remaining estimated liability by $210,978 to $1,029,022. We believe that we have recognized principally all of the costs required to exitthis business but can provide no assurance that additional costs will not be incurred. Any additional costs would adversely impact our operating resultsand cash flows, and our stock price could decline. 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 ofbandwidth that they purchase from us during economic downturns which will directly affect our revenues and operating results. An economic or industryslowdown may cause other businesses or industries to delay or abandon implementation of new systems and technologies, including wireless broadbandservices. Further, political uncertainties, including acts of terrorism and other unforeseen events, may impose additional risks upon and adversely affectthe wireless or broadband industry generally, and our business, specifically. 21 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 beable 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 thesechallenges, 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 toother means of delivering wireless broadband services. As a result, our services may become obsolete and we may be unable to develop competitiveproducts 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 extensivelyregulated by federal, state and local governmental authorities. A number of federal, state and local privacy, security, and consumer laws also apply to ourbusiness. These regulations and their application are subject to continuous change as new legislation, regulations or amendments to existing regulationsare 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 ofcompanies that offer competing services such as cable and fiber providers, and telecommunications carriers also affects our business. If we fail to complywith these regulations, we may be subject to penalties, both monetary and nonmonetary, which may adversely affect our financial condition and results ofoperations. On February 26, 2015, the FCC adopted an Open Internet order in which fixed and mobile broadband services are reclassified as telecommunicationsservices governed by Title II of the Communications Act. This reclassification includes forbearance from applying many sections of the CommunicationsAct and the FCC’s rules to broadband service providers. As part of the Title II reclassification, the FCC could adopt new regulations requiring broadbandservice providers to register and pay Universal Service Fund (“USF”) fees as well as submit to a significant amount of other common carrier regulations. 22 The Open Internet order also adopted rules prohibiting broadband service providers from: (1) blocking access to legal content, applications, services ornon-harmful devices; (2) impairing or degrading lawful Internet traffic on its basis, content, applications or services; or (3) favoring certain Internet trafficover other traffic in exchange for consideration. Depending on how the Open Internet rules are implemented, the Open Internet order could limit ourability to manage customers’ use of our networks, thereby limiting our ability to prevent or address customers’ excessive bandwidth demands. Tomaintain the quality of our network and user experience, we may manage the bandwidth used by our customers’ applications, in part by restricting thetypes of applications that may be used over our network. The FCC Open Internet regulations may constrain our ability to employ bandwidth managementpractices. Excessive use of bandwidth-intensive applications would likely reduce the quality of our services for all customers. Such decline in the qualityof 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 andreclassify fixed and mobile broadband services as information services governed by Title I of the Communications Act. At the time of this filing, it isunknown if and when the proposed rules will be adopted, and it is possible that wireless broadband services may become subject to less federal regulationin the future. 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 licenseor the imposition of fines. In addition, regulatory authorities may grant new licenses to third parties, resulting in greater competition in territories wherewe already have rights to licensed spectrum. In order to promote competition, licenses may also require that third parties be granted access to ourbandwidth, 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 alicense 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 tocompanies like us and the impact of such regulations on our competitive position are presently unknown and could be detrimental to our business andprospects. 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 securedindebtedness, 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. As of December 31, 2017, we had$34,657,986 of principal and interest outstanding under the terms of this loan. We have agreed to maintain a minimum balance of cash or cashequivalents equal to or greater than $6,500,000 at all times throughout the term of the loan. As of December 31, 2017, we had $7,568,982 in cash andcash equivalents with one large financing banking institution. The loan bears interest payable in cash at a rate equal to the greater of (i) the sum of theone 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. In November 2016, $5,000,000 of principal and accrued interest obligations in connection with this loan was converted into our Series D ConvertiblePreferred Stock (“Series D Preferred Stock”). This had the effect of reducing principal by $4,935,834 and given interest rates we experienced during theyear ended December 31, 2016, reduced annual interest expense by approximately $592,000 and annual cash interest payments by approximately$395,000. 23 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 tothe 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 principalamount 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 foroperations 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 successfulfinancial 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, we may be forced to reduceor delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. In the event that we are required todispose of material assets or operations to meet our debt service and other obligations, the value realized on such assets or operations will depend onmarket conditions and the availability of buyers. Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Ourobligations 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 abilityto dispose of material assets or operations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all. 24 Our long-term debt agreement contains various covenants limiting the discretion of our management in operating our business. Our long-term debt agreement contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating ourbusiness. In particular, these instruments limit our ability to, among other things: ●incur additional debt; ●grant liens on assets; ●issue capital stock with certain features; ●sell or acquire assets outside the ordinary course of business; and ●make fundamental business changes. On June 14, 2017, the lender delivered to us a “Waiver to Loan Agreement” (the “Waiver”) waiving our obligations to provide a report of our auditorscovering our December 31, 2016 audited financial statements “without a `going concern' or like qualification or exception and without any qualificationor exception as to the scope of such audit” as provided in the debt agreement. The effective date of the Waiver is March 31, 2017 and the Waiver onlyapplies to our failure to deliver such report of our auditors for the December 31, 2016 audited financial statements and not with respect to any futurefinancial years. The Waiver is effective retroactive to the date on which our auditors’ report concerning the December 31, 2016 financial statements whichincluded a “going concern” explanatory paragraph was issued. The lender has not provided us any notice of Default or any Event of Default, as suchterms are defined in our agreements with the lender, and has waived for all purposes the December 31, 2016 going concern covenant requirement.Notwithstanding such waiver, as a result of non-compliance with the non-financial covenant as of December 31, 2016, we reclassified long term debt witha net carrying value of $31,487,253 as current liabilities as of December 31, 2016. Effective January 26, 2018, the Company entered into a Forbearance to Loan Agreement (the “Agreement”) with the lender, as administrative agent to thelenders under the loan agreement entered into on October 16, 2014 by and among the Company, certain of its subsidiaries, the lender and the lender’sparty thereto (the “Loan Agreement”). Pursuant to the Agreement, the lender, through March 30, 2018 (the “Forbearance Period”), waived the Company’srequirement to maintain at least $6,500,000 minimum in deposit accounts or securities accounts (the “$6,500,000 Minimum”) and agreed to forbear fromexercising any of its rights with respect to an event of default related to the $6,500,000 Minimum. The Forbearance Period shall terminate upon theCompany’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 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 containeda going concern qualification. The agreement was further amended and restated effective March 30, 2018 to extend the forbearance period until April 15,2018. We expect to extend the Forbearance Period beyond April 15, 2018 but there is no guarantee that we will be able to do so on terms acceptable to usor at all. As a result of the 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. 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-termdebt agreement, a default may allow the lender under the relevant instruments to accelerate the related debt and to exercise their remedies under theseagreements, which will typically include the right to declare the principal amount of that debt, together with accrued and unpaid interest and other relatedamounts, immediately due and payable, to exercise any remedies the lender may have to foreclose on assets that are subject to liens securing that debt andto terminate any commitments they had made to supply further funds. The long-term debt agreement governing our indebtedness also contains variouscovenants that may limit our ability to pay dividends. 25 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 stockholderswhich 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 theauthority to issue preferred stock without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series ofpreferred stock that would grant to such holders (i) the preferred right to our assets upon liquidation, (ii) the right to receive dividend payments beforedividends are distributed to the holders of common stock and (iii) the right to the redemption of the shares, together with a premium, prior to theredemption of our common stock. In addition, our Board of Directors could authorize the issuance of a series of preferred stock that has greater votingpower than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock orresult 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 stockcould receive less proceeds in connection with any future sale of the Company, whether in liquidation or on any other basis. We are subject to extensive financial reporting and related requirements for which our accounting and other management systems and resources maynot be adequately prepared. We are subject to reporting and other obligations under the Securities Exchange Act of 1934, as amended, including the requirements of Section 404 ofthe Sarbanes-Oxley Act. Section 404 requires us to conduct an annual management assessment of the effectiveness of our internal controls over financialreporting. These reporting and other obligations place significant demands on our management, administrative, operational and accounting resources. Inorder to maintain compliance with these requirements, we may need to (i) upgrade our systems, (ii) implement additional financial and managementcontrols, reporting systems and procedures, (iii) implement an internal audit function, and (iv) hire additional accounting, internal audit and finance staff.If we are unable to accomplish these objectives in a timely and effective manner, our ability to comply with our financial reporting requirements andother rules that apply to reporting companies could be impaired. Any failure to maintain effective internal controls could have a negative impact on ourability to manage our business and on our stock price. We may be at risk to accurately report financial results or detect fraud if we fail to maintain an effective system of internal controls. 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 anassessment by management on the Company’s internal control over financial reporting in their annual and quarterly reports on Form 10-K and 10-Q. Wecannot assure you that significant deficiencies or material weaknesses in our disclosure controls and internal control over financial reporting will not beidentified 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 loseconfidence in the reliability of our financial reporting which may adversely affect our stock price. 26 Risks Relating to Our Common Stock Our common stock is quoted on the OTCQB which may have an unfavorable impact on our stock price and liquidity. Our common stock is quoted on the OTCQB. The OTCQB is an automated quotation service operated by OTC Markets, LLC. The quotation of our shareson the OTCQB may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, in part because ofthe inability or unwillingness of certain investors to acquire shares of common stock not traded on a national securities exchange, and could depress thetrading 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 ourCommon Stock cumbersome and may reduce the value of an investment in our Common 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 marketprice 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 apenny 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 ordealer 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 investmentexperience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and theperson 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 stockmarket, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the brokeror dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions insecurities 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 themarket 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 commissionspayable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to aninvestor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stockheld in the account and information on the limited market in penny stocks. 27 A limited public trading market may cause volatility in the price of our common stock. The quotation of our common stock on the OTCQB 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 smallercompanies like us. Our common stock is subject to this volatility. Sales of substantial amounts of common stock, or the perception that such sales mightoccur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and ourstockholders could suffer losses or be unable to liquidate their holdings. Because our common stock does not trade on a national securities exchange, ourcommon stock is subject to the securities laws of the various states and jurisdictions of the United States in addition to federal securities law. While wemay 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 wherewe 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 shareswithout 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 expectedto 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 ourcommon 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 stockprice 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 effecton 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 shareof 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 SeriesA Preferred Stock, subject to certain adjustments. The rights will generally separate from the common stock and become exercisable if any person orgroup 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 ofDirectors, our Rights Plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) withoutfirst negotiating with our Board of Directors. In addition, we are governed by provisions of Delaware law that may prohibit large stockholders, inparticular 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 ourstockholders would otherwise favor, or otherwise reduce the price that investors might be willing to pay for our common stock in the future. 28 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 periodunder Rule 144 or registration for resale, or issued upon the conversion of preferred stock, if any, or exercise of warrants, it could create a circumstancecommonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. As of December 31, 2017, we had394,399 shares of common stock issued and outstanding. As of December 31, 2017, we had 2,400 shares underlying warrants that have been registered forresale pursuant to an effective registration statement on Form S-3 (File No. 333-212437), 71,734 shares of common stock underlying our Series GConvertible Preferred Stock (“Series G Preferred Stock”) available for resale under Rule 144 and 53,440 shares of common stock underlying our Series HConvertible Preferred Stock (“Series H Preferred Stock”) for resale under Rule 144. The existence of an overhang, whether or not sales have occurred orare 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 andprice 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 and Series H PreferredStock; these rights may have a negative effect on the value of shares of our Common Stock. The holders of our outstanding shares of Series G Preferred Stock and Series H Preferred Stock have rights and preferences generally superior to those ofour holders of common stock. The existence of these superior rights and preferences may have a negative effect on the value of shares of our commonstock. 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 ●the right to convert into shares of our common stock at the conversion price set forth in the certificates of designations governing the respectivePreferred Stock, which may be adjusted. Item 1B - Unresolved Staff Comments. None. 29 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 $183,000 andescalates by approximately 3% annually reaching $213,000 for 2024. Our lease expires December 31, 2024 with an option to renew for an additional fiveyear term. Item 3 - Legal Proceedings. There are no significant legal proceedings pending, and we are not aware of any material proceeding contemplated by a governmental authority, to whichwe are a party or any of our property is subject. Item 4 - Mine Safety Disclosures. Not applicable 30 PART II Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock was listed on the NASDAQ Capital Market under the symbol TWER from May 31, 2007 until November 30, 2016. Effective December1, 2016, the Company moved to trade on the OTCQB under the symbol TWER. The following table sets forth the high and low sales prices as reported onthe NASDAQ Capital Market for the period from January 1, 2016 through November 30, 2016 and OTCQB for subsequent periods. The quotations reflectinter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. All stock prices included in thefollowing table are adjusted for the 1 for 20 reverse split of our common stock effected on July 7, 2016 and the 1 for 75 Listing Reverse Splitimplemented on September 29, 2017. Fiscal Year 2017 HIGH LOW First Quarter $15.75 $10.50 Second Quarter $14.25 $6.75 Third Quarter $9.00 $4.50 Fourth Quarter $6.00 $3.00 Fiscal Year 2016 High Low First Quarter $600.00 $150.00 Second Quarter $855.00 $180.00 Third Quarter $312.75 $88.50 Fourth Quarter $117.00 $13.50 The last reported sales price of our common stock on the OTCQB on December 29, 2017 was $3.15 and on March 23, 2018, the last reported sales pricewas $3.60. According to the records of our transfer agent, as of March 23, 2018, there were 38 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 theforeseeable future. Rather, we expect to retain future earnings (if any) to fund the operation and expansion of our business and for general corporatepurposes. 31 Securities Authorized for Issuance Under Equity Compensation Plans As of December 31, 2017, securities issued and securities available for future issuance under our 2008 Non-Employee Directors Compensation Plan, our2007 Equity Compensation Plan, our 2007 Incentive Stock Plan, our 2016 Equity Incentive Plan and our 2016 Non-Executive Incentive Plan were asfollows: Equity Compensation Plan Information Number ofsecurities to beissued uponexercise ofoutstandingoptions,warrants andrights Weightedaverageexercise priceof outstandingoptions,warrants andrights Number ofsecuritiesremainingavailable forfuture issuanceunder equitycompensationplans Equity compensation plans approved by security holders 76,601 $117.42 - Equity compensation plans not approved by security holders - $- - Total 76,601 $117.42 - Recent Sales of Unregistered Securities. There were no unregistered securities sold by us during the year ended December 31, 2017 that were not otherwise disclosed by us during the year in aQuarterly 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 Information Upon its formation in 2013, the Company determined that the Shared Wireless Infrastructure business represented a separate business segment which wasreported as the "Shared Wireless Infrastructure" or "Shared Wireless" segment. The Company's existing business which provides fixed wireless services tobusinesses was reported as the "Fixed Wireless" business segment. The Company also established a Corporate Group so that centralized operatingactivities which supported both business segments could be reported separately. During the fourth quarter of 2015, the Company determined to exit theShared Wireless infrastructure business. As a result, the operating results of the Shared Wireless business are reported as discontinued operations in thesefinancial statements. The Fixed Wireless operating results are reported as a single segment referred to as continuing operations. Costs associated with theCorporate Group are included in continuing operations. 32 Overview - Fixed Wireless We provide fixed wireless broadband services to commercial customers and deliver access over a wireless network transmitting over both licensed andunlicensed radio spectrum. Our service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data andvideo 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 customerson a monthly basis, in advance, for each month of service. Payments received in advance of services performed are recorded as deferred revenues andrecognized as revenue ratably over the service period. Infrastructure and access expenses relate directly to maintaining our network and providing connectivity to our customers. Infrastructure primarily relatesto our Points-of-Presence ("PoPs") where we install a substantial amount of equipment, mostly on the roof, which we utilize to connect numerouscustomers to the internet. We enter into long term lease agreements to maintain our equipment on these PoPs and these rent payments comprise themajority of our infrastructure and access costs. Access expenses primarily consist of bandwidth connectivity agreements that we enter into with nationalservice providers. Network operations costs relate to the daily operations of our network and ensuring that our customers have connectivity within the terms of our servicelevel 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 comprisesapproximately 55% to 60% of network operations costs. Information technology systems and support comprises approximately 15% to 20% of networkoperations costs. Customer support costs relate to our continuing communications with customers regarding their service level agreement. Payroll comprisesapproximately 78% to 88% of customer support costs. Other costs include travel expenses to service customer locations, shipping, troubleshooting, andfacilities 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 marketinginitiatives and business development expenses. General and administrative expenses include costs attributable to corporate overhead and the overall support of our operations. Salaries and other relatedpayroll costs for executive management and finance personnel are included in this category. Other costs include accounting, legal and other professionalservices, and other general operating expenses. 33 Overview - Shared Wireless Infrastructure In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed toleverage its fixed wireless network in urban markets to provide other wireless technology solutions and services. Hetnets built a carrier-class networkwhich offered a shared wireless infrastructure platform, primarily for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fiaccess and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of2015, the Company determined to exit this business and curtailed activities in its smaller markets. The remaining network, located in New York City, wasthe largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015and 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 tothe major cable company (the “Buyer”). The asset purchase agreement provided that the Buyer would assume certain rooftop leases in NYC and acquireownership of the Wi-Fi access points and related equipment associated with operating the network. The Company retained ownership of all backhaul andrelated equipment and the parties entered into a backhaul services agreement under which the Company will provide bandwidth to the Buyer at thelocations 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 sharerelated 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 relatedamounts and disclosures have been retroactively adjusted for all periods presented. Results of Operations Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 Continuing Operations – Fixed Wireless Revenues. Revenues totaled $26,212,550 during the year ended December 31, 2017 compared to $26,895,613 during the year ended December 31, 2016representing a decrease of $683,063, or 3%. The decrease is due to fewer customers but is offset by new customers having a higher average rate per unitand a lower overall customer churn rate. Customer Churn. Customer churn, calculated as a percent of revenue lost on a monthly basis from customers terminating service or reducing their servicelevel, totaled 1.31% during the year ended December 31, 2017 compared to 1.70% during the year ended December 31, 2016. Churn levels can fluctuatefrom period to period depending upon whether customers move to a location not serviced by the Company, go out of business, or a myriad of otherreasons. 34 Infrastructure and Access. Infrastructure and access totaled $10,670,673 for the year ended December 31, 2017 compared to $10,366,246 for the yearended December 31, 2016 representing an increase of $304,427, or 3%. The increase primarily relates to higher tower rental costs and maintenanceactivity offset by a reduction in bandwidth costs. Depreciation and Amortization. Depreciation and amortization totaled $6,734,987 during the year ended December 31, 2017 compared to $10,875,935during the year ended December 31, 2016 representing a decrease of $4,140,948, or 38%. Depreciation expense totaled $5,324,969 during the year endedDecember 31, 2017 compared to $9,417,612 during the year ended December 31, 2016 representing a decrease of $4,092,643, or 43%. The depreciationdecrease is due to capital investment activity being lower than historical levels and a higher percentage of assets becoming fully depreciated. Amortization expense totaled $1,410,019 during the year ended December 31, 2017 compared to $1,458,323 during the year ended December 31, 2016representing a decrease of $48,304, or 3%. Amortization expense relates to customer related intangible assets recorded in connection with acquisitionsand can fluctuate significantly from period to period depending upon the timing of acquisitions, the relative amounts of intangible assets recorded, andthe amortization periods. Network Operations. Network operations totaled $4,342,392 for the year ended December 31, 2017 compared to $5,113,382 for the year ended December31, 2016 representing a decrease of $770,990, or 15%. The primary reasons for the decrease are lower payroll costs of $334,003, or 11%, due primarily tostaffing reductions, and information technology related cost reductions of $221,977, or 24%, due to decreased third party support and software licenses. Customer Support. Customer support totaled $1,608,526 for the year ended December 31, 2017 compared to $1,858,314 for the year ended December 31,2016 representing a decrease of $249,788, or 13%. The decrease is due to lower payroll related expenses of $367,440, or 23%, due to lower averageheadcount 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. 35 Sales and Marketing. Sales and marketing expenses totaled $3,883,438 during the year ended December 31, 2017 compared to $3,936,915 during theyear ended December 31, 2016 representing a decrease of $53,477, or l.4%. Advertising expenses have decreased $161,107, or 66%, as the Company hassignificantly reduced its Internet marketing initiatives in connection with its current marketing focus on specific businesses in certain connectedbuildings rather than marketing broadly to all businesses within a market, offset by increased indirect channel commissions of $135,213, or 17%,associated with the Company’s residual program which pays continuing commissions as long as the referred business is a customer. General and Administrative. General and administrative expenses totaled $6,324,084 during the year ended December 31, 2017 compared to $7,777,657during the year ended December 31, 2016 representing a decrease of $1,453,573, or 19%. Public company costs decreased $872,353, or 77%, primarilydue 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 yearended 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 DPreferred 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 thefinancial statements. 36 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 endedDecember 31, 2016 representing a decrease of $1,403,250, or approximately 21%. Interest expense relates to the $35,000,000 secured term loan whichclosed in October 2014 and capital lease arrangements. The decrease is primarily attributable to the $5,000,000 reduction of debt in the fourth quarter of2016 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 andcurtail activities in certain smaller markets. See Note 4 “Discontinued Operations” within the notes to our consolidated financial statements for additionalinformation about our discontinued operations. 37 Liquidity and Capital Resources Changes in capital resources during the years ended December 31, 2017 and 2016 are described below. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and thesatisfaction of liabilities in the normal course of business. As of December 31, 2017, we had cash and cash equivalents of approximately $7.6 million andworking capital deficiency of approximately $31.1 million. We have incurred significant operating losses since inception and continue to generate lossesfrom operations and as of December 31, 2017, we have an accumulated deficit of $189.1 million. These matters raise substantial doubt about our abilityto continue as a going concern within one year after the date these financial statements are issued. Management has also evaluated the significance ofthese conditions in relation to the Company's ability to meet its obligations. The consolidated financial statements do not include any adjustmentsrelating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable tocontinue as a going concern. Historically, we have financed our operation through private and public placement of equity securities, as well as debt financing and capital leases. Ourability 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 believesthat 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 thatany 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, wemay need to curtail or cease our operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised tosupport further operations. There can be no assurance that such a plan will be successful. 38 On June 20, 2016, the Company raised $2,280,000 in a private placement offering of common stock and warrants and received net proceeds of$2,236,250. 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. On September 12, 2016, the Company raised $4,000,000 in a registered public offering of common stock and received net proceeds of $3,378,280. On 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. On November 8, 2016, the Company entered into a series of agreements wherein $5,000,000 of the Company’s senior secured debt due to Lender wascanceled and the Company simultaneously issued 1,000 shares of Series D Preferred Stock and warrants to purchase 4,000,000 shares of common stock atan exercise price of $1.15 per share. The cancellation of that debt serves to reduce the balloon payment due in October 2019 by that amount and reduceinterest payments by $400,000 on an annual basis. On November 22, 2016, the Company raised $1,000,000 in a private placement offering of preferred stock and received net proceeds of $827,635. Continuing Operations Net Cash Used In Operating Activities. Net cash used in operating activities for the year ended December 31, 2017 totaled $1,423,961 compared to$6,188,647 for the year ended December 31, 2016. The $4,764,686 decrease in cash used in operations is due to a $7,725,039 decrease in net loss, a$2,344,841 decrease in cash outflows associated with operating assets and liabilities, offset by a $5,305,194 decrease in non-cash items. Net Cash Used in Investing Activities. Net cash used in investing activities for the year ended December 31, 2017 totaled $2,431,752 compared to$2,322,429 for the year ended December 31, 2016 representing an increase of $109,323. Cash capital expenditures totaled $2,407,877 in the 2017 periodcompared to $2,361,601 in the 2016 period representing an increase of $46,276. Capital expenditures can fluctuate from period to period dependingupon the number of customer additions and upgrades, network construction activity related to increasing capacity or coverage, and other related reasons. Net Cash (Used in) Provided by Financing Activities. Net cash used in financing activities for the year ended December 31, 2017 totaled $868,749compared to net provided by financing activities of $7,213,677 for the year ended December 31, 2016 representing a decrease of $8,082,426. During the2016 period, we completed three common stock offerings which resulted in net proceeds of $6,142,680 and two preferred stock offerings which resultedin net proceeds of $2,022,372. 39 Discontinued Operations Net cash provided by discontinued operations for the year ended December 31, 2017 was $21,000 compared to net cash used in discontinued operationsof $1,546,688 for the year ended December 31, 2016, representing an increase of $1,567,688. See Note 4 “Discontinued Operations” within the notes toour consolidated financial statements for additional information about our discontinued operations. 40 Other Considerations Debt Financing. In October 2014, we entered into the Loan Agreement with Lender. The Lender provided us with a five-year $35,000,000 secured termloan (the “Financing”). The Financing was issued at a 3% discount and the Company incurred $2,893,739 in debt issuance costs. Net proceeds were$31,056,260. On November 8, 2016 and in connection with a financing transaction as more fully discussed in Note 10, Capital Stock, an investor acquired $5,000,000of the Company's obligations to the Lender consisting of principal and accrued interest of $4,935,834 and $64,166, respectively. The investor thenimmediately exchanged such obligations for 1,000 shares of the Company's Series D Preferred Stock and warrants for the purchase of up to 53,334 sharesof the Company's common stock. The loan bears interest at a rate equal to the greater of (i) the sum of the most recently effective one month LIBOR as in effect on each payment date plus7% or (ii) 8% per annum, and additional paid in kind (“PIK”), or deferred, interest that accrues at 4% per annum. The aggregate principal amount outstanding plus all accrued and unpaid interest is due in October 2019. The Company has the option of makingprincipal payments (i) on or before October 16, 2016 (the “Second Anniversary”) but only for the full amount outstanding and (ii) after the SecondAnniversary 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 purchase2,400 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. 41 Impact of Inflation, Changing Prices and Economic Conditions Pricing for many technology products and services have historically decreased over time due to the effect of product and process improvements andenhancements. In addition, economic conditions can affect the buying patterns of customers. While our customer base experienced a decline during 2017,our overall pricing increased during that same period. Customers continued to place a premium on value and performance. Pricing of services continuedto be a focus for prospective buyers with multi-point and midrange product pricing remaining steady while competition for high capacity linksintensified. In part, pressure on high capacity links was due to decreased costs for equipment and some competitors willing to sacrifice margins. Webelieve that our customers will continue to upgrade their bandwidth service. The continued migration of many business activities and functions to theInternet, and growing use of cloud computing should also result in increased bandwidth requirements over the long term. Inflation has remainedrelatively 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 managementto make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and theamounts of revenues and expenses. Critical accounting policies are those that require the application of management’s most difficult, subjective orcomplex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change insubsequent periods. In preparing the financial statements, we utilize available information, including our past history, industry standards and the currenteconomic environment, among other factors, in forming our estimates and judgments, giving appropriate consideration to materiality. Actual results maydiffer from these estimates. In addition, other companies may utilize different estimates which may impact the comparability of our results of operations toother companies in our industry. We believe that of our significant accounting policies, the following may involve a higher degree of judgment andestimation, 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 totalrevenue 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 ormanner 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 notrecoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriategrouping of assets, is compared to the asset’s carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairmentloss 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 netrealizable value. 42 Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired in an acquisition. Goodwill is notamortized 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 andprojected financial performance of the reporting unit. No further analysis is required if it is determined that there is a less than 50 percent likelihood thatthe 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 forobligations associated with the retirement of tangible long-lived assets and the associated costs. This guidance requires the recognition of an assetretirement obligation and an associated asset retirement cost when there is a legal obligation associated with the retirement of tangible long-livedassets. Our network equipment is installed on both buildings in which we have a lease agreement (“Company Locations”) and at customer locations. Inboth instances, the installation and removal of our equipment is not complicated and does not require structural changes to the building where theequipment is installed. Costs associated with the removal of our equipment at Company or customer locations are not material, and accordingly, we havedetermined 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, financings, or other relationships with unconsolidated entities known as “Special Purposes Entities.” Recent Accounting Pronouncements Recent accounting pronouncements applicable to our financial statements are described in Note 3 to our financial statements titled Basis of Presentationand Summary of Significant Accounting Policies which is included elsewhere in this document. 43 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, all cash and cash equivalents are immediately available cash balances. A portion of our cash and cash equivalents are held in institutional moneymarket 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 furtherdecline 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. 44 Item 8 - Financial Statements and Supplementary Data. TOWERSTREAM CORPORATION AND SUBSIDIARIESIndex to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm46 Consolidated Balance Sheets47 Consolidated Statements of Operations48 Consolidated Statements of Stockholders’ Deficit49 Consolidated Statements of Cash Flows50 Notes to Consolidated Financial Statements51 45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directorsof 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, 2017and 2016, the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all materialrespects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the twoyears in the period ended December 31, 2017, 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 fullydescribed in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meetits 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 thatmight 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 financialstatements 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 rulesand 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 obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not requiredto 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 anunderstanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internalcontrol 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, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Marcum llp Marcum llp We have served as the Company’s auditor since 2007. New York, NYApril 2, 2018 46 TOWERSTREAM CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS As of December 31, 2017 2016 Assets Current Assets Cash and cash equivalents $7,568,982 $12,272,444 Accounts receivable, net of reserves for uncollectable accounts of $95,884 and $64,824, respectively 912,333 505,074 Prepaid expenses and other current assets 242,320 434,444 Current assets of discontinued operations - 231,978 Total Current Assets 8,723,635 13,443,940 Property and equipment, net 13,430,980 15,252,357 Intangible assets, net 2,242,471 3,652,490 Goodwill 1,674,281 1,674,281 Other assets 386,047 369,769 Total Assets $26,457,414 $34,392,837 Liabilities and Stockholders’ (Deficit) Equity Current Liabilities Accounts payable $1,150,861 $323,625 Accrued expenses 1,622,036 911,210 Accrued interest 722,629 - Deferred revenues 934,450 1,161,520 Current maturities of capital lease obligations 382,918 791,009 Current liabilities of discontinued operations 1,029,022 1,240,000 Deferred rent 78,048 110,738 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 Total Current Liabilities 39,788,664 36,025,355 Long-Term Liabilities Capital lease obligations, net of current maturities 305,947 158,703 Other 754,203 1,062,237 Total Long-Term Liabilities 1,060,150 1,220,940 Total Liabilities 40,848,814 37,246,295 Commitments (Note 15) 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; Liquidationvalue of $0 and $1,233,000 as of December 31, 2017 and 2016 - 2 Series E Convertible Preferred - 0 and 500,000 shares issued and outstanding, respectively; Liquidationvalue of $0 and $500 as of December 31, 2017 and 2016 - 500 Series F Convertible Preferred – 0 and 1,233 shares issued and outstanding, respectively; Liquidationvalue of $0 and $1,233,000 as of December 31, 2017 and 2016 - 1 Series G Convertible Preferred - 538 and 0 shares issued and outstanding, respectively; Liquidationvalue of $538,000 and $0 as of December 31, 2017 and 2016 1 - Series H Convertible Preferred - 501 and 0 shares issued and outstanding, respectively; Liquidationvalue of $501,000 and $0 as of December 31, 2017 and 2016 1 - Common stock, par value $0.001; 200,000,000 shares authorized; 394,399 and 244,369 shares issuedand outstanding as of December 31, 2017 and 2016, respectively 394 244 Additional paid-in-capital 174,733,113 173,801,022 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 47 TOWERSTREAM CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS For the Years EndedDecember 31, 2017 2016 Revenues $26,212,550 $26,895,613 Operating Expenses Infrastructure and access 10,670,673 10,366,246 Depreciation and amortization 6,734,987 10,875,935 Network operations 4,342,392 5,113,382 Customer support 1,608,526 1,858,314 Sales and marketing 3,883,438 3,936,915 General and administrative 6,324,084 7,777,657 Total Operating Expenses 33,564,100 39,928,449 Operating Loss (7,351,550) (13,032,836)Other Income/(Expense) Interest expense, net (5,201,972) (6,605,222)Loss on extinguishment of debt - (500,000)Loss before income taxes (12,553,522) (20,138,058) (Provision) benefit for income taxes 83,840 (56,663)Loss from continuing operations (12,469,682) (20,194,721)Loss from discontinued operations Loss from discontinued operations - (1,419,517)Gain on sale of assets - 1,177,742 Total loss from discontinued operations - (241,775) 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. 48 TOWERSTREAM CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICITFor the Years Ended December 31, 2017 and 2016 Series BConvertible Series CConvertible Series DConvertible Series E Convertible Series FConvertible Series GConvertible Series HConvertible Additional Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common Stock Paid-In- Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Total Balance at January 1, 2016 - $- - $- - $- - $- - $- - $- - $- 44,567 $45 $158,764,373 $(156,218,731) $2,545,687 Issuance on June 20, 2016of 10,000 units consisting ofshares of common stock andwarrants at $228.00 per unitfor gross cash proceeds of$2,280,000, net oftransaction costs of $43,750 - - - - - - - - - - - - - - 10,000 10 2,236,240 - 2,236,250 Issuance on July 7, 2016 of892,857 units consisting ofshares of Series BConvertible Preferred Stockand warrants at $1.40 perunit for gross cash proceedsof $1,250,000, net oftransaction costs of $56,156 892,857 893 - - - - - - - - - - - - - - 1,193,844 - 1,194,737 Issuance on July 21 and July26, 2016 of 5,953 shares ofcommon stock in connectionwith the conversion of892,857 shares of Series BConvertible Preferred Stock (892,857) (893) - - - - - - - - - - - - 5,953 6 887 - - Issuance on September 12,2016 of 680,000 shares ofSeries C ConvertiblePreferred Stock inexchange for certainoutstanding warrants - - 680,000 680 - - - - - - - - - - - - (680) - - Issuance on September 12,2016 of 39,507 shares ofcommon stock at $101.25per share for gross cashproceeds of $4,000,000, netof transaction costs of$621,720 - - - - - - - - - - - - - - 39,507 40 3,378,240 - 3,378,280 Issuance on various datesbetween October 10 andOctober 18, 2016, inclusive,of 9,067 shares of commonstock in connection with theconversion of 680,000shares of Series CConvertible Preferred Stock - - (680,000) (680) - - - - - - - - - - 9,067 9 671 - - Issuance on November 1,2016 of 5,926 shares ofcommon stock at $101.25per share for gross cashproceeds of $600,000, netof transaction costs of$71,850 - - - - - - - - - - - - - - 5,926 6 528,144 - 528,150 Issuance on November 8,2016 of 1,000 shares ofSeries D ConvertiblePreferred Stock with avalue of $5,500,000 inexchange for the reductionof $5,000,000 in long-debt,net of transaction costs of$170,264 - - - - 1,000 1 - - - - - - - - - - 5,329,735 - 5,329,736 Recognition on November8, 2016 of beneficialconversion feature of$1,375,000 related to themodification of theconversion terms of SeriesD Convertible PreferredStock and recorded as adeemed dividend - - - - - - - - - - - - - - - - - - - Issuance on various datesbetween November 10 andNovember 16, 2016,inclusive, of 43,044 sharesof common stock inconnection with theconversion of 378 shares ofSeries D ConvertiblePreferred Stock - - - - (378) - - - - - - - - - 43,044 43 (43) - - Issuance on November 22,2016 of 2,799 shares ofSeries D ConvertiblePreferred Stock inconnection with a 5.5 for 1forward split of that seriesof stock - - - - 2,799 3 - - - - - - - - - - (3) - - Issuance on November 22,2016 of 1,000 shares ofcommon stock at $1,000 pershare for gross cashproceeds of $1,000,000, netof transaction costs of$172,366 - - - - 1,000 1 - - - - - - - - - - 827,634 - 827,635 Recognition on November22, 2016 of beneficialconversion feature of$346,745 related to themodification of theconversion terms of SeriesD Convertible PreferredStock and recorded as adeemed dividend - - - - - - - - - - - - - - - - - - - Issuance on November 22,2016 of 2,000,000 shares ofSeries E ConvertiblePreferred Stock inexchange for certainoutstanding warrants - - - - - - 2,000,000 2,000 - - - - - - - - (2,000) - - Issuance on various datesbetween November 22 andNovember 29, 2016,inclusive, of 63,334 sharesof common stock inconnection with theconversion of 1,955 sharesof Series D ConvertiblePreferred Stock - - - - (1,955) (2) - - - - - - - - 63,334 63 (61) - - Issuance on December 19,2016 of 20,000 shares ofcommon stock in connectionwith the conversion of1,500,000 shares of Series EConvertible Preferred Stock - - - - - - (1,500,000) (1,500) - - - - - - 20,000 20 1,480 - - Issuance on December 30,2016 of 1,233 shares ofSeries F ConvertiblePreferred Stock inexchange for 1,233 sharesof Series D ConvertiblePreferred Stock - - - - (1,233) (1) - - 1,233 1 - - - - - - - - - Issuance on various datesbetween February 1, andSeptember 21, 2016,inclusive, of 2,573 shares ofcommon stock at anaverage of $189.75 pershare for services valued at$488,656 - - - - - - - - - - - - - - 2,573 2 488,654 - 488,656 Issuance at the end of eachquarter in connection withthe employee stockpurchase plan an aggregatetotal of 398 shares ofcommon stock at anaverage price of $72.75 pershare for proceeds of$28,952 - - - - - - - - - - - - - - 398 - 28,952 - 28,952 Share-based compensationexpense for options issuedto directors, management,and employees during thecurrent 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 convertiblepreferred into commonshares - - (500,000) (500) - - - - - - 6,667 7 493 - - Conversion on various datesfrom January 26, 2017 toApril 13,2017, inclusive,Series F convertiblepreferred into commonshares - - - - (590) - - - - - 39,334 39 (39) - - Conversion on May 26,2017 of Series DConvertible Preferred Stockinto Series G Preferredstock, and the conversion ofSeries F ConvertiblePreferred stock into SeriesH Convertible PreferredStock (1,233) (2) - - (643) (1) 938 1 938 1 - - 1 - - Conversion on various datesfrom May 30, 2017 to June29,2017, inclusive, Series Hconvertible preferred intocommon shares - - - - - - - - (437) - 46,614 47 (47) - - Conversion on various datesfrom June 30, 2017 toAugust 22,2017, inclusive,Series G convertiblepreferred into commonshares (400) - 53,335 53 (53) - - Additional shares issued asa result of the roundingprovisions of the reversestock split of September 29,2017 - - - - - - - - - - 4,050 4 (4) - - Stock-based compensationfor options - - - - - - - - - - - - 931,382 - 931,382 Issuance of common stockunder employee stockpurchase 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. 49 TOWERSTREAM CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS For the Years EndedDecember 31, 2017 2016 Cash Flows Used In Operating Activities: Net loss $(12,469,682) $(20,436,496)Loss from discontinued operations - 241,775 Net loss from continuing operations (12,469,682) (20,194,721)Adjustments to reconcile loss from continuing operations to net cash used in operating activities: Provision (benefit) for income taxes (83,840) 56,663 Provision for doubtful accounts 122,000 25,000 Depreciation for property, plant and equipment 5,324,969 9,417,612 Amortization for intangible assets 1,410,019 1,458,323 Interest added to note principal 1,366,992 1,499,315 Amortization of debt discount and deferred financing costs 1,014,456 1,609,588 Loss on extinguishment of debt - 500,000 Write-off of debt discount and deferred financing costs in connection with extinguishment of debt - 331,609 Accrued interest 722,629 (21,389)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 (529,259) (221,523)Prepaid expenses and other current assets 192,124 39,585 Other assets 7,598 (24,584)Account payable 827,236 (553,509)Accrued expenses 223,319 (765,628)Deferred revenues (227,070) (325,234)Total Adjustments 11,045,721 14,006,074 Net Cash Used In Continuing Operating Activities (1,423,961) (6,188,647)Net Cash Provided By (Used In) Discontinued Operating Activities 21,000 (1,546,688)Net Cash Used In Operating Activities (1,402,961) (7,735,335) Cash Flows Used In Investing Activities: Acquisitions of property and equipment (2,407,877) (2,361,601)Payments (refund) of security deposits (23,875) 39,172 Net Cash Used In Continuing Investing Activities (2,431,752) (2,322,429) Cash Flows (Used In) Provided By Financing Activities: Payments on capital lease obligations (869,055) (975,804)Net proceeds from the issuance of common stock and warrants - 6,142,680 Net proceeds from the issuance of preferred stock - 2,022,372 Proceeds from the issuance of common stock under employee stock purchase plan 306 24,429 Net Cash (Used In) Provided By Financing Activities (868,749) 7,213,677 Net Decrease In Cash and Cash Equivalents Continuing Operations (4,724,462) (1,297,399)Discontinued Operations 21,000 (1,546,688)Net Decrease In Cash and Cash Equivalents (4,703,462) (2,844,087)Cash and Cash Equivalents – Beginning of year 12,272,444 15,116,531 Cash and Cash Equivalents – Ending of year $7,568,982 $12,272,444 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 theconversion 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. 50 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 ofoperations, the Company’s business activities were focused on delivering fixed wireless broadband services to commercial customers over a wirelessnetwork transmitting over both licensed and unlicensed radio spectrum. The Company’s fixed wireless service supports bandwidth on demand, wirelessredundancy, virtual private networks, disaster recovery, bundled data and video services. The Company provides services to business customers in NewYork 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 wirelessbroadband providers in various markets. In January 2013, the Company incorporated a wholly-owned subsidiary, Hetnets Tower Corporation (“Hetnets”), to operate a new business designed toleverage its fixed wireless network in urban markets to provide other wireless technology solutions and services. Hetnets built a carrier-class networkwhich offered a shared wireless infrastructure platform, primarily for (i) co-location of customer owned antenna and related equipment and (ii) Wi-Fiaccess and offloading. The Company referred to this as its “Shared Wireless Infrastructure” or “Shared Wireless” business. During the fourth quarter of2015, the Company determined to exit this business and curtailed activities in its smaller markets. The remaining network, located in New York City, wasthe largest and had a lease access contract with a major cable company. As a result, the Company explored opportunities during the fourth quarter of 2015and 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 andrelated equipment associated with such leases. The Company retained ownership of all backhaul and related equipment, and the parties entered into anagreement under which the Company provides backhaul services to the Buyer. The agreement is for a three-year period with two one-year renewals and iscancellable by the Buyer on sixty days’ notice. During the first quarter of 2016, the Company determined that it would not be able to sell the remainder ofthe NYC network, and accordingly, all remaining assets were redeployed into the fixed wireless network or written off. The operating results and cashflows for Hetnets have been presented as discontinued operating results in these consolidated financial statements. 51 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Note 2 - Liquidity, Going Concern, and Management Plans The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and thesatisfaction of liabilities in the normal course of business. As of December 31, 2017, the Company had cash and cash equivalents of approximately $7.6million and working capital deficiency of approximately $31.1 million. The Company incurred significant operating losses since inception andcontinues to generate losses from operations and as of December 31, 2017, the Company has an accumulated deficit of $189.2 million. These matters raisesubstantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.Management has also evaluated the significance of these conditions in relation to the Company's ability to meet its obligations. The consolidatedfinancial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilitiesthat might be necessary should the Company be unable to continue as a going concern. The Company has monitored and reduced certain of its operating costs over the course of the year. Historically, the Company has financed its operationthrough private and public placement of equity securities, as well as debt financing and capital leases. The Company’s ability to fund its longer term cashrequirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt orequity financings or through the potential sale of the Company’s assets in order to achieve its business plan objectives. Management believes that it canbe successful in obtaining additional capital; however, no assurance can be provided that the Company will be able to do so. There is no assurance thatany funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Companyis unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficientadditional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Note 3 - Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances andtransactions have been eliminated in consolidation. Retroactive Adjustment For Reverse Stock Splits On July 7, 2016, the Company effected a one-for-twenty reverse stock split of its common stock. On September 29, 2017, the Company effected a one-for-seventy-five reverse stock split of its common stock. Consequently, all earnings per share andother share related amounts and disclosures have been retroactively adjusted for all periods presented for the reverse stock splits. 52 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and theamounts 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. 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, theCompany’s cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurancelimits. As of December 31, 2017, the Company had cash and cash equivalent balances of approximately $7.3 million in excess of the federally insuredlimit 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 becollected. The allowance is based on the history of past write-offs, the aging of balances, collections experience and current credit conditions. Additionsinclude 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 overthe 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 tofive years and information technology from three to five years. Expenditures for maintenance and repairs which do not extend the useful life of the assetsare charged to expense as incurred. Gains or losses on disposals of property and equipment are reflected in general and administrative expenses in theCompany’s consolidated statements of operations. 53 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 lifebecause the Company is able to maintain the license indefinitely as long as it complies with certain FCC requirements. The Company intends to and hasdemonstrated an ability to maintain compliance with such requirements. The Financial Accounting Standards Board’s (“FASB”) guidance on goodwilland other intangible assets states that an asset with an indefinite useful life is not amortized. However, as further described in the next paragraph, theseassets 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 evaluatedperiodically for impairment, or whenever events or circumstances indicate their carrying value may not be recoverable. Conditions that would result in animpairment 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 asignificant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. When such events orcircumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to theasset’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 ofits 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 oftangible long-lived assets and the associated costs. This guidance requires the recognition of an asset retirement obligation and an associated assetretirement cost when there is a legal obligation associated with the retirement of tangible long-lived assets. The Company’s network equipment isinstalled on both buildings in which the Company has a lease agreement and at customer locations. In both instances, the installation and removal of theCompany’s equipment is not complicated and does not require structural changes to the building where the equipment is installed. Costs associated withthe removal of the Company’s equipment at company or customer locations are not material, and accordingly, the Company has determined that it doesnot 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 notamortized but rather is reviewed annually 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 thecurrent and projected financial performance of the reporting unit. No further analysis is required if it is determined that there is a less than 50 percentlikelihood that the carrying value is greater than the fair value. The Company completed a qualitative assessment and determined that there was noimpairment of goodwill as of December 31, 2017 and 2016, respectively. 54 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Fair Value of Financial Instruments The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy in accordance with the FASB’sguidance. 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 anorderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets andliabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or forwhich fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment inmeasuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generallymeasured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation andjudgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operatingloss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the yearsin 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 isrecognized 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 taxasset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal ofdeferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to betaken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not to besustained upon examination. On December 22, 2017, new tax legislation known as the Tax Cuts and Jobs Act (the “Act”) was signed into law. The law change will result in many taxaccounting 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 intolaw. Accordingly, recognition of the tax effect of the rate reduction of the Act has been accounted for in the computation of the Company’s federaldeferred tax asset and liability balances, which are computed utilizing the new rates in the period for which the tax law was enacted with a correspondingnet adjustment to deferred income tax expense (or benefit) and the effect to the valuation allowance. The change in the federal rate as a result of the Act isreflected 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 andvaluation allowance disclosure. Revenue Recognition The Company normally enters into contractual agreements with its customers for periods ranging between one to three years. The Company recognizesthe total revenue provided under a contract ratably over the contract period, including any periods under which the Company has agreed to provideservices at no cost. The Company applies the revenue recognition principles set forth under the United States Securities and Exchange Commission StaffAccounting Bulletin 104, (“SAB 104”) which provides for revenue to be recognized when (i) persuasive evidence of an arrangement exists, (ii) deliveryor installation has been completed, (iii) the customer accepts and verifies receipt, and (iv) collectability is reasonably assured. 55 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 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 thereporting period. Deferred revenues are also recognized for certain customers who pay for their services in advance. 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 expenseat 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 topurchase shares of common stock. The fair value of stock-based awards is determined on the grant date using a valuation model. The fair value isrecognized 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 outstandingduring 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 56 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Segments The Company determined that the Shared Wireless Infrastructure and Fixed Wireless businesses represented separate business segments. In addition, theCompany established a Corporate Group so that centralized operating and administrative activities which supported both businesses could be reportedseparately. During the fourth quarter of 2015, the Company determined to exit the Shared Wireless Infrastructure business. As a result, its operating resultsfor all periods presented are being reported as discontinued operations in these financial statements. The operating results of the Fixed Wireless businessare 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”. ASU2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic605-35, "Revenue Recognition - Construction-Type and Production-Type Contracts.” The core principle of ASU 2014-09 is that revenue is recognizedwhen the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled inexchange for those goods or services. ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financialstatements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 alsorequires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain orfulfill a contract. ASU 2014-09 provides two methods of retrospective application. The first method is the full retrospective method which would requirethe Company to apply ASU 2014-09 to each prior reporting period presented. The second method is the modified retrospective method which wouldrequire the Company to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the date of initial application. ASU 2014-09 will beeffective for the Company beginning in fiscal 2018 as a result of ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of theEffective Date," which was issued by the FASB in August 2015 and extended the original effective date by one year. The Company has adopted ASU2014-09 as of January 1, 2018 and will utilize the modified retrospective method of adoption. The Company has evaluated the impact of adopting theavailable methodologies of ASU 2014-09 and 2015-14 upon its financial statements and concluded that there is not a material difference in theaccounting treatment of its 2017 revenue. While the Company will provide expanded disclosure as a result of ASU 2014-09, this standard will not haveany impact on its consolidated balance sheet and statement of operations. There have been four new ASUs issued amending certain aspects of ASU2014-09, ASU 2016-08, "Principal versus Agent Considerations (Reporting Revenue Gross Versus Net)," was issued in March,2016 to clarify certainaspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU 2016-10, "Identifying Performance Obligations and Licensing," issuedin April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensingimplementation. ASU 2016-12, "Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients" provides amendmentsand 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 electionsregarding the disclosures required for remaining performance obligations in certain cases and also makes other technical corrections and improvements tothe standard. With its evaluation of the impact of ASU 2014-09, the Company concluded that the updated guidance provided by these four new ASUs didnot have a material impact on the 2017 financial statements. 57 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 forthe 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 theCompany on January 1, 2019. Early adoption is permitted. While we continue to evaluate the impact of the standard on our consolidated financialstatements, we expect that it will materially increase the assets and liabilities on our consolidated balance sheet as we recognize the rights andcorresponding obligations related to operating leases. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-BasedPayment Accounting.” The new standard involves several aspects of the accounting for share-based payment transactions, including the income taxconsequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard was effective forthe Company on January 1, 2017 and did not have a material impact on the Company’s consolidated financial position and results of operations. As partof the adoption of this guidance, the Company elected to continue estimating forfeitures in its calculation of stock-based compensation. 58 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 cashflows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effectivefor public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this standardis 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 thedefinition 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, aninput and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning afterDecember 15, 2017, including interim periods within that reporting period. The Company does not expect this new guidance to have a material impact onits 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 GoodwillImpairment,” which removes Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods beginning afterDecember 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 ofoperations. 59 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED In May 2017, the FASB issued ASU 2017-09: Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting which clarifieswhich changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The standard is effectivebeginning after December 15, 2017; early adoption is permitted. The adoption of this standard is not expected to have a material impact on theCompany’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 andHedging (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 beclassified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument isindexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, afreestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair valueas a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that presentearnings 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 adividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options thathave down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debtwith Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update re-characterize theindefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Thoseamendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, andinterim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effectivefor fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption ispermitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments shouldbe 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 transitionguidance because those amendments do not have an accounting effect. The adoption of this ASU is not expected to have a material impact on theCompany’s consolidated financial position and results of operations. Note 4 - Discontinued Operations During the fourth quarter of 2015, the Company determined to exit the business conducted by Hetnets and curtailed activities in its smaller markets. Theremaining network, located in New York City, was the largest and had a lease access contract with a major cable company. As a result, the Companyexplored opportunities during the fourth quarter of 2015 and continuing into the first quarter of 2016 to sell the NYC network. On March 9, 2016, theCompany completed a sale and transfer of certain assets pursuant to an asset purchase agreement with a large cable company. Under the terms of theagreement, the Buyer assumed certain rooftop leases and acquired ownership of and the right to operate the Wi-Fi access points and related equipmentassociated with such leases. The Company retained ownership of all backhaul and related equipment, and the parties entered into an agreement underwhich the Company provides backhaul services to the Buyer. The agreement is for a three-year period with two one-year renewals and is cancellable bythe 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 theaccompanying consolidated balance sheets. As a result, during the first quarter of 2016, the Company recognized a gain of $1,177,742 in its discontinuedoperations. 60 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The Company had determined that it would not be able to sell the remaining network locations in New York City. As a result, the Company recognizedcharges totaling $1,585,319 in the first quarter of 2016 which included $453,403 representing the estimated cost to settle lease obligations, $528,364 towrite off network assets which could not be redeployed into the fixed wireless network, $110,500 related to security deposits which are not expected to berecovered, and $493,052 related to the accelerated expensing of deferred acquisition costs. These costs were partially offset by a $1,244,284 reduction inthe accrual for terminated lease obligations that was recorded in the fourth quarter of 2015. This reduction reflects the outcome of settlements negotiatedin the first quarter of 2016 with certain landlords. The operating results and cash flows for Hetnets have been reclassified and presented as discontinuedoperations in these consolidated financial statements for all periods presented. Operating Results A more detailed presentation of loss from discontinued operations is set forth below. There has been no allocation of consolidated interest expense todiscontinued 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) 61 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 Assets: Prepaid expenses and other current assets $- $231,978 Total Current Assets $- $231,978 Liabilities: Accrued expenses - leases $1,029,022 $1,240,000 Total Current Liabilities $1,029,022 $1,240,000 Accrued expenses represents the estimated cost of terminating the leases associated with the Hetnets business. Accordingly, disbursements associatedwith such activity during the year ended December 31, 2017 were recorded as reductions to that estimated liability. As of December 31, 2017 and basedupon negotiations, settlements and experiences through that date, the Company had reduced that remaining estimated liability by $210,978 to$1,029,022. 62 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 Network and base station equipment $2,629,526 $2,620,898 Customer premise equipment 1,269,373 669,792 Information technology 1,860,028 1,860,028 5,758,927 5,150,718 Less: accumulated depreciation 4,708,697 4,083,274 Property acquired through capital leases, net $1,050,230 $1,067,444 63 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Note 6 - Goodwill and Intangible Assets Intangible assets consist of the following: As of December 31, 2017 2016 Goodwill $1,674,281 $1,674,281 Customer relationships $11,856,126 $11,856,126 Less: accumulated amortization 11,856,126 11,725,369 Customer relationships, net - 130,757 Backhaul agreement 3,837,783 3,837,783 Less: accumulated amortization 2,345,312 1,066,050 Backhaul agreement, net 1,492,471 2,771,733 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 backhaulagreement 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-yearterm of the agreement. The customer contracts acquired in the Delos Internet acquisition were being amortized over a 50-month period which ended inApril 2017. The Company’s licenses with the Federal Communications Commission (the “FCC”) are not subject to amortization as they have anindefinite useful life. Years Ending December 31, 2018 1,279,261 2019 213,210 Total $1,492,471 64 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 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 a3% original issue discount. 65 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED This Note matures on October 16, 2019 and 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 ratewas 1.57% as of December 31, 2017. 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 theCompany, 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 andcustomary covenants (including limitations on other debt, liens, acquisitions, investments and dividends), and events of default (including paymentdefaults, breaches of covenants, a material impairment in the Lender’s security interest or in the collateral, and events relating to bankruptcy orinsolvency). The Note contains several restrictive covenants and the most significant of which requires the Company to maintain a minimum cashbalance 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 loanbalances, and the Lender may terminate its lending commitment, declare all outstanding obligations immediately due and payable, and take such otheractions 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, as administrative agent to thelenders under the loan agreement entered into on October 16, 2014 by and among the Company, certain of its subsidiaries, the lender and the lender’sparty thereto (the “Loan Agreement”). Pursuant to the Agreement, the lender, through March 30, 2018 (the “Forbearance Period”), waived the Company’srequirement to maintain at least $6,500,000 minimum in deposit accounts or securities accounts (the “$6,500,000 Minimum”) and agreed to forbear fromexercising any of its rights with respect to an event of default related to the $6,500,000 Minimum. The Forbearance Period shall terminate upon theCompany’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 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 containeda going concern qualification. The 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 thatamount 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 ofcapital stock redeemable for cash or convertible into debt securities; and iv) any change of control. 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 Noteusing 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 theCompany's common stock at $1,890.00 and $15.00 per share, respectively, through April 2022. The fair value of these warrants was calculatedutilizing the Black-Scholes option pricing model; 66 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED b)$2,893,739 in costs incurred associated with obtaining this financing arrangement which consisted primarily of professional fees; and c)$1,050,000 related to a 3% original issue discount. On November 8, 2016 and in connection with a financing transaction as more fully discussed in Note 10, Capital Stock, an investor acquired $5,000,000of the Company's obligations to the Lender consisting of principal and accrued interest of $4,935,834 and $64,166, respectively. The investor thenimmediately exchanged such obligations for 1,000 shares of the Company's Series D Preferred Stock and warrants for the purchase of up to 53,334 sharesof the Company's common stock. In connection with that exchange, the Company: a)Wrote-off the portion of the unamortized debt discount and deferred financing costs associated with the exchanged principal and recorded acharge to interest expense of $331,609. The accrued interest and the adjustment to the unamortized debt discount activity described in thisparagraph are separate from and unrelated to the amounts appearing in the following paragraphs; and b)Recorded a non-cash loss on extinguishment of debt charge of $500,000. This amount represents the difference between the fair value of theSeries D Preferred Stock of $5,500,000 as described in Note 10, Capital Stock, and the carrying amount of the debt of $5,000,000 as of the dateof the exchange. The Company recorded interest expense of $4,142,046 and $4,497,945 for the years ended December 31, 2017 and 2016, respectively. Of those amounts,the Company paid to the Lender $2,775,054 and $2,998,630 and added $1,366,992 and $1,499,315 to the principal amount of the Note during the yearsended December 31, 2017 and 2016, respectively. The Company recorded amortization expense of $1,014,456 and $1,609,588 for the years ended December 31, 2017 and 2016, respectively, andclassified those amounts as interest expense. 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 onevote per share and are entitled to receive dividends, if any, as may be declared by the Company's Board of Directors. Upon liquidation, dissolution, orwinding-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. Theyhave no preemptive, subscription, redemption, or conversion rights. Any rights, preferences, and privileges of holders of the Company’s common stockare 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 theCompany's Board of Directors and issued in the future. 67 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED 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 totime 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 furtherapproval of the shareholders, is authorized to fix the preferences, limitations and relative rights of the shares of each class or series within a class. Theissuance of preferred stock could adversely affect the voting power, conversion or other rights of holders of common stock. Preferred stock could beissued 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 Stockduring the year ended December 31, 2016, and Series G through Series H Convertible Preferred Stock during the year ended December 31, 2017. TheCompany had shares of the following series of preferred stock issued and outstanding as of December 31, 2017 and 2016: Designated Issued and Outstanding 2017 2016 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 - Series H Convertible Preferred Stock 938 501 - 3,930,387 1,039 502,466 The preferences, rights, and limitations of each series of preferred stock, and equity activity for the years ended December 31, 2017 and 2016, arediscussed to the extent appropriate in the following paragraphs. a)On November 8, 2010, the Company adopted a shareholder rights plan under which the Company issued one "preferred share purchase right" foreach 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 aright 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. Ingeneral, the rights will become exercisable if a person or group acquires 15% or more of the Company’s outstanding common stock or announcesa tender offer or exchange offer for 15% or more of the Company’s outstanding common stock. The rights will expire on November 8, 2020. TheCompany may redeem the rights for $0.001 each at any time until the tenth business day following public announcement that a person or grouphas acquired 15% or more of its outstanding common stock. 68 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED b)On June 20, 2016, the Company raised $2,280,000 through the issuance of 10,000 units (the “June Units”) at $228.00 per June Units. The JuneUnits collectively consisted of: i) 10,000 shares of common stock, and ii) warrants for the purchase of 10,000 shares of the Company's commonstock at $375.00 per share for a period of five years. The shares of common stock and the warrants were immediately separable and were issuedindependently. Expenses associated with this transaction totaled $43,750 resulting in net proceeds to the Company of $2,236,250. Such netproceeds were allocated to the shares and the warrants issued in the amounts of $1,677,188 and $559,062, respectively, in proportion to theirrelative fair value on the date of issuance. The fair value of the shares of common stock was determined by utilizing the closing price on the dayof the transaction and the fair value of the warrants was determined by using the Black-Scholes model as more fully described in Note 11, StockOption Plans and Warrants. c)On July 7, 2016 and as previously indicated, the Company effected a 1-for-20 reverse stock split. Consequently, all share quantities, per shareamounts, and any other appropriate amounts or disclosures in these financial statements affected by that reverse stock split have been adjustedfor that reverse stock split. d)On July 7, 2016, the Company raised $1,250,000 through the issuance of 892,857 units (the “July Units”) at $1.40 per July Unit. The July Unitscollectively consisted of: i) 892,857 shares of newly created Series B Convertible Preferred Stock ("Series B Preferred Stock") which wereconvertible 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 share for a period of five years. The shares of common stock and the warrants were immediately separable and were issuedindependently. Expenses associated with this transaction totaled $56,156 resulting in net proceeds to the Company of $1,193,844. Such netproceeds were allocated to the shares and the warrants issued in the amounts of $963,949 and $229,895, respectively, in proportion to theirrelative fair value on the date of issuance. The fair value of the shares of Series B Preferred Stock was determined by reference to the number ofshares of common stock which they were convertible into and the closing price for those shares on the day of the transaction. The fair value ofthe warrants was determined by using the Black-Scholes model as more fully described in Note 11, Stock Option Plans and Warrants. e)On July 21 and July 26, 2016, the holders of the 892,857 shares of Series B Preferred Stock, previously issued on July 7, 2016, converted all suchshares into 5,953 shares of common 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 forthe purchase of up to 10,000 and 2,977 shares of the Company's common stock described above, respectively. In that exchange, the holderssurrendered those warrants and the Company issued 680,000 shares of newly created Series C Convertible Preferred Stock ("Series C PreferredStock") which was convertible into the Company's common stock on a one-for-one basis. The Company accounted for this exchange by reducingadditional 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. 69 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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. Expensesassociated with this transaction, including the 7% underwriters' commission of $280,000, totaled $621,720 resulting in net proceeds to theCompany of $3,378,280. In connection with this transaction, the Company granted the underwriter an option through October 31, 2016 topurchase up to an additional 5,926 shares of the Company's common stock at $101.25 per share, subject to the same commission structure, tocover 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 onSeptember 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 itsoption and the Company raised $600,000 through the issuance of 5,926 shares of common stock at $101.25 per share. Expenses associated withthis 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 fora 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 53,334shares of the Company's common stock at an exercise price of $100.50 for a period of five years. 70 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 theSeries 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 uponsuch conversion is determined by multiplying the number of Series D shares being converted by their stated value of $5,500 per shareand 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 affiliateswould 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 describedabove; 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 percommon share through November 8, 2017. That restriction remains in effect so long as there are shares of Series D Preferred Stockoutstanding 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 withthis transaction totaled $170,264 resulting in net effective proceeds to the Company of $5,329,736. Such net proceeds were allocated to theshares 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 ofissuance. The fair value of the shares of Series D Preferred Stock was determined by reference to the number of shares of common stock whichthey were convertible into and the closing price for those shares on the day of the transaction. The fair value of the warrants was determined byusing 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 deemeddividend 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 dayof the transaction and subtracting the conversion price per share. This difference was then multiplied by the number of shares of common stockinto which the shares of Series D Preferred Stock were convertible into on the date of the transaction. 71 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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, previouslyissued on November 8, 2016, elected to convert them into shares of common stock. In accordance with the terms applicable to that series ofpreferred 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 sharesoutstanding 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 DPreferred 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 tofacilitate record keeping purposes. Additionally, on that date, the Company amended the key preferences, rights, and limitations of the shares ofSeries D Preferred Stock to indicate that number of shares of common stock issuable upon their conversion is determined by: multiplying thenumber 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 pershare. 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 abeneficial conversion feature and a deemed dividend in the amount of $346,745. This amount was calculated using the closing price per share ofthe Company’s common stock on the day of the transaction and subtracting the conversion price per share. This difference was then multipliedby 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 thepurchase of up to 53,334 shares of the Company's common stock. In that exchange, the holders surrendered those warrants and the Companyissued 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; 72 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 affiliateswould 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 describedabove. m)On various dates from November 22 through November 29, 2016, inclusive, the holder of 1,955 shares of Series D Preferred Stock, previouslyissued on November 8 and 22, 2016, elected to convert them into shares of common stock. In accordance with the terms applicable to that seriesof 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 convertthem into shares of common stock. In accordance with the terms applicable to that series of preferred shares, the Company issued 20,000 sharesof 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 onNovember 8 and 22, 2016. In that exchange, the holder surrendered those shares and the Company issued 1,233 shares of newly created Series FConvertible 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 theexception 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 thusproviding, 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 affiliateswould 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 describedabove. 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 professionalservices 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 ofthose shares of common stock was immediately expensed and classified in general and administrative expenses in the Company’s statements ofoperations. 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 accordancewith 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 theminto shares of common stock. In accordance with the conversion terms applicable to the Series F Preferred Stock, the Company issued 39,334shares 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 FPreferred Stock for 938 shares of newly created Series G Preferred Stock and 938 shares of the newly created Series H Preferred Stock. 73 The key preferences, rights, and limitations of the Series G Preferred Stock and Series H Preferred Stock, are as follows: i.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 ofcommon stock issuable upon the conversion of the Series G Preferred Stock is determined by multiplying the number of shares of Series GPreferred 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 ofshares of Series H Preferred Stock being converted by their stated value of $1,000 per share and then dividing by the conversion price of $9.38per 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 preferentialpayment equal to 100% of the stated value of such Series H Preferred Stock, plus all accrued and unpaid dividends, if any. All subsequentissuances and junior preferred issuances of our capital stock will be junior in rank to the Series G Preferred Stock and Series H Preferred Stockwith 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 Stockand Series H Preferred Stock shall participate on an “as converted” basis, with all dividends declared on our common stock. In addition, if theCompany grants, issues or sells any rights to purchase securities pro rata to all of the Company’s record holders of its common stock, each holderwill be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of commonstock 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 resultof such conversion, the holder would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately aftergiving effect to the issuance of shares of common stock upon conversion of the Series G Preferred Stock and Series H Preferred Stock, whichbeneficial ownership limitation may be decreased by the holder at its option. Each holder is entitled to vote on all matters submitted tostockholders of the Company and shall have the number of votes equal to the number of shares of common stock issuable upon conversion ofsuch 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 conversionfeature and a deemed dividend in the amount of $1,905,570. This amount was calculated using the closing price per share of the Company’scommon stock on the day of the transaction and subtracting the conversion price per share. This difference was then multiplied by the number ofshares of common stock into which the shares of Series G Preferred Stock and Series H Preferred Stock were convertible into on the date of thetransaction. 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 intoshares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 46,614 shares ofcommon stock. 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 theminto shares of common stock. In accordance with the conversion terms applicable to those preferred shares, the Company issued 53,335 shares ofcommon 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 bythat reverse stock split have been adjusted for that reverse stock split. 74 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Note 11 - Stock Option Plans and Warrants 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 andother stock-based instruments to officers and employees, consultants and directors of the Company. The total number of shares of common stock issuableunder the 2007 Plan is 1,603. A total of 1,067 stock options or common stock have been issued under the 2007 Plan as of December 31, 2017. 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 ofcommon stock in the form of options or restricted stock. Shareholders approved an increase in the number of authorized shares of common stock issuableunder the 2007 Incentive Stock Plan from 1,667 to 3,334 in November 2012. A total of 2,635 stock options, common stock or restricted stock have beenissued under the 2007 Incentive Stock Plan as of December 31, 2017. 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 thefair 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 ofDecember 31, 2017 under the 2007 Plan and the 2007 Incentive Stock Plan combined is 1,235 shares. The 2008 Non-Employee Directors Compensation Plan (the “2008 Directors Plan”) became effective in August 2008 and provided for the issuance of upto 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 ofcommon stock issuable under the 2008 Directors Plan to 1,334. A total of 1,202 stock options or common stock have been issued under the 2008Directors Plan as of December 31, 2017. Options granted under the 2008 Directors Plan have terms of up to ten years and are exercisable at a price pershare 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 forissuance as of December 31, 2017 under the 2008 Directors Plan is 132 shares. The 2016 Equity Incentive Plan (the “2016 Equity Incentive Plan”) became effective in September 2016 and provided for the issuance of up to 9,094shares of common stock in the form of equity or equity-linked awards to officers, directors, consultants and other personnel. Shareholders approved anincrease 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. InFebruary 2017, the Company’s shareholders approved an increase in the number of authorized shares of common stock issuable under the 2016 EquityIncentive Plan from 19,134 to 33,618. A total of 72,800 stock options have been issued under the 2016 Equity Incentive Plan as of December 31, 2017. 75 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The 2016 Non-Executive Equity Incentive Plan (the “2016 Non-Employee Incentive Plan”) became effective in December 2016 and provides for theissuance 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 havebeen issued under the 2016 Non-Employee Incentive Plan as of December 31, 2017. 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 ata 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 theamortization of stock options granted under the Company’s stock option plans totaled $931,382 and $1,024,955 for the years ended December 31, 2017and 2016, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying consolidated statements ofoperations. The unamortized amount of stock options expense was $230,212 as of December 31, 2017 which will be recognized over a weighted-average period of2.3 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 weightedaverage assumptions: Years Ended December 31, 2017 2016 Risk-free interest rate 1.6%to1.7% 0.9%to1.8% Expected volatility 110%to113% 78%to11% Expected life (in years) 4.2 4.2 Expected dividend yield 0% 0% Estimated forfeiture rates 20% 1%to20% 76 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility was based upon the historical volatility for theCompany’s common stock. The Company utilized historical data to determine the expected life of stock options. The dividend yield reflected the factthat the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future. The Company reviews its forfeiturerate annually to update its assumption for recent experience. Option transactions under the stock option plans during the years ended December 31, 2017 and 2016 were as follows: Number WeightedAverageExercise Price Outstanding as of January 1, 2016 3,014 $3,700.88 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 Grants under the stock option plans were as follows: For the Years EndedDecember 31, 2017 2016 Annual grants to outside directors 170 3,936 Executive grants 50,586 6,036 Non-employee grants 334 1,101 Employee grants - 14,827 Total 51,090 25,900 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 thedate of grant. Director grants vesting periods range from vesting immediately upon issuance to vesting monthly or quarterly over a one year period fromthe date of issuance. Executive grants, except as noted below, have vesting periods ranging from vesting immediately upon issuance, vesting monthly orquarterly 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 overthe next three year period from the date of issuance. Employee grants range from one half vesting immediately upon issuance with the remaining one halfvesting quarterly over the next year to vesting annually over a three year period from the date of issuance. Non-employee grants vesting periods rangefrom 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 ofup 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 onJanuary 24, 2018; 8,358 will vest in eight quarterly installments during the twenty-four months ending January 24, 2020; 7,313 will vest upon theachievement 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, Floridafor gross proceeds equal to or greater than $15,000,000. 77 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Certain stock options awarded to Ernest Ortega, Chief Executive Officer, in conjunction with his 2017 employment agreement contained performancebased 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 tomarket over the vesting period based on probabilities and projections of the underlying performance measures. The aggregate fair value of theperformance based options granted was $140,708 for the year ended December 31, 2017. The Company has not recorded any expense associated with theperformance based stock options issued for the year ended December 31, 2017. The Company will continue to evaluate the probability of achieving thecriteria 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 aprovision 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, theCompany's former Chief Financial Officer. Mr. Urso's options vested 100% upon issuance and the options issued to Messrs. Giftakis and Larcombe vestratably on a quarterly basis over the eight quarters immediately following the date of the awards. The options awarded to Mr. Larcombe weresubsequently modified and fully expensed on May 15, 2017 to reflect immediate vesting and, unless exercised prior to May 15, 2018, shall be forfeited. On May 15, 2017, the Company entered into an employment agreement with Laura Thomas, Former Chief Financial Officer, wherein she was issuedoptions 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% afterone 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 EndedDecember 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 ofDecember 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 remainingcontractual 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 theCompany’s common stock at December 31, 2017, was $3.15 per share. The Company calculates the intrinsic value of stock options and warrants as thedifference 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 andwarrants. Stock Warrants Warrant transactions during the years ended December 31, 2017 and 2016 were as follows: Number WeightedAverageExercise Price Outstanding as of January 1, 2016 2,700 $1,965.00 Granted during 2016 66,311 122.25 Exchanged during 2016 (66,311) 122.25 Expired during 2016 (300) 7,500.00 Outstanding and exercisable as of December 31, 2016 and 2017 2,400 $1,265.25 78 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED As of December 31, 2017, 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 theCompany’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 yearsfrom 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 theBlack-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-incapital. 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’scommon stock. The dividend yield reflected the fact that the Company has not historically paid dividends, and does not expect to pay dividends in theforeseeable 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 yearsfrom 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 andattributed a value to them of $240,709 which was accounted for as an addition to additional paid-in capital. Assumptions included an interest rate of0.97%, 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 bythe Federal Reserve. The expected volatility was based upon the historical volatility for the Company’s common stock. The dividend yield reflected thefact 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 Note10, 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 theCompany'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 sixmonths from the date of issuance. The Company utilized the Black-Scholes model to value these warrants and attributed a value to them of $2,920,000which 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 expectedvolatility was based upon the historical volatility for the Company’s common stock. The dividend yield reflected the fact that the Company has nothistorically 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. SeeNote 10, Capital Stock, for further information regarding this transaction. 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 andhave completed 30 days of employment with the Company. The Company can elect to match up to a certain amount of employees’ contributions to the401(k) Plan. No employer contributions were made during the years ended December 31, 2016 and 2015. Under the Company’s 2010 Employee Stock Purchase Plan (“ESPP Plan”), participants can purchase shares of the Company’s stock at a 15% discount. Amaximum 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 December31, 2017 and 2016, respectively. 79 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 Current Federal $- $- State - - Total current - - Deferred Federal (896,114) 45,587,097 State (256,033) 8,228,412 Change in valuation allowance 1,068,307 (53,758,846)Total deferred (83,840) 56,663 Provision for income taxes $(83,840) $56,663 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 U.S. Federal statutory rate (34.0)% (34.0)%State taxes (5.0)% (4.9)%Permanent differences 0.1% 0.9%Rate Change -% 7.6%Prior year Net Operating Loss write-off (Section 382 restriction) -% 263.2%Change of Federal Deferred Tax Rate 29.7% -%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 ofDecember 31, 2017, the tax returns for Towerstream Corporation for the years 2014 through 2017 remain open to examination by the Internal RevenueService and various state authorities. 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 thesenew 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 areduction 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 allowancewas ($3,791,030). 80 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 Deferred tax assets Net operating loss carryforwards $4,345,624 $2,948,281 Stock-based compensation 2,280,815 2,931,251 Intangible assets 1,094,799 1,261,696 Debt discount 831,717 984,422 Allowance for doubtful accounts 25,889 25,281 Other 287,571 532,040 Total deferred tax assets 8,866,415 8,682,971 Valuation allowance (8,744,600) (7,676,293)Deferred tax assets, net of valuation allowance 121,815 1,006,678 Deferred tax liabilities Depreciation (121,815) (1,006,678)Intangible assets (336,597) (420,437)Total deferred tax liabilities (458,412) (1,427,115)Net deferred tax liabilities $(336,597) $(420,437) 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 thefinancial 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 and 2016, the Company has evaluated and concluded that there were no material uncertain tax positions requiring recognitionin the Company’s financial statements. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense, and penaltiesas general and administrative expenses. No interest and penalties were recorded during the years ended December 31, 2017 and 2016. The Company doesnot 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 occurredpreviously or that could occur in the future as provided in Section 382 of the Internal Revenue Code, as well as similar state provisions. Section 382limits the utilization of NOLs when there is a greater than 50% change of ownership as determined under the regulations. Since its formation, theCompany 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 thefuture upon subsequent disposition. 81 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED As of December 31, 2015, the Company had approximately $140,517,000 of federal and state NOL carryovers. As of November 9, 2016, the Companyhad a greater than 50% change in ownership under Section 382 of the Internal Revenue Code. Based on the calculations under Section 382, the NOLcarryforward as of that date is limited to approximately $4,612,000. After the ownership change and through December 31, 2016, the Company had ataxable loss of approximately $2,948,000. For the year ended December 31, 2017, the Company had a taxable loss of approximately $8,536,000. Thetotal federal and state NOLs of approximately $16,095,000 as of December 31, 2017 begin to expire starting in the year ending December 31, 2027. 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 deferredtax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periodsin which those temporary differences become deductible. In making this determination, under the applicable financial reporting standards, the Companyhas considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. Since both goodwill and theFCC licenses are considered to be assets with indefinite lives for financial reporting purposes, the related deferred tax liabilities cannot be used as asource of future taxable income for purposes of determining the need for a valuation allowance. Based upon this evaluation, a full valuation allowancehas been recorded as of December 31, 2017 and 2016. The change in valuation allowance was $1,068,307 and ($53,664,554), respectively, for the yearsended December 31, 2017 and 2016 of which zero and $94,292, respectively, pertains to discontinued operations. 82 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES 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 measurefair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assetsor 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 unobservableinputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification withinthe 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 carryingamounts of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The carrying value ofthe 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. Therewere no changes in the valuation techniques during the year ended December 31, 2017. TotalCarryingValue Quotedprices inactivemarkets(Level 1) Significantotherobservableinputs(Level 2) Significantunobservableinputs(Level 3) December 31, 2017 $7,568,982 $7,568,982 $- $- December 31, 2016 $12,272,444 $12,272,444 $- $- Note 15 - 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-cancelableagreements expiring on various dates through June 2024. Certain of these operating leases include extensions, at the Company's option, for additionalterms ranging from one to fifteen years. Amounts associated with the extension periods have not been included in the table below as it is not presentlydeterminable which options, if any, the Company will elect to exercise. 83 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED As of December 31, 2017, total future operating lease obligations were as follows: 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 Rent expenses were as follows: Year Ended December 31, 2017 2016 Points of Presence $8,693,892 $8,491,235 Corporate offices 220,309 335,713 Other 935,293 552,177 Total $9,849,494 $9,379,125 Rent expenses related to Points of Presence were included in infrastructure and access in the Company’s condensed consolidated statements ofoperations. Rent expense related to our corporate offices was allocated between general and administrative, sales and marketing, customer support, andnetwork operations expense in the Company’s condensed consolidated statements of operations. Other rent expenses were included in network operationswithin 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 February2015 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. 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 andexpires 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, 2017with 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 companydid 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 leasecommenced 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. 84 TOWERSTREAM CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED Capital Lease Obligations The Company has entered into capital leases to acquire property and equipment expiring through August 2020. As of December 31, 2017, total futurecapital lease obligations were as follows: Years Ending December 31, 2018 $436,000 2019 261,552 2020 72,000 Sub-Total 769,552 Less: Interest expense 80,686 Total capital lease obligations $688,866 Current $382,918 Long-Term $305,948 Note 16 - Subsequent Events On January 5, 2018, the Company entered into a separation agreement with Laura Thomas, who resigned as the Company's Chief Financial Officer.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 taxwithholdings, (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. Inaddition, 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’sChief Financial Officer. The agreement has an initial term of two years and may be extended for additional one-year terms. Mr. Macdonald will receive anannual 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 stockcompensation in the future, at the Board of Director’s discretion. Effective January 26, 2018, the Company entered into a Forbearance to the Loan Agreement with Lender, as administrative agent to the lenders under theLoan Agreement entered into on October 16, 2014 by and among the Company, certain of its subsidiaries, Lender and the lenders party thereto. Pursuantto the Agreement, Lender, through March 30, 2018 (the “Forbearance Period”), waived the Company’s requirement to maintain at least $6,500,000minimum in deposit accounts or securities accounts (the “$6,500,000 Minimum”) and agreed to forbear from exercising any of its rights with respect to anevent of default related to the $6,500,000 Minimum. The Forbearance Period shall terminate upon the Company’s failure to maintain at least $4,000,000minimum 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 “QualifiedAuditor’s Report” in the event that the Company’s audited consolidated financial statements for the year ended December 31, 2017 contained a goingconcern explanatory paragraph. The agreement was further amended and restated effective March 30, 2018 to extend the forbearance period until April15, 2018. 85 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 chieffinancial 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, controlsand 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 isaccumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performingsimilar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chieffinancial officer concluded that our disclosure controls and procedures are effective, as of December 31, 2017, in ensuring that material information thatwe are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the timeperiods specified in the Securities and Exchange Commission rules and forms. 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 monitoringcompliance with covenants in its debt agreement. Management implemented a remediation plan, which was completed during the third quarter. Theremediation plan included the following steps: ●A detail covenant worksheet is compiled to include all financial and non-financial covenants. The covenant worksheet will include allcovenants associated with current debt arrangements and will be modified to reflect any amendments to current debt and/or new debtarrangements. ●The Company will ensure that the “Certificate of Financial Officer” certifying compliance with the covenants is provided to the lenderconcurrently 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 ofDecember 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 that havematerially 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 financialreporting 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 principalexecutive and principal financial officers and effected by a company’s Board of Directors, management and other personnel to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted 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 withgenerally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of ourmanagement and directors; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that couldhave a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. 86 Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. 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. Based on our assessment, our management has concluded that, as of December 31, 2017, our internal control over financial reporting is effective based onthose criteria. Item 9B - Other Information. None. 87 PART III Item 10 - Directors, Executive Officers and Corporate Governance. The following table sets forth the names, ages, and positions of the current directors and executive officers. Our directors hold office for one-year termsuntil the following annual meeting of stockholders and until his or her successor has been elected and qualified or until the director’s earlier resignationor removal. Officers are elected annually by the Board of Directors and serve at the discretion of the Board of Directors. NameAgePositionPhilip Urso58Chairman of the Board of DirectorsErnest Ortega52Chief Executive Officer and DirectorArthur G. Giftakis51Chief Operating OfficerJohn Macdonald47Chief Financial OfficerHoward L. Haronian, M.D.(1)(2)(3)55DirectorWilliam J. Bush(1)(2)52Director (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 toDelaware. On January 12, 2007, a wholly-owned subsidiary of ours completed a reverse merger with and into a private company, TowerstreamCorporation, with Towerstream Corporation (the private company) being the surviving company and becoming a wholly-owned subsidiary of ours. Uponclosing of the merger, we discontinued our former business and succeeded to the business of Towerstream Corporation as our sole line of business. At thesame time, we also changed our name to Towerstream Corporation and our newly acquired subsidiary, Towerstream Corporation, changed its name toTowerstream 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 beenthe 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, MCFCommunications, 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 January2017. In January 2018, the Company appointed Mr. Ortega to serve as a director. Prior to his appointment as Chief Executive Officer, Mr. Ortega served asChief Revenue Officer of Colt Technology Services from October 2015 to December 2016, as Chief Revenue Officer of Cogent CommunicationsHoldings, Inc. (Nasdaq: CCOI) from August 2013 to October 2015 and as EVP Sales & Marketing of XO Communications from June 1999 to August2013. Arthur G. Giftakis has been our Chief Operating Officer since February 2016. Prior to his appointment to Chief Operating Officer, Mr. Giftakis served asthe Company’s senior vice president of engineering and operations since January 2014. Prior to his position with the Company, Mr. Giftakis served as thedirector of sales engineering at Sockeye Networks and Navisite. In addition, Mr. Giftakis was the director of data communications at Bell Atlantic for tenyears. 88 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 connectivityproducts and guidance and stabilization solutions from February 2015 to February 2017. Prior to that, he was Director of Accounting at APC bySchneider Electric, a manufacturer of critical power products and solutions provider for data centers and other applications, from May 2010 to February2015. He began his career with Ernst & Young LLP serving as an assurance manager. A licensed Certified Public Accountant (CPA) in Massachusetts, heholds 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 theCompany since it became public in 2007. Dr. Haronian is an interventional cardiologist and has been president of Cardiology Specialists, Ltd. of RhodeIsland since 1994. Dr. Haronian has served on the clinical faculty of the Yale School of Medicine since 1994. Dr. Haronian graduated from the YaleSchool of Management Program for Physicians in 1999. Dr. Haronian has directed the Cardiac Catheterization program at The Westerly Hospital sincefounding the program in 2003. Dr. Haronian was appointed to the Board of Directors due to his extensive knowledge of the Company’s operations sinceits 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 ofStem, 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 commercialand government grid-connected solar electric power systems. From October 2008 to December 2009, Mr. Bush served as the chief financial officer ofSolar Semiconductor, Ltd., a private vertically integrated manufacturer and distributor of quality photovoltaic modules and systems targeted for use inindustrial, commercial and residential applications with operations in India helping it reach $100 million in sales in its first 15 months of operation. Priorto that, Mr. Bush served as chief financial officer and corporate controller for a number of high growth software and online media companies as well asbeing 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 corporatecontroller for Autodesk, Inc. (NasdaqGM: ADSK), one of the largest software applications company in the world. His prior experience includes sevenyears 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 Committeereceives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our Company’sassessment of risks. In addition, the Audit Committee reports regularly to the full Board of Directors which also considers our risk profile. The AuditCommittee 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 overseesour Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is themost 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 timeduring 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. 89 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 ofthe 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 bankingactivities. ●Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission (the “SEC”), or the CommoditiesFutures 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 personsassociated 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 ofour 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 tothe Company. Board Committees Since January 2007, the standing committees of our Board of Directors consist of an Audit Committee, a Compensation Committee and a NominatingCommittee. Each member of our committees is “independent” as such term is defined under and required by the federal securities laws and the rules ofthe NASDAQ Stock Market. The charters of each of the committees have been approved by our Board of Directors and are available on our website atwww.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 statementsand to review our accounting and auditing principles. The Audit Committee reviews the scope, timing and fees for the annual audit and the results ofaudit examinations performed by independent public accountants, including their recommendations to improve our system of accounting and ourinternal 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 forthe activities of management and the independent auditors. The Audit Committee is empowered to retain independent legal counsel and other advisorsas it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of theadvisors. Each of our Audit Committee members possesses an understanding of financial statements and generally accepted accounting principles. TheBoard 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. Thedesignation of Mr. Bush as an “audit committee financial expert” will not impose on him any duties, obligations or liability that are greater than thosethat are generally imposed on him as a member of our Audit Committee and Board of Directors, and his designation as an “audit committee financialexpert” will not affect the duties, obligations or liability of any other member of our Audit Committee or Board of Directors. 90 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 theCompensation Committee. The Compensation Committee has certain duties and powers as described in its charter, including but not limited toperiodically reviewing and approving our salary and benefits policies, compensation of executive officers, administering our stock option plans andrecommending 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. TheNominating Committee considers and makes recommendations on matters related to the practices, policies and procedures of the Board of Directors andtakes a leadership role in shaping our corporate governance. As part of its duties, the Nominating Committee assesses the size, structure and compositionof the Board of Directors and its committees, and coordinates the evaluation of Board of Directors performance. The Nominating Committee also acts as ascreening 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 February1, 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 ExecutiveOfficer. Mr. Urso received a monthly salary of $12,500, a car allowance of $1,000 per month and continued health insurance coverage for himself andhis 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 executiveofficers in the summary compensation table below: Name Fees Earned orPaid in Cash OptionAwards (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 asthe 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. MacNeilresigned 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 AccountingStandards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are containedin 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, Bushand MacNeil, and Dr. Haronian. 91 Pursuant to the 2008 Non-Employee Directors Compensation Plan (the “Directors Plan”) in effect in 2015, each non-employee director was entitled toreceive 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 commonstock 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 orappointment to our Board of Directors and thereafter annually on the first business day in June, subject to such director remaining on the Board ofDirectors. 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 CompensationCommittees 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 whobeneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the SEC. Based solely on our reviewof copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied withall Section 16(a) filing requirements during the year ended December 31, 2017, except that our Board of Directors (Messrs. Urso, Koehler, Bush andMacNeil, 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 confidentialityrequirements. The Audit Committee is responsible for applying and interpreting our code of ethics and business conduct in situations where questions arepresented 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 conductis 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 anyperson who requests a copy. Requests should be directed by e-mail to John Macdonald, our Chief Financial Officer, at jmacdonald@towerstream.com, orby mail to Towerstream Corporation, 76 Hammarlund Way, Middletown, Rhode Island 02842, or by telephone at (401) 848-5848. Item 11 - Executive Compensation. Summary Compensation Table The following table summarizes the annual and long-term compensation paid to our chief executive officer and our other most highly compensatedexecutive 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 executiveofficers”. In January 2017, Mr. Urso, the Chairman of the Board of Directors, resigned from his position as Interim Chief Executive Officer and theCompany appointed Ernest Ortega as Mr. Urso’s successor. Mr. Larcombe resigned from his position with the Company in 2017 and the Companyappointed Laura Thomas as Mr. Larcombe’s successor. Ms. Thomas resigned from her position in January 2018. In 2016, the Company adopted newcompensation policies applicable to named executive officers under which they would receive lesser cash compensation amounts than previously paidplus equity incentives intended to align the interests of such executives with the interests of stockholders. Such policies reduced the obligation of theCompany for payment of historical levels of cash compensation to executives, which the Company had been contractually obligated to pay pursuant toits employment agreements with executives. 92 Name and Principal PositionYear Salary Bonus OptionAwards(1) Other Total Philip Urso2017 $25,385 $- $68,005(2) $- $93,390 Former Interim Chief ExecutiveOfficer*2016 $264,248 $- $297,650(3) $- $561,898 Ernest Ortega2017 $325,365 $218,681(4) $261,323(5) $- $805,369 Chief Executive Officer Arthur G. Giftakis2017 $230,000 $83,828(6) $59,632(7) $- $373,460 Chief Operating Officer2016 $190,615 $25,000 $360,567(8) $- $576,182 Laura Thomas2017 $152,308 $44,310(9) $64,871(10) $- $261,489 Chief Financial Officer** Frederick Larcombe2017 $104,608 $- $34,002(11) $35,840(12) $174,450 Former Chief FinancialOfficer***2016 $148,480 $- $- $- $148,480 Jeffrey M. Thompson2016 $63,939 $- $- $277,083(13) $341,022 Former President and ChiefExecutive Officer**** Joseph P. Hernon2016 $153,125 $- $- $81,250(14) $234,375 Former Chief FinancialOfficer***** *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 AccountingStandards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are containedin 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 inrecognition 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 purchase67 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 inrecognition of services performed during 2016. These options vest quarterly over one year with the first tranche vesting on November 19, 2016. 93 (4) Per his employment agreement, Mr. Ortega is eligible for an annual bonus of $300,000. The Compensation Committee has determined that hisbonus will be based on the following metrics: 30% on churn, 30% on EBITDA and 40% on cash flows. Bonuses will be paid on the achievementpercentage attained. For the year ended December 31, 2017, Mr. Ortega was awarded a bonus of $218,681 based on the following (cash flows andEBITDA dollars are in thousands): Metric Actual Objective Achievementof 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 to27,162 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 onJanuary 24, 2018; 8,358 will vest in eight quarterly installments during the twenty-four months ending January 24, 2020; 7,313 will vest uponthe achievement of three consecutive quarters of positive cash flow; and 7,313 will vest upon the sale of the Company's earth station assets inMiami, 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 hisbonus will be based on the following metrics: 30% on churn, 30% on EBITDA and 40% on cash flows. Bonuses will be paid on the achievementpercentage attained. For the year ended December 31, 2017, Mr. Giftakis was awarded a bonus of $83,828 based on the following (cash flowsand EBITDA dollars are in thousands): Metric Actual Objective Achievementof 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 sharein recognition of services performed in 2016. These options vest ratably on a quarterly basis over the eight quarters immediately following thegrant 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 400shares 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 thefirst 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 sharein 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 financialand 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 7,556shares 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 vestratably over the following three years. 94 (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 sharein recognition of services performed in 2016. These options vest ratably on a quarterly basis over the eight quarters immediately following thegrant date. (12)As part of Mr. Larcombe’s separation agreement dated May 15, 2017, he received a severance payment of $35,840. (13)As part of Mr. Thompson’s separation agreement dated February 12, 2016, he received a payment of an amount approximately equal to theremaining term of Mr. Thompson's employment agreement which was to expire in October 2016. (14)As part of Mr. Hernon’s separation agreement dated June 3, 2016, he received a one-time payment equal to three months of his pay. Grants of Plan-Based Awards The following table summarizes the stock option awards granted to our named executive officers during the year ended December 31, 2017: NameGrant Date All OtherOptionAwards:Numberof SecuritiesUnderlyingOptions Exercise orBasePrice ofOptionAwards($/Share)(1) Grant DateFair Valueof Stockand OptionAwards($)(2) Ernest Ortega1/24/17 12,536 $12.75 $120,608 1/24/17 14,626 $12.75 $140,708 Arthur G. Giftakis2/3/17 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 exerciseprice 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 AccountingStandards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are containedin 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. 95 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 ofSecuritiesUnderlyingUnexercisedOptionsExercisable Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable OptionExercisePrice OptionExpirationDateErnest 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 theCompany'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. 96 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 asChairman of the Board of Directors. In relation to Mr. Urso’s appointment to Interim Chief Executive Officer, the Board of Directors modified hiscompensation 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 topurchase 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 thegrant, 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 ChiefExecutive 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 asInterim Chief Executive Officer through July 2017, with all such options having an exercise price equal to the price of the Company’s common stock atmarket 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. TheCompany did not enter into any severance agreement with Mr. Urso in connection with his resignation. Effective February 1, 2017, the Company enteredinto an employment agreement with Mr. Urso, pursuant to which he will provide support and transition services to the Company’s new Chief ExecutiveOfficer 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 carallowance 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 SeniorVice President of Engineering and Operations of the Company at the time of his appointment. In connection to his appointment as Chief OperatingOfficer, 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 stockhaving 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 oftwo years in equal quarterly installments. On November 23, 2016, the Company entered into an employment agreement with Mr. Giftakis to which he willserve 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 yearin cash, stock or options, as approved at the discretion of the Compensation Committee. His employment agreement has a term of two years and mayautomatically be renewed for additional one year terms unless earlier terminated by either party with three months prior notice. Upon termination for anyreason, Mr. Giftakis is entitled to accrued but unpaid salary and bonus. Upon termination without cause by the Company, for good reason by Mr. Giftakisor 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 twelvemonths base salary, continued participation in the Company’s benefits plans to be paid by the Company and immediate vesting of all stock option andother equity awards. Effective June 14, 2016, Frederick Larcombe joined the Company as Chief Financial Officer. His agreement with the Company, as amended, provides forcompensation 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. Underthe terms of the separation agreement, Mr. Larcombe, through June 30, 2017, provided consulting and support services to the Company. Mr. Larcombewill receive a severance payment of an aggregate of $35,840, payable in six weekly installments provided that Mr. Larcombe has provided the requestedservices under the separation agreement. In addition, all of Mr. Larcombe’s outstanding options vested immediately and, unless exercised prior to May15, 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 ChiefExecutive Officer. The agreement has a term of eighteen months and automatically renews for additional one-year terms unless earlier terminated byeither 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 bonuscompensation of up to $300,000 per year, as approved at the discretion of the Board of Directors. In addition, the Company issued options for thepurchase 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 veston 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 theachievement 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, Floridafor 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 salaryearned through the date of termination, (ii) any annual bonuses earned through the date of termination, (iii) any and all reasonable expenses paid orincurred in connection with and related to the performance of his duties and responsibilities for the Company during the period ending on the terminationdate, (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 beentitled to his continued base salary through the remainder of the term of employment. 97 On May 15, 2017, the Company entered into an employment agreement with Laura Thomas. Ms. Thomas received an annual base salary of $240,000 andwill 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 commonstock 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 followingthree years. In the event of resignation for Good Reason (as defined in the Employment Agreement) or termination other than for Cause (as defined in theEmployment Agreement) within 180 days of a Change of Control, Ms. Thomas will be entitled to a severance payment equal to (i) the greater of hercontinued base salary through the balance of the term, as renewed, or 12 months of her then bases Salary, (ii) continued participation in Company welfarebenefit 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 12months of continuation of benefits and (iii) immediate vesting of all stock options and equity awards; provided, that she executes an agreement releasingCompany and its affiliates from any liability. The agreement has an initial term of two years and may be extended for additional one year terms. OnJanuary 5, 2018, Laura Thomas resigned from her position as Chief Financial Officer and entered into a separation agreement with the Company. Pursuantto the separation agreement, Ms. Thomas will receive a severance payment of (i) current base salary of $240,000 through January 5, 2018, (ii) threemonths 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’sChief Financial Officer. The agreement has an initial term of two years and may be extended for additional one year terms. Mr. Macdonald will receive anannual 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 stockcompensation 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 toa 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 bepaid 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 executiveofficer, 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 andconditions, 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 October2016, (iii) vesting of option and other stock incentive awards held by Mr. Thompson and (iv) a three month non-competition period and a twelve monthnon-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, 2016pursuant to which Mr. Hernon resigned from all positions with the Company and its subsidiaries. Among other terms and conditions, the separationagreement 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, anamount 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 table sets forth information with respect to the beneficial ownership of our common stock as of March 23, 2018 by: ● 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. 98 The percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficialownership 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 thedisposition of, with respect to the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has solevoting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Towerstream Corporation, 76Hammarlund Way, Middletown, Rhode Island 02842, unless otherwise indicated. As of March 23, 2018, there were 394,399 shares of our commonstock outstanding. Name and Address of Beneficial Owner Amount and Natureof Beneficial Ownership(1) Percent ofClass (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 alloptions, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisablewithin 60 days of March 23, 2018. Shares issuable pursuant to the exercise of stock options and warrants exercisable within 60 days are deemedoutstanding and held by the holder of such options or warrants for computing the percentage of outstanding common stock beneficially owned bysuch 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 thesecurities 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 GPreferred Stock held by HS Contrarian Investments, LLC (“HSCI”). Excludes (i) 27,911 shares of common stock underlying Series G Preferred Stockheld 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 stockcontains an ownership limitation such that the holder may not exercise any of such securities to the extent that such exercise would result in theholder’s beneficial ownership being in excess of 9.99% of the Issuer’s issued and outstanding common stock together with all shares owned by theholder and its affiliates. John Stetson is the Manager of HSCI and in such capacity has voting and dispositive power over the securities held by suchentity. 99 (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 thesecurities held by such entity. Barry Honig may be deemed to hold sole voting and dispositive power over 11,825 shares of common stock and sharedvoting and dispositive power over 22,997 shares of common stock. 401K may be deemed to hold shared voting and dispositive power over 22,997shares 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 theManaging 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 70shares 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 beneficialownership 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 stockissuable 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 parties can include any of our directors or executive officers, certain of our stockholders and their immediate family members. Each year, weprepare and require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions with us in which theofficer or director or their family members have an interest. This helps us identify potential conflicts of interest. A conflict of interest occurs when anindividual’s private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole. Our code of ethics and businessconduct requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify our AuditCommittee of the Board of Directors, which is responsible for considering and reporting to the Board of Directors any questions of possible conflicts ofinterest of Board of Directors members. Our code of ethics and business conduct further requires pre-clearance before any employee, officer or directorengages in any personal or business activity that may raise concerns about conflict, potential conflict or apparent conflict of interest. Copies of our codeof ethics and business conduct and the Audit Committee charter are posted on the corporate governance section of our website at www.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 ororganization 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 similarcapacity 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 thesame standards of good faith and fiduciary duty they apply to their general responsibilities. They will approve a related party transaction only when, intheir 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 table sets forth the fees that the Company accrued or paid to Marcum LLP for the fiscal 2017 and fiscal 2016. 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 controlover financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit servicesprovided 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 theperformance 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. Description2.1 Agreement of Merger and Plan of Reorganization, dated January 12, 2007, by and among University Girls Calendar, Ltd., TowerstreamAcquisition, Inc. and Towerstream Corporation (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K ofTowerstream 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 toTowerstream Corporation (Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K of Towerstream Corporation filedwith 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 tothe 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 TowerstreamCorporation 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 Form8-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 theCurrent 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 tothe 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 tothe 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 tothe Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on July 8, 2016). 102 3.10 Certificate of Designation of Rights, Preferences and Privileges of Series C Preferred Stock (Incorporated by reference to Exhibit 3.10 tothe Registration Statement on Form S-1/A of Towerstream Corporation filed with the Securities and Exchange Commission onSeptember 15, 2016).3.11 Certificate of Designation of Rights, Preferences and Privileges of Series D Preferred Stock (Incorporated by reference to Exhibit 3.1 tothe 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 andExchange Commission on November 22, 2016).3.13 Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (Incorporated by reference toExhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission onNovember 22, 2016).3.14 Certificate of Designations, Preferences and Rights of Series F Preferred Stock (Incorporated by reference to Exhibit 3.1 to the CurrentReport 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 DConvertible Preferred Stock (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Towerstream Corporationfiled 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 CurrentReport 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 CurrentReport 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 tothe Current Report on Form 8-K of Towerstream Corporation filed with the Securities and Exchange Commission on September 28,2017).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 ofTowerstream 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-Kof 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 CurrentReport 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 theCurrent 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). 103 10.5* Towerstream Corporation 2007 Incentive Stock Plan (Incorporated by reference to Exhibit B to the Proxy Statement on Schedule 14A ofTowerstream 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 andExchange 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 byreference to Exhibit 10.10 to the Annual Report on Form 10-K of Towerstream Corporation filed with the Securities and ExchangeCommission 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 ofTowerstream 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 TowerstreamCorporation 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 Securitiesand 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 Securitiesand 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 MelodyBusiness Finance LLC, as Administrative Agent (Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K ofTowerstream Corporation filed with the Securities and Exchange Commission on March 12, 2015). 104 10.13 Warrant and Registration Rights Agreement dated October 16, 2014 by and among Towerstream Corporation and the warrant holdersnamed therein (Incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K of Towerstream Corporation filed withthe Securities and Exchange Commission on March 12, 2015). 10.14 Form of A-Warrant Certificate (Incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K of TowerstreamCorporation filed with the Securities and Exchange Commission on March 12, 2015). 10.15 Form of B-Warrant Certificate (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of TowerstreamCorporation filed with the Securities and Exchange Commission on March 12, 2015). 10.16** Separation Agreement by and between Jeffrey M. Thompson and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 tothe Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 17, 2016).10.17 Asset Purchase Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner CableEnterprises, LLC (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and ExchangeCommission on March 15, 2016).10.18**** Backhaul Agreement dated March 9, 2016, by and among Towerstream Corporation, Towerstream I, Inc. and Time Warner CableEnterprises, LLC (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and ExchangeCommission on March 15, 2016).10.19 Mutual Termination Agreement dated March 9, 2016 by and between Time Warner Cable Enterprises, LLC and Hetnets TowerCorporation (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and ExchangeCommission on March 15, 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 onMarch 15, 2016). 105 10.21 Amendment No. 1 to Warrant and Registration Rights Agreement dated March 9, 2016, by and between Towerstream Corporation andMelody Business Finance, LLC (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securitiesand 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 theCurrent 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 theCurrent 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 andExchange 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 ExchangeCommission 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 theSecurities 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 theSecurities 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 theSecurities 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 CurrentReport 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 andExchange 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 theCurrent 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 RegistrationStatement 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 theSecurities 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 theCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on November 25, 2016). 106 10.35** Employment Agreement by and between Ernest Ortega and Towerstream Corporation (Incorporated by reference to Exhibit 10.1 to theCurrent 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 Statementon 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 ofTowerstream 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/Aof 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 ofTowerstream 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 onForm 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 FormS-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/Aof 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 onForm 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 tothe 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 tothe 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 andExchange 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 tothe 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 theCurrent 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, 201810.51*** Forbearance to Loan Agreement with Melody Business Finance LLC dated February 28, 201810.52*** Forbearance to Loan Agreement with Melody Business Finance LLC dated March 30, 201814.1 Code of Ethics and Business Conduct (Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K of TowerstreamCorporation 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 Instance101.SCH*****XBRL Taxonomy Extension Schema101.CAL*****XBRL Taxonomy Extension Calculation101.DEF*****XBRL Taxonomy Extension Definition101.LAB*****XBRL Taxonomy Extension Labels101.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 March15, 2016. An un-redacted version of this Exhibit has been separately filed with the Commission pursuant to an application for confidentialtreatment. 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 SecuritiesAct 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 notsubject to liability under these sections. 108 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 itsbehalf by the undersigned, thereunto duly authorized. TOWERSTREAM CORPORATION Date: April 2, 2018By:/s/ Ernest Ortega Ernest Ortega Chief Executive Officer (Principal Executive Officer) By:/s/ John Macdonald John Macdonald Chief Financial Officer (Principal Financial Officer and PrincipalAccounting 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 onthe dates indicated. Name Capacity Date /s/ Philip Urso Director - Chairman of Board of Directors April 2, 2018 Philip Urso /s/ Ernest Ortega Chief Executive Officer April 2, 2018Ernest Ortega (Principal Executive Officer) /s/ John Macdonald Chief Financial Officer April 2, 2018John Macdonald (Principal Financial Officer and PrincipalAccounting Officer) /s/ Howard L. Haronian, M.D. Director April 2, 2018Howard L. Haronian, M.D. /s/ William J. Bush Director April 2, 2018William J. Bush 109 Exhibit 10.47 THIRD AMENDMENT TO LEASE This THIRD AMENDMENT TO LEASE (this “Third Amendment”) is dated as of October 24, 2017 by and between Brookwood MIDDLETOWNTECH, LLC, a Delaware limited liability company (“Landlord”) and TOWERSTREAM I, INC., a Delaware corporation (“Tenant”). WHEREAS, Landlord, as successor in interest to Tech Plaza 2, 3, & 4 LLC, and Tenant, as successor in interest to Towerstream Corporation, aDelaware corporation, are parties to that certain Lease dated March 21, 2007 (the “Base Lease”), as amended by that certain First Amendment to Leasedated August 8, 2007, and as further amended by that certain Second Amendment to Lease dated August 28, 2013 (collectively, the “Lease”), for the leaseof certain premises consisting of approximately 25,000 rentable square feet of space in Suite 110 (hereinafter referred to as the “Surrender Space”) andapproximately 4,000 rentable square feet of warehouse space (the “Warehouse Space”, and together with the Surrender Space, collectively the “ExistingPremises”) in the building known as Tech 4 Office Building (the “Tech 4 Building”) at 88 Silva Lane, Middletown Rhode Island as further described inthe Lease; and WHEREAS, Tenant desires to relocate from the Surrender Space at the Tech 4 Building to approximately 12,569 rentable square feetapproximately shown on Exhibit A attached hereto (the “New Space”) located in the building known as Tech 3 Office Building (the “Tech 3 Building”)at 76 Hammarlund Way, Middletown Rhode Island, by relinquishing the Surrender Space and leasing from Landlord the New Space; and WHEREAS, after the New Space Commencement Date (as set forth below), the New Space shall be incorporated into and made a part of the“Premises” under the Lease; and WHEREAS, Landlord and Tenant wish to amend the Lease as set forth herein; NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Landlord andTenant hereby agree as follows: AGREEMENT 1. Definitions. Capitalized terms used in this Third Amendment shall have the same meanings ascribed to such capitalized terms in the Lease unlessotherwise provided for herein. 2. Extension. The Term of the Lease with respect to the New Space only is hereby extended for an additional five (5) years such that it shall hereafterexpire on December 31, 2024. For the avoidance of doubt, the Term of the Lease with respect to the Warehouse Space shall expire at 12:00 p.m. onDecember 31, 2019. 3. Relocation. Beginning on the later to occur of (i) January 1, 2018 or (ii) Substantial Completion of the Landlord’s Work, as said terms are defined inthe Work Letter attached hereto as Exhibit B (the “New Premises Commencement Date”), Landlord shall deliver possession of the New Premises to Tenantand the New Premises shall be added to the Warehouse Premises and the term “Premises”, as used in the Lease, shall thereafter refer to the WarehousePremises and the New Premises. The New Premises shall be subject to all the terms and provisions of the Lease, except as expressly provided herein.Landlord and Tenant shall confirm the New Premises Commencement Date by executing a Commencement Letter in the form attached hereto as ExhibitC.  4. Surrender of the Surrender Space/Definitions. On or before the New Space Commencement Date (the “Surrender Date”), Tenant shall vacate theSurrender Space and surrender the same to Landlord, subject to and in accordance with Tenant’s surrender and restoration obligations set forth in theLease as though the Term of the Lease with respect to the Surrender Space were originally set to expire on the Surrender Date. Effective as of the SurrenderDate the Parties shall have no further rights or obligations arising out of or in connection with the Surrender Space or the lease thereof, except as providedherein or which expressly survive termination of the Lease. Failure to vacate and surrender the Surrender Space in compliance with the terms hereof shallbe deemed a default under the Lease and holding over with respect to the Surrender Space and Tenant is hereby notified pursuant to Section 14.19 of theLease that Landlord intends to lease the Surrender Space on the Surrender Date to Magellan Method LLC. Following the Surrender Date with respect tothe New Space only: (i)the term “Building”, as used in the Lease, shall mean and refer only to the building known as Tech 3 Office Building located at 76Hammarlund Way, Middletown Rhode Island (ii)the term “Building Rentable Area” as used in the Lease shall mean approximately 47,360 rentable square feet; (iii)the term “Escalation Factor” (also known as “Proportionate Share”) shall mean 26.39% Annual Basic Rent. Beginning on the New Space Commencement Date Tenant shall pay Basic Rent with respect to the New Space according to thefollowing schedule: PeriodAnnual Basic Rent(per annum)Monthly Installmentof Basic RentPer Square FootRental New Space CommencementDate* – 12/31/2018$183,256.02$15,271.34$14.5801/01/2019 – 12/31/2019$188,660.69$15,721.72$15.0101/01/2020 – 12/31/2020$193,436.91$16,119.74$15.3901/01/2021 – 12/31/2021$198,213.13$16,517.76$15.7701/01/2022 – 12/31/2022$203,115.04$16,926.25$16.1601/01/2023 – 12/31/2023$208,268.33$17,355.69$16.5701/01/2024 – 12/31/2024$213,421.62$17,785.14$16.98Until the New Space Commencement Date Tenant shall continue to pay Basic Rent and Additional Rent with respect to the Existing Premises inaccordance with the Lease. * Basic Rent with respect to any partial month during the Term, including, without limitation any partial month between the New SpaceCommencement Date and January 1, 2018, shall be prorated based on the number of days in such month. 5. Condition of Premises. Tenant has inspected the New Space and agrees to accept the same for its continued occupancy “as is” and “where is” withoutany representation or warranty and without any agreements, representations, understandings or obligation on the part of the Landlord to perform anyalterations, repairs or improvements therein except as provided in the Work Letter attached hereto as Exhibit B. 6. Termination Option. So long as (i) there exists no default either at the time of exercise or on the Early Termination Date (as hereinafter defined), and(ii) the Tenant named herein has not assigned any portion of the Lease nor sublet any portion of the Premises, Tenant shall have the one-time right (the“Termination Right”) to terminate the Lease with respect to the New Premises by notice given on or before December 31, 2021 and such termination shallbe effective December 31, 2022 (the “Early Termination Date”). In order to be effective, such notice must be accompanied by a termination paymentequal to $149,875.00. If Tenant fails to exercise the Termination Right strictly in accordance with this section, time being of the essence, then theTermination Right shall automatically lapse and Tenant shall have no right to terminate this Lease. Upon timely exercise of the Termination Right incompliance with the terms hereof, the Early Termination Date shall be deemed the Expiration Date and Tenant shall surrender the Premises on or beforethe Early Termination Date in accordance with the terms of this Lease.  7. Option to Renew. So long as there exists no default either at the time of exercise or on the first day of the Extension Term (as hereinafter defined) andTenant has not assigned this Lease in whole or in part nor sublet the Premises in whole or in part (except in connection with Permitted Transfers asdefined herein). Tenant shall have the option to extend the Term for one (1) additional five (5) year period (the "Extension Term") upon written notice toLandlord given no less than twelve (12) months and no more than fifteen (15) months prior to the expiration of the Term. If Tenant fails to exercise itsoption to extend the Term strictly within the time period set forth in this section, then Tenant's option to extend the Term shall automatically lapse and beof no further force or effect. In the event that Tenant exercises the option granted hereunder, the Extension Term shall be upon the same terms andconditions as are in effect under this Lease immediately preceding the commencement of such Extension Term except that the Basic Rent due from theTenant shall he increased to Landlord's determination of Basic Rent as provided herein, and Tenant shall have no further right or option to extend theTerm or to any abatements, improvement allowance or other inducements. If Tenant timely exercises its option to extend the Term, then no later thanthirty (30) days following receipt of Tenant's notice, Landlord shall notify Tenant in writing of Landlord's determination of the Basic Rent for theExtension Term ("Landlord's Rental Notice"). If Tenant does not object to Landlord's determination of the Basic Rent by written notice to Landlordwithin ten (10) business days after the date of Landlord's Rental Notice, then Tenant shall be deemed to have accepted the Basic Rent set forth inLandlord's Rental Notice. Notwithstanding the foregoing, if Tenant timely objects to Landlord's Rental Notice, and the parties cannot agree on Basic Rent for the Extension Termwithin thirty (30) days after Landlord receives Tenant's notice of objection, then the Term shall automatically be extended and Basic Rent for theExtension Term shall be submitted to arbitration as follows: Basic Rent shall be determined by impartial arbitrators (who shall be qualified real estateappraisers or brokers with at least ten (10) years of experience dealing with like types of properties in the market area), one to be chosen by the Landlord,one to be chosen by Tenant, and a third to be selected, if necessary, as below provided, and shall reflect the greater of (i) the rate that would be agreedupon between a landlord and a tenant on or about the date on which the Extension Term is to begin for a comparable term and for space comparable to thePremises in the Building and buildings comparable to the Building in the market area, taking into account any material economic differences between theterms of this Lease and any comparison lease, such as the manner, if any, in which the landlord under any such lease is reimbursed for operating expensesand taxes and (ii) the Basic Rent payable during the last month of the current Term. The unanimous written decision of the two first chosen (withoutselection and participation of a third arbitrator), or otherwise the written decision of a majority of three arbitrators chosen and selected as aforesaid, shallbe conclusive and binding upon Landlord and Tenant. Landlord and Tenant shall each notify the other of its chosen arbitrator within ten (10) daysfollowing the call for arbitration and, unless such two arbitrators shall have reached a unanimous decision within thirty (30) days after their designation,they shall select an impartial third arbitrator to determine the market value as herein defined. Such third arbitrator and the first two chosen shall rendertheir decision within thirty (30) days following the date of appointment of the third arbitrator and shall notify Landlord and Tenant thereof, whichdecision shall be final and binding on the parties. Landlord and 'Tenant shall each pay the expenses of its own arbitrator and shall share the payment ofexpenses of the third arbitrator equally, regardless of the outcome of arbitration. If the dispute between the parties as to the Basic Rent for the ExtensionTerm has not been resolved before the commencement of the Extension Term, Tenant shall pay Basic Rent for the Extension Term based upon the BasicRent designated by Landlord in the Landlord's Rental Notice until either (i) agreement of the parties as to the fair market rent, or (ii) decision of thearbitrators, as the case may be, at which time Tenant shall promptly pay any underpayment of Basic Rent to Landlord, or Landlord shall credit theoverpayment of Basic Rent against the next installment of rental or other charges due to Landlord.  Notwithstanding anything contained herein, in no event shall the Basic Rent for any Extension Term be less than the Basic Rent payable for the Premisesimmediately prior to such Extension Term. 8. Option to Expand. Tenant shall have the right of first offer as set forth on Exhibit D attached hereto. 9. Real Estate Brokers. Landlord utilized the services of CBRE (the “Broker”) in connection with this Third Amendment. Tenant represents to Landlordthat Tenant did not involve any brokers in procuring this Third Amendment. Landlord shall pay a commission to the Broker as is agreed to by the partiesper a separate agreement. Tenant hereby agrees to forever indemnify, defend and hold Landlord harmless from and against any commissions, liability,loss, cost, damage or expense (including reasonable attorneys’ fees) that may be asserted against or incurred by Landlord as a result of anymisrepresentation by Tenant hereunder. 10. Governing Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State of Rhode Island (withoutregard to conflicts of law). 11. Ratification of Lease. Except as modified hereby, all other terms and conditions of the Lease shall remain unchanged and in full force and effect andare hereby ratified and confirmed by the parties hereto. (a) Tenant represents and warrants to Landlord that as of the date of Tenant’s execution of this Third Amendment: (i) Tenant is not in defaultunder any of the terms and provisions of the Lease; (ii) Landlord is not in default in the performance of any of its obligations under the Lease; and (iii)Tenant is unaware of any condition or circumstance which, with the giving of notice or the passage of time or both, would constitute a default byLandlord under the Lease. Tenant acknowledges that as of the date of Tenant’s execution of this Third Amendment, Tenant has no defenses, offsets, liens,claims or counterclaims against Landlord under the Lease or against the obligations of Tenant under the Lease (including, without limitation, any rentalsor other charges due or to become due under the Lease). Tenant further acknowledges and agrees that Tenant shall hereafter have no right or option toexpand the Premises pursuant to any right of first refusal or right of first offer or otherwise, or to extend, renew or terminate the Lease except as expresslyset forth in this Third Amendment. 12. Entire Agreement. This Third Amendment, in conjunction with the Lease, constitutes the entire agreement of Landlord and Tenant with respect tothe subject matter hereof and supersedes all oral and written agreements and understandings made and entered into by the parties prior to the date hereof. 13. Multiple Counterparts. This Third Amendment may be executed in multiple counterparts, all of which, when taken together, shall constitute oneand the same instrument. [Remainder of page intentionally blank]  IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment. LANDLORD: BROOKWOOD MIDDLETOWN TECH, LLCa Delaware limited liability company By: Brookwood Real Estate Partners II, LLC,a Delaware limited liability company By: Brookwood Real Estate Co. II, LLC,a Delaware limited liability company By: /s/ Kurt M. Zerich Name: Kurt M. ZernichTitle: Authorized SignerTENANT: TOWERSTREAM I, INC.,a Delaware corporation By:_/s/ Arthur Giftakis Name: Arthur Giftakis Its: COO Date: October 17, 2017  EXHIBIT A Plan of New Space  EXHIBIT B Work Letter 1. Landlord’s Work. Landlord will make certain improvements to the New Space (the “Landlord’s Work”) as set forth on that certain space plan (the“Plan”) attached hereto as Schedule 1 and previously approved by Tenant. Should said Plan or any part of Landlord’s Work require the preparation ordevelopment of additional plans or specifications, then Tenant shall have five (5) business days from Landlord’s submission of such additional plans orspecifications to Tenant to approve or disapprove the same. Tenant’s failure to so approve or disapprove within such five (5) business day period shallconstitute a Tenant Delay (as defined herein) and, at Landlord’s election, be deemed Tenant’s approval thereof. Tenant’s disapproval of such plans andspecifications shall specifically identify the nature of such disapproval. Landlord shall then have such plans and specifications amended to incorporatethose items specified in Tenant’s disapproval to which Landlord agrees. Tenant’s approval of such plans and specifications shall not be unreasonablywithheld, conditioned or delayed. Landlord and Tenant shall diligently work together in good faith to agree upon such plans and specifications, it beingagreed that Tenant shall have no right to request that such plans and specifications be revised to reflect any work which is not contemplated on Schedule1 attached hereto except pursuant to Section 4 below. Upon approval, or deemed approval, of such additional plans and specifications the same shall bedeemed the “Plan” for the purposes of this Work Letter. Landlord’s Work shall not include furniture, fixtures, equipment, wiring or cabling for phone ordata, any new supplemental cooling or any specialty equipment or appliances. 2. Substantial Completion. “Substantial Completion” or “Substantially Complete” means that Landlord’s Work has been sufficiently completed suchthat the New Space is suitable for its intended purpose, notwithstanding any minor or insubstantial details of construction, decoration or mechanicaladjustment that remain to be performed (“Punch List Items”). Landlord shall complete all Punch List Items following notice thereof from Tenant;provided, however, that except to the extent to which Tenant shall have given Landlord notice of any Punch List Items not later than ten days (10) daysafter the date Landlord delivers the New Space to Tenant, Tenant shall be deemed conclusively to have approved the completion of Landlord’s Work andTenant shall have no claim that Landlord has failed to perform any of Landlord’s Work required under this Work Letter. If there is a delay in theSubstantial Completion of the Landlord’s Work for any reason neither Landlord, nor the managing or leasing agent of the Tech 3 Building or the Tech 4Building, nor any of their respective agents, partners or employees, shall have any liability to Tenant in connection with such delay, nor shall the Leasebe affected in any way except that the New Space Commencement Date shall not occur until Landlord’s Work is Substantially Complete.Notwithstanding the foregoing or any language of the Lease to the contrary, if Landlord’s Work is delayed by a Tenant Delay (as defined below) thenTenant shall begin paying Basic Rent with respect to the New Space as required under this Third Amendment as of the date the New SpaceCommencement Date would have occurred but for such Tenant Delay. 3. Tenant Delay. “Tenant Delay” means the occurrence of any one or more of the following which cause a delay in the completion of Landlord’s Work:(i) Tenant is Delinquent (as hereafter defined) in submitting to Landlord any information, authorization or approvals requested by Landlord in connectionwith the performance of Landlord’s Work; (ii) the performance or completion of any work or activity by a party employed by Tenant, including any ofTenant’s employees, agents, contractors, subcontractors and materialmen; (iii) any postponements or delays requested by Tenant and agreed to byLandlord regarding the completion of the Landlord’s Work; (iv) any error in Landlord’s Work caused or related to any act or omission by Tenant or itsemployees or agents; (v) the performance of any TI Changes (as defined below); or (vi) any other act or omission of the Tenant which causes a delay in thecompletion of Landlord’s Work. For the purposes of this Section, the term “Delinquent” shall mean that the action or communication required of Tenantis not taken within three (3) business days following request by Landlord.  4. Changes to Landlord’s Work. Tenant will have no right to make any changes (“TI Changes”) to the Plan or Landlord’s Work without the prior writtenconsent of Landlord and the execution by Landlord and Tenant of a written change order which specifies (i) the nature of the TI Changes and (ii) anestimate of the cost to Tenant as a result of such TI Changes. Tenant shall be solely responsible for the costs of all TI Changes and Tenant shall such costsas Additional Rent upon demand. 5. Performance of Landlord’s Work in Surrender Space. Tenant acknowledges and agrees that Landlord may perform work within the Surrender Spaceprior to the Surrender Date to prepare the Surrender Space for occupancy by another tenant (“Landlord’s Surrender Space Work”), as Landlord will berequired to perform Landlord’s Surrender Space Work during Tenant’s occupancy, Tenant acknowledges and agrees that: (i) Landlord’s Surrender SpaceWork in the Surrender Space may be performed during regular business hours; (ii) construction of Landlord’s Surrender Space Work may interfere with theoperation of Tenant’s business in the Surrender Space; and (iii) Tenant shall provide Landlord’s contractor with access to the Surrender Space atreasonable times and after reasonable notice to perform Landlord’s Surrender Space Work. Tenant agrees to cooperate with Landlord and Landlord’scontractor and to follow all reasonable directions given by Landlord in connection with the performance of the Landlord’s Surrender Space Work. Tenantagrees to remove Tenant’s equipment and other personal property from any work area within a reasonable period of time upon receiving a request to do sofrom Landlord or Landlord’s contractor. Tenant shall determine what measures are necessary to protect Tenant’s computers, equipment, furnishings andother personal property from dirt, dust or paint resulting from Landlord’s Surrender Space Work and Tenant shall be fully responsible for taking suchmeasures. Tenant shall indemnify and hold Landlord harmless from and against any and all liability and claims of any kind for loss or damage to anyperson or property arising out of or occurring during the performance of Landlord’s Surrender Space Work while Tenant is in occupancy and, to the fullestextent permitted by law, Landlord shall not be liable to Tenant for injury or damage which may be sustained by the person or property of Tenant, itsemployees, agents, invitees or customers, or any other person arising out of or during construction of any Landlord’s Surrender Space Work while Tenantis in occupancy of the Surrender Space.  Schedule 1  EXHIBIT C COMMENCEMENT LETTER ___________, 201_ _________________________________________________________ RE: Lease dated March 21, 2007, as amended by that certain First Amendment to Lease dated August 8, 2007, that certain Second Amendment to Leasedated August 28, 2013, and as further amended by that certain Third Amendment to Lease dated ___________ __, 2017 (collectively, the “Lease”)between BROOKWOOD MIDDLETOWN TECH, LLC, a Delaware limited liability company (“Landlord”) and TOWERSTREAM I, INC., a Delawarecorporation (“Tenant”) concerning premises at 76 Hammarlund Way and 88 Silva Lane, Middletown, Rhode Island. On behalf of Landlord, and in accordance with the above-referenced Lease, we request that you and/or the proper authority, please confirm thefollowing statements: 1. The New Space Commencement Date is ______________. 2. Tenant acknowledges and agrees that as of the date of this letter (i) all improvements required by the Lease to be performed by Landlord tothe New Space have been completed; and (ii) Tenant has accepted the New Space in its current condition. Please confirm your agreement with the above terms of this letter by signing below and returning a copy to Landlord. Failure to execute thisletter and deliver the same to Landlord within five (5) days shall be conclusive evidence against Tenant that the above statements are accurate and true. Sincerely, By: Name:Its: AGREED TO & ACCEPTED BY: TOWERSTREAM I, INC.,a Delaware corporation By: Name:Its:  Exhibit DOption to Expand If during the Term of this Lease, any space on the first floor of the Tech 3 Building ("First Offer Space") shall become "available for leasing" (as said termis hereafter defined), as determined by Landlord and provided that the "Offer Conditions" (as such term is hereafter defined) are then satisfied, Landlordshall offer (the "Offer") to lease the First Offer Space to Tenant for a fair market rent as determined by Landlord in its sole discretion and upon such otherterms and conditions as are specified by Landlord in the Offer. If within five (5) business days after Landlord provides the Offer to Tenant, Tenant doesnot unconditionally accept the Offer in writing as to all of such space described in the Offer or if Tenant accepts the Offer as aforesaid but does notexecute and deliver a final fully executed Lease or Lease amendment (a "First Offer Space Lease) for such space in form and substance satisfactory toLandlord within twenty (20) days after acceptance of the Offer as aforesaid, so long as Tenant had a minimum of five (5) business days to review thedocument, all of Tenant's rights in and to the First Offer Space identified in such Offer shall cease and terminate and Landlord shall be free to rent all orany part of such space to any party upon such terms and conditions as Landlord may elect in its sole discretion, free of all rights of Tenant under thisExhibit D. Any default under the First Offer Space Lease shall be considered a default under this Lease and vice versa, and the First Offer Space Leaseshall contain a provision to that effect. Time is of the essence with respect to the provisions herein. As used herein the term "Offer Conditions" shall mean that (a) no default of Tenant beyond any applicable notice and cure period shall have occurredunder this Lease, (b) Tenant's interest in this Lease shall not have been assigned and no part of the Premises under this Lease shall have been sublet(except for Permitted Transfers) and (c) at least one (1) year remains unexpired in the Term. As used herein, First Offer Space shall be deemed "availablefor leasing" by Landlord when, as determined by Landlord in its sole discretion, the applicable space is vacant and any lease thereof has expired or theapplicable space is scheduled to become vacant and all lease and other occupancy, expansion and offer rights with respect thereto of all other tenants oroccupants have expired. Landlord shall also have the right to elect to treat space as "available for leasing" (and to provide Tenant an Offer with respectthereto) at any time within twelve (12) months prior to the date which Landlord estimates to be the date when such space will, in fact, become availablefor occupancy by Tenant. It is expressly understood and agreed that Landlord shall be free to accept extensions and renewals of all leases in effect from time to time with respect toany space which otherwise might constitute First Offer Space, whether or not such extension or renewal options were originally included under the termsof such leases, to amend leases so as to extend the term thereof, on such terms and conditions as Landlord may elect and that Landlord shall be free topermit tenants under leases whose terms have expired to hold over on a month-to-month basis or otherwise upon such terms and conditions as theLandlord may elect, in any such case, without including the same as "available for leasing" or making any Offer hereunder and free of all rights of Tenanthereunder. In no event shall Landlord ever be obligated to deliver first Offer Space to Tenant prior to the date when all leases and occupancy rightstherein have expired or terminated and the space is actually surrendered to Landlord. All of Tenant's rights under this Exhibit D shall cease and terminateupon (a) any assignment or subletting of Tenant's interest under this Lease (other than Permitted Transfers), and (b) the date when less than one (1) yearremains unexpired in the Term. All rights of Tenant under this Exhibit D are and shall be expressly subject and subordinate to all rights of other tenantswho, at the date of this Third Amendment, have leases with respect to any part of the Building which contain rights of any kind to lease all or any part ofthe First Offer Space. The rights of the Tenant under this Exhibit D are sometimes called the "First Offer Rights". 72439443v.2 Exhibit 10.50 Forbearance to Loan Agreement THIS FORBEARANCE TO LOAN AGREEMENT (this “Agreement”) effective as of January 26, 2018 (the “Effective Date”), is made by andamong TOWERSTREAM CORPORATION, a Delaware corporation (“Parent”), TOWERSTREAM I, INC., a Delaware corporation, HETNETSTOWER CORPORATION, a Delaware corporation (together with Parent and Towerstream I, Inc., the “Borrowers” and each a “Borrower”), theLENDERS (as defined below), and MELODY BUSINESS FINANCE, LLC, a Delaware limited liability company, as administrative agent for theLenders (in such capacity, “Administrative Agent”). WITNESSETH: WHEREAS, Borrowers, the financial institutions from time to time party thereto (the “Lenders”) and Administrative Agent are parties to thatcertain Loan Agreement dated as of October 16, 2014 (as amended, supplemented, amended and restated or otherwise modified from time to time, the“Loan Agreement”); WHEREAS, Borrowers have notified the Administrative Agent that upon payment of obligations in the ordinary course, Parent, on aconsolidated basis with its subsidiaries, may no longer maintain at least $6,500,000 in deposit accounts or securities accounts (as each such term isdefined in the UCC) with respect to which Administrative Agent has a perfected first priority security interest in, and control over, unrestricted cash orCash Equivalents, in such event and which if not waived or cured, would cause an Event of Default under the Loan Agreement pursuant to Section 6.16thereof (the “Existing Event of Default”); WHEREAS, Borrowers have requested that Administrative Agent and Lenders agree to a conditional waiver and forbear from exercising any oftheir rights and remedies with respect to the Event of Default as hereinafter provided in order to afford Parent with sufficient time to explore strategicalternatives, and Administrative Agent and the Lenders, subject to the terms and conditions contained herein, have agreed to such conditional waiver andforbearance to be effective as of the date hereof; and WHEREAS, Borrower, Administrative Agent and the Lenders acknowledge that the terms of this Agreement do not constitute a novation orextinguishment, of the Loan Agreement. NOW, THEREFORE, in consideration of the mutual covenants and the fulfillment of the conditions set forth herein, the parties hereby agree asfollows: 1. Definitions. All capitalized terms defined in the Loan Agreement and not otherwise defined in this Agreement shall have the same meaningsas assigned to them in the Loan Agreement when used in this Agreement, unless the context hereof shall otherwise require or provide. 2. Estoppel, Acknowledgement and Reaffirmation. Each Loan Party hereby acknowledges and agrees that, as of January 26, 2018, (a) theaggregate outstanding principal amount of the Loans was not less than $34,657,984.50, which constitutes a valid and subsisting obligation of the LoanParties to the Lenders that is not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind. The Loan Parties hereby: (w)acknowledge the Specified Event of Default; (x) acknowledge their respective obligations under the Loan Agreement and the Loan Documents to whichthey are party; (y) reaffirm that each Lien created and granted in, or pursuant to, the Loan Agreement and the other Loan Documents is valid andsubsisting; and (z) acknowledge that this Agreement shall in no manner impair or otherwise adversely affect such Obligations or Liens.  3. Conditional Waiver and Forbearance. Unless the Forbearance Period is sooner terminated as provided herein and subject to the conditionshereof and upon satisfaction of the terms set forth in Section 7 hereof, Administrative Agent and the Lenders hereby agree to waive compliance withSection 6.16 of the Loan Agreement and forbear from the exercise of any of its rights and remedies under the Loan Agreement and the other LoanDocuments in connection with the Specified Even of Default for a period beginning as of the date hereof through and including March 30, 2018 (togetherwith any extensions thereof, the “Forbearance Period”); provided that interest on the Loans shall accrue at the Default Rate. (a) Conditional Waiver and Forbearance Limited to Specified Event of Default. Administrative Agent’s and the Lenders’ conditionalwaiver and forbearance shall be limited solely to the exercise of their rights and remedies arising under the Loan Documents as a result of theSpecified Event of Default, and Administrative Agent and the Lenders shall not be deemed to have waived any rights or remedies they may havewith respect to any other Default, other Event of Default or breach occurring thereunder during the Forbearance Period, or any breach of thisAgreement. (b) Notice Requirements Satisfied. Each Borrower acknowledges that all notice requirements embodied in the Loan Documents andimposed upon Administrative Agent or any of the Lenders in connection with the Specified Event of Default, and the exercise of their remediestherefor (together with all applicable cure and/or grace periods) have been satisfied (or shall be deemed to have been satisfied by this Agreement)without exception, and that upon the expiration or earlier termination of the Forbearance Period, Administrative Agent and the Lenders shall,with respect to the Specified Event of Default, have the full right and power to exercise all remedies granted to them thereunder without furthernotice to such Borrower and subject to no other conditions precedent. (c) Agreement in the Nature of Forbearance Only. Each Borrower hereby acknowledges that Administrative Agent’s and the Lenders’obligations under this Agreement are, as applicable, in the nature of a conditional waiver and forbearance only, and that Administrative Agentand the Lenders have not made any agreement or commitment to modify or extend the Loan Documents beyond the Forbearance Period, andthat, upon the termination of the Forbearance Period, Administrative Agent and the Lenders shall have the immediate and unconditional right toexercise their remedies under the Loan Documents. (d) Termination of the Forbearance Period. The Forbearance Period shall end on the first to occur of the following: (i) End of Forbearance Period. The expiration of the Forbearance Period. Forbearance to Loan Agreement- 2 - (ii) Breach. A breach by any Borrower of any of the conditions, covenants, representations and/or warranties set forth in thisAgreement. (iii) New Default. The occurrence of any new Default or Event of Default under any one or more of the Loan Documents,other than, for the purposes of this Section 3(d), a Default or Event of Default resulting from either (1) Parent’s failure to remain currentin its filings and reports with the SEC to the extent such failure would be deemed to breach Section 6.9 of the Loan Agreement, and (2)Parent being Delisted in breach of Section 8(s) of the Loan Agreement. (iv) Creditor Enforcement Action. Any creditor(s) of any Borrower or any Guarantor take(s) or threaten(s) in writing anyenforcement action against any Borrower or any Guarantor which, in Administrative Agent’s reasonable judgment, would materiallyinterfere with the operation of any Borrower’s or any Guarantor’s business or Administrative Agent’s and the Lenders’ ability to collectthe Obligations. (v) Bankruptcy. Any Borrower or any Guarantor institutes or consents to the institution of any proceeding under theBankruptcy Code or any similar statute or any proceeding under the Bankruptcy Code or any similar statute relating to any Borrower orany Guarantor is instituted without the consent of such Borrower or such Guarantor. (vi) Proceeding by Borrower or any Guarantor. Any Borrower or any Guarantor initiates any judicial, administrative orarbitration proceeding against Administrative Agent or any Lender. (vii) Cash Maintenance. At any time during the Forbearance Period the Parent, on a consolidated basis with its subsidiaries,no longer maintains at least $4,000,000.00 in deposit accounts or securities accounts (as each such term is defined in the UCC) withrespect to which Administrative Agent has a perfected first priority security interest in, and control over, unrestricted cash or CashEquivalents. Upon termination of the Forbearance Period, Administrative Agent’s and the Lenders’ agreement to conditionally waive and forbear shallterminate automatically without further act or action by Administrative Agent or any Lender, and Administrative Agent and the Lenders shall be entitledto exercise any and all rights and remedies available under the Loan Documents and this Agreement, at law, in equity, or otherwise without any furtherlapse of time, expiration of applicable grace periods, or requirements of notice, all of which are hereby expressly waived by Borrower. 4. Ratification of Loan Documents. Each Borrower, Administrative Agent and each Lender further agrees that the Liens created by the LoanDocuments shall continue and carry forward until the Obligations are paid and performed in full. Each Borrower further agrees that such Liens are herebyratified and affirmed as valid and subsisting against the property described in the Loan Documents and that this Agreement shall in no manner vitiate,affect or impair the Loan Agreement or the other Loan Documents (except as expressly modified in this Agreement), and that such Liens shall not in anymanner be waived, released, altered or modified. Each Borrower acknowledges and agrees that as of the Effective Date, to its current and actualknowledge, there are no offsets, defenses or claims against any part of the Obligations. Forbearance to Loan Agreement- 3 - 5. Additional Agreements. (a) Without limiting the generality of the foregoing or the agreements set forth in Section 6.15 of the Loan Agreement, Borrowersratify, acknowledge and agree that the Administrative Agent has appointed Omar Jaffrey as the Observer, and that in such capacity Mr. Jaffreyshall (i) have the right to attend all meetings of each Board (and committee thereof) in a non-voting observer capacity, (ii) be provided allmaterials provided to the members of each Board (and committee thereof) and notice of such meetings, all in the manner and at the time providedto the members of such Board (and committee thereof). During the Forbearance Period, each Borrower hereby waives and covenants not toexercise Borrowers’ right to exclude the Observer from access to any material or meeting or portion thereof as set forth in Section 6.15(d) of theLoan Agreement except to preserve the attorney-client privilege so long as outside legal counsel to the Borrowers has advised Borrowers inwriting that the attorney-client privilege applies to such material or meeting or portion thereof under applicable law and that access to suchmaterial or meeting or portion thereof would result in the waiver of such attorney-client privilege under applicable law. (b) On or before February 2, 2018, Parent shall prepare and deliver to Administrative Agent a 13-week cash flow projection (“CashFlow Projection”) and operating budget for Parent and its subsidiaries on a consolidated basis (“Operating Budget”) each in form and contentreasonably satisfactory to Administrative Agent. Parent shall deliver to Administrative Agent a revised Cash Flow Projection for the following13-week period on the first Business Day of each calendar week together with a comparison of actual cash flows achieved for the immediatelypreceding calendar week to the projected cash flows for such week. Without limiting the obligations set forth in Section 6.2(e) of the LoanAgreement, Parent shall cause each Loan Party promptly to provide Administrative Agent with information regarding the operations, businessaffairs and financial condition of any Loan Party, including, but not limited to, the results of operations of Parent and its subsidiaries comparedto the Operating Budget. Parent shall cause the Chief Executive Officer and Chief Financial Officer of Parent to be available during normalbusiness hours to answer the questions of, and to provide information to, the Observer and to any representative of Administrative Agent relatingto the operations, business affairs and financial condition of any Loan Party. (c) By no later than February 2, 2018, Parent shall have retained, and at all times thereafter Parent shall maintain the retention of athird party investment banker of national reputation or qualified telecommunications banker ( of which Bank Street Group LLC shall beconsidered qualified) (the “Financial Adviser”) selected by Parent and retained at Parent’s own cost and expense, with such Financial Adviserand such terms of retention to be acceptable to the Administrative Agent in the Administrative Agent’s sole discretion, to assist Parent in aprocess that will lead to the sale of Borrowers or other transaction reasonably expected to result in the payment in full in cash of all Obligationsowing to Administrative Agent and the Lenders (such transaction, the “Sale Transaction”), and to perform such other services as Parent mayrequire. Parent shall promptly advise the Administrative Agent of any material developments in efforts, shall promptly deliver to theAdministrative Agent all materials (including any teaser, general marketing materials and confidential information memoranda) distributed toparties in furtherance of any proposed Sale Transaction, shall at all reasonable times make its officers and management representatives availableto the Administrative Agent to discuss such Sale Transaction process and any material developments related thereto and shall provide theAdministrative Agent and the Lenders with any written indications of interest, proposals, term sheets, letters of intent, commitment letters andother significant materials received in connection with such Sale Transaction within two (2) Business Days following their receipt. For theavoidance of doubt, the Borrowers acknowledge that the Administrative Agent and the Lenders shall have the right, at all reasonable times, toconsult directly with the Financial Adviser regarding the status of any Sale Transaction efforts. Forbearance to Loan Agreement- 4 - (d) Borrowers and certain of Borrowers’ respective employees, representatives, attorneys and agents, and Lenders and certain ofLenders’ respective employees, representatives, attorneys and agents, may have discussions and negotiations with respect to the Specified Eventof Default and amendments to the Loan Documents. All such discussions (whether before, on or after the date hereof) are referred to herein as the“Discussions”. None of the Discussions or any action or inaction on the part of Administrative Agent or any Lender taken or omitted during theperiod of the Discussions (unless and until evidenced by definitive documentation, if any) shall be construed to constitute or represent acommitment or intention by Administrative Agent or any Lender to (i) make any financial accommodations to Borrowers or any other persons,(ii) restructure the Loan or any Loan Document, (iii) make any additional loan to Borrowers, or (iv) waive, modify or further forebear fromexercising any of any such Lender’s rights, powers, privileges or remedies in respect of the Loan, and under the Loan Documents, at law, inequity or otherwise. Moreover (x) prior to the date hereof, no such commitment, waiver, modification or further forbearance has been offered,granted, extended or agreed to by Administrative Agent or any Lender during the period of the Discussions and (y) from and after the date hereof,no such commitment, waiver, modification or further forbearance shall bind Administrative Agent or any Lender unless and until evidenced bydefinitive documentation. No failure on the part of Administrative Agent or any Lender or any of their respective agents to exercise, and nocourse of dealing with respect to, and no delay in exercising, any right, power or remedy against any Borrower or under the Loan Documentsduring the period of the Discussions shall operate as a waiver thereof; nor shall any single or partial exercise by Administrative Agent or theLenders or by any of their respective agents of any right, power or remedy against Borrowers hereunder or under the Loan Documents during theperiod of the Discussions preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Any such Discussionsare voluntary in nature, are entered into in reliance upon the understandings set forth in this Section 5(d) and may be terminated by writtennotice sent in accordance with the terms of the Loan Agreement by any Lender or Borrower at any time without cause or prior notice and withoutliability of any kind. The agreements set forth in this Section 5(d) shall survive the expiration or earlier termination of the Forbearance Period. Forbearance to Loan Agreement- 5 - 6. Representations and Warranties. Borrower hereby certifies that, after giving effect to this Agreement: (a) The representations and warranties of each Borrower contained in Article 5 of the Loan Agreement, or which are contained in anydocument furnished at any time under or in connection with the Loan Agreement, that are qualified by materiality are true and correct on and asof the date hereof, and each of the representations and warranties of each Borrower contained in Article 5 of the Loan Agreement (other thanSection 5.25 of the Loan Agreement solely with respect to the Specified Event of Default), or which are contained in any document furnished atany time under or in connection with the Loan Agreement, that are not qualified by materiality are true and correct in all material respects on andas of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are trueand correct, or true and correct in all material respects, as the case may be, as of such earlier date; (b) this Agreement has been duly authorized, executed and delivered by each Borrower and constitutes a legal, valid and bindingobligation of each Borrower, except as may be limited by general principles of equity or by the effect of the Bankruptcy Code or any applicablesimilar statute; and (c) after giving effect to this Agreement and except for the Specified Event of Default, no Default or Event of Default exists. 7. Conditions to Effectiveness. This Agreement shall not be effective until the following conditions precedent have been satisfied: (a) Administrative Agent shall have received counterparts of this Agreement executed by each Borrower, Administrative Agent andeach Lender; (b) No Default or Event of Default shall exist except the Specified Event of Default; and (c) Administrative Agent shall have received such other documents, instruments and certificates as reasonably requested byAdministrative Agent. Upon the satisfaction of the conditions set forth in this Section 5, this Agreement shall be effective as of the date hereof. 8. Scope of Agreement. Any and all other provisions of the Loan Agreement and any other Loan Documents are hereby amended and modifiedwherever necessary and even through not specifically addressed herein, so as to conform to the amendments and modifications set forth in thisAgreement. 9. Limitation on Agreements. The amendments and agreements set forth herein are limited in scope as described herein and shall not bedeemed (a) to be a consent under, or waiver of, any other term or condition of the Loan Agreement or any of the other Loan Documents, or (b) to prejudiceany right or rights which Administrative Agent or any Lender now has or may have in the future under, or in connection with the Loan Documents, asamended or modified by this Agreement, the other Loan Documents or any of the documents referred to herein or therein. Forbearance to Loan Agreement- 6 - 10. CHOICE OF LAW; SERVICE OF PROCESS; JURY TRIAL WAIVER.THE VALIDITY OF THIS AGREEMENT, THECONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECTTO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUEDIN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING 5-1401 AND 5-1402 OF THE NEW YORKGENERAL OBLIGATIONS LAW, BUT OTHERWISE EXCLUDING AND WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLESTHEREOF).THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY,TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEWYORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION ORENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLYAGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCHNEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. BORROWER AND THE LENDER GROUPWAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OFFORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITHTHIS SECTION 10. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THEAFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED ORCERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS SAID ADDRESS. BORROWER AND THE LENDER GROUP HEREBYWAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OFTHIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUPREPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIALRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAYBE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 11. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context,everything contained in each Section applies equally to this entire Agreement. 12. Loan Document. This Agreement is a Loan Document and is subject to all provisions of the Loan Agreement applicable to LoanDocuments, all of which are incorporated in this Agreement by reference the same as if set forth in this Agreement verbatim. Forbearance to Loan Agreement- 7 - 13. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for thepurpose of determining the legal enforceability of any specific provision. 14. No Novation. This Agreement is given as an amendment and modification of, and not as a payment of, the Obligations and is not intendedto constitute a novation of the Loan Agreement or any of the other Loan Documents. All of the Obligations owing by Borrower under the LoanAgreement and the other Loan Documents shall continue. 15. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that no Borrower or any of Parent’s Subsidiaries may assign or otherwise transfer any of itsrights or obligations hereunder without the prior written consent of Administrative Agent and each of the Lenders. Nothing in this Agreement, expressedor implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) anylegal or equitable right, remedy or claim under or by reason of this Agreement.16. Counterparts; Telefacsimile Execution. This Agreement may beexecuted in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed tobe an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of thisAgreement by telefacsimile or other electronic means shall be equally as effective as delivery of an original executed counterpart of this Agreement. Anyparty delivering an executed counterpart of this Agreement by telefacsimile or other electronic means also shall deliver an original executed counterpartof this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of thisAgreement. 17. Expenses. Without limiting the provisions of the Loan Agreement (including, without limitation, Article 10 thereof), Borrowers agree topay all costs and expenses (including without limitation reasonable fees and expenses of any counsel, financial advisor, industry advisor and agent forAdministrative Agent or any Lender) incurred before or after the date hereof by Administrative Agent, any Lender and their respective Affiliates inconnection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents. 18. Release. As a material part of the consideration for Administrative Agent and the Lenders entering into this Agreement, each Borrower(“Releasor”) agrees as follows (the “Release Provision”): (a) Releasor hereby releases and forever discharges Administrative Agent, each Lender and their respective predecessors, successors,assigns, officers, managers, directors, shareholders, employees, agents, attorneys, representatives, parent corporations, subsidiaries, and affiliates(hereinafter all of the above collectively referred to as “Lender Group”) jointly and severally from any and all claims, counterclaims, demands,damages, debts, agreements, covenants, suits, contracts, obligations, liabilities, accounts, offsets, rights, actions, and causes of action of anynature whatsoever occurring prior to the date hereof, including, without limitation, all claims, demands, and causes of action for contribution andindemnity, whether arising at law or in equity, presently possessed, whether known or unknown, whether liability be direct or indirect, liquidatedor unliquidated, presently accrued, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted (“Claims”),which Releasor may have or claim to have against any of Lender Group. Forbearance to Loan Agreement- 8 - (b) Releasor agrees not to sue any of Lender Group or in any way assist any other Person in suing Lender Group with respect to anyClaim released herein. The Release Provision may be pleaded as a full and complete defense to, and may be used as the basis for an injunctionagainst, any action, suit, or other proceeding which may be instituted, prosecuted, or attempted in breach of the release contained herein. (c) Releasor acknowledges, warrants, and represents to Lender Group that: (i) Releasor has read and understands the effect of the Release Provision. Releasor has had the assistance of independentcounsel of its own choice, or has had the opportunity to retain such independent counsel, in reviewing, discussing, and considering allthe terms of the Release Provision; and if counsel was retained, counsel for Releasor has read and considered the Release Provision andadvised Releasor to execute the same. Before execution of this Agreement, Releasor has had adequate opportunity to make whateverinvestigation or inquiry it may deem necessary or desirable in connection with the subject matter of the Release Provision. (ii) Releasor is not acting in reliance on any representation, understanding, or agreement not expressly set forth herein.Releasor acknowledges that Lender Group has not made any representation with respect to the Release Provision except as expressly setforth herein. (iii) Releasor has executed this Agreement and the Release Provision thereof as its free and voluntary act, without any duress,coercion, or undue influence exerted by or on behalf of any Person. (iv) Releasor is the sole owner of the Claims released by the Release Provision, and Releasor has not heretofore conveyed orassigned any interest in any such Claims to any other Person. (d) Releasor understands that the Release Provision was a material consideration in the agreement of Administrative Agent and theLenders to enter into this Agreement. (e) It is the express intent of Releasor that the release and discharge set forth in the Release Provision be construed as broadly aspossible in favor of Lender Group so as to foreclose forever the assertion by Releasor of any Claims released hereby against Lender Group. Forbearance to Loan Agreement- 9 - (f) If any term, provision, covenant, or condition of the Release Provision is held by a court of competent jurisdiction to be invalid,illegal, or unenforceable, the remainder of the provisions shall remain in full force and effect. 19. INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTIONHEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTSBETWEEN THE PARTIES. (Signature pages follow) Forbearance to Loan Agreement- 10 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed. BORROWERS: TOWERSTREAM CORPORATION,a Delaware corporation By: /s/ Ernest Ortega Name: Ernest OrtegaTitle: CEO TOWERSTREAM I, INC.,a Delaware corporation, By: /s/ Ernest Ortega Name: Ernest OrtegaTitle: CEO HETNETS TOWER CORPORATION,a Delaware corporation, By: /s/ Ernest Ortega Name: Ernest OrtegaTitle: CEO Signature PageForbearance to Loan Agreement S-1 ADMINISTRATIVE AGENT: MELODY BUSINESS FINANCE, LLC,a Delaware limited liability company By: /s/ Terri Lecamp Name: Terri LecampTitle: Authorized Signatory Signature PageForbearance to Loan AgreementS-2 LENDERS: MELODY CAPITAL PARTNERS FDB CREDIT FUND, LLCBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Name: Terri LecampTitle: Authorized Signatory MELODY CAPITAL PARTNERS OFFSHORE CREDIT MINI-MASTER FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Name: Terri LecampTitle: Authorized Signatory MELODY CAPITAL PARTNERS ONSHORE CREDIT FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Name: Terri LecampTitle: Authorized Signatory MELODY SPECIAL SITUATIONS OFFSHORE CREDIT MINI-MASTER FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Name: Terri LecampTitle: Authorized Signatory Signature PageForbearance to Loan AgreementS-3Exhibit 10.51 Amended and RestatedForbearance to Loan Agreement THIS AMENDED AND RESTATED FORBEARANCE TO LOAN AGREEMENT (this “Agreement”) effective as of February 28, 2018 (the“Effective Date”), is made by and among TOWERSTREAM CORPORATION, a Delaware corporation (“Parent”), TOWERSTREAM I, INC., aDelaware corporation, HETNETS TOWER CORPORATION, a Delaware corporation (together with Parent and Towerstream I, Inc., the “Borrowers”and each a “Borrower”), OMEGA COMMUNICATIONS CORPORATION, a Delaware corporation, ALPHA COMMUNICATIONS CORPORATION,a Delaware corporation, TOWERSRTEAM HOUSTON, INC., a Texas corporation (together with Omega Communications Corporation and AlphaCommunications Corporation, the “Guarantors” and each a “Guarantor”), the MAJORITY LENDERS (as defined below), and MELODY BUSINESSFINANCE, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in such capacity, “Administrative Agent”). WITNESSETH: WHEREAS, Borrowers, the financial institutions from time to time party thereto (the “Lenders”) and Administrative Agent are parties to thatcertain Loan Agreement dated as of October 16, 2014 (as amended, supplemented, amended and restated or otherwise modified from time to time, the“Loan Agreement”); WHEREAS, Guarantors entered into that certain Guaranty, dated as of October 16, 2014, for the ratable benefit of Administrative Agent and theLenders; WHEREAS, Borrowers have notified the Administrative Agent that (i) upon payment of obligations in the ordinary course, Parent, on aconsolidated basis with its subsidiaries, may no longer maintain at least $6,500,000 in deposit accounts or securities accounts (as each such term isdefined in the UCC) with respect to which Administrative Agent has a perfected first priority security interest in, and control over, unrestricted cash orCash Equivalents, such event if not waived or cured, would breach of Section 6.16 of the Loan Agreement which would cause an Event of Default underthe Loan Agreement and (ii) Borrowers anticipate that the report of Parent’s independent certified public accounts accompanying the auditedconsolidated financial statements of Parent and its consolidated Subsidiaries at and for the year ended December 31, 2017 may contain a going concernqualification (“Qualified Auditor’s Report”) in breach of Section 6.1(a)(i) of the Loan Agreement which would cause an Event of Default under the LoanAgreement (together the “Specified Events of Default” and each a “Specified Event of Default”); WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders entered into that certain Forbearance to Loan Agreement,dated as of January 26, 2018 (the “Original Forbearance Agreement”); WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders have agreed to amend and restate the Original ForbearanceAgreement as provided herein;  WHEREAS, Borrowers and Guarantors have requested that Administrative Agent and Majority Lenders (as defined in the Loan Agreement) agreeto a conditional waiver and forbear from exercising any of their rights and remedies with respect to the Specified Events of Default as hereinafter providedin order to afford Parent with sufficient time to explore strategic alternatives, and Administrative Agent and the Majority Lenders, subject to the terms andconditions contained herein, have agreed to such conditional waiver and forbearance to be effective as of the Effective Date; and WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders acknowledge that the terms of this Agreement do notconstitute a novation or extinguishment, of the Loan Agreement. NOW, THEREFORE, in consideration of the mutual covenants and the fulfillment of the conditions set forth herein, the parties hereby agree asfollows: 1. Definitions. All capitalized terms defined in the Loan Agreement and not otherwise defined in this Agreement shall have the same meaningsas assigned to them in the Loan Agreement when used in this Agreement, unless the context hereof shall otherwise require or provide. 2. Estoppel, Acknowledgement and Reaffirmation. Each Loan Party hereby acknowledges and agrees that, as of January 26, 2018, (a) theaggregate outstanding principal amount of the Loans was not less than $34,657,984.50, which constitutes a valid and subsisting obligation of the LoanParties to the Lenders that is not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind. The Loan Parties hereby: (w)acknowledge the Specified Events of Default; (x) acknowledge their respective obligations under the Loan Agreement and the Loan Documents to whichthey are party; (y) reaffirm that each Lien created and granted in, or pursuant to, the Loan Agreement and the other Loan Documents is valid andsubsisting; and (z) acknowledge that this Agreement shall in no manner impair or otherwise adversely affect such Obligations or Liens. 3. Conditional Waiver and Forbearance. Unless the Forbearance Period is sooner terminated as provided herein and subject to the conditionshereof and upon satisfaction of the terms set forth in Section 7 hereof, Administrative Agent and the Lenders hereby agree to waive compliance withSections 6.16 and 6.1(a)(i) (with respect only to the Qualified Auditor’s Report) of the Loan Agreement and forbear from the exercise of any of its rightsand remedies under the Loan Agreement and the other Loan Documents in connection with the Specified Events of Default for a period beginning as ofthe date hereof through and including March 30, 2018, and, with respect only to the Qualified Auditor’s Report, April 17, 2018 (together with anyextensions thereof, the “Forbearance Period”); provided that interest on the Loans shall accrue at the Default Rate. (a) Conditional Waiver and Forbearance Limited to Specified Events of Default. Administrative Agent’s and the Majority Lenders’conditional waiver and forbearance shall be limited solely to the exercise of their rights and remedies arising under the Loan Documents as aresult of the Specified Events of Default, and Administrative Agent and the Majority Lenders shall not be deemed to have waived any rights orremedies they may have with respect to any other Default, other Event of Default or breach occurring thereunder during the Forbearance Period,or any breach of this Agreement. Forbearance to Loan Agreement- 2 - (b) Notice Requirements Satisfied. Each Borrower and Guarantor acknowledges that all notice requirements embodied in the LoanDocuments and imposed upon Administrative Agent or any of the Lenders in connection with the Specified Events of Default, and the exerciseof their remedies therefor (together with all applicable cure and/or grace periods) have been satisfied (or shall be deemed to have been satisfiedby this Agreement) without exception, and that upon the expiration or earlier termination of the Forbearance Period, Administrative Agent andthe Lenders shall, with respect to the Specified Event of Default, have the full right and power to exercise all remedies granted to themthereunder without further notice to such Borrower and subject to no other conditions precedent. (c) Agreement in the Nature of Forbearance Only. Each Borrower and Guarantor hereby acknowledges that Administrative Agent’sand the Lenders’ obligations under this Agreement are, as applicable, in the nature of a conditional waiver and forbearance only, and thatAdministrative Agent and the Lenders have not made any agreement or commitment to modify or extend the Loan Documents beyond theForbearance Period, and that, upon the termination of the Forbearance Period, Administrative Agent and the Lenders shall have the immediateand unconditional right to exercise their remedies under the Loan Documents. (d) Termination of the Forbearance Period. The Forbearance Period shall end on the first to occur of the following: (i) End of Forbearance Period. The expiration of the Forbearance Period. (ii) Breach. A breach by any Borrower or Guarantor of any of the conditions, covenants, representations and/or warranties setforth in this Agreement. (iii) New Default. The occurrence of any new Default or Event of Default under any one or more of the Loan Documents,other than, for the purposes of this Section 3(d), a Default or Event of Default resulting from either (1) Parent’s failure to remain currentin its filings and reports with the SEC to the extent such failure would be deemed to breach Section 6.9 of the Loan Agreement, and (2)Parent being Delisted in breach of Section 8(s) of the Loan Agreement. (iv) Creditor Enforcement Action. Any creditor(s) of any Borrower or any Guarantor take(s) or threaten(s) in writing anyenforcement action against any Borrower or any Guarantor which, in Administrative Agent’s reasonable judgment, would materiallyinterfere with the operation of any Borrower’s or any Guarantor’s business or Administrative Agent’s and the Lenders’ ability to collectthe Obligations. Forbearance to Loan Agreement- 3 - (v) Bankruptcy. Any Borrower or any Guarantor institutes or consents to the institution of any proceeding under theBankruptcy Code or any similar statute or any proceeding under the Bankruptcy Code or any similar statute relating to any Borrower orany Guarantor is instituted without the consent of such Borrower or such Guarantor. (vi) Proceeding by Borrower or any Guarantor. Any Borrower or any Guarantor initiates any judicial, administrative orarbitration proceeding against Administrative Agent or any Lender. (vii) Cash Maintenance. At any time during the Forbearance Period the Parent, on a consolidated basis with its subsidiaries,no longer maintains at least $4,000,000.00 in deposit accounts or securities accounts (as each such term is defined in the UCC) withrespect to which Administrative Agent has a perfected first priority security interest in, and control over, unrestricted cash or CashEquivalents. Upon termination of the Forbearance Period, Administrative Agent’s and the Majority Lenders’ agreement to conditionally waive and forbearshall terminate automatically without further act or action by Administrative Agent or any Majority Lender, and Administrative Agent and the Lendersshall be entitled to exercise any and all rights and remedies available under the Loan Documents and this Agreement, at law, in equity, or otherwisewithout any further lapse of time, expiration of applicable grace periods, or requirements of notice, all of which are hereby expressly waived by eachBorrower and Guarantor. 4. Ratification of Loan Documents. Each Borrower, each Guarantor, Administrative Agent and each Majority Lender further agrees that theLiens created by the Loan Documents shall continue and carry forward until the Obligations are paid and performed in full. Each Borrower and eachGuarantor further agrees that such Liens are hereby ratified and affirmed as valid and subsisting against the property described in the Loan Documentsand that this Agreement shall in no manner vitiate, affect or impair the Loan Agreement or the other Loan Documents (except as expressly modified inthis Agreement), and that such Liens shall not in any manner be waived, released, altered or modified. Each Borrower and each Guarantor acknowledgesand agrees that as of the Effective Date, to its current and actual knowledge, there are no offsets, defenses or claims against any part of the Obligations. 5. Additional Agreements. (a) Without limiting the generality of the foregoing or the agreements set forth in Section 6.15 of the Loan Agreement, the LoanParties ratify, acknowledge and agree that the Administrative Agent has appointed Omar Jaffrey as the Observer, and that in such capacity Mr.Jaffrey shall (i) have the right to attend all meetings of each Board (and committee thereof) in a non-voting observer capacity, (ii) be provided allmaterials provided to the members of each Board (and committee thereof) and notice of such meetings, all in the manner and at the time providedto the members of such Board (and committee thereof). During the Forbearance Period, each Loan Party hereby waives and covenants not toexercise Loan Parties’ right to exclude the Observer from access to any material or meeting or portion thereof as set forth in Section 6.15(d) of theLoan Agreement except to preserve the attorney-client privilege so long as outside legal counsel to such Loan Parties has advised the LoanParties in writing that the attorney-client privilege applies to such material or meeting or portion thereof under applicable law and that access tosuch material or meeting or portion thereof could result in the waiver of such attorney-client privilege under applicable law. Forbearance to Loan Agreement- 4 - (b) On or before February 2, 2018, Parent shall prepare and deliver to Administrative Agent a 13-week cash flow projection (“CashFlow Projection”) and operating budget for Parent and its Subsidiaries on a consolidated basis (“Operating Budget”) each in form and contentreasonably satisfactory to Administrative Agent. Parent shall deliver to Administrative Agent a revised Cash Flow Projection for the following13-week period on the first Business Day of each calendar week thereafter, together with a comparison of actual cash flows achieved for theimmediately preceding calendar week to the projected cash flows for such week. Without limiting the obligations set forth in Section 6.2(e) ofthe Loan Agreement, Parent shall cause each Loan Party promptly to provide Administrative Agent with information regarding the operations,business affairs and financial condition of any Loan Party, including, but not limited to, the results of operations of Parent and its subsidiariescompared to the Operating Budget. Parent shall cause the Chief Executive Officer and Chief Financial Officer of Parent to be available duringnormal business hours to answer the questions of, and to provide information to, the Observer and to any representative of Administrative Agentrelating to the operations, business affairs and financial condition of any Loan Party. (c) Parent shall maintain the retention of a third party investment banker of national reputation or qualified telecommunicationsbanker (of which Bank Street Group LLC shall be considered qualified) (the “Financial Adviser”) selected by Parent and retained at Parent’sown cost and expense, with such Financial Adviser and such terms of retention to be acceptable to the Administrative Agent in theAdministrative Agent’s sole discretion, to assist Parent in a process that will lead to the sale of the Loan Parties or other transaction reasonablyexpected to result in the payment in full in cash of all Obligations owing to Administrative Agent and the Lenders (such transaction, the “SaleTransaction”), and to perform such other services as Parent may require. Parent shall promptly advise the Administrative Agent of any materialdevelopments in efforts, shall promptly deliver to the Administrative Agent all materials (including any teaser, general marketing materials andconfidential information memoranda) distributed to parties in furtherance of any proposed Sale Transaction, shall at all reasonable times make itsofficers and management representatives available to the Administrative Agent to discuss such Sale Transaction process and any materialdevelopments related thereto and shall provide the Administrative Agent with any written indications of interest, proposals, term sheets, lettersof intent, commitment letters and other significant materials received in connection with such Sale Transaction within two (2) Business Daysfollowing their receipt. For the avoidance of doubt, the Borrowers and Guarantors acknowledge that the Administrative Agent and the Lendersshall have the right, at all reasonable times, to consult directly with the Financial Adviser regarding the status of any Sale Transaction efforts. Forbearance to Loan Agreement- 5 - (d) Borrowers and certain of Borrowers’ respective employees, representatives, attorneys and agents, and Majority Lenders and certainof Majority Lenders’ respective employees, representatives, attorneys and agents, may have discussions and negotiations with respect to theSpecified Events of Default and amendments to the Loan Documents. All such discussions (whether before, on or after the date hereof) arereferred to herein as the “Discussions”. None of the Discussions or any action or inaction on the part of Administrative Agent or any Lendertaken or omitted during the period of the Discussions (unless and until evidenced by definitive documentation, if any) shall be construed toconstitute or represent a commitment or intention by Administrative Agent or any Lender to (i) make any financial accommodations toBorrowers or any other persons, (ii) restructure the Loan or any Loan Document, (iii) make any additional loan to Borrowers, or (iv) waive,modify or further forebear from exercising any of any such Lender’s rights, powers, privileges or remedies in respect of the Loan, and under theLoan Documents, at law, in equity or otherwise. Moreover (x) prior to the date hereof, no such commitment, waiver, modification or furtherforbearance has been offered, granted, extended or agreed to by Administrative Agent or any Lender during the period of the Discussions and (y)from and after the date hereof, no such commitment, waiver, modification or further forbearance shall bind Administrative Agent or any Lenderunless and until evidenced by definitive documentation. No failure on the part of Administrative Agent or any Lender or any of their respectiveagents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy against any Borrower orunder the Loan Documents during the period of the Discussions shall operate as a waiver thereof; nor shall any single or partial exercise byAdministrative Agent or the Lenders or by any of their respective agents of any right, power or remedy against Borrowers hereunder or under theLoan Documents during the period of the Discussions preclude any other or further exercise thereof or the exercise of any other right, power orremedy. Any such Discussions are voluntary in nature, are entered into in reliance upon the understandings set forth in this Section 5(d) and maybe terminated by written notice sent in accordance with the terms of the Loan Agreement by any Lender or Borrower at any time without cause orprior notice and without liability of any kind. The agreements set forth in this Section 5(d) shall survive the expiration or earlier termination ofthe Forbearance Period. 6. Representations and Warranties. Each Borrower and Guarantor hereby certifies that, after giving effect to this Agreement: (a) The representations and warranties of each Borrower and Guarantor contained in Article 5 of the Loan Agreement, or which arecontained in any document furnished at any time under or in connection with the Loan Agreement, that are qualified by materiality are true andcorrect on and as of the date hereof, and each of the representations and warranties of each Borrower and Guarantor contained in Article 5 of theLoan Agreement (other than Section 5.25 of the Loan Agreement solely with respect to the Specified Events of Default), or which are containedin any document furnished at any time under or in connection with the Loan Agreement, that are not qualified by materiality are true and correctin all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlierdate, in which case they are true and correct, or true and correct in all material respects, as the case may be, as of such earlier date; Forbearance to Loan Agreement- 6 - (b) this Agreement has been duly authorized, executed and delivered by each Borrower and each Guarantor and constitutes a legal,valid and binding obligation of each such party, except as may be limited by general principles of equity or by the effect of the BankruptcyCode or any applicable similar statute; and (c) after giving effect to this Agreement and except for the Specified Events of Default, no Default or Event of Default exists. 7. Conditions to Effectiveness. This Agreement shall not be effective until the following conditions precedent have been satisfied: (a) Administrative Agent shall have received counterparts of this Agreement executed by each Borrower, each Guarantor,Administrative Agent and each Majority Lender; (b) No Default or Event of Default shall exist except the Specified Events of Default; and (c) Administrative Agent shall have received such other documents, instruments and certificates as reasonably requested byAdministrative Agent. Upon the satisfaction of the conditions set forth in this Section 5, this Agreement shall be effective as of the date hereof. 8. Scope of Agreement. Any and all other provisions of the Loan Agreement and any other Loan Documents are hereby amended and modifiedwherever necessary and even through not specifically addressed herein, so as to conform to the amendments and modifications set forth in thisAgreement. 9. Limitation on Agreements. The amendments and agreements set forth herein are limited in scope as described herein and shall not bedeemed (a) to be a consent under, or waiver of, any other term or condition of the Loan Agreement or any of the other Loan Documents, or (b) to prejudiceany right or rights which Administrative Agent or any Lender now has or may have in the future under, or in connection with the Loan Documents, asamended or modified by this Agreement, the other Loan Documents or any of the documents referred to herein or therein. Forbearance to Loan Agreement- 7 - 10. CHOICE OF LAW; SERVICE OF PROCESS; JURY TRIAL WAIVER.THE VALIDITY OF THIS AGREEMENT, THECONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECTTO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUEDIN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING 5-1401 AND 5-1402 OF THE NEW YORKGENERAL OBLIGATIONS LAW, BUT OTHERWISE EXCLUDING AND WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLESTHEREOF).THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY,TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEWYORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION ORENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLYAGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCHNEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. BORROWER AND THE LENDER GROUPWAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OFFORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITHTHIS SECTION 10. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THEAFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED ORCERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS SAID ADDRESS. BORROWER AND THE LENDER GROUP HEREBYWAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OFTHIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUPREPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIALRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAYBE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 11. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context,everything contained in each Section applies equally to this entire Agreement. 12. Loan Document. This Agreement is a Loan Document and is subject to all provisions of the Loan Agreement applicable to LoanDocuments, all of which are incorporated in this Agreement by reference the same as if set forth in this Agreement verbatim. 13. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for thepurpose of determining the legal enforceability of any specific provision. 14. No Novation. This Agreement amends and restates the Original Forbearance Agreement. This Agreement is given as an amendment andmodification of, and not as a payment of, the Obligations and is not intended to constitute a novation of the Loan Agreement or any of the other LoanDocuments. All of the Obligations owing by Borrower under the Loan Agreement and the other Loan Documents shall continue. Forbearance to Loan Agreement- 8 - 15. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that no Borrower or any of Parent’s Subsidiaries may assign or otherwise transfer any of itsrights or obligations hereunder without the prior written consent of Administrative Agent and each of the Lenders. Nothing in this Agreement, expressedor implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) anylegal or equitable right, remedy or claim under or by reason of this Agreement.16. Counterparts; Telefacsimile Execution. This Agreement may beexecuted in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed tobe an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of thisAgreement by telefacsimile or other electronic means shall be equally as effective as delivery of an original executed counterpart of this Agreement. Anyparty delivering an executed counterpart of this Agreement by telefacsimile or other electronic means also shall deliver an original executed counterpartof this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of thisAgreement. 17. Expenses. Without limiting the provisions of the Loan Agreement (including, without limitation, Article 10 thereof), Borrowers agree topay all costs and expenses (including without limitation reasonable fees and expenses of any counsel, financial advisor, industry advisor and agent forAdministrative Agent or any Lender) incurred before or after the date hereof by Administrative Agent, any Lender and their respective Affiliates inconnection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents. 18. Release. As a material part of the consideration for Administrative Agent and the Lenders entering into this Agreement, each Borrower(“Releasor”) agrees as follows (the “Release Provision”): (a) Releasor hereby releases and forever discharges Administrative Agent, each Lender and their respective predecessors, successors,assigns, officers, managers, directors, shareholders, employees, agents, attorneys, representatives, parent corporations, subsidiaries, and affiliates(hereinafter all of the above collectively referred to as “Lender Group”) jointly and severally from any and all claims, counterclaims, demands,damages, debts, agreements, covenants, suits, contracts, obligations, liabilities, accounts, offsets, rights, actions, and causes of action of anynature whatsoever occurring prior to the date hereof, including, without limitation, all claims, demands, and causes of action for contribution andindemnity, whether arising at law or in equity, presently possessed, whether known or unknown, whether liability be direct or indirect, liquidatedor unliquidated, presently accrued, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted (“Claims”),which Releasor may have or claim to have against any of Lender Group. (b) Releasor agrees not to sue any of Lender Group or in any way assist any other Person in suing Lender Group with respect to anyClaim released herein. The Release Provision may be pleaded as a full and complete defense to, and may be used as the basis for an injunctionagainst, any action, suit, or other proceeding which may be instituted, prosecuted, or attempted in breach of the release contained herein. Forbearance to Loan Agreement- 9 - (c) Releasor acknowledges, warrants, and represents to Lender Group that: (i) Releasor has read and understands the effect of the Release Provision. Releasor has had the assistance of independentcounsel of its own choice, or has had the opportunity to retain such independent counsel, in reviewing, discussing, and considering allthe terms of the Release Provision; and if counsel was retained, counsel for Releasor has read and considered the Release Provision andadvised Releasor to execute the same. Before execution of this Agreement, Releasor has had adequate opportunity to make whateverinvestigation or inquiry it may deem necessary or desirable in connection with the subject matter of the Release Provision. (ii) Releasor is not acting in reliance on any representation, understanding, or agreement not expressly set forth herein.Releasor acknowledges that Lender Group has not made any representation with respect to the Release Provision except as expressly setforth herein. (iii) Releasor has executed this Agreement and the Release Provision thereof as its free and voluntary act, without any duress,coercion, or undue influence exerted by or on behalf of any Person. (iv) Releasor is the sole owner of the Claims released by the Release Provision, and Releasor has not heretofore conveyed orassigned any interest in any such Claims to any other Person. (d) Releasor understands that the Release Provision was a material consideration in the agreement of Administrative Agent and theLenders to enter into this Agreement. (e) It is the express intent of Releasor that the release and discharge set forth in the Release Provision be construed as broadly aspossible in favor of Lender Group so as to foreclose forever the assertion by Releasor of any Claims released hereby against Lender Group. (f) If any term, provision, covenant, or condition of the Release Provision is held by a court of competent jurisdiction to be invalid,illegal, or unenforceable, the remainder of the provisions shall remain in full force and effect. 19. INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTIONHEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTSBETWEEN THE PARTIES. (Signature pages follow) Forbearance to Loan Agreement- 10 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed. BORROWERS: TOWERSTREAM CORPORATION,a Delaware corporation By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO TOWERSTREAM I, INC.,a Delaware corporation, By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO HETNETS TOWER CORPORATION,a Delaware corporation, By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO Signature PageForbearance to Loan AgreementS-1 GUARANTORS: OMEGA COMMUNICATIONS CORPORATION,a Delaware corporation By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO ALPHA COMMUNICATIONS CORPORATION,a Delaware corporation, By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO TOWERSTREAM HOUSTON, INC,a Texas corporation, By: /s/Ernest Ortega Name: Ernest OrtegaTitle: CEO Signature PageForbearance to Loan AgreementS-2 ADMINISTRATIVE AGENT: MELODY BUSINESS FINANCE, LLC,a Delaware limited liability company By: /s/ Terri Lecamp Terri LecampAuthorized Signatory Signature PageForbearance to Loan AgreementS-3 MAJORITY LENDERS: MELODY CAPITAL PARTNERS OFFSHORE CREDIT MINI-MASTER FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Terri LecampAuthorized Signatory MELODY CAPITAL PARTNERS ONSHORE CREDIT FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Terri LecampAuthorized Signatory MELODY SPECIAL SITUATIONS OFFSHORE CREDIT MINI-MASTER FUND, LPBy: Melody Capital Partners, LP Its Investment Advisor By: /s/ Terri Lecamp Terri LecampAuthorized Signatory Signature PageForbearance to Loan AgreementS-4Exhibit 10.52 First Amendment to Amended and RestatedForbearance to Loan Agreement THIS FIRST AMENDMENT TO AMENDED AND RESTATED FORBEARANCE TO LOAN AGREEMENT (this “Agreement”) effective as ofMarch 30, 2018 (the “Effective Date”), is made by and among TOWERSTREAM CORPORATION, a Delaware corporation (“Parent”),TOWERSTREAM I, INC., a Delaware corporation, HETNETS TOWER CORPORATION, a Delaware corporation (together with Parent andTowerstream I, Inc., the “Borrowers” and each a “Borrower”), OMEGA COMMUNICATIONS CORPORATION, a Delaware corporation, ALPHACOMMUNICATIONS CORPORATION, a Delaware corporation, TOWERSRTEAM HOUSTON, INC., a Texas corporation (together with OmegaCommunications Corporation and Alpha Communications Corporation, the “Guarantors” and each a “Guarantor”), the MAJORITY LENDERS (asdefined below), and MELODY BUSINESS FINANCE, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in suchcapacity, “Administrative Agent”). WITNESSETH: WHEREAS, Borrowers, the financial institutions from time to time party thereto (the “Lenders”) and Administrative Agent are parties to thatcertain Loan Agreement dated as of October 16, 2014 (as amended, supplemented, amended and restated or otherwise modified from time to time, the“Loan Agreement”); WHEREAS, Guarantors entered into that certain Guaranty, dated as of October 16, 2014, for the ratable benefit of Administrative Agent and theLenders; WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders entered into that certain Amended and Restated Forbearanceto Loan Agreement, dated as of February 28, 2018 (the “Original Forbearance Agreement”); WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders have agreed to amend the Original Forbearance Agreementas provided herein; and WHEREAS, Borrowers, Guarantors, Administrative Agent and the Majority Lenders acknowledge that the terms of this Agreement do notconstitute a novation or extinguishment, of the Loan Agreement. NOW, THEREFORE, in consideration of the mutual covenants and the fulfillment of the conditions set forth herein, the parties hereby agree asfollows: 1. Definitions. All capitalized terms defined in the Loan Agreement and not otherwise defined in this Agreement shall have the same meaningsas assigned to them in the Loan Agreement or the Original Forbearance Agreement, as applicable, when used in this Agreement, unless the context hereofshall otherwise require or provide. 2. Amendment. The reference to “March 30, 2018” appearing in Section 3 of the Original Forbearance Agreement is deleted and replaced with“April 15, 2018”. Except as so modified, the Original Forbearance Agreement remains in full force and effect.  3. Ratification of Loan Documents. Each Borrower, each Guarantor, Administrative Agent and each Majority Lender further agrees that theLiens created by the Loan Documents shall continue and carry forward until the Obligations are paid and performed in full. Each Borrower and eachGuarantor further agrees that such Liens are hereby ratified and affirmed as valid and subsisting against the property described in the Loan Documentsand that this Agreement shall in no manner vitiate, affect or impair the Loan Agreement or the other Loan Documents (except as expressly modified inthis Agreement), and that such Liens shall not in any manner be waived, released, altered or modified. Each Borrower and each Guarantor acknowledgesand agrees that as of the Effective Date, to its current and actual knowledge, there are no offsets, defenses or claims against any part of the Obligations. 4. Representations and Warranties. Each Borrower and Guarantor hereby certifies that, after giving effect to this Agreement: (a) The representations and warranties of each Borrower and Guarantor contained in Article 5 of the Loan Agreement, or which arecontained in any document furnished at any time under or in connection with the Loan Agreement, that are qualified by materiality are true andcorrect on and as of the date hereof, and each of the representations and warranties of each Borrower and Guarantor contained in Article 5 of theLoan Agreement (other than Section 5.25 of the Loan Agreement solely with respect to the Specified Events of Default), or which are containedin any document furnished at any time under or in connection with the Loan Agreement, that are not qualified by materiality are true and correctin all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlierdate, in which case they are true and correct, or true and correct in all material respects, as the case may be, as of such earlier date; (b) this Agreement has been duly authorized, executed and delivered by each Borrower and each Guarantor and constitutes a legal,valid and binding obligation of each such party, except as may be limited by general principles of equity or by the effect of the BankruptcyCode or any applicable similar statute; and (c) after giving effect to this Agreement and except for the Specified Events of Default, no Default or Event of Default exists. 5. Conditions to Effectiveness. This Agreement shall not be effective until the following conditions precedent have been satisfied: (a) Administrative Agent shall have received counterparts of this Agreement executed by each Borrower, each Guarantor,Administrative Agent and each Majority Lender; (b) No Default or Event of Default shall exist except the Specified Events of Default; and (c) Administrative Agent shall have received such other documents, instruments and certificates as reasonably requested byAdministrative Agent. - 2 -First Amendment to Forbearance to Loan Agreement  Upon the satisfaction of the conditions set forth in this Section 5, this Agreement shall be effective as of the date hereof. 6. Scope of Agreement. Any and all other provisions of the Loan Agreement and any other Loan Documents are hereby amended and modifiedwherever necessary and even through not specifically addressed herein, so as to conform to the amendments and modifications set forth in thisAgreement. 7. Limitation on Agreements. The amendments and agreements set forth herein are limited in scope as described herein and shall not bedeemed (a) to be a consent under, or waiver of, any other term or condition of the Loan Agreement or any of the other Loan Documents, or (b) to prejudiceany right or rights which Administrative Agent or any Lender now has or may have in the future under, or in connection with the Loan Documents, asamended or modified by this Agreement, the other Loan Documents or any of the documents referred to herein or therein. 8. CHOICE OF LAW; SERVICE OF PROCESS; JURY TRIAL WAIVER. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THERIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BEDETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEWYORK (INCLUDING 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE EXCLUDING ANDWITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLES THEREOF). THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY, TOTHE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEWYORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION ORENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLYAGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCHNEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. BORROWER AND THE LENDER GROUPWAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OFFORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITHTHIS SECTION 10. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THEAFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED ORCERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS SAID ADDRESS. BORROWER AND THE LENDER GROUP HEREBYWAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OFTHIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUPREPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIALRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAYBE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. - 3 -First Amendment to Forbearance to Loan Agreement  9. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context,everything contained in each Section applies equally to this entire Agreement. 10. Loan Document. This Agreement is a Loan Document and is subject to all provisions of the Loan Agreement applicable to LoanDocuments, all of which are incorporated in this Agreement by reference the same as if set forth in this Agreement verbatim. 11. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for thepurpose of determining the legal enforceability of any specific provision. 12. No Novation. This Agreement amends the Original Forbearance Agreement. This Agreement is given as an amendment and modificationof, and not as a payment of, the Obligations and is not intended to constitute a novation of the Loan Agreement or any of the other Loan Documents. Allof the Obligations owing by Borrower under the Loan Agreement and the other Loan Documents shall continue. 13. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that no Borrower or any of Parent’s Subsidiaries may assign or otherwise transfer any of itsrights or obligations hereunder without the prior written consent of Administrative Agent and each of the Lenders. Nothing in this Agreement, expressedor implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) anylegal or equitable right, remedy or claim under or by reason of this Agreement. 14. Counterparts; Telefacsimile Execution. This Agreement may be executed in any number of counterparts and by different parties onseparate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shallconstitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic means shall beequally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement bytelefacsimile or other electronic means also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executedcounterpart shall not affect the validity, enforceability, and binding effect of this Agreement. 15. Expenses. Without limiting the provisions of the Loan Agreement (including, without limitation, Article 10 thereof), Borrowers agree topay all costs and expenses (including without limitation reasonable fees and expenses of any counsel, financial advisor, industry advisor and agent forAdministrative Agent or any Lender) incurred before or after the date hereof by Administrative Agent, any Lender and their respective Affiliates inconnection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents. - 4 -First Amendment to Forbearance to Loan Agreement  16. Release. As a material part of the consideration for Administrative Agent and the Lenders entering into this Agreement, each Borrower(“Releasor”) agrees as follows (the “Release Provision”): (a) Releasor hereby releases and forever discharges Administrative Agent, each Lender and their respective predecessors, successors,assigns, officers, managers, directors, shareholders, employees, agents, attorneys, representatives, parent corporations, subsidiaries, and affiliates(hereinafter all of the above collectively referred to as “Lender Group”) jointly and severally from any and all claims, counterclaims, demands,damages, debts, agreements, covenants, suits, contracts, obligations, liabilities, accounts, offsets, rights, actions, and causes of action of anynature whatsoever occurring prior to the date hereof, including, without limitation, all claims, demands, and causes of action for contribution andindemnity, whether arising at law or in equity, presently possessed, whether known or unknown, whether liability be direct or indirect, liquidatedor unliquidated, presently accrued, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted (“Claims”),which Releasor may have or claim to have against any of Lender Group. (b) Releasor agrees not to sue any of Lender Group or in any way assist any other Person in suing Lender Group with respect to anyClaim released herein. The Release Provision may be pleaded as a full and complete defense to, and may be used as the basis for an injunctionagainst, any action, suit, or other proceeding which may be instituted, prosecuted, or attempted in breach of the release contained herein. (c) Releasor acknowledges, warrants, and represents to Lender Group that: (i) Releasor has read and understands the effect of the Release Provision. Releasor has had the assistance of independentcounsel of its own choice, or has had the opportunity to retain such independent counsel, in reviewing, discussing, and considering allthe terms of the Release Provision; and if counsel was retained, counsel for Releasor has read and considered the Release Provision andadvised Releasor to execute the same. Before execution of this Agreement, Releasor has had adequate opportunity to make whateverinvestigation or inquiry it may deem necessary or desirable in connection with the subject matter of the Release Provision. (ii) Releasor is not acting in reliance on any representation, understanding, or agreement not expressly set forth herein.Releasor acknowledges that Lender Group has not made any representation with respect to the Release Provision except as expressly setforth herein. - 5 -First Amendment to Forbearance to Loan Agreement  (iii) Releasor has executed this Agreement and the Release Provision thereof as its free and voluntary act, without any duress,coercion, or undue influence exerted by or on behalf of any Person. (iv) Releasor is the sole owner of the Claims released by the Release Provision, and Releasor has not heretofore conveyed orassigned any interest in any such Claims to any other Person. (d) Releasor understands that the Release Provision was a material consideration in the agreement of Administrative Agent and theLenders to enter into this Agreement. (e) It is the express intent of Releasor that the release and discharge set forth in the Release Provision be construed as broadly aspossible in favor of Lender Group so as to foreclose forever the assertion by Releasor of any Claims released hereby against Lender Group. (f) If any term, provision, covenant, or condition of the Release Provision is held by a court of competent jurisdiction to be invalid,illegal, or unenforceable, the remainder of the provisions shall remain in full force and effect. 17. INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTIONHEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTSBETWEEN THE PARTIES. (Signature pages follow) - 6 -First Amendment to Forbearance to Loan Agreement  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed. BORROWERS: TOWERSTREAM CORPORATION,a Delaware corporation By:/s/ Ernest Ortega Name:Ernest Ortega Title:CEO TOWERSTREAM I, INC.,a Delaware corporation, By:/s/ Ernest Ortega Name: Ernest Ortega Title: CEO HETNETS TOWER CORPORATION,a Delaware corporation, By: /s/ Ernest Ortega Name:Ernest Ortega Title: CEO S-1Signature Page First Amendment to Forbearance to Loan Agreement  GUARANTORS: OMEGA COMMUNICATIONS CORPORATION,a Delaware corporation By:/s/ Ernest Ortega Name:Ernest Ortega Title:CEO ALPHA COMMUNICATIONS CORPORATION,a Delaware corporation, By:/s/ Ernest Ortega Name: Ernest Ortega Title: CEO TOWERSTREAM HOUSTON, INC,a Texas corporation, By: /s/ Ernest Ortega Name:Ernest Ortega Title: CEO S-2Signature Page First Amendment to Forbearance to Loan Agreement  ADMINISTRATIVE AGENT: MELODY BUSINESS FINANCE, LLC,a Delaware limited liability company By:/s/ Celine Hannett Name:Celine Hannett Title:Authorized Signatory S-3Signature Page First Amendment to Forbearance to Loan Agreement  MAJORITY LENDERS: MELODY CAPITAL PARTNERS OFFSHORE CREDIT MINI-MASTERFUND, LP By: Melody Capital Partners, LPIts Investment Advisor By:/s/ Andres Scaminaci Andres Scaminaci Authorized Signatory MELODY CAPITAL PARTNERS ONSHORE CREDIT FUND, LP By:Melody Capital Partners, LPIts Investment Advisor By:/s/ Andres Scaminaci Andres Scaminaci Authorized Signatory MELODY SPECIAL SITUATIONS OFFSHORE CREDIT MINI-MASTER FUND, LP By: Melody Capital Partners, LPIts Investment Advisor By: /s/ Andres Scaminaci Andres Scaminaci Authorized Signatory S-4Signature Page First Amendment to Forbearance to Loan Agreement Exhibit 21.1 SUBSIDIARIES OF TOWERSTREAM CORPORATION The following is a list of subsidiaries of Towerstream Corporation as of December 31, 2017, omitting some subsidiaries which, considered in theaggregate, would not constitute a significant subsidiary: Subsidiary Jurisdiction of Organization Towerstream I, Inc. Delaware Exhibit 23.1 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT We consent to the incorporation by reference in the Registration Statements of Towerstream Corporation on Forms S-3 [FILE NO. 333-204581, 333-212437, 333-214795] and Forms S-8 [FILE NO. 333-161180, 333-151306, 333-174107, 333-211562] of our report, which includes an explanatoryparagraph as to the Company’s ability to continue as a going concern, dated April 2, 2018, with respect to our audits of the consolidated financialstatements of Towerstream Corporation as of December 31, 2017 and 2016 and for each of the two years in the period ended December 31, 2017, whichreport is included in this Annual Report on Form 10-K of Towerstream Corporation for the year ended December 31, 2017. /s/ Marcum llp Marcum llpNew York, NYApril 2, 2018 Exhibit 31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Ernest Ortega, certify that: (1)I have reviewed this annual report on Form 10-K of Towerstream Corporation for the year ended December 31, 2017; (2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; (3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting. (5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: April 2, 2018 /s/ Ernest Ortega Ernest OrtegaChief Executive Officer(Principal Executive Officer) Exhibit 31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, John Macdonald, certify that: (1)I have reviewed this annual report on Form 10-K of Towerstream Corporation for the year ended December 31, 2017; (2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; (3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; (4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting. (5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: April 2, 2018 /s/ John Macdonald John MacdonaldChief Financial Officer(Principal Financial Officer and Principal AccountingOfficer) Exhibit 32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERPURSUANT TO 18 U.S. C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Towerstream Corporation, (the “Company’’) on Form 10-K for the period ended December 31, 2017 as filed withthe Securities and Exchange Commission on the date hereof (the “Report’’), I, Ernest Ortega, Chief Executive Officer of the Company, certify, pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 2, 2018 /s/ Ernest Ortega Ernest OrtegaChief Executive Officer(Principal Executive Officer) Exhibit 32.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Towerstream Corporation, (the “Company’’) on Form 10-K for the period ended December 31, 2017, as filedwith the Securities and Exchange Commission on the date hereof (the “Report’’), I, John Macdonald, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 2, 2018 /s/ John Macdonald John MacdonaldChief Financial Officer(Principal Financial Officer and PrincipalAccounting Officer) 

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