SECURITIES AND EXCHANGE COMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[Mark One}

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 for the quarterly period ended JUNE 30, 2002
                                                             -------------

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 for the transition period from _______ to ________

                         Commission file number: 0-25203
                                                 -------

                             OMNICOMM SYSTEMS, INC.
                             ----------------------
                 (Name of small business issuer in its charter)

                 Delaware                           11-3349762
         (State of incorporation)             (IRS employer Ident. No.)

          2555 Davie Road, Suite 110-B, Davie, Florida          33317
          --------------------------------------------          ------
               (Address of principal office)                  (Zip Code)

                  Registrant's telephone number: (954) 473-1254

         Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X NO ____

         The number of shares outstanding of each of the issuer's classes of
equity as of June 30, 2002: 8,323,697 common stock $.001 par value, 4,215,224
Series A Preferred stock, $.001 par value, 200,000 Series B Preferred Stock,
$.001 par value, 79,950 Series C Preferred Stock, $.001 par value.

<PAGE>

                             OMNICOMM SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                         JUNE 30,           DECEMBER 31,
                                                                                           2002                 2001
                                                                                       ------------         ------------
                                                                                        (UNAUDITED)
                                                                                        -----------
                                     ASSETS
<S>                                                                                    <C>                  <C>
CURRENT ASSETS
           Cash                                                                        $     60,356         $    142,826
           Accounts receivable                                                               22,673               65,705
           Prepaid expenses                                                                  14,679                2,095
                                                                                       ------------         ------------
           Total current assets                                                              97,708              210,626

PROPERTY AND EQUIPMENT, net                                                                 341,574              421,512

OTHER ASSETS
           Intangible assets, net                                                                -0-              48,452
           Other assets                                                                       5,500                5,500
                                                                                       ------------         ------------

TOTAL ASSETS                                                                           $    444,782         $    686,090
                                                                                       ============         ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
           Accounts payable and accrued expenses                                       $  1,841,510         $  1,026,919
           Notes payable - current                                                          242,963              242,963
           Notes payable related party- current                                              98,322               98,322
           Deferred revenue                                                                  21,641               83,085
                                                                                       ------------         ------------
           Total current liabilities                                                      2,204,436            1,451,289

CONVERTIBLE DEBT                                                                          2,065,000            2,065,000
NOTES PAYABLE, net of current portion                                                       242,963              242,963
NOTES PAYABLE RELATED PARTY, net of current portion                                          98,322               98,322
                                                                                       ------------         ------------
TOTAL LIABILITIES                                                                         4,610,721            3,857,574
                                                                                       ------------         ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
           Undesignated  preferred  stock - $.001 par  value. 4,022,500 shares                   -0-                  -0-
           authorized, no shares issued and outstanding

           8% Series B convertible  preferred stock, - $.001 par value. 230,000                 200                  200
           shares  authorized, 200,000 and 200,000 issued and outstanding,
           respectively; liquidation preference $2,000,000 and $2,000,000,
           respectively

           8% Series C convertible  preferred stock, - $.001 par value. 747,500                  80                   -0-
           shares authorized, 79,950 and -0- issued and outstanding,
           respectively; liquidation preference $799,500 and $-0-, respectively

           5% Series A convertible preferred stock - $0.001 par value,                        4,215                4,215
           5,000,000 shares authorized; 4,215,224 and 4,215,224 issued and
           outstanding, respectively; liquidation preference $4,215,224 and
           $4,215,224, respectively

           Common stock - 20,000,000 shares authorized, 8,323,697 issued and                  8,944                8,944
           outstanding, after deducting 620,951 shares of treasury stock, at
           $.001 par value
           Additional paid in capital - preferred                                         6,072,146            5,519,282
           Additional paid in capital - common                                            8,980,604            8,613,635
           Less:  Treasury stock, cost method, 620,951 and 620,951 - shares,               (293,912)            (293,912)
           respectively
           Accumulated deficit                                                          (18,854,361)         (16,932,609)
           Deferred compensation                                                            (82,715)             (90,099)
           Subscriptions receivable                                                          (1,140)              (1,140)
                                                                                       ------------         ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                     (4,165,939)          (3,171,484)
                                                                                       ------------         ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                   $    444,782         $    686,090
                                                                                       ============         ============
</TABLE>

SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
FINANCIAL STATEMENTS.

                                       1

<PAGE>
                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                              FOR THE SIX MONTHS ENDED                FOR THE THREE MONTHS ENDED
                                                                       JUNE 30,                                JUNE 30,
                                                               2002                2001                2002                2001
                                                           -----------         -----------         -----------         -----------
<S>                                                        <C>                 <C>                 <C>                 <C>
REVENUES                                                   $   225,973         $    57,179         $   121,951         $    16,084
COST OF SALES                                                  202,934              38,198              78,225              21,713
                                                           -----------         -----------         -----------         -----------

GROSS MARGIN                                                    23,039              18,981              43,726              (5,629)

OTHER EXPENSES
Salaries, benefits and related taxes                           876,565             995,097             438,952             431,858
Rent & occupancy expenses                                       78,565              77,986              38,345              36,610
Consulting - medical advisory                                   14,423                 -0-              14,423                 -0-
Consulting - marketing sales                                       582                 -0-                 582                 -0-
Legal and professional fees                                    118,795             100,917              36,869              58,419
Travel                                                          20,260              42,210               5,814                (980)
Telephone and internet                                          40,056              57,256              16,531              22,817
Selling, general and administrative                             53,484              51,874              34,739              25,967
Interest expense, net                                          145,026             753,286              72,982              82,649
Depreciation and amortization                                  128,394             182,933              45,612              95,605
                                                           -----------         -----------         -----------         -----------
Total other expenses                                         1,476,150           2,261,559             704,849             752,945
                                                           -----------         -----------         -----------         -----------

(Loss) before taxes and preferred dividends                 (1,453,111)         (2,242,578)           (661,123)           (758,574)

Income tax expense (benefit)                                       -0-                 -0-                 -0-                 -0-
                                                           -----------         -----------         -----------         -----------

Net income (loss)                                           (1,453,111)         (2,242,578)           (661,123)           (758,574)
Preferred stock  dividends,  including deemed dividends
of $366,804  and  $263,805 for the six and three months
ended  June 30, 2002,  and  dividends  in  arrears of
$79,342 and $39,890 on the Series B  Preferred  Stock
for the six and three  months  ended June 30,  2002 and
$12,094 and $10,063 on the Series C  Preferred  Stock
for the six and three months ended June 30, 2002              (560,078)           (102,059)           (364,960)            (51,200)
                                                           -----------         -----------         -----------         -----------

Net income (loss) attributable to common stockholders      $(2,013,189)        $(2,344,637)        $(1,026,083)        $  (809,774)
                                                           ===========         ===========         ===========         ===========

Net (loss) per share                                       $     (0.24)        $     (0.30)        $     (0.12)        $     (0.10)
                                                           ===========         ===========         ===========         ===========
Weighted average number of shares outstanding                8,323,697           7,739,214           8,323,697           7,883,732
                                                           ===========         ===========         ===========         ===========
</TABLE>



SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES
TO FINANCIAL STATEMENTS


                                       2
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                               FOR THE SIX MONTHS ENDED
                                                                                                      JUNE 30,
                                                                                                2002               2001
                                                                                            -----------         -----------
<S>                                                                                         <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                                      $(1,453,111)        $(2,242,578)
     Adjustment  to reconcile net income to net cash provided by (used in) operating
     activities:
     Depreciation and amortization                                                              128,394             182,933
     Common stock issued for services                                                               -0-              97,858
     Interest expense from beneficial conversion feature on 12% convertible note                    -0-             508,835
     Amortization of deferred compensation                                                        7,384               1,981
     Interest expense on detachable warrants                                                        165             108,773
     Change in assets and liabilities:
     Accounts receivable                                                                         43,032             (18,324)
     Prepaid expenses                                                                           (12,584)             (2,458)
     Intangible assets                                                                              -0-             (66,750)
     Accounts payable and accrued expenses                                                      712,750             135,465
     Deferred revenue                                                                           (61,444)              3,613
                                                                                            -----------         -----------
Net cash provided by (used in) operating activities                                            (635,414)         (1,290,652)

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                                                             -0-             (21,508)
                                                                                            -----------         -----------
Net cash provided by (used in) operating activities                                                 -0-             (21,508)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from convertible notes, net of issuance costs                                          -0-             794,900
Payments on notes payable                                                                        (3,841)            (16,000)
Proceeds from notes payable                                                                       3,841             430,000
Proceeds from issuance of common stock                                                              -0-               4,200
Issuance of Series C convertible preferred stock, net of issuance costs                         552,944                 -0-
Proceeds from stock option exercise                                                                 -0-              16,000
                                                                                            -----------         -----------
Net cash provided by (used in) financing activities                                             552,944           1,229,100
                                                                                            -----------         -----------

Net increase (decrease) in cash and cash equivalents                                            (82,470)            (83,060)
Cash and cash equivalents at beginning of period                                                142,826              90,958
                                                                                            -----------         -----------
Cash and cash equivalents at end of period                                                  $    60,356         $     7,898
                                                                                            ===========         ===========
</TABLE>


                                       3
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                               FOR THE SIX MONTHS ENDED
                                                                                       JUNE 30,
                                                                                2002             2001
                                                                              --------        --------
<S>                                                                           <C>             <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:

Income tax paid                                                               $    -0-        $    -0-
                                                                              ========        ========
Interest paid                                                                 $ 22,560        $ 23,657
                                                                              ========        ========

NON-CASH TRANSACTIONS
Conversion of convertible notes payable into shares of common stock           $    -0-        $ 37,500
Common stock issued in exchange for notes payable and accrued interest        $    -0-        $112,329
Conversion of notes payable into 12% convertible notes                        $    -0-        $760,000
Shares issued as collateral for a note payable                                $    -0-        $ 75,000
Conversion of Series A preferred stock into shares of common stock            $    -0-        $ 45,000
</TABLE>



SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES
TO FINANCIAL STATEMENTS


                                       4
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

NOTE 1:           ORGANIZATION AND NATURE OF OPERATIONS
                  -------------------------------------

                  OmniComm Systems, Inc. is an Internet-based healthcare
                  technology company that provides Web-based electronic data
                  capture ("EDC") solutions and related value-added services to
                  pharmaceutical and biotech companies, clinical research
                  organizations, and other clinical trial sponsors. Our
                  Internet-based TrialMaster(R) software allows clinical trial
                  sponsors and investigative sites to securely collect,
                  validate, transmit, and analyze clinical study data.

NOTE 2:           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                  ------------------------------------------
                  BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
                  -----------------------------------------------------

                  The Company's accounts include those of its two wholly owned
                  subsidiaries, OmniCommerce and OmniTrial B.V and have been
                  prepared in conformity with (i) generally accepted accounting
                  principles; and (ii) the rules and regulations of the United
                  States Securities and Exchange Commission. All significant
                  intercompany accounts and transactions between the Company and
                  its subsidiaries have been eliminated in consolidation.

                  ESTIMATES IN FINANCIAL STATEMENTS
                  ---------------------------------

                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the amounts
                  reported in the financial statements and footnotes thereto.
                  Actual results may differ from those estimates.

                  RECLASSIFICATIONS
                  -----------------

                  Certain reclassifications have been made in the 2001 financial
                  statements to conform to the 2002 presentation. These
                  reclassifications did not have any effect on net income (loss)
                  or shareholders' equity.

                  SEGMENT INFORMATION
                  -------------------

                  The Company operates in one reportable segment.

                  CASH AND CASH EQUIVALENTS
                  -------------------------

                  Cash equivalents consist of highly liquid, short-term
                  investments with maturities of 90 days or less. The carrying
                  amount reported in the accompanying balance sheets
                  approximates fair value.

                  ACCOUNTS RECEIVABLE
                  -------------------

                  Accounts receivable are judged as to collectibility by
                  management and an allowance for bad debts is established as
                  necessary. As of each balance sheet date, no reserve was
                  considered necessary.

                  CONCENTRATION OF CREDIT RISK
                  ----------------------------

                  Accounts receivable subject the Company to its highest
                  potential concentration of credit risk. The Company reserves
                  for credit losses. The Company does not require collateral on
                  trade accounts receivables.

                  PROPERTY AND EQUIPMENT
                  ----------------------

                  Property and equipment are recorded at cost. Additions and
                  betterments are capitalized; maintenance and repairs are
                  expensed as incurred. Depreciation is calculated using the
                  straight-line method over the asset's estimated useful life,
                  which is 5 years for leasehold improvements, equipment and
                  furniture and 3 years for software. Gains or losses on
                  disposal are charged to operations.


                                       5
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  INTANGIBLE AND OTHER ASSETS
                  ---------------------------

                  Intangible assets are amortized on a straight-line basis over
                  periods ranging from one to five years. The Company
                  continually reviews the recoverability of the carrying value
                  of these assets using the methodology prescribed in SFAS 121.
                  The Company also reviews long-lived assets and the related
                  intangible assets for impairment whenever events or changes in
                  circumstances indicate the carrying amounts of such assets may
                  not be recoverable. If it is determined the carrying amount of
                  the assets is permanently impaired then intangible assets are
                  written down to fair value and the useful life of the asset
                  may be changed prospectively. Fair value is determined based
                  on discounted cash flows, appraised values or management's
                  estimates, depending upon the nature of the assets. As of June
                  30, 2002, management believes no revision to the remaining
                  useful lives or write-down of intangible assets is required.

                  DEFERRED REVENUE
                  ----------------

                  Deferred revenue represents cash advances received in excess
                  of revenue earned on on-going contracts. Payment terms vary
                  with each contract but may include an initial payment at the
                  time the contract is executed, with future payments dependent
                  upon the completion of certain contract phases or targeted
                  milestones. In the event of contract cancellation, the Company
                  is entitled to payment for all work performed through the
                  point of cancellation. The Company had $21,641 in deferred
                  revenues relating to contracts for services to be performed
                  over the next six to nine months.

                  REVENUE RECOGNITION POLICY
                  --------------------------

                  OmniComm's revenue model is transaction-based and can be
                  implemented either as an ASP (application service provider) or
                  licensed for implementation by a customer such as a
                  pharmaceutical company. Revenues are derived from the set-up
                  of clinical trial engagements; on-going maintenance fees
                  incurred throughout the duration of an engagement; fees for
                  report writing and change orders. The clinical trials that are
                  conducted using TrialMaster can last from 4 months to several
                  years. Most of the fees associated with our product including
                  post-setup customer support in the form of maintenance charges
                  are recognized ratably over the term of the clinical trial.
                  Cost of sales is primarily comprised of programmer salaries
                  and taxes and is expensed as incurred.

                  The Company recognizes sales, for both financial statement and
                  tax purposes in accordance with SEC Staff Accounting Bulletin
                  No. 101 "Revenue Recognition in Financial Statements (SAB
                  101)". SAB 101 requires that revenues be recognized ratably
                  over the life of a contract. In accordance with SAB 101 the
                  Company will periodically record deferred revenues relating to
                  advance payments in contracts. The Company had $21,641 in
                  deferred revenue relating to contracts for services to be
                  performed over the next six to nine months.

                  ADVERTISING
                  -----------

                  Advertising costs are expenses as incurred. Advertising costs
                  were $4,050 and $1,600 for the periods ended June 30, 2002 and
                  2001, respectively.

                  RESEARCH AND DEVELOPMENT EXPENSES
                  ---------------------------------

                  Software development costs are included in research and
                  development and are expensed as incurred. Statement of
                  Financial Accounting Standards No. 86 ("SFAS 86") requires the
                  capitalization of certain development costs of software to be
                  sold once technological feasibility is established, which the
                  Company defines as completion to the point of marketability.
                  The capitalized cost is then amortized on a straight-line
                  basis over the estimated product life. To date, the period
                  between achieving technological feasibility and the general
                  availability of such software has been short and software
                  development costs qualifying for capitalization have been
                  immaterial. Accordingly, the Company has not capitalized any
                  software development costs under SFAS 86. Research and
                  development expense was approximately $237,987 in 2002 and
                  $209,803 in 2001 for the six months ended June 30.


                                       6
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  STOCK OPTIONS
                  -------------

                  The Company uses the intrinsic-value method of accounting for
                  stock-based awards granted to employees and, accordingly, does
                  not recognize compensation expense for its stock-based awards
                  to employees in the Consolidated Statements of Income. See
                  Note 15 for pro forma information on the impact of the
                  fair-value method of accounting for stock options.

                  STOCK BASED COMPENSATION
                  ------------------------

                  Stock-based compensation is recognized using the intrinsic
                  value method in accordance with the provisions of Accounting
                  Principles Board Opinion No. 25, "Accounting for Stock Issued
                  to Employees". For disclosure purposes, pro forma net loss and
                  loss per common share are provided in accordance with
                  Statement of Financial Accounting Standards No. 123,
                  "Accounting for Stock Based Compensation", as if the fair
                  value method had been applied.

                  EARNINGS PER SHARE
                  ------------------

                  The Financial Accounting Standards Board issued Statement of
                  Financial Accounting Standards ("SFAS") No. 128, "Earnings per
                  Share." SFAS 128 replaced the previously reported primary and
                  fully diluted earnings per share with basic and diluted
                  earnings per share. Unlike primary earnings per share, basic
                  earnings per share excludes any dilutive effects of options,
                  warrants, and convertible securities. The diluted earnings per
                  share calculation is very similar to the previously fully
                  diluted earnings per share calculation method.

                  Basic earnings per share were calculated using the weighted
                  average number of shares outstanding of 8,323,697 and
                  7,739,214 for the six months ended June 30, 2002 and 2001 and
                  8,323,697 and 7,883,732 for the three months ended June 30,
                  2002 and 2001, respectively. There were no differences between
                  basic and diluted earnings per share. Options to purchase
                  2,367,041 shares of common stock at prices ranging from $.25
                  to $5.50 per share were outstanding at June 30, 2002. Stock
                  warrants to purchase 13,194,428 shares of common stock at
                  prices ranging from $0.25 to $10.00 per share were outstanding
                  at June 30, 2002. The Company granted a Unit Purchase Option
                  ("Agent Option") to the Placement Agent of its Series B
                  Convertible Preferred Stock that provides the Placement Agent
                  the ability to purchase 27,000 Series B Preferred Shares with
                  1,080,000 detachable common stock warrants. The exercise of
                  the Agent Option would result in the issuance of an aggregate
                  of 2,160,000 shares of common stock at an exercise price of
                  $0.25 per share. The options, warrants and Agent Options were
                  not included in the computation of diluted earnings per share
                  because they have an anti-dilutive effect on net loss per
                  share. The Company's convertible debt and convertible
                  preferred stock have an anti-dilutive effect on net loss per
                  share.

                  INCOME TAXES
                  ------------

                  The Company accounts for income taxes in accordance with
                  Statement of Financial Accounting Standards No. 109,
                  "Accounting for Income Taxes." SFAS 109 has as its basic
                  objective the recognition of current and deferred income tax
                  assets and liabilities based upon all events that have been
                  recognized in the financial statements as measured by the
                  provisions of the enacted tax laws.

                  Valuation allowances are established when necessary to reduce
                  deferred tax assets to the estimated amount to be realized.
                  Income tax expense represents the tax payable for the current
                  period and the change during the period in the deferred tax
                  assets and liabilities.


                                       7
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  IMPACT OF NEW ACCOUNTING STANDARDS
                  ----------------------------------

                  In July 2001, the Financial Accounting Standards Board issued
                  Statement of Financial Accounting Standards No. 141
                  "Accounting for Derivative Instruments and Hedging Activities"
                  ("SFAS 141"), and Statement of Financial Accounting Standards
                  No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
                  They also issued Statement of Financial Accounting Standards
                  No. 143, "Accounting for Obligations Associated with the
                  Retirement of Long Lived Assets" ("SFAS 143"), and Statement
                  of Financial Accounting Standards No. 144, "Accounting for the
                  Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), in
                  August and October 2001, respectively.

                  SFAS 141 requires all business combinations initiated after
                  June 30, 2001 be accounted for under the purchase method. SFAS
                  141 supersedes APB Opinion No. 16, "Business Combination's",
                  and Statement of Financial Accounting Standards No. 38,
                  "Accounting for Preacquisition Contingencies" of purchased
                  Enterprises, and is effective for all business combinations
                  initiated after June 30, 2001.

                  SFAS 142 addresses the financial accounting and reporting for
                  acquired goodwill and other intangible assets. Under the new
                  rules, the Company is no longer required to amortize goodwill
                  and other intangible assets with indefinite lives, but will be
                  subject to periodic testing for impairment. SFAS 142
                  supercedes APB Opinion No. 17, "Intangible Assets". The
                  Company expects that SFAS 142 will not have a material impact
                  on its consolidated results of operations and financial
                  position upon adoption. The Company adopted SFAS 142 on
                  January 1, 2002.

                  SFAS 143 establishes accounting standards for the recognition
                  and measurement of an asset retirement obligation and its
                  associated asset retirement cost. It also provides accounting
                  guidance for legal obligations associated with the retirement
                  of tangible long-lived assets. SFAS 143 is effective in fiscal
                  years beginning after June 15, 2002, with early adoption
                  permitted. The Company expects that the provisions of SFAS 143
                  will not have a material impact on its consolidated results of
                  operations and financial position upon adoption. The Company
                  adopted SFAS 143 effective January 1, 2002.

                  SFAS 144 establishes a single accounting model for the
                  impairment or disposal of long-lived assets, including
                  discontinued operations. SFAS 144, supersedes Statement of
                  Financial Accounting Standards No. 121, "Accounting for
                  Impairment of Long-Lived Assets and for Long-Lived Assets to
                  be Disposed Of" ("SFAS 121"), and APB Opinion No. 30,
                  "Reporting the Results of Operations - Reporting the Effects
                  of Disposal of a Segment of a Business, and Extraordinary,
                  Unusual and Infrequently Occurring Events and Transactions".
                  The provisions of SFAS 144 are effective in fiscal years
                  beginning after December 15, 2001, with early adoption
                  permitted, and in general are to be applied prospectively. The
                  Company adopted SFAS 144 effective January 1, 2002 and does
                  not expect that the adoption will have a material impact on
                  its consolidated results of operations and financial position.

NOTE 3:           RESTATEMENT
                  -----------

                  Management determined that warrants issued during 2001 by the
                  Company should have been valued in accordance with Statement
                  of Financial Accounting Standards No. 123 "Accounting for
                  Stock Compensation" ("SFAS 123"). SFAS 123 requires businesses
                  to value stock based compensation utilizing a fair value
                  approach. Upon review, management determined that the
                  Black-Scholes option pricing model should have been used to
                  estimate the respective fair value of warrants that had been
                  issued in connection with certain bridge loans the Company
                  entered into in 2001.

                  As a result, the financial statements of OmniComm Systems as
                  of June 30, 2001 and for the period then ended have been
                  restated to reflect the utilization of the Black-Scholes
                  pricing model where applicable. The effect of the restatement
                  was to increase additional paid in capital by $670,610,
                  increase deferred compensation by 51,021 and increase
                  accumulated deficit by $619,589 resulting in no change to the
                  total stockholders' equity as of June 30, 2001; and to
                  increase the net loss attributable to common stockholders by
                  $619,589, a non-cash charge, for the six months ended June 30,
                  2001.


                                       8
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  The Company issued $1,550,000 in 12% Convertible Notes during
                  the first six months of 2001. A portion of the notes were
                  issued at prices below market value. EITF 98-5, "Accounting
                  for Convertible Securities with Beneficial Conversion Features
                  or Contingently Adjustable Conversion Ratios", requires the
                  recording of interest expense on convertible debt that is
                  issued with an embedded beneficial conversion feature, or in
                  the money, at the date the investor is committed to purchase
                  the convertible securities. The Company valued the 12%
                  Convertible Notes Payable utilizing the intrinsic value method
                  and recorded $508,835 in interest expense with a corresponding
                  credit to additional paid-in capital.

                  During 2001 we issued 176,700 detachable common stock warrants
                  as additional compensation in connection with short-term
                  bridge loans that were used for working capital purposes. We
                  valued the warrants utilizing the Black-Scholes model and
                  recorded $108,773 as interest expense.

                  A summary of the effects of the restatement is as follows;
<TABLE>
<CAPTION>

AT JUNE 30, 2001                               AS PREVIOUSLY REPORTED    AS RESTATED
----------------                               ----------------------    ------------
<S>                                                 <C>                  <C>
Series A preferred stock                            $      4,215         $      4,215
Common stock                                               8,510                8,510
Additional paid in capital - common                    3,645,562            4,316,172
Additional paid in capital - preferred                 3,807,964            3,807,964
Accumulated deficit                                  (10,652,743)         (11,272,332)
Treasury stock                                          (293,912)            (293,912)
Deferred compensation                                        -0-              (51,021)
Subscriptions receivable                                  (1,140)              (1,140)
                                                    ------------         ------------

Stockholders' equity                                $ (3,481,544)        $ (3,481,544)
                                                    ============         ============

FOR THE SIX MONTHS ENDED JUNE 30, 2001         AS PREVIOUSLY REPORTED    AS RESTATED
--------------------------------------         ----------------------    ------------
Salaries, benefits and related taxes                $    993,116         $    995,097
Interest expense                                         135,678              753,286
Net loss                                              (1,622,989)          (2,242,578)
Net loss attributable to common stockholders          (1,725,048)          (2,344,637)

Basic and diluted net loss per common share         $      (0.22)        $      (0.30)


FOR THE THREE MONTHS ENDED JUNE 30, 2001       AS PREVIOUSLY REPORTED    AS RESTATED
----------------------------------------       ----------------------    ------------
Salaries, benefits and related taxes                $    431,264         $    431,858
Interest expense                                          79,176               82,649
Net loss                                                (754,507)            (758,574)
Net loss attributable to common stockholders            (805,707)            (809,774)

Basic and diluted net loss per common share         $      (0.10)        $      (0.10)
</TABLE>

NOTE 4:           OPERATIONS AND LIQUIDITY
                  ------------------------

                  We have experienced negative cash flow from operations since
                  1999 and have funded our activities to date primarily from
                  debt and equity financings. We will continue to require
                  substantial funds to continue our research and development
                  activities and to market, sell and commercialize our
                  technology. We will need to raise substantial additional
                  capital to fund our future operations. Our capital
                  requirements will depend on many factors, including the
                  problems, delays, expenses and complications frequently
                  encountered by companies developing and commercializing new
                  technologies; the progress of our research and development
                  activities; the rate of technological advances; determinations
                  as to the commercial potential of our technology under
                  development; the status of competitive technology; the
                  establishment of collaborative relationships; the success of
                  our


                                       9
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  sales and marketing programs; and other changes in economic,
                  regulatory or competitive conditions in our planned business.
                  Estimates about the adequacy of funding for our activities are
                  based upon certain assumptions, including assumptions that the
                  research and development programs relating to our technology
                  can be conducted at projected costs and that progress towards
                  the commercialization of our technology will be timely and
                  successful. There can be no assurance that changes in our
                  research and development plans, acquisitions or other events
                  will not result in accelerated or unexpected expenditures.

                  To satisfy our capital requirements, we will seek additional
                  financing through debt and equity financings. There can be no
                  assurance that any such fundings will be available to us on
                  favorable terms or at all. If adequate funds are not available
                  when needed, we may be required to delay, scale back or
                  eliminate some or all of our research and product development
                  and marketing programs. If we are successful in obtaining
                  additional financings, the terms of such financings may have
                  the effect of diluting or adversely affecting the holdings or
                  the rights of the holders of our common and preferred stock.

                  The ability of the Company to continue in existence is
                  dependent on its having sufficient financial resources to
                  bring products and services to market for marketplace
                  acceptance. As a result of its significant losses, negative
                  cash flows from operations, and accumulated deficits for the
                  periods ending June 30, 2002, there is doubt about the
                  Company's ability to continue as a going concern.

NOTE 5:           INTANGIBLE ASSETS AND GOODWILL
                  ------------------------------

                  Included in Intangible Assets are the following assets:
<TABLE>
<CAPTION>
                                                                               JUNE 30, 2002
                                                                                                  ACCUMULATED
                                                                   COST                           AMORTIZATION
                                                                   ----                           ------------
<S>                                                              <C>                                <C>
                 Covenant not to compete                         $120,000                           $120,000
                 Software development costs                        87,500                             87,500
                 Organization costs                                   539                                539
                 Debt acquisition costs                           301,888                            301,888
                                                                 --------                           --------
                                                                 $509,927                           $509,927
                                                                 ========                           ========
<CAPTION>

                                                                            DECEMBER 31, 2001
                                                                                                  ACCUMULATED
                                                                   COST                           AMORTIZATION
                                                                   ----                           ------------
<S>                                                              <C>                                <C>
                 Covenant not to compete                         $120,000                           $120,000
                 Software development costs                        87,500                             87,500
                 Organization costs                                   539                                539
                 Debt acquisition costs                           301,888                            253,436
                                                                 --------                           --------
                                                                 $509,927                           $461,475
                                                                 ========                           ========
</TABLE>

                  The covenant not to compete and the software development costs
                  were acquired as a result of the acquisition of Education
                  Navigator, Inc. (EdNav) on June 26, 1998. The covenant was for
                  a two-year period and was being amortized ratably over that
                  time. The software development costs were capitalized and were
                  amortized ratably over a three-year period, as that was the
                  expected life of the various products.

                  During the year ended December 31, 2001, the Company issued
                  Convertible Notes with gross proceeds totaling $1,615,000. The
                  Company recorded total debt acquisition fees of $218,440 of
                  which $70,250 were to be paid in cash and $148,190 were deemed
                  additional compensation derived from 323,000 stock warrants
                  issued to the placement agent as additional compensation. The
                  debt acquisition costs were amortized ratably over the term of
                  the notes. Amortization expense of the debt acquisition costs
                  totaled $48,552 for the six months ended June 30, 2002.
                  Approximately $2,890 of the debt acquisition costs were
                  reclassified as stock issuance costs in connection with the
                  conversion of $12,500 (original cost) of the convertible notes
                  into common stock of the Company during 2001.


                                       10
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)


NOTE 6:           PROPERTY AND EQUIPMENT, AT COST
                  -------------------------------

                  Property and equipment consists of the following:
<TABLE>
<CAPTION>

                                            JUNE 30, 2002                DECEMBER 31, 2001
                                                      ACCUMULATED                     ACCUMULATED       ESTIMATED
                                         COST         DEPRECIATION       COST         DEPRECIATION     USEFUL LIVES
                                       --------       ------------     --------       ------------     ------------
<S>                                    <C>              <C>            <C>              <C>
                 Computer and          $420,298         $211,386       $420,298         $169,408
                 office equipment                                                                      5 years
                 Leasehold                3,299            1,062          3,299              732
                 improvements                                                                          5 years
                 Computer software      260,287          150,745        260,287          117,349       3 years
                 Office furniture        42,350           21,466         42,350           17,231       5 years
                                       --------         --------       --------         --------
                                       $726,234         $384,660       $726,234         $304,720
                                       ========         ========       ========         ========
</TABLE>

                  Depreciation expense for the periods ended June 30, 2002 and
                  2001 was $79,940 and $69,693 respectively.

NOTE 7:           ACCOUNTS PAYABLE AND ACCRUED EXPENSES
                  -------------------------------------

                  Accounts payable and accrued expenses consist of the following
                  at June 30, 2002 and December 31, 2001:
<TABLE>
<CAPTION>

                                                                               6/30/02       12/31/01
                                                                               -------       --------
<S>                                                                           <C>            <C>
                 Accounts payable                                             $386,628       $155,531
                 Accrued payroll and related costs                             251,075         41,818
                 Other accrued expenses                                        227,034         77,083
                 Accrued interest                                              334,538        212,089
                 Accrued dividends                                             514,716        412,879
                 Accrued expenses of OmniTrial BV                              127,519        127,519
                                                                            ----------     ----------
                      Total accounts payable and accrued expenses           $1,841,510     $1,026,919
                                                                            ==========     ==========
</TABLE>

                  Other accrued expenses consist primarily of placement agent
                  fees and expenses due on private placements of our debt and
                  equity securities that occurred during 2000, 2001 and 2002 and
                  accrued legal fees associated with the sale of Series C
                  Convertible Preferred Stock. Accrued payroll and related costs
                  includes approximately $221,000 in past due payroll taxes
                  accrued during the first and second quarter that the Company
                  has not yet paid, but are considered legal obligations of the
                  Company.

NOTE 8:           EARNINGS PER SHARE
                  ------------------

                  Basic earnings per shares ("EPS") is computed by dividing
                  income available to common shareholders (which for the Company
                  equals its net loss) by the weighted average number of common
                  shares outstanding, and dilutive EPS adds the dilutive effect
                  of stock options and other common stock equivalents.
                  Antidilutive shares aggregating 31,839,617 have been omitted
                  from the calculation of dilutive EPS for the period ended June
                  30, 2002. A reconciliation between numerators and denominators
                  of the basic and diluted earnings per shares is as follows:
<TABLE>
<CAPTION>

                                    SIX MONTHS ENDED JUNE 30, 2002                 SIX MONTHS ENDED JUNE 30, 2001
                                    ------------------------------                 ------------------------------
                               INCOME             SHARES        PER-SHARE     INCOME              SHARES        PER-SHARE
                              NUMERATOR         DENOMINATOR       AMOUNT     NUMERATOR          DENOMINATOR       AMOUNT
                             -----------         ---------        ------    -----------          ---------      ------
<S>                          <C>                 <C>              <C>       <C>                  <C>            <C>
           Basic EPS         $(2,013,189)        8,323,697        $(0.24)   $(2,344,637)         7,739,214      $(0.30)

           Effect of
           Dilutive
           Securities
           None.                     -0-               -0-           -0-            -0-                -0-         -0-
                             -----------         ---------        ------    -----------          ---------      ------
           Diluted EPS       $(2,013,189)        8,323,697        $(0.24)   $(2,344,637)         7,739,214      $(0.30)
                             ===========         =========        ======    ===========          =========      ======
</TABLE>


                                       11
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                   THREE MONTHS ENDED JUNE 30, 2002               THREE MONTHS ENDED JUNE 30, 2001
                                   --------------------------------               --------------------------------
                               INCOME             SHARES        PER-SHARE     INCOME              SHARES        PER-SHARE
                              NUMERATOR         DENOMINATOR       AMOUNT     NUMERATOR          DENOMINATOR       AMOUNT
                             -----------         ---------        ------    -----------          ---------      ------
<S>                          <C>                 <C>              <C>       <C>                  <C>            <C>
           Basic EPS         $(1,026,083)        8,323,697        $(0.12)   $  (809,774)         7,883,732      $(0.10)

           Effect of
           Dilutive
           Securities
           None.                     -0-               -0-           -0-            -0-                -0-         -0-
                             -----------         ---------        ------    -----------          ---------      ------
           Diluted EPS       $(1,026,083)        8,323,697        $(0.12)   $  (809,774)         7,883,732      $(0.10)
                             ===========         =========        ======    ===========          =========      ======
</TABLE>

NOTE 9:           EQUITY INVESTMENTS
                  ------------------

                  EUROPEAN MEDICAL NETWORK (EMN) INVESTMENT, AT COST
                  --------------------------------------------------

                  On March 20, 2000 the Company entered into a stock purchase
                  agreement under which it agreed to purchase a 25% interest in
                  Medical Network AG EMN, a Swiss company ("EMN"). The
                  agreement, set to close on April 20, 2000, provided that the
                  purchase price for 25% of EMN's stock equity was $838,500 to
                  be paid partly in cash and stock. Two cash payments totaling
                  US $645,000 were to be paid in installments as follows:
                  $335,000 on March 20, 2000, upon which EMN would deliver 10%
                  of its stock equity, and $310,000 on April 20, 2000, upon
                  which EMN would deliver the remaining 15% of its stock equity.
                  In addition, the Company was to provide 41,883 shares of
                  restricted common stock to EMN. Pursuant to the terms of the
                  stock purchase agreement, on March 20, 2000, EMN's
                  shareholders entered into an agreement that provided for the
                  Company to have one seat on EMN's board of directors and the
                  right to veto any sale of equity in excess of 49% of the total
                  issued and outstanding equity of EMN.

                  On March 20, 2000, the Company paid EMN $335,000, received 10%
                  of EMN's equity and a seat on EMN's board. On April 20, 2000,
                  the Company did not make the second payment of $310,000 or the
                  stock payment of 41,883 shares to EMN and the stock purchase
                  agreement did not close. On July 11, 2000, the Company and EMN
                  agreed to renegotiate the terms of their agreement subject to
                  the Company's success in finding adequate financing. As part
                  of the renegotiation the Company resigned its seat on EMN's
                  board and offered to sell its 10% interest back to EMN. The
                  Company accounts for its investment in EMN under the cost
                  method of accounting. The Company has established a valuation
                  allowance of $335,000 against its investment in EMN to reflect
                  the uncertainty of the fair market value of the investment as
                  of June 30, 2002 and 2001.

NOTE 10:          NOTES PAYBLE
                  ------------

                  LONG-TERM BORROWINGS
                  --------------------

                  At June 30, 2002, the Company owed $485,926 in long-term notes
                  payable, of which $242,963 was classified as the current
                  portion due of notes payable. These promissory notes were
                  amended and restated on August 31, 2001, in connection with
                  the private placement of the Company's 8% Series B Preferred
                  Stock, with new terms which include an interest rate of 8% per
                  annum, and with one half of the principal payable upon the
                  closing of any financing by the Company resulting in gross
                  proceeds in excess of $2,000,000, and the balance of the
                  principal together with accrued interest payable no later than
                  August 31, 2003.


                                       12
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  RELATED PARTY NOTES PAYABLE
                  ---------------------------

                  At June 30, 2002, the Company owed $196,644 in related party
                  notes payable. These promissory notes were amended and
                  restated on August 31, 2001 with new terms which include an
                  interest rate of 8% per annum, and with one half of the
                  principal payable upon the closing of any financing by the
                  Company resulting in gross proceeds in excess of $2,000,000,
                  and the balance of the principal together with accrued
                  interest payable no later than August 31, 2003.

                  During March 2002, the Company borrowed $2,341 from Randall
                  Smith, the Company's Chairman and Chief Technology Officer.
                  This amount was repaid without interest on April 12, 2002.

                  During April 2002, the Company borrowed $1,500 from Ronald
                  Linares, the Company's Chief Financial Officer. This amount
                  was repaid without interest on May 1, 2002.

NOTE 11:          CONVERTIBLE NOTES
                  -----------------

                  During the first quarter of 1999, the Company issued 10%
                  Convertible Notes Payable in the amount of $862,500 pursuant
                  to a Confidential Private Placement Memorandum. There were
                  costs of $119,625 associated with this offering. The Company
                  also granted the agent the option to purchase 250,000 common
                  shares at $.001 per share. The agent exercised the option. The
                  net proceeds to the Company were $742,875. The notes bear
                  interest at ten percent annually, payable semi-annually. The
                  notes are convertible after maturity, which is five years,
                  into shares of common stock of the Company at $1.25 per share.
                  As of June 30, 2002 approximately $412,500 of the Convertible
                  Notes had been converted into 330,000 shares of common stock
                  of the Company leaving an outstanding balance of $450,000.

                  The Company is currently in default on interest payments owed
                  totaling $11,280 on its 10% Convertible Notes. The terms of
                  the notes provide a payment grace period of thirty days in
                  which to make required semi-annual interest payments. The
                  company was in default effective January 30, 2002.

                  During the first six months of 2001, the Company issued 12%
                  Convertible Notes Payable in the amount of $1,615,000 pursuant
                  to a Confidential Private Placement Memorandum. There were
                  costs of $218,440 associated with the offering of which
                  $148,190 is attributable to warrants issued to the placement
                  agent as additional compensation that were valued using the
                  Black-Scholes method. The net proceeds to the Company were
                  $1,484,750 with the cash compensation costs of $70,250 accrued
                  at June 30, 2002, and $60,000 of accrued expenses due to the
                  placement agent converted as part of the private placement of
                  the 12% Convertible Notes Payable. The notes bear interest at
                  twelve percent annually, payable at maturity. The notes are
                  convertible after maturity, which is January 31, 2002, into
                  shares of common stock of the Company at $0.50 per share. EITF
                  98-5, "Accounting for Convertible Securities with Beneficial
                  Conversion Features or Contingently Adjustable Conversion
                  Ratios", requires Company's to record interest expense on
                  convertible debt that is issued with an embedded beneficial
                  conversion feature, or in the money at the date the investor
                  is committed to purchase the convertible securities. The
                  Company valued the 12% Convertible Notes Payable utilizing the
                  intrinsic value method and recorded $508,835 in interest
                  expense with a corresponding credit to additional paid-in
                  capital.

                  The Company is currently in default in the repayment of
                  principal and interest due on its 12% Convertible Notes. The
                  terms of the notes provides a payment grace period of thirty
                  days in which to make any required monetary payments.
                  Principal of $1,615,000 together with accrued interest of
                  $184,236 was in default effective March 3, 2002. Accrued
                  interest totaled $263,880 on June 30, 2002.


                                       13
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

NOTE 12:          COMMITMENTS AND CONTINGENCIES
                  -----------------------------

                  The Company currently leases office space under operating
                  leases. The minimum future lease payments required under the
                  Company's operating leases at June 30, 2002 are as follows:

                          2002                  $33,450
                          2003                   44,600
                          2004                        0
                          2005                        0
                          2006                        0
                                                -------
                          Total                 $78,050
                                                =======

                  In addition, to annual base rental payments, the Company pays
                  for the operating expenses associated with its leased office
                  space and is responsible for any escalation in operating
                  expenses as determined in the lease. Rental expense was
                  $78,565 and $77,986 for the six months ended June 30, 2002 and
                  2001.

                  CONTINGENT LIABILITIES
                  ----------------------

                  On or about September 6, 2000, the Company's wholly owned
                  subsidiary, OmniTrial B.V. ("OmniTrial") submitted a petition
                  for bankruptcy protection from the bankruptcy court of the
                  Netherlands. The court appointed a liquidating trustee. The
                  Company claimed that certain assets in the possession of
                  OmniTrial were paid for by the Company and therefore should
                  not be part of the liquidating assets of OmniTrial. The
                  bankruptcy trustee rejected that claim and told the Company
                  that as part of the OmniTrial bankruptcy estate the assets
                  would be sold to diminish any deficiency of the estate. On
                  July 5, 2001 the Company signed a settlement agreement
                  providing for the return of the assets to the Company in
                  exchange for a payment of $10,000 that was made on or about
                  July 5, 2001. The Company does not expect to incur any
                  additional liability in this bankruptcy proceeding.

                  In January 2001, a former employee, Eugene A. Gordon, filed a
                  lawsuit in Dade County, Florida alleging breach of his
                  employment contract with us. The plaintiff alleges we owe him
                  more than $100,000 for back payment of salary according to the
                  terms of his employment contract. We dispute Mr. Gordon's
                  allegations and are vigorously defending this lawsuit. As part
                  of its defense, the Company recently filed a counterclaim
                  against Mr. Gordon and a counter-suit against his wife. This
                  matter remains pending.

                  On February 2, 2001, an advertising firm, Wray Ward Laseter
                  filed a lawsuit in the Superior Court of North Carolina
                  against the Company. The plaintiff alleged claims totaling
                  approximately $84,160 against the Company for fees associated
                  with advertising, marketing and public relations services
                  provided between March and September 2000. On or about April
                  27, 2001, the Company and Wray Ward Laseter entered into a
                  settlement agreement which provided that the plaintiff dismiss
                  the lawsuit with prejudice and release its claims against the
                  Company in return for a series of payments totaling $66,000.
                  The Company made all required payments under the settlement
                  agreement. Wray Ward Laseter filed and the Superior Court
                  accepted on November 30, 2001 a Stipulation of Dismissal.

                  On February 16, 2001, a staffing agency, Temp Art, Inc. filed
                  a lawsuit in the County Court in and for Miami-Dade County,
                  Florida. The plaintiff alleged the Company breached its
                  contract and owed approximately $13,126 for back payment of
                  services rendered plus interest and costs. On September 25,
                  2001, the Company and Temp Art entered into a settlement
                  agreement that provided that the plaintiff dismiss the lawsuit
                  with prejudice and release its claims against the Company in
                  return for a payment of $15,700. The Company made the required
                  payment on September 25, 2001 and a Voluntary Dismissal was
                  entered by the County Court on October 5, 2001.

                                       14
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  EMPLOYMENT AGREEMENTS
                  ---------------------

                  During 2001, the Company entered into three-year employment
                  agreements with its Chairman/Chief Technology Officer and
                  Chief Financial Officer with compensation for up to six months
                  if terminated under certain conditions. Under separate stock
                  option agreements entered into concurrently with their
                  employment agreements, the Chairman/Chief Technology Officer
                  and Chief Financial Officer were granted incentive stock
                  options to purchase 210,000 shares of common stock at the
                  market price per share respectively.

                  During June 2002, the Company entered into a one-year
                  employment agreement with its President and Chief Executive
                  Officer. The Company concurrently entered into stock options
                  agreements that provide for 50,000 options to be issued at the
                  time of execution with additional options issued based on the
                  achievement of certain operating parameters that include
                  revenue and operating cash flow performance.

                  FINANCIAL ADVISORY AGREEMENT
                  ----------------------------

                  During March 2002, the Company entered into a one-year
                  financial advisory agreement with Noesis Capital to assist the
                  Company in performing certain financial advisory services
                  including the sale of securities, and the possible sale,
                  merger or other business combination involving the Company.
                  Pursuant to this agreement, the Company is obligated to pay
                  $90,000 in professional fees.

NOTE 13:          RELATED PARTY TRANSACTIONS
                  --------------------------

                  During March 2002, the Company borrowed $2,341 from Randall
                  Smith, the Company's Chairman and Chief Technology Officer.
                  This amount was repaid without interest on April 12, 2002.

                  During April 2002, the Company borrowed $1,500 from Ronald
                  Linares, the Company's Chief Financial Officer. This amount
                  was repaid without interest on May 1, 2002.

                  Cornelis F. Wit, our President and Chief Executive Officer and
                  a member of our Board of Directors, is a consultant to Noesis
                  Capital Corp. and served as President of Corporate Finance of
                  Noesis Capital Corp. from March 1995 to September 2000. Noesis
                  Capital Corp. has served as placement agent for us in three
                  private placements of securities which were closed between
                  June 1999 and January 2001. Guus van Kesteren, a member of our
                  Board of Directors, is a consultant for Noesis Capital Corp.

                  In December 1999, we entered into a consulting agreement with
                  Messrs. van Kesteren and Wit, each of whom is a member of our
                  Board of Directors, providing that we will compensate each of
                  these individuals for sales leads or contacts developed by
                  them in connection with our TrialMaster system. For the
                  periods ended June 30, 2001 and 2002, no compensation was
                  earned by either Mr. van Kesteren or Mr. Wit under this
                  agreement. This agreement was terminated upon mutual agreement
                  of the Company and Messrs. Wit and van Kesteren effective June
                  30, 2002, and a new agreement with identical terms was entered
                  into on the same date with Mr. van Kesteren only.

                  On April 5, 2002, Cornelis F. Wit, President and Chief
                  Executive Officer and a Director of the Company, invested
                  $10,000 in a private placement of our Series C Convertible
                  Preferred Stock. The Series C Convertible Preferred Stock is
                  convertible into shares of the Company's common stock at a
                  conversion price of $0.25 per share and carries a stated
                  dividend rate of 8% per annum.

                  On April 5, 2002, Guus van Kesteren a Director of the Company,
                  invested $10,000 in a private placement of our Series C
                  Convertible Preferred Stock. The Series C Convertible
                  Preferred Stock is convertible into shares of the Company's
                  common stock at a conversion price of $0.25 per share and
                  carries a stated dividend rate of 8% per annum.

                  On January 30 2002, Noesis N.V., one of our stockholders,
                  invested $90,000 in a private placement of our Series C
                  Convertible Preferred Stock. The Series C Convertible
                  Preferred Stock is convertible into shares of the Company's
                  common stock at a conversion price of $0.25 per share and
                  carries a stated dividend rate of 8% per annum.


                                       15
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  From time to time we have borrowed funds from Mr. van
                  Kesteren, including:

                  between July 2000 and December 2000, we borrowed an aggregate
                  of $110,000 from him under two promissory notes, one of which
                  bore interest at a rate of 12% per annum and the other at 5%
                  per annum. These notes were converted into debt issued as part
                  of a private placement of our debt in January 2000. The
                  private placement debt accrues interest at 12% per annum and
                  is convertible into shares of our Common Stock at the holder's
                  option at a rate of $0.50 per share commencing on January 31,
                  2002.

                  between February 2001 and July 2001, we borrowed an aggregate
                  of $190,000 from him under promissory notes which bore
                  interest of 12% per annum. These promissory notes were amended
                  and restated on August 30, 2001 with new terms which included
                  an interest rate of 8% per annum, and with one half of the
                  principal payable upon the closing of any financing by us
                  resulting in gross proceeds in excess of $2,000,000, and the
                  balance of the principal together with accrued interest
                  payable no later than August 30, 2003.

                  in June 2001, we borrowed an aggregate of $25,000 from him
                  under promissory notes which bore interest at a rate of 12%
                  per annum and had a maturity date of December 22, 2001. These
                  notes were converted into the Units sold in our private
                  placement of Series B Convertible Preferred Stock in August
                  2001.

                  in conjunction with these various loans, we have granted Mr.
                  van Kesteren warrants to purchase an aggregate of 70,700
                  shares of our Common Stock at exercise prices ranging from
                  $.30 to $2.25 per share.

                  The Company granted Randall G. Smith, Chairman of the Board
                  and Chief Technology Officer, warrants to purchase 20,000
                  shares of our Common stock at an exercise price of $0.41 per
                  share in connection with a pledge of real property he made in
                  securing a loan made to the Company by Mr. van Kesteren in
                  July 2001, in the amount of $100,000

                  On August 17, 2000, we borrowed $100,000 from Noesis N.V., one
                  of our stockholders. One of our directors, Mr. Wit, at that
                  time, was President of Corporate Finance of Noesis Capital
                  Corp., an affiliate of Noesis N.V., and remains a consultant
                  to the firm. The promissory note bore interest rate at a rate
                  of 8% per annum and had a maturity date of January 1, 2001. At
                  our request, Noesis N.V. agreed to convert this promissory
                  note into debt issued as part of a private placement of our
                  debt in January 2001. The private placement debt accrues
                  interest at 12% per annum and is convertible into shares of
                  our Common Stock at the holder's option at a rate of $0.50 per
                  share commencing on January 31, 2002.

NOTE 14:          POST-RETIREMENT EMPLOYEE BENEFITS
                  ---------------------------------

                  The Company does not have a policy to cover employees for any
                  health care or other welfare benefits that are incurred after
                  employment (post-retirement). Therefore, no provision is
                  required under SFAS's 106 or 112.

NOTE 15:          STOCKHOLDERS' EQUITY (DEFICIT)
                  ------------------------------

                  The authorized capital stock of the Company consists of
                  20,000,000 shares of Common Stock, $.001 par value per share,
                  and 10,000,000 shares of preferred stock, par value $.001 per
                  share, of which 5,000,000 shares have been designated as
                  Series A Convertible Preferred Stock, 230,000 shares have been
                  designated as Series B Convertible Preferred Stock and 747,500
                  shares have been designated as Series C Convertible Preferred
                  Stock.

                  As of June 30, 2002 the Company had the following outstanding
                  securities:

                  |_|   8,323,697 shares of Common Stock issued and outstanding;

                  |_|   14,274,428 warrants issued and outstanding to purchase
                        shares of our common stock;

                  |_|   4,215,224 shares of our 5% Series A Convertible
                        Preferred Stock issued and outstanding, and

                  |_|   200,000 shares of our 8% Series B Convertible Preferred
                        Stock issued and outstanding

                  |_|   79,950 shares of our Series C Convertible Preferred
                        Stock issued and outstanding


                                       16
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  COMMON STOCK
                  ------------

                  Holders of Common Stock are entitled to one vote for each
                  share on all matters submitted to a stockholder vote. Holders
                  of our voting securities do not have cumulative voting rights
                  and holders of a majority of our voting securities voting for
                  the election of directors can elect all of the directors.
                  Holders of Common Stock are entitled to share in all dividends
                  that the board of directors, in its discretion, declares from
                  legally available funds.

                  Holders of Common Stock have no conversion, preemptive or
                  other subscription rights, and there are no redemption
                  provisions for the Common Stock. The rights of the holders of
                  Common Stock are subject to any rights that may be fixed for
                  holders of preferred stock, when and if any preferred stock is
                  outstanding. All outstanding shares of Common Stock are duly
                  authorized, validly issued, fully paid and non-assessable.

                  PREFERRED STOCK
                  ---------------

                  Our Board of Directors, without further stockholder approval,
                  may issue preferred stock in one or more series from time to
                  time and fix or alter the designations, relative rights,
                  priorities, preferences, qualifications, limitations and
                  restrictions of the shares of each series. The rights,
                  preferences, limitations and restrictions of different series
                  of preferred stock may differ with respect to dividend rates,
                  amounts payable on liquidation, voting rights, conversion
                  rights, redemption provisions, sinking fund provisions and
                  other matters. Our Board of Directors may authorize the
                  issuance of preferred stock which ranks senior to our Common
                  Stock for the payment of dividends and the distribution of
                  assets on liquidation. In addition, our Board of Directors can
                  fix limitations and restrictions, if any, upon the payment of
                  dividends on our Common Stock to be effective while any shares
                  of preferred stock are outstanding.

                  5% SERIES A CONVERTIBLE PREFERRED STOCK
                  ---------------------------------------

                  In 1999, our Board of Directors designated 5,000,000 shares of
                  our preferred stock as 5% Series A Convertible Preferred
                  Stock. The 5% Series A Preferred Stock was created pursuant to
                  a Certificate of Designations filed with the Delaware
                  Secretary of State on July 19, 1999. Between June 1999 and
                  January 2000 the Company issued 4,263,500 shares of the 5%
                  Series A Convertible Preferred Stock with net proceeds of
                  $4,018,843.

                  The designations, rights and preferences of the Series A
                  Convertible Preferred Stock include:

                  |_|   the shares are not redeemable,

                  |_|   each share of Series A Convertible Preferred Stock is
                        convertible into shares of our Common Stock at any time
                        at the option of the holder at a conversion price of
                        $1.50 per share. The conversion price will be further
                        adjusted for any stock splits, stock dividends, and
                        corporate reorganizations, and certain other corporate
                        transactions and issuances of securities at below the
                        applicable conversion price per share. The Series A
                        Convertible Preferred Stockholders have waived their
                        rights to an anti-dilution adjustment reducing their
                        conversion price as a result of the issuance of the
                        Series B Convertible Preferred Stock,

                  |_|   the shares of Series A Convertible Preferred Stock
                        currently pay a dividend at a rate of 5.00% per annum,
                        payable semi-annually, on January 1 and July 1 of each
                        year,

                  |_|   in the event of our liquidation or winding up, each
                        share of Series A Convertible Preferred Stock carries a
                        liquidation preference equal to $1.50 per share,

                  |_|   each share of Series A Convertible Preferred Stock has
                        full voting rights, share for share, with the then
                        outstanding Common Stock on the basis of one vote for
                        each share of Common Stock issuable upon the conversion
                        of the Series A Convertible Preferred Stock.

                                       17
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  |_|   the holders of the Series A Convertible Preferred Stock
                        were granted certain demand and piggy-back registration
                        rights covering the shares of our Common Stock issuable
                        upon the conversion of the Series A Convertible
                        Preferred Stock into Common Stock of the Company.

                  |_|   the holders of the 5% Series A Convertible Preferred
                        Stock are entitled to vote two of the five members of
                        the Company's Board of Directors.

                  There were $514,716 and $309,354 of accrued and unpaid
                  dividends on the Series A Convertible Preferred Stock at June
                  30, 2002 and 2001, respectively.

                  SERIES B CONVERTIBLE PREFERRED STOCK
                  ------------------------------------

                  In August 2001, our Board of Directors designated 200,000
                  shares of our preferred stock as Series B Convertible
                  Preferred Stock. The 8% Series B Preferred Stock was created
                  pursuant to a Certificate of Designations filed with the
                  Delaware Secretary of State on August 31, 2001. A Corrected
                  Certificate of Designations was filed on February 7, 2002 with
                  the Delaware Secretary of State increasing the number of
                  shares authorized as Series B Convertible Stock to 230,000.
                  During September 2001 the Company issued 200,000 shares of the
                  8% Series B Convertible Preferred Stock with net proceeds of
                  $1,711,518.

                  The designations, rights and preferences of the Series B
                  Convertible Preferred Stock include:

                  |_|   the stated value of each share is $10.00 per share,

                  |_|   the shares are not redeemable,

                  |_|   each share of Series B Convertible Preferred Stock is
                        convertible into shares of our Common Stock at the
                        option of the holder at any time commencing January 31,
                        2002 at the option of the holder at $0.25 per share, as
                        adjusted, and the shares automatically convert into
                        shares of our Common Stock at $0.25 per share at such
                        time as we complete a public offering raising proceeds
                        in excess of $25 million at an offering price of at
                        least $0.75 per share. We may require all outstanding
                        shares of the Series B Convertible Preferred Stock to
                        convert in the event the closing bid price of our Common
                        Stock exceeds $0.50 for 20 consecutive trading days, and
                        our Common Stock has been listed on The Nasdaq Stock
                        Market or other comparable national stock exchange or
                        the OTC Bulletin Board and a registration statement
                        registering the shares of Common Stock issuable upon
                        conversion of the Series B Convertible Preferred Stock
                        has been declared effective,

                  |_|   The conversion price will be further adjusted for any
                        stock splits, stock dividends, and corporate
                        reorganizations, and certain other corporate
                        transactions and issuances of securities at below the
                        applicable conversion price per share or market value of
                        the Common Stock,

                  |_|   the shares of Series B Convertible Preferred Stock pay a
                        dividend at a rate of 8% per annum, payable when and as
                        declared by the Board of Directors, or upon conversion
                        or liquidation. At our option, dividends can be paid in
                        cash or shares of Common Stock valued at the conversion
                        price of the Series B Preferred Stock. Dividends are
                        cumulative,

                  |_|   each share of Series B Convertible Preferred Stock will
                        rank senior to our Series A Convertible Preferred Stock,

                  |_|   in the event of our liquidation or winding up, each
                        share of Series B Convertible Preferred Stock carries a
                        liquidation preference equal to $10.00 per share plus
                        accrued and unpaid dividends, and


                                       18
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)


                  |_|   the holders of the Series B Convertible Preferred Stock
                        are entitled to vote, together with the holders of our
                        Common Stock, on the basis of one vote for each share of
                        Common Stock issuable upon the conversion of the Series
                        B Convertible Stock,

                  |_|   the holders of the Series B Convertible Preferred Stock
                        were granted certain registration rights covering the
                        shares of our Common Stock issuable upon the conversion
                        of the Series B Convertible Preferred Stock,

                  |_|   the holders of the 8% Series B Convertible Preferred
                        Stock are entitled to vote one of the five members of
                        the Company's Board of Directors.

                  There were arrearages of $130,599 and $-0- on the Series B
                  Convertible Preferred Stock for undeclared dividends as of
                  June 30, 2002 and 2001.

                  SERIES C CONVERTIBLE PREFERRED STOCK
                  ------------------------------------

                  In March 2002, our Board of Directors designated 747,500
                  shares of our preferred stock as Series C Convertible
                  Preferred Stock. The 8% Series C Preferred Stock was created
                  pursuant to a Certificate of Designations filed with the
                  Delaware Secretary of State on March 31, 2002. To date, the
                  Company has issued 79,950 shares of the Series C Convertible
                  Preferred Stock with net proceeds of approximately $552,944.
                  At June 30 2002 the Company was still actively marketing the
                  Series C Preferred Stock Private Placement to accredited
                  investors.

                  The designations, rights and preferences of the Series C
                  Convertible Preferred Stock include:

                  |_|   the stated value of each share is $10.00 per share,

                  |_|   the shares are not redeemable,

                  |_|   each share of Series C Convertible Preferred Stock is
                        convertible at any time, at the option of the holder,
                        into a number of shares of Common Stock determined by
                        dividing the stated value per share of the Series C
                        Convertible Preferred Stock by $0.25, which is the
                        Series C Conversion Price.The Series C Convertible
                        Preferred Stock will automatically convert into shares
                        of our Common Stock upon a public offering of our
                        securities raising gross proceeds in excess of
                        $25,000,000 at a per share price greater than 2.5 times
                        the Series C Conversion Price per share, as adjusted for
                        any stock split, stock dividend, recapitalization, or
                        other similar transaction. In addition, the Series C
                        Convertible Preferred Stock will automatically convert
                        into shares of our Common Stock at the Series C
                        Conversion Price at such time as the closing bid price
                        for our Common Stock has traded at two times the then
                        prevailing Series C Conversion Price for a period of 20
                        consecutive trading days, provided that (i) a public
                        trading market exists for our Common Stock on a national
                        securities exchange, the Nasdaq Stock Market, or the
                        over the counter market; and (ii) the Conversion Shares
                        have been registered for resale and are not subject to
                        any lock-up and the number of shares of the Series C
                        Convertible Preferred Stock which can be converted in
                        any 30-day period will be limited to the number of
                        shares of Common Stock underlying the Series C
                        Convertible Preferred Stock equal to 10 times the
                        average daily trading volume during the 20-day look-back
                        period set forth above,

                  |_|   The conversion price will be further adjusted for any
                        stock splits, stock dividends, and corporate
                        reorganizations, and certain other corporate
                        transactions and issuances of securities at below the
                        applicable conversion price per share or market value of
                        the Common Stock,


                                       19
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  |_|   the shares of Series C Convertible Preferred Stock pay a
                        dividend at a rate of 8% per annum, payable when and as
                        declared by the Board of Directors, or upon conversion
                        or liquidation. At our option, dividends can be paid in
                        cash or shares of Common Stock valued at the conversion
                        price of the Series C Preferred Stock. Dividends are
                        cumulative,

                  |_|   each share of Series C Convertible Preferred Stock will
                        rank pari passu with our Series B Convertible Preferred
                        Stock and senior to our Series A Convertible Preferred
                        Stock,

                  |_|   in the event of our liquidation or winding up, each
                        share of Series C Convertible Preferred Stock carries a
                        liquidation preference equal to $10.00 per share plus
                        accrued and unpaid dividends, and

                  |_|   the holders of the Series C Convertible Preferred Stock
                        are entitled to vote, together with the holders of our
                        Common Stock, on the basis of one vote for each share of
                        Common Stock issuable upon the conversion of the Series
                        C Convertible Stock,

                  |_|   the holders of the Series C Convertible Preferred Stock
                        were granted certain registration rights covering the
                        shares of our Common Stock issuable upon the conversion
                        of the Series C Convertible Preferred Stock,

                  |_|   the holders of the Series C Convertible Preferred
                        Stock are entitled to vote two of the seven members of
                        the Company's Board of Directors.

                  There were arrearages of $12,095 and $-0- on the Series C
                  Convertible Preferred Stock for undeclared dividends as of
                  June 30, 2002 and 2001.

                  WARRANTS
                  --------

                  We have issued and outstanding warrants to purchase a total of
                  13,194,428 shares of our Common Stock, including:

                  |_|   warrants to purchase 2,359,832 shares of our Series A
                        Preferred Stock at an exercise price of $2.00 per share
                        expiring in December 2002 which were issued by us in
                        connection with the offering of the Series A Preferred
                        Stock offering.

                  |_|   warrants to purchase 8,000,000 shares of our Common
                        Stock at an exercise price of $.25 per share expiring
                        September 2006 which were issued by us in connection
                        with the Series B Convertible Preferred Stock offering,
                        which warrants contain a cashless exercise provision.

                  |_|   warrants to purchase 1,235,596 shares of our Common
                        Stock at exercise prices ranging from $.30 to $10.00 per
                        share expiring through July 2006 which were issued by us
                        to various individuals for a variety of reasons
                        including consulting services, advisory services,
                        settlement of a long-term lease obligation, and in
                        connection with the issuance of certain promissory
                        notes.

                  |_|   warrants to purchase 1,599,000 shares of our Common
                        Stock at an exercise price of $.25 per share expiring
                        May 2007 which were issued by us in connection with the
                        Series C Convertible Preferred Stock offering, which
                        warrants contain a cashless exercise provision.

                  PLACEMENT AGENT'S UNIT PURCHASE OPTION
                  --------------------------------------

                  Commonwealth Associates, L.P. acted as our placement agent in
                  connection with the September 2001 private placement of units
                  which included our 8% Series B Convertible Preferred Stock. We
                  issued Commonwealth Associates a seven year option to purchase
                  2.7 units, each unit consisting of 10,000 shares of Series B
                  Convertible Preferred Stock and warrants to purchase 400,000
                  shares of Common Stock, exercisable at $100,000 per unit, as
                  additional compensation.


                                       20
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  ACCOUNTING FOR STOCK BASED COMPENSATION
                  ---------------------------------------

                  The Company has adopted Statement of Financial Accounting
                  Standards No. 123, "Accounting for Stock-Based Compensation",
                  ("SFAS No. 123") and as permitted under SFAS 123 applies
                  Accounting Principles Board Opinion No. 25, "Accounting for
                  Stock Issued to Employees", ("APB 25") and related
                  interpretations in accounting for stock-based compensation
                  plans. If the Company had elected to adopt optional
                  recognition provisions of SFAS 123 for its stock option plans,
                  net loss and net loss per share would have been changed to pro
                  forma amounts indicated below:

(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)                2002            2001
-----------------------------------------                ----            ----
Net loss available to common stockholders
    As reported                                        $(2,013)        $(2,345)
    Pro forma                                          $(2,021)        $(2,567)
Basic and diluted net loss per share
    As reported                                         $(0.24)         $(0.30)
    Pro forma                                           $(0.24)         $(0.33)

                  These pro forma amounts may not be representative of future
                  disclosures since the estimated fair value of stock options is
                  amortized to expense over the vesting period, and additional
                  options may be granted in future years.

                  The estimated fair value of each OmniComm option granted is
                  calculated using the Black-Scholes pricing model. The weighted
                  average assumptions used in the model were as follows:

                                                2002              2001
                                                ----              ----
Risk-free interest rate                        5.00%             5.00%
Expected years until exercise                6 Years           6 Years
Expected stock volatility                    150.0 %            150.0%
Dividend yield                                    0%                0%

                  STOCK OPTION PLAN
                  -----------------

                  In 1998, the Company's Board of Directors approved the
                  OmniComm Systems 1998 Stock Option Plan, (the "1998 Plan").
                  The 1998 Plan provides for granting Incentive Stock Options,
                  Nonqualified Stock Options, Stock Appreciation Rights,
                  Restricted Stock Awards, Phantom Stock Unit Awards and
                  Performance Share Units. Pursuant to the 1998 Plan the Company
                  may grant options to purchase up to 3,000,000 shares of the
                  Company's common stock. The term of each option may not exceed
                  ten years from the date of grant, and options vest in
                  accordance with a vesting schedule established by the Plan
                  administrator.

                  The Company's share option activity and related information is
                  summarized below:
<TABLE>
<CAPTION>
                                               PERIOD ENDED JUNE 30,            YEAR ENDED DECEMBER 31,
                                                      2002                                2001
                                          -----------------------------      ---------------------------------
                                                                WEIGHTED                              WEIGHTED
                                                                AVERAGE                               AVERAGE
                                                                EXERCISE                              EXERCISE
                                            OPTIONS              PRICE         OPTIONS                  PRICE
                                            -------              -----         -------                  -----
<S>                                        <C>                   <C>          <C>                       <C>
Outstanding at beginning of period         3,584,039             $1.33        3,316,006                 $2.28
             Granted                          25,000             $0.35        2,089,500                 $0.48
             Exercised                           -0-             $0.00           20,000                 $0.80
             Cancelled                     1,241,998             $1.38        1,801,467                 $2.09
                                           ---------                          ---------                 -----

Outstanding at end of period               2,367,041             $0.77        3,584,039                 $1.33
                                           =========             =====        =========                 =====
Exercisable at end of period               1,943,703             $1.22        2,636,372                 $1.47
                                           =========             =====        =========                 =====
</TABLE>

                                       21
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

                  The following table summarizes information about stock options
                  outstanding at June 30, 2002:
<TABLE>
<CAPTION>

                                        OUTSTANDING                                       EXERCISABLE
                            ------------------------------------------------------------------------------
                                              WEIGHTED
                                               AVERAGE
                                             REMAINING        WEIGHTED                           WEIGHTED
                                              YEARS OF         AVERAGE                            AVERAGE
RANGE OF                     NUMBER OF     CONTRACTUAL        EXERCISE          NUMBER OF        EXERCISE
EXERCISE PRICES                OPTIONS            LIFE           PRICE            OPTIONS           PRICE
---------------                -------            ----           -----            -------           -----
<S>     <C>                  <C>                  <C>            <C>              <C>               <C>
$0.25 - $0.47                1,041,501            4.72           $0.41            704,831           $0.40
$0.50 - $0.83                  532,334            7.17           $0.55            445,666           $0.55
$1.00 - $2.50                  789,206            3.56           $1.73            789,206           $1.73
$2.61 - $5.50                    4,000            7.09           $2.75              4,000           $2.75
</TABLE>

                  OTHER STOCK BASED COMPENSATION
                  ------------------------------

                  During 2001, the Company issued an aggregate of 126,340 shares
                  of common stock to employees and advisors with a fair market
                  value of $97,858 for services rendered under employment and
                  consulting agreements.

                  During 2001, the Company issued 50,000 warrants to advisors as
                  compensation for services to be rendered over periods ranging
                  from 3 to 5 years. The Company valued the warrants in
                  accordance with SFAS 123 utilizing the Black-Scholes Model.
                  The Company recorded $95,689 in deferred compensation and is
                  amortizing the amounts over the expected life of the
                  consulting services to be rendered. The Company recognized
                  non-cash compensation expense totaling $7,384 during the six
                  months ended June 30, 2002 in connection with the warrant
                  grants.

NOTE 16:          OMNITRIAL, B.V. BANKRUPTCY
                  --------------------------

                  On or about September 6, 2000, the Company's wholly owned
                  subsidiary, OmniTrial B.V. ("OmniTrial") submitted a petition
                  for bankruptcy protection from the bankruptcy court of the
                  Netherlands. The court appointed a liquidating trustee. The
                  Company claimed that certain assets in the possession of
                  OmniTrial were paid for by the Company and therefore should
                  not be part of the liquidating assets of OmniTrial. The
                  bankruptcy trustee rejected that claim and told the Company
                  that as part of the OmniTrial bankruptcy estate the assets
                  would be sold to diminish any deficiency of the estate. On
                  July 5, 2001 the Company signed a settlement agreement
                  providing for the return of the assets to the Company in
                  exchange for a payment of $10,000.

NOTE 17:          INCOME TAXES
                  ------------

                  Income taxes are accrued at statutory US and state income tax
                  rates. Income tax expense is as follows:
<TABLE>
<CAPTION>
                                                                    6/30/02           6/30/01
                                                                    -------           -------
<S>                                                               <C>                 <C>
                 Current tax expense (benefit):
                             Income tax at statutory rates        $     -0-           $     -0-
                                                                  =========           =========
                 Deferred tax expense (benefit):
                             Amortization  of  goodwill  and            -0-             (35,320)
                             covenant
                             Operating loss carryforward           (546,806)           (575,411)
                                                                  ---------           ---------
                                                                   (546,806)           (610,731)
                 Valuation allowance                                546,806             610,731
                                                                  ---------           ---------
                 Total tax expense (benefit)                      $     -0-           $     -0-
                                                                  ========            =========
</TABLE>


                                       22
<PAGE>
                             OMNICOMM SYSTEMS, INC.
             NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)



                  The tax effects of significant temporary differences, which
                  comprise the deferred tax assets are as follows:
<TABLE>
<CAPTION>
                                                                     6/30/02             12/31/01
                                                                     -------             --------
<S>                                                             <C>                   <C>
                 Deferred tax assets:
                 Amortization of intangibles                    $   283,698           $    283,698
                 Operating loss carryforwards                     5,088,372              4,257,868
                                                                -----------           ------------
                             Gross deferred tax assets            5,372,070              4,541,566
                             Valuation allowance                 (5,372,070)            (4,541,566)
                                                                -----------           ------------
                             Net deferred tax asset             $       -0-           $        -0-
                                                                ===========           ============
</TABLE>

                  The Company has net operating loss carryforwards (NOL) for
                  income tax purposes of approximately $11,850,000. This loss is
                  allowed to be offset against future income until the year 2021
                  when the NOL's will expire. Other timing differences relate to
                  depreciation and amortization for the stock acquisition of
                  Education Navigator in 1998. The tax benefits relating to all
                  timing differences have been fully reserved for in the
                  valuation allowance account due to the lack of operating
                  history and the substantial losses incurred through 2002.


                                       23
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
------------------------------------------------------------------

GENERAL

The following information should be read in conjunction with the Consolidated
Interim Financial Statements and Notes thereto and other information set forth
in this report.

FORWARD-LOOKING STATEMENTS
--------------------------

Statements contained in this Form 10-QSB that are not historical fact are
"forward looking statements". These statements can often be identified by the
use of forward-looking terminology such as "estimate", "project", "believe",
"expect", "may", "will", "should", "intends", or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties. We wish to caution the reader
that these forward-looking statements, such as statements relating to timing,
costs and of the acquisition of, or investments in, existing business, the
revenue or profitability levels of such businesses, and other matters contained
in this Form 10-QSB regarding matters that are not historical facts, are only
predictions. No assurance can be given that plans for the future will be
consummated or that the future results indicated, whether expressed or implied,
will be achieved. While sometimes presented with numerical specificity, these
plans and projections and other forward-looking statements are based upon a
variety of assumptions, which we consider reasonable, but which nevertheless may
not be realized. Because of the number and range of the assumptions underlying
our projections and forward-looking statements, many of which are subject to
significant uncertainties and contingencies that are beyond our reasonable
control, some of the assumptions inevitably will not materialize, and
unanticipated events and circumstances may occur subsequent to the date of this
Form 10-QSB. Therefore, our actual experience and results achieved during the
period covered by any particular projections or forward-looking statements may
differ substantially from those projected. Consequently, the inclusion of
projections and other forward- looking statements should not be regarded as a
representation by us or any other person that these plans will be consummated or
that estimates and projections will be realized, and actual results may vary
materially. There can be no assurance that any of these expectations will be
realized or that any of the forward-looking statements contained herein will
prove to be accurate. The Company does not undertake any obligation to update or
revise any forward-looking statement made by it or on its behalf, whether as a
result of new information, future events or otherwise.

OVERVIEW

We are an Internet-based healthcare technology company that provides Web-based
electronic data capture ("EDC") solutions and related value-added services to
pharmaceutical and biotechnology companies, clinical research organizations, and
other clinical trial sponsors. Our Internet-based TrialMaster(R) software allows
clinical trial sponsors and investigative sites to securely collect, validate,
transmit, and analyze clinical study data including patient histories, patient
dosing, adverse events, and other clinical trial information. We phased out the
systems integration segment of our business during 2001. All of our personnel
are involved in the development and marketing of TrialMaster.

THE SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH THE SIX MONTHS ENDED JUNE 30,
2001

RESULTS OF OPERATIONS

REVENUES

Revenues for the period ended June 30, 2002 were $225,973 compared to $57,179
for the same period in 2001. The increase can be attributed to increased success
we have experienced in marketing TrialMaster. In particular, we found the
markets increasingly receptive to utilizing EDC services during the second half
of 2001 and we have continued building upon this momentum both through the
acquisition of new clients and more importantly via repeat engagements with
existing clients. This is consistent with our expectation that the market will
begin adopting EDC services more rapidly as early adopters bring increasing
credibility to the market. We anticipate increasing the personnel dedicated to
sales during the third quarter of 2002 and will begin targeting clinical
research organizations and academic institutions on a more concentrated basis in
an effort to broaden our exposure in the marketplace. While industry growth
estimates vary, most predictions indicate that EDC is anticipated to become



                                       24
<PAGE>

widely accepted. For example, Forrester Research and Frost & Sullivan each
predict annual double-digit growth in the use of EDC technologies between 2001
and 2006. Web-based EDC has been around for approximately four years and between
5% and 10% of all clinical trials are currently conducted using Web-based EDC.
Incremental growth within the industry should continue as competitive pressures
mount in the pharmaceutical industry to replace existing prescription drugs
losing their patent protection. Revenues associated with our Internet-based
clinical trial products were approximately $225,973 and $33,981 for 2002 and
2001 respectively. Systems integration revenues in 2001 were approximately
$23,198 compared to $0 in 2002. We do not expect any systems integration
revenues in 2002.

Our TrialMaster product is currently being sold as an application service
provider ("ASP") that provides EDC and other services such as an enterprise
management suite which assists its clients in the pharmaceutical, biotechnology
and medical device industries in accelerating the completion of clinical trials.

TrialMaster contracts provide for pricing that is based on both the size and
duration of the clinical trial. Size parameters include the number of patients
participating in the trial and the number of data points being collected per
patient. The client will pay a trial setup fee based on the previously mentioned
factors, and then pay an on-going maintenance fee for the duration of the
clinical trial that provides software, network and site support during the
trial. Generally, these contracts will range in duration from four months to
several years. Setup fees are generally earned prior to the inception of a
trial, however, the revenues will be recognized in accordance with SEC Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" which
requires that the revenues be recognized ratably over the life of the contract.
The maintenance fee revenues are earned and recognized monthly. Costs associated
with contract revenues are recognized as incurred.

COST OF GOODS SOLD

Cost of goods sold increased to $202,934 in 2002 compared to $38,198.
Approximately 43% of the expenses incurred in 2001 relate to our systems
integration business and these expenses were eliminated in 2002 as we continued
phasing out that line of our business. Cost of goods sold now relates primarily
to salaries and benefits associated with the programmers, developers and systems
analysts producing clinical trials on behalf of our clients.

We expect to increase development programming labor costs on an absolute basis
as our trial revenues increase. We expect labor costs to decrease on a relative
percentage basis as we increase our trial base and develop economies of scale
with regard to trial production. In addition, we expect that use of TrialMaster
V3.0, the latest release of our trial-building software will exponentially
improve our ability to reduce our trial production related costs.

OTHER EXPENSES

SALARIES, BENEFITS AND RELATED TAXES

Salaries and related expenses are our biggest expense at 57% of total Other
Expenses for the first quarter of 2002. Salaries and related expenses totaled
$876,565 in 2002 compared to $995,097 in 2001. Total salaries increased by
approximately 6% versus 2001 since a portion of total payroll is now accounted
for in cost of goods sold. We currently employ approximately 18 employees out of
our Davie, Florida corporate office. We expect to increase headcount within our
technology and sales and marketing functions in concert with anticipated
increases in TrialMaster clients during the second-half of fiscal 2002.

RENT & OCCUPANCY EXPENSES

Rent expense was $78,565 for fiscal 2002 compared with $77,986 for fiscal 2001.
Although rent expense remained relatively constant, the components of the costs
have changed. Our development office in Tampa was closed in March 2001 and that
function was relocated to the corporate office to provide a more effective
synthesis of workflows between our R & D function and our operations and
marketing departments. During November 2001 our corporate offices were relocated
to the Ft. Lauderdale, Florida area. We believe this market provides a better
environment for technical personnel recruiting. We were also able to reduce our
rent obligations by approximately $3,300 per month. In December 2001, we
established a disaster recovery site at a Bell South Co-Location facility in
Atlanta, Georgia. This is designed to ensure 100% system up-time.


                                       25
<PAGE>

LEGAL AND PROFESSIONAL FEES

Legal and professional fees totaled $118,795 in 2002 compared with $100,917
during fiscal 2001. Key components of the 2002 amounts include $45,000 paid to
our former placement agent for financial advisory services, $42,383 to our
accountants for audit and tax related services, $9,653 in legal expenses related
to various matters and $21,758 that relate to accounting and legal services
associated with our obligations as a public company. We expect on-going legal
and professional fees to fall in-line with what was experienced during 2001.

TRAVEL

We incurred $20,260 in travel expenses during fiscal 2002 compared to $42,210
during 2001. We began reducing travel expenses during mid-2000 as a result of
the on-going working capital difficulties that we have been experiencing. Those
cost-cutting measures continued in 2001 and during the first quarter of 2002. We
expect travel to increase as we experience more success in penetrating the
marketplace with our sales efforts. We expect this increase to be offset by the
increase in accompanying revenues.

TELEPHONE AND INTERNET

Telephone and Internet related costs were reduced by $17,200 due to decreased
telephone and Internet access costs associated with the closing of our office in
Tampa, Florida, and a decrease in overall long-distance charges associated with
the closed facilities. We do not anticipate increases in access charges during
fiscal 2002 based on our own existing communications infrastructure and our
projected 2002 clinical trial workload.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SGA") were $53,484 during the
second quarter of 2002. These expenses relate primarily to costs incurred in
running our office day-to-day and other costs not directly related to other
captioned items in our income statement, and include the cost of office
equipment and supplies, the costs of attending conferences and seminars and
other expenses incurred in the normal course of business. We made a concerted
effort during the second half of 2000 to eliminate or reduce SGA expenses not
crucial to the efficient operation of our company. This effort continued during
2001 and is now culturally ingrained. We do expect to increase the overall
dollar volume spent on SGA as we increase our revenue base and step-up our
overall activity.

INTEREST EXPENSE

Interest expense was $145,026 during 2002 versus $753,286 in fiscal 2001. During
2001 we entered into a private placement of 12% Convertible Notes. We recorded
interest expense of $508,835 in connection with a "beneficial conversion
feature" that was deemed to exist when the conversion price of some of the 12%
Notes was issued at a discount to the prevailing market price of the stock. This
expense is non-cash and we recorded a corresponding increase to our additional
paid-in capital.

During 2001 we issued 176,700 detachable common stock warrants as additional
compensation in connection with short-term bridge loans that were used for
working capital purposes. We valued the warrants utilizing the Black-Scholes
model and recorded $108,773 as interest expense.

PREFERRED STOCK DIVIDENDS

During 2002 we issued 1,599,000 warrants to investors in a private placement of
our Series C Convertible Preferred Stock. The warrants were valued at $366,804
utilizing the Black-Scholes model. The net proceeds received in the Series C
Convertible Preferred Stock Unit offering were allocated to the Series C
Preferred Stock and we recognized a deemed dividend on preferred stock of
$366,804 resulting in a charge to retained earnings and a credit to additional
paid-in capital within our stockholders' equity as of June 30, 2002. Dividends
on our Series A Preferred Stock totaled $101,839 in 2002 compared to $102,059
for the comparable period in 2001. There were arrearages of $79,342 in Series B
Preferred Stock dividends and $12,094 in Series C Preferred Stock dividends at
June 30, 2002 and we therefore deducted $91,436 from Net Income (Loss)
Attributable to Common Stockholders'.


                                       26
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

We changed our primary focus to providing Internet based database applications
to the clinical trial industry in mid-1998. At that time we began phasing out
our systems integration business segment and we effectively completed that
transition during the first half of 2001. Since we made TrialMaster and its
related components our primary business we have experienced negative cash flows
and have relied primarily on the proceeds from the sale of debt and equity
securities to fund our operations. In addition, we have utilized stock-based
compensation as a means of paying for consulting and salary related expenses.

Cash and cash equivalents decreased by $82,470 to $60,356 at June 30, 2002. This
was the result of cash provided by financing activities of $552,944 offset by
cash used in operating activities of approximately $635,414. The significant
components of the activity include a loss from operations of approximately
$1,453,111 offset by non-cash expenses of 135,943, increases in cash of $681,754
from changes in working capital accounts and approximately $552,944 we raised
through the sale of debt and equity securities.

We are not currently bound by any long or short-term agreements for the purchase
or lease of capital expenditures. Any amounts expended for capital expenditures
would be the result of an increase in the capacity needed to adequately service
any increase in our business. To date we have paid for any needed additions to
our capital equipment infrastructure from working capital funds and anticipate
this being the case in the future.

The Company is currently in default on interest payments owed totaling $11,280
on its 10% Convertible Notes. The terms of the notes provides a payment grace
period of thirty days in which to make required semi-annual interest payments.
The company was in default effective January 30, 2002.

The Company is currently in default in the repayment of principal and interest
due on its 12% Convertible Notes. The terms of the notes provides a payment
grace period of thirty days in which to make any required monetary payments.
Principal of $1,615,000 together with accrued interest of $199,103 was in
default effective March 3, 2002. Total accrued interest was $263,880 at June 30,
2002.

The Company has incurred approximately $221,000 in payroll taxes during the
first and second quarters of fiscal 2002 that had not been paid as of June 30,
2002. Those payroll taxes became legal responsibilities when incurred and will
be required to be paid during the third quarter of 2002.

On March 28, 2002 our Placement Agent, Noesis Capital, began the distribution of
a Confidential Private Placement Memorandum for the sale to accredited investors
of our Series C Convertible Preferred Stock. Gross proceeds to date have totaled
$799,500 and we have accrued $246,556 in transaction related fees leaving net
proceeds of approximately $552,944. In September 2001 we completed a private
placement of our Series B Preferred Stock that resulted in $2,000,000 in gross
proceeds.

Because of the losses experienced since 1999 we have needed to continue
utilizing the proceeds from the sale of debt and equity securities to fund our
working capital needs. The capital markets since mid-2000 have provided a
difficult climate for the raising of capital because of the decline in value of
publicly held technology stocks and the corresponding apprehension on the part
of investors to invest in technology oriented firms. In addition, when
available, capital has been expensive relative to the valuations that were
afforded during the expansion of the Internet sector in 1999 and 2000. The
softness in the capital markets coupled with the losses experienced have caused
working capital shortfalls. We have used a combination of equity financing and
short-term bridge loans to fund our working capital needs. Other than our
current capital and capital we may raise from future debt or equity offerings or
short-term bridge loans, we do not have any additional sources of working
capital.

We will continue to require substantial funds to continue our research and
development activities and to market, sell and commercialize our technology. We
will need to raise substantial additional capital to fund our future operations.
Our capital requirements will depend on many factors, including the problems,
delays, expenses and complications frequently encountered by companies
developing and commercializing new technologies; the progress of our research
and development activities; the rate of technological advances; determinations
as to the commercial potential of our technology under development; the status



                                       27
<PAGE>

of competitive technology; the establishment of collaborative relationships; the
success of our sales and marketing programs; the cost of filing, prosecuting and
defending and enforcing patents and intellectual property rights; and other
changes in economic, regulatory or competitive conditions in our planned
business. Estimates about the adequacy of funding for our activities are based
upon certain assumptions, including assumptions that the research and
development programs relating to our technology can be conducted at projected
costs and that progress towards the commercialization of our technology will be
timely and successful. There can be no assurance that changes in our research
and development plans, acquisitions or other events will not result in
accelerated or unexpected expenditures.

To satisfy our capital requirements, we will seek additional financing through
debt and equity financings. There can be no assurance that any such fundings
will be available to us on favorable terms or at all. If adequate funds are not
available when needed, we may be required to delay, scale back or eliminate some
or all of our research and product development programs. If we are successful in
obtaining additional financings, the terms of such financings may have the
effect of diluting or adversely affecting the holdings or the rights of the
holders of our common and preferred stock.

The ability of the Company to continue in existence is dependent on its having
sufficient financial resources to bring products and services to market for
marketplace acceptance. As a result of its significant losses, negative cash
flows from operations, and accumulated deficits for the periods ending June 30,
2002, there is doubt about the Company's ability to continue as a going concern.

THE THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH THE THREE MONTHS ENDED JUNE
30, 2001

RESULTS OF OPERATIONS

REVENUES

Revenues for the three months ended June 30, 2002 were $121,951 compared to
$16,084 for the same period in 2001. Revenues associated with our Internet-based
clinical trial products were approximately $121,951 and $14,805 for 2002 and
2001 respectively. Systems integration revenues in 2001 were approximately
$1,279 compared to $0 in 2002. We do not expect any systems integration revenues
in 2002.

COST OF GOODS SOLD

Cost of goods sold increased to $78,225 in 2002 compared to $21,713. Cost of
goods sold now relates primarily to salaries and benefits associated with the
programmers, developers and systems analysts producing clinical trials on behalf
of our clients.

Cost of goods sold should remain constant from the levels experienced during the
second quarter of 2002 for the short-term. We expect that increases in
production work will be offset by the use of our new trial-building software. In
the long-term we expect cost of goods sold to decrease on a percentage basis as
we achieve higher levels of productivity in our production department.

OTHER EXPENSES

SALARIES, BENEFITS AND RELATED TAXES

Salaries and related expenses are our biggest expense at 62% of total Other
Expenses for the first quarter of 2002. Salaries and related expenses totaled
$438,952 in 2002 compared to $431,858 in 2001. Total salaries increased by 14%
versus 2001 since a portion of total payroll is now accounted for in cost of
goods sold.

RENT & OCCUPANCY EXPENSES

Rent expense was $38,345 for fiscal 2002 compared with $36,610 for fiscal 2001.
Although rent expense remained relatively constant, the components of the costs
have changed. Our development office in Tampa was closed in March 2001 and that
function was relocated to the corporate office to provide a more effective
synthesis of workflows between our R & D function and our operations and



                                       28
<PAGE>

marketing departments. During November 2001 our corporate offices were relocated
to the Ft. Lauderdale, Florida area. We believe this market provides a better
environment for technical personnel recruiting. We were also able to reduce our
rent obligations by approximately $3,300 per month. In December 2001, we
established a disaster recovery site at a Bell South Co-Location facility in
Atlanta, Georgia. This is designed to ensure 100% system up-time.

LEGAL AND PROFESSIONAL FEES

Legal and professional fees totaled $36,869 in 2002 compared with $58,419 during
fiscal 2001. Key components of the 2002 amounts include $22,500 paid to our
former placement agent for financial advisory services, $5,000 to our
accountants for audit and tax related services, $203 in legal expenses related
to various matters and $9,166 that relate to accounting and legal services
associated with our obligations as a public company. We expect on-going legal
and professional fees to fall in-line with what was experienced during 2001.

TRAVEL

We incurred $5,814 in travel expenses during fiscal 2002 compared to $(980)
during 2001. We began reducing travel expenses during mid-2000 as a result of
the on-going working capital difficulties that we have been experiencing. Those
cost-cutting measures continued in 2001 and during the first quarter of 2002. We
expect travel to increase as we experience more success in penetrating the
marketplace with our sales efforts. We expect this increase to be offset by the
increase in accompanying revenues.

TELEPHONE AND INTERNET

Telephone and Internet related costs were reduced by $6,286 due to decreased
telephone and Internet access costs associated with the closing of our office in
Tampa, Florida, and a decrease in overall long-distance charges associated with
the closed facilities. We do not anticipate increases in access charges during
fiscal 2002 based on our own existing communications infrastructure and our
projected 2002 clinical trial workload.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SGA") were $34,739 during the
second quarter of 2002. These expenses relate primarily to costs incurred in
running our office day-to-day and other costs not directly related to other
captioned items in our income statement, and include the cost of office
equipment and supplies, the costs of attending conferences and seminars and
other expenses incurred in the normal course of business.

INTEREST EXPENSE

Interest expense was $72,982 during 2002 versus $82,649 in fiscal 2001.

PREFERRED STOCK DIVIDENDS

During the second quarter of 2002 we issued 1,150,000 warrants to investors in a
private placement of our Series C Convertible Preferred Stock. The warrants were
valued at $263,805 utilizing the Black-Scholes model. The net proceeds received
in the Series C Convertible Preferred Stock Unit offering were allocated to the
Series C Preferred Stock and we recognized a deemed dividend on preferred stock
of $263,805 resulting in a charge to retained earnings and a credit to
additional paid-in capital within our stockholders' equity as of June 30, 2002.
Dividends on our Series A Preferred Stock totaled $51,202 in 2002 compared to
$51,200 for the comparable period in 2001. There were dividend arrearages
incurred during the second quarter of 2002 of $39,890 on our Series B Preferred
Stock and $10,063 on our Series C Preferred Stock dividends and we therefore
deducted $49,953 from Net Income (Loss).


                                       29
<PAGE>


ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)       EXHIBITS.

The following documents are filed as a part of this report or are incorporated
by reference to previous filings, if so indicated:

EXHIBIT NO.       DESCRIPTION
-----------       -----------


   10.7           Employment  Agreement and Stock Option  Agreement  between
                  OmniComm and Cornelis F. Wit dated June 1, 2002.

   10.8           Consulting Agreement between OmniComm and David Ginsberg, D.O.
                  dated June 13, 2002.

   99.1           Section 906 of the Sarbanes-Oxley Act of 2002
                  Certification of Cornelis F. Wit, CEO

   99.2           Section 906 of the Sarbanes-Oxley Act of 2002
                  Certification of Ronald T Linares, CFO



        (b)       REPORTS ON FORM 8-K.
                  NONE.

                                       30
<PAGE>


                                   SIGNATURES
                                   ----------

IN ACCORDANCE WITH SECTION 13 OR 15(D) OF THE EXCHANGE ACT, THE REGISTRANT
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.

OMNICOMM SYSTEMS, INC.
----------------------
REGISTRANT
----------
<TABLE>

<S>       <C>
By:      /s/Cornelis F. Wit, Director, Chief Executive Officer and President
         -------------------------------------------------------------------
Date:    August 12, 2002
         ---------------


By:      /s/Ronald T. Linares, Vice President of Finance, Chief Financial and Accounting Officer
         ---------------------------------------------------------------------------------------
Date:    August 12, 2002
         ---------------
</TABLE>



                                       31