Sec Form 4 Filing - Smith David E @ CATASYS, INC. - 2016-12-29

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0287 Expires: November 30, 2011 Estimated average burden hours per response... 0.5

1. Name and Address of Reporting Person Smith David E 2. Issuer Name and Ticker or Trading Symbol CATASYS, INC. [ CATS:OTC] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X __ Director X __ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) C/O COAST ASSET MANAGEMENT, LLC, 11150 SANTA MONICA BOULEVARD, SUITE 1400 3. Date of Earliest Transaction (MM/DD/YY) 12/29/2016 (Street) LOS ANGELES, CA90025 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) __ X __ Form filed by One Reporting Person _____ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Warrant $ 0.85 12/29/2016 J( 1 ) 264,706 12/29/2016 12/29/2021 Common Stock 264,706 ( 1 ) 264,706 I Through Shamus, LLC Convertible Debenture $ 0.85 12/29/2016 J( 2 ) 352,942 12/29/2016 03/31/2017 Common Stock 352,942 ( 2 ) 352,942 I Through Shamus, LLC

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other Smith David E C/O COAST ASSET MANAGEMENT, LLC 11150 SANTA MONICA BOULEVARD, SUITE 1400 LOS ANGELES, CA90025 X X Signatures /s/ David Smith 01/04/2017 Signature of Reporting Person Date

Explanation of Responses:

( 1 )On December 29, 2016, Catasys, Inc. ("Catasys") issued to Shamus, LLC ("Shamus") a warrant exercisable for 264,706 shares of Catasys common stock at the exercise price of $0.85 per share (the "Warrant"), subject to potential future adjustment pursuant to the provisions of the Warrant. The Warrant was issued to Shamus concurrently and in connection with a debt financing from Shamus to Catasys pursuant to an 8% Series B convertible debenture dated as of December 29, 2016 (the "Debenture"). ( 2 )On December 29, 2016, Catasys issued the Debenture to Shamus. At the option of the holder, the Debenture is convertible into 352,942 shares of Catasys common stock at the conversion price of $0.85 per share, subject to potential future adjustment pursuant to the provisions of the Debenture.

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.