##### Table of Contents





SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





[Mark One]

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

for the quarterly period ended September 30, 2009



| ̈ | 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.

(Exact name of registrant as specified in its Charter)

No Changes

(Former name, former address and former fiscal year, if changed since last report)







|                                                             |  |                                   
|------------------------------------------------------------ |  | ----------------------------------
|Delaware                                                     |  | 11-3349762                        
|State or other jurisdiction of Incorporation or organization |  | IRS Employer Identification Number
|                                                             | 
|2101 W. Commercial Blvd. Suite 4000, Ft. Lauderdale, FL      |  | 33309                             
|Address of principal executive offices                       |  | Zip Code                          

954.473.1254

Registrants Telephone Number (including area code)





Indicate by check mark whether the
Issuer: (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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈  (Not required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 under the Securities Exchange Act of 1934. (Check one):



|                        |  |   |  |                                             |  |                           |  |  
|----------------------- |  | - |  | ------------------------------------------- |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  |                                             |  | Accelerated filer         |  |  ̈
|Non-accelerated filer   |  |  ̈ |  | (Do not check if smaller reporting company) |  | Smaller reporting company |  | þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

The number of shares outstanding of each of the issuers classes of common equity as of November 12, 2009: 85,503,692 common stock $.001 par
value.









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##### Table of Contents

TABLE OF CONTENTS TO THE QUARTERLY REPORT ON FORM 10-Q FOR THE

NINE MONTH PERIOD ENDED SEPTEMBER 30, 2009



|                                                                                                                                                                                  |  |                                                                                        |  |         
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | --------
|                                                                                                                                                                                  |  |                                                                                        |  | Page No.
|PART I - FINANCIAL INFORMATION                                                                                                                                                   
|Item 1.                                                                                                                                                                           |  | Financial Statements (unaudited)                                                       |  | 3       
|Item 2.                                                                                                                                                                           |  | Managements Discussion and Analysis of Financial Condition and Results of Operations. |  | 35      
|Item 3.                                                                                                                                                                           |  | Quantitative and Qualitative Disclosures About Market Risk.                            |  | 53      
|Item 4T                                                                                                                                                                           |  | Controls and Procedures.                                                               |  | 54      
|PART II - OTHER INFORMATION                                                                                                                                                      
|Item 1.                                                                                                                                                                           |  | Legal Proceedings.                                                                     |  | 55      
|Item 1A.                                                                                                                                                                          |  | Risk Factors.                                                                          |  | 55      
|Item 2.                                                                                                                                                                           |  | Unregistered Sales of Equity Securities and Use of Proceeds.                           |  | 55      
|Item 3.                                                                                                                                                                           |  | Defaults Upon Senior Securities.                                                       |  | 55      
|Item 4.                                                                                                                                                                           |  | Submission of Matters to a Vote of Security Holders.                                   |  | 55      
|Item 5.                                                                                                                                                                           |  | Other Information.                                                                     |  | 55      
|Item 6.                                                                                                                                                                           |  | Exhibits.                                                                              |  | 55      
|SIGNATURES                                                                                                                                                                        |  | 56                                                                                    
|Exhibit 31.1Certification of Principal Executive Officer Pursuant to Section 
302 of the Sarbanes-Oxley Act of 2002CEO Cornelis F. Wit                                          
|                                                                                                                                                                                 
|Exhibit 31.2Certification of Principal Financial Officer Pursuant to Section 
302 of the Sarbanes-Oxley Act of 2002CFO Ronald T. Linares                                        
|                                                                                                                                                                                 
|Exhibit 32.1Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 
906 of the Sarbanes-Oxley Act of 2002Principal Executive OfficerCornelis F. Wit  
|                                                                                                                                                                                 
|Exhibit 32.2Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 
906 of the Sarbanes-Oxley Act of 2002Principal Financial OfficerRonald T. Linares
|                                                                                                                                                                                  |  |                                                                                        |  |         



2



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##### Table of Contents

PART I - FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS (unaudited)
|------- | --------------------------------

OMNICOMM SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                                                                    |  | September 30,2009 |             |   | December 31,2008 |  
|                                                                                                                                                                                                                    |  | (unaudited)       |             |   |                  |  
|ASSETS                                                                                                                                                                                                              |  |                   |             |   |                  |   |             |  
|CURRENT ASSETS                                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Cash                                                                                                                                                                                                                |  | $                 | 281,476     |   |                  | $ | 2,035,818   |  
|Accounts receivable, net of allowance for doubtful accounts of $205,320 and $150,933 in 2009 and 2008,
respectively                                                                                                 |  |                   | 1,014,637   |   |                  |   | 2,607,893   |  
|Prepaid expenses                                                                                                                                                                                                    |  |                   | 189,195     |   |                  |   | 98,562      |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|Total current assets                                                                                                                                                                                                |  |                   | 1,485,308   |   |                  |   | 4,742,273   |  
|                                                                                                                                                                                                                    |  |                  
|PROPERTY AND EQUIPMENT, net                                                                                                                                                                                         |  |                   | 1,188,965   |   |                  |   | 769,228     |  
|                                                                                                                                                                                                                    |  |                  
|OTHER ASSETS                                                                                                                                                                                                        |  |                   |             |   |                  |   |             |  
|Intangible assets, net                                                                                                                                                                                              |  |                   | 1,276,640   |   |                  |   | -0-         |  
|Other assets                                                                                                                                                                                                        |  |                   | 18,995      |   |                  |   | 17,641      |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |                  
|TOTAL ASSETS                                                                                                                                                                                                        |  | $                 | 3,969,908   |   |                  | $ | 5,529,142   |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |                  
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|CURRENT LIABILITIES                                                                                                                                                                                                 |  |                   |             |   |                  |   |             |  
|Accounts payable and accrued expenses                                                                                                                                                                               |  | $                 | 949,713     |   |                  | $ | 1,085,700   |  
|Notes payable, current portion                                                                                                                                                                                      |  |                   | -0-         |   |                  |   | 111,800     |  
|Deferred revenue, current portion                                                                                                                                                                                   |  |                   | 3,048,127   |   |                  |   | 3,549,058   |  
|Patent litigation settlement liability, current portion                                                                                                                                                             |  |                   | 631,439     |   |                  |   | 241,464     |  
|Convertible notes payable, current portion                                                                                                                                                                          |  |                   | 279,983     |   |                  |   | 384,043     |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                                                                           |  |                   | 4,909,262   |   |                  |   | 5,372,065   |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|Notes payablelong term                                                                                                                                                                                             |  |                   | 111,800     |   |                  |   | -0-         |  
|Notes payable related partieslong term                                                                                                                                                                             |  |                   | 137,500     |   |                  |   | 197,500     |  
|Deferred revenuelong term                                                                                                                                                                                          |  |                   | 1,197,657   |   |                  |   | 885,200     |  
|Convertible notes payable, related parties, net of current portion                                                                                                                                                  |  |                   | 6,006,530   |   |                  |   | 4,165,025   |  
|Convertible notes payable, net of current portion                                                                                                                                                                   |  |                   | 267,238     |   |                  |   | 156,752     |  
|Patent litigation settlement liability, net of current portion                                                                                                                                                      |  |                   | 1,785,810   |   |                  |   | 1,929,019   |  
|Conversion feature liability, related parties, net of current portion                                                                                                                                               |  |                   | 712,150     |   |                  |   | 1,185,960   |  
|Conversion feature liability, net of current portion                                                                                                                                                                |  |                   | 71,702      |   |                  |   | 71,942      |  
|Warrant liability, related parties                                                                                                                                                                                  |  |                   | 849,513     |   |                  |   | 2,017,160   |  
|Warrant liability                                                                                                                                                                                                   |  |                   | 439,273     |   |                  |   | 620,801     |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|TOTAL LIABILITIES                                                                                                                                                                                                   |  |                   | 16,488,435  |   |                  |   | 16,601,424  |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |                  
|COMMITMENTS AND CONTINGENCIES (See Note 11)                                                                                                                                                                         |  |                   |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |                  
|SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Undesignated preferred stock$.001 par value. 4,022,500 shares authorized, no shares issued and outstanding                                                                                                         |  |                   | -0-         |   |                  |   | -0-         |  
|                                                                                                                                                                                                                    |  |                  
|Series B convertible preferred stock,$.001 par value. 230,000 shares authorized, -0- and -0- issued and outstanding,
respectively; liquidation preference $-0- and $-0-, respectively                              |  |                   | -0-         |   |                  |   | -0-         |  
|                                                                                                                                                                                                                    |  |                  
|Series C convertible preferred stock,$.001 par value. 747,500 shares authorized, -0- and -0- issued and outstanding,
respectively; liquidation preference $-0- and $-0-, respectively                              |  |                   | -0-         |   |                  |   | -0-         |  
|                                                                                                                                                                                                                    |  |                  
|5% Series A convertible preferred stock$0.001 par value, 5,000,000 shares authorized; 4,125,224 and 4,125,224 issued and
outstanding, respectively; liquidation preference $4,125,224 and $4,125,224, respectively |  |                   | 4,125       |   |                  |   | 4,125       |  
|                                                                                                                                                                                                                    |  |                  
|Common stock250,000,000 shares authorized, 85,503,692 and 76,579,951 issued and outstanding, respectively, at $.001 par
value                                                                                      |  |                   | 86,470      |   |                  |   | 77,546      |  
|Additional paid in capitalpreferred                                                                                                                                                                                |  |                   | 3,718,054   |   |                  |   | 3,718,054   |  
|Additional paid in capitalcommon                                                                                                                                                                                   |  |                   | 35,949,743  |   |                  |   | 33,430,270  |  
|Accumulated other comprehensive income/(loss)                                                                                                                                                                       |  |                   | 3,051       |   |                  |   | 989         |  
|Less: Treasury stock, cost method, 1,014,830 and 1,014,830 shares, respectively                                                                                                                                     |  |                   | (503,086    | ) |                  |   | (503,086    | )
|Accumulated deficit                                                                                                                                                                                                 |  |                   | (51,776,884 | ) |                  |   | (47,800,180 | )
|TOTAL SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                |  |                   | (12,518,527 |   |                  |   | (11,072,282 | )
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                |  | $                 | 3,969,908   |   |                  | $ | 5,529,142   |  
|                                                                                                                                                                                                                    |  |                   |             |   |                  |   |             |  

See accompanying summary of accounting policies and notes to financial statements.



3



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------- |  | -------------------------------------- | ---------- | - | --------------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                        |  | For the nine months endedSeptember 30, |            |   | For the three months endedSeptember 30, |  
|                                                        |  | 2009                                   |            |   | 2008                                    |   |            | 2009 |  |   | 2008       |  
|Revenues                                                |  | $                                      | 6,692,440  |   |                                         | $ | 4,281,367  |      |  | $ | 2,461,464  |   |  | $ | 1,629,783  |  
|                                                        |  |                                        |            |  
|Cost of sales                                           |  |                                        | 1,396,935  |   |                                         |   | 980,845    |      |  |   | 450,690    |   |  |   | 322,409    |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Gross margin                                            |  |                                        | 5,295,505  |   |                                         |   | 3,300,522  |      |  |   | 2,010,774  |   |  |   | 1,307,374  |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Operating expenses                                      |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Salaries, benefits and related taxes                    |  |                                        | 6,785,888  |   |                                         |   | 6,620,322  |      |  |   | 2,497,681  |   |  |   | 2,358,184  |  
|                                                        |  |                                        |            |  
|Rent & occupancy expenses                               |  |                                        | 514,168    |   |                                         |   | 410,090    |      |  |   | 239,337    |   |  |   | 145,247    |  
|                                                        |  |                                        |            |  
|Consulting                                              |  |                                        | 124,455    |   |                                         |   | 258,379    |      |  |   | 35,124     |   |  |   | 41,884     |  
|                                                        |  |                                        |            |  
|Legal and professional fees                             |  |                                        | 474,237    |   |                                         |   | 318,594    |      |  |   | 237,358    |   |  |   | 152,815    |  
|                                                        |  |                                        |            |  
|Travel                                                  |  |                                        | 289,725    |   |                                         |   | 326,320    |      |  |   | 110,425    |   |  |   | 108,389    |  
|                                                        |  |                                        |            |  
|Telephone and internet                                  |  |                                        | 104,645    |   |                                         |   | 114,725    |      |  |   | 39,001     |   |  |   | 33,452     |  
|                                                        |  |                                        |            |  
|Selling, general and administrative                     |  |                                        | 883,061    |   |                                         |   | 391,974    |      |  |   | 253,614    |   |  |   | 97,030     |  
|                                                        |  |                                        |            |  
|Bad Debt Expense                                        |  |                                        | 143,794    |   |                                         |   | 28,691     |      |  |   | 128,053    |   |  |   | 28,691     |  
|                                                        |  |                                        |            |  
|Depreciation and amortization                           |  |                                        | 355,534    |   |                                         |   | 403,582    |      |  |   | 224,482    |   |  |   | 182,058    |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Total operating expenses                                |  |                                        | 9,675,507  |   |                                         |   | 8,872,677  |      |  |   | 3,765,075  |   |  |   | 3,147,750  |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Operating income (loss)                                 |  |                                        | (4,380,002 | ) |                                         |   | (5,572,155 | )    |  |   | (1,754,301 | ) |  |   | (1,840,376 | )
|                                                        |  |                                        |            |  
|Other income (expense)                                  |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Interest expense                                        |  |                                        | (1,950,721 | ) |                                         |   | (1,994,009 | )    |  |   | (658,546   | ) |  |   | (794,754   | )
|                                                        |  |                                        |            |  
|Interest income                                         |  |                                        | 4,395      |   |                                         |   | 6,594      |      |  |   | 96         |   |  |   | 1          |  
|                                                        |  |                                        |            |  
|Loss on extinguishment of debt                          |  |                                        | 432        |   |                                         |   | -0-        |      |  |   | -0-        |   |  |   | -0-        |  
|Unrealized Gain/(Loss) on Derivative Liabilities        |  |                                        | 2,349,194  |   |                                         |   | 1,909,051  |      |  |   | (605,399   | ) |  |   | 1,681,435  |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|(Loss) before taxes and preferred dividends             |  |                                        | (3,976,704 | ) |                                         |   | (5,650,519 | )    |  |   | (3,018,150 | ) |  |   | (953,694   | )
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Net income (loss)                                       |  |                                        | (3,976,704 | ) |                                         |   | (5,650,519 | )    |  |   | (3,018,150 | ) |  |   | (953,694   |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Preferred stock dividends in arrears Series A Preferred |  |                                        | (153,850   | ) |                                         |   | (148,870   | )    |  |   | (51,847    | ) |  |   | (49,940    | )
|                                                        |  |                                        |            |  
|Preferred stock dividends in arrears Series B Preferred |  |                                        | -0-        |   |                                         |   | (9,753     | )    |  |   | -0-        |   |  |   | -0-        |  
|                                                        |  |                                        |            |  
|Preferred stock dividends in arrears Series C Preferred |  |                                        | -0-        |   |                                         |   | (67,245    | )    |  |   | -0-        |   |  |   | -0-        |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Total preferred stock dividends                         |  |                                        | (153,850   | ) |                                         |   | (225,868   | )    |  |   | (51,847    | ) |  |   | (49,940    | )
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Net income (loss) attributable to common stockholders   |  | $                                      | (4,130,554 | ) |                                         | $ | (5,876,387 | )    |  | $ | (3,069,997 | ) |  | $ | (1,003,634 | )
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Net (loss) per share, basic and diluted                 |  | $                                      | (0.05      | ) |                                         | $ | (0.08      | )    |  | $ | (0.04      | ) |  | $ | (0.01      | )
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                        |            |  
|Weighted average number of shares outstanding           |  |                                        | 79,787,889 |   |                                         |   | 70,150,937 |      |  |   | 85,252,194 |   |  |   | 75,816,148 |  
|                                                        |  |                                        |            |   |                                         |   |            |      |  |   |            |   |  |   |            |  

See accompanying summary of accounting policies and notes to financial statements



4



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##### Table of Contents

OMNICOMM SYSTEM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008

(unaudited)



|                                                                                           |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                           |  | 2009 |            |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Net income (loss)                                                                          |  | $    | (3,976,703 | ) |      | $ | (5,650,519 | )
|Adjustment to reconcile net income to net cash provided by (used in) operating activities: |  |      |            |   |      |   |            |  
|Common stock issued in lieu of salary                                                      |  |      | 109,178    |   |      |   | 24,000     |  
|Gain on extinguishment of debt                                                             |  |      | (432       | ) |      |   | -0-        |  
|Unrealized gain on derivatives                                                             |  |      | (2,349,194 | ) |      |   | (1,909,051 | )
|Interest expense from derivative instruments                                               |  |      | 1,286,831  |   |      |   | 1,805,426  |  
|Employee stock option expense                                                              |  |      | 630,969    |   |      |   | 986,733    |  
|Common stock issued for services                                                           |  |      | 62,250     |   |      |   | -0-        |  
|Common stock issued for accrued interest                                                   |  |      | -0-        |   |      |   | 28,130     |  
|Common stock issued in cashless exercise of stock options                                  |  |      | -0-        |   |      |   | (1,387     | )
|Unrealized gain on subsidiary liabilities                                                  |  |      | -0-        |   |      |   | (127,519   | )
|Depreciation and amortization                                                              |  |      | 355,534    |   |      |   | 403,582    |  
|Change in assets and liabilities:                                                          |  |      |            |   |      |   |            |  
|Accounts receivable                                                                        |  |      | 1,593,256  |   |      |   | (633,932   | )
|Prepaid expenses                                                                           |  |      | (45,926    | ) |      |   | (43,073    | )
|Other assets                                                                               |  |      | (1,354     | ) |      |   | (17        | )
|Accounts payable and accrued expenses                                                      |  |      | (135,988   | ) |      |   | 319,632    |  
|Patent settlement liability                                                                |  |      | (21,019    | ) |      |   | -0-        |  
|Deferred revenue                                                                           |  |      | (1,143,062 | ) |      |   | 865,321    |  
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) operating activities                                        |  |      | (3,635,660 | ) |      |   | (3,932,674 | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|CASH FLOWS FROM INVESTING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Cash received in acquisition of eResearch Technology assets                                |  |      | 1,150,000  |   |      |   | -0-        |  
|Purchase of Logos Technologies, Ltd. assets                                                |  |      | (152,628   | ) |      |   | -0-        |  
|Purchase of property and equipment                                                         |  |      | (145,615   | ) |      |   | (467,796   | )
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities                                        |  |      | 851,757    |   |      |   | (467,796   | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|CASH FLOWS FROM FINANCING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Repayments of notes payable                                                                |  |      | (360,000   | ) |      |   | (300,000   | )
|Stock subscription receivable                                                              |  |      | -0-        |   |      |   | 2,500      |  
|Proceeds from exercise of employee stock option                                            |  |      | -0-        |   |      |   | 6,503      |  
|Proceeds from notes payable                                                                |  |      | -0-        |   |      |   | 850,000    |  
|Proceeds from issuance of convertible debentures                                           |  |      | 1,400,000  |   |      |   | 4,436,179  |  
|Payments on convertible notes payable                                                      |  |      | (12,500    | ) |      |   | (1,000,000 | )
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) financing activities                                        |  |      | 1,027,500  |   |      |   | 3,995,182  |  
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|Effect of exchange rate change on cash and cash equivalents                                |  |      | 2,061      |   |      |   | (9,736     | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|Net increase (decrease) in cash and cash equivalents                                       |  |      | (1,754,342 | ) |      |   | (415,024   | )
|Cash and cash equivalents at beginning of period                                           |  |      | 2,035,818  |   |      |   | 481,961    |  
|                                                                                           |  |      |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                 |  |      | 281,476    |   |      |   | 66,937     |  
|                                                                                           |  |      |            |   |      |   |            |  

See accompanying summary of accounting policies and notes to financial statements



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##### Table of Contents

OMNICOMM SYSTEM, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008

(continued)

(unaudited)



|                                                                           |  |                                        |           |      |   |          
|-------------------------------------------------------------------------- |  | -------------------------------------- | --------- | ---- | - | ---------
|                                                                           |  | For the nine months endedSeptember 30,
|                                                                           |  | 2009                                   |           | 2008
|Supplemental Disclosure of Cash Flow Information:                          |  |                                        |           |      |   |          
|Cash paid during the period for:                                           |  |                                        |           |      |   |          
|                                                                           |  |                                       
|Income tax                                                                 |  | $                                      | -0-       |      | $ | -0-      
|                                                                           |  |                                        |           |      |   |          
|Interest                                                                   |  | $                                      | 602,809   |      | $ | 66,444   
|                                                                           |  |                                        |           |      |   |          
|                                                                           |  |                                       
|Non-cash Transactions                                                      |  |                                        |           |      |   |          
|Conversion of Series A Preferred Stock into common stock                   |  | $                                      | -0-       |      | $ | 45,000   
|Conversion of Series B Preferred Stock into common stock                   |  | $                                      | -0-       |      | $ | 191,518  
|Common stock issued pursuant to anti-dilution provision                    |  | $                                      | -0-       |      | $ | 344,510  
|Common stock issued for services                                           |  | $                                      | 62,250    |      | $ | -0-      
|Conversion of series C preferred stock into shares of common stock         |  | $                                      | -0-       |      | $ | 3,684,407
|Common stock issued in lieu of salary                                      |  | $                                      | 109,178   |      | $ | 24,000   
|Common Stock issued for the acquisition of assets and liabilities assumed: |  |                                        |           |      |   |          
|Fixed assets                                                               |  | $                                      | 36,006    |      | $ | 0        
|Prepaid expenses                                                           |  | $                                      | 44,707    |      | $ | 0        
|Customer list                                                              |  | $                                      | 1,392,701 |      | $ | 0        
|Software application code                                                  |  | $                                      | 324,964   |      | $ | 0        
|Present value of assumed patent liability                                  |  | $                                      | 267,790   |      | $ | 0        
|Deferred Revenue                                                           |  | $                                      | 954,588   |      | $ | 0        
|Common Stock issued for accrued interest                                   |  | $                                      | -0-       |      | $ | 28,130   
|Common Stock tendered in exercise of incentive stock options               |  | $                                      | -0-       |      | $ | 133,967  
|Cashless exercise of warrants                                              |  | $                                      | -0-       |      | $ | 589,681  

See accompanying summary of accounting policies and notes to financial statements



6



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



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

OmniComm Systems, Inc. is a 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 located in the United States. TrialMaster, our proprietary EDC software, allows clinical trial sponsors and investigative sites to securely collect, validate,
transmit, and analyze clinical trial data.

Our ability to compete within the EDC industry is predicated on our ability to
continue enhancing and broadening the scope of solutions offered through our EDC software and services which include TrialMaster. Our research and development efforts are focused on developing new, complementary software solutions, as well as
enhancing our existing software solutions through the addition of increased functionality. The majority of our research and development activities represent salaries to our software developers. During the nine months ended September 30, 2009
and September 30, 2008 we spent approximately $1,271,211 and $663,792, respectively, on research and development activities, which include costs associated with customization of our software products including TrialMaster, the EDC software
acquired as part of our acquisition of the EDC assets of eResearch Technology in June 2009 and the software development costs associated with our Phase One software that was acquired in the Logos Technologies, Ltd. acquisition in August 2009.



|NOTE 2: | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------- | ------------------------------------------



BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The Companys accounts include those of all its wholly owned subsidiaries and have been prepared in conformity with (i) accounting
principles generally accepted in the United States of America; 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.

UNAUDITED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements of OmniComm Systems, Inc. and its Subsidiaries (the Company) have been prepared
in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to such rules and regulations,
certain financial information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The results for the periods indicated are unaudited, but reflect all adjustments (consisting only of
normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

The
operating results for the nine-month period ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009. These unaudited consolidated financial statements should be read
in conjunction with the consolidated financial statements and footnotes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the consolidated 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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



RECLASSIFICATIONS

Certain reclassifications have been made in the 2008 financial statements to conform to the 2009 presentation. These reclassifications did
not have any effect on net income (loss) or shareholders equity.

SEGMENT INFORMATION

The Company operates in one reportable segment which is the delivery of EDC services and products to clinical trial sponsors. The Company
segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through four main activities. These activities include:



| |  |  | the initial setup activities associated with building, implementing and initiating clinical trial projects;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | change orders or change requests made by the clinical trial sponsor that require changes to the scope of the clinical trial project;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the maintenance fees paid by our customers for clinical trial projects that have been implemented. The services provided include application hosting
and related support services. Services for this offering are charged monthly as a fixed fee. Revenues are recognized ratably over the period of the service; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the sale and transfer of our software products on a licensed basis and the associated the installation, validation and training professional and
consulting services we provide licensees.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The fees associated with each business activity for the nine
month periods ended September 30, 2009 and September 30, 2008, respectively are:



|                          |  |           |  |       |           |  |   |           |  |       |  
|------------------------- |  | --------- |  | ----- | --------- |  | - | --------- |  | ----- | -
|Business Activity         |  | 9/30/2009 |  |       | 9/30/2008 | 
|Set-up Fees               |  | 3,525,554 |  | 52.7  | %         |  |   | 3,053,654 |  | 71.3  | %
|Change Orders             |  | 341,388   |  | 5.1   | %         |  |   | 320,618   |  | 7.5   | %
|Maintenance               |  | 1,562,797 |  | 23.3  | %         |  |   | 907,095   |  | 21.2  | %
|Tech. Transition          |  | 515,158   |  | 7.7   | %         |  |   | -0-       |  | 0.0   | %
|Prof. Services            |  | 421,195   |  | 6.3   | %         |  |   | -0-       |  | 0.0   | %
|Hosting and Subscriptions |  | 326,348   |  | 4.9   | %         |  |   | -0-       |  | 0.0   | %
|                          |  |           |  |       |           |  |   |           |  |       |  
|Totals                    |  | 6,692,440 |  | 100.0 | %         |  | $ | 4,281,367 |  | 100.0 | %
|                          |  |           |  |       |           |  |   |           |  |       |  

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 consolidated balance sheets approximates fair value.

ACCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary. The Company
had recorded an allowance for uncollectible accounts receivable of $150,933 and $205,320 as of December 31, 2008 and September 30, 2009, respectively.



8



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



CONCENTRATION OF CREDIT RISK

Except as follows, the Company has no significant off-balance-sheet risk or credit risk concentrations. Financial instruments that subject
the Company to potential credit risks are principally cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with credit worthy financial institutions, however, the Company does maintain cash in its accounts
from time-to-time that exceed the maximum federally insured limits. Concentrated credit risk with respect to accounts receivable is limited to creditworthy customers. The Company's customers are principally located in the United States. The Company
is directly affected by the overall financial condition of the pharmaceutical, biotechnology and medical device industries and management believes that credit risk exists and that any credit risk the Company faces has been adequately reserved for as
of September 30, 2009. Prior to 2008 the Company has not historically experienced significant losses related to receivables from individual customers or groups of customers in any specific industry or geographic area. During the second half of
fiscal 2008 and continuing during 2009, the biotechnology industry experienced liquidity and funding difficulties. Several of the Companys clients operate in this segment. The Company maintains an allowance for doubtful accounts based on
accounts past due according to contractual terms and historical collection experience. Actual losses when incurred are charged to the allowance. The Company's losses related to collection of accounts receivable prior to fiscal 2008 were consistently
within management's expectations. The overall downturn in the U.S. economy impacted several of the Companys clients beginning in late 2008. Due to these factors, no additional credit risk beyond amounts provided for collection losses, which
the Company reevaluates on a monthly basis based on specific review of receivable agings and the period that any receivables are beyond the standard payment terms, is believed by management to be probable in the Company's accounts receivable. The
Company does not require collateral from its customers in order to mitigate credit risk.

One customer accounted for 28% of
our revenues during the first nine months of 2009 or approximately $1,870,670. One customer accounted for 30% of our revenues during the nine-month period ended September 30, 2008 or approximately $1,285,209. One customer accounted for 36% of
our revenues for the year ended December 31, 2008, or approximately $2,238,000. The following table summarizes the number of customers who individually comprise greater than 10% of total revenue and/or total accounts receivable and their
aggregate percentage of the Company's total revenue and gross accounts receivable for the periods presented.



|                      |  |               |  |                            |                     |  |               |  |                                      |  
|--------------------- |  | ------------- |  | -------------------------- | ------------------- |  | ------------- |  | ------------------------------------ | -
|For the periods ended |  | Revenues      |  |                            | Accounts Receivable | 
|                      |  | # ofCustomers |  | Percentageof TotalRevenues |                     |  | # ofCustomers |  | Percentageof TotalAccountsReceivable |  
|12/31/2008            |  | 1             |  | 36                         | %                   |  | 2             |  | 71                                   | %
|9/30/2008             |  | 1             |  | 30                         | %                   |  | 2             |  | 43                                   | %
|9/30/2009             |  | 1             |  | 28                         | %                   |  | 3             |  | 34                                   | %



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



The following table summarizes activity in the Company's allowance for doubtful
accounts for the periods presented.



|                    |  |                       |         |                   |        
|------------------- |  | --------------------- | ------- | ----------------- | -------
|                    |  | For the periods ended
|                    |  | December 31,2008      |         | September 30,2009
|Beginning of period |  | $                     | 2,586   |                   | 150,933
|Bad debt expense    |  |                       | 148,347 |                   | 143,794
|Write-offs          |  |                       | -0-     |                   | 89,407 
|                    |  |                       |         |                   |        
|End of period       |  | $                     | 150,933 |                   | 205,320
|                    |  |                       |         |                   |        

The Company serves all of its hosting customers from third-party web hosting
facilities located in the United States. The Company does not control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event
third-party web hosting facilities become unavailable, although in such circumstances, the Company's service may be interrupted during the transition.

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,
computers, equipment and furniture and 3 years for software. Gains or losses on disposal are charged to operations.

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. As of September 30, 2009, the Company had $4,245,784 in deferred revenues relating to contracts for services to be performed
over periods ranging from 1 month to 5 years. The Company had $3,048,127 in deferred revenues that are expected to be recognized in the next twelve fiscal 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; licensing
arrangements, on-going maintenance fees incurred throughout the duration of an engagement; fees for report writing and project change orders. The clinical trials that are conducted using TrialMaster can last from a few 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. 104 Revenue Recognition in Financial Statements (SAB 104) (Codified within Accounting Standards Codification (ASC) Revenue Recognition) and AICPA Statement of Position 97-2 (SOP 97-2)
Software Revenue Recognition as amended by SOP 98-9 (Codfied within ASC 985.605, Software Industry Revenue Recognition). SAB 104 requires that revenues be recognized ratably over the life of a contract. The Company will
periodically record deferred revenues relating to advance payments in contracts. Under its licensing arrangement the Company recognizes revenue pursuant to SOP 97-2. Under these arrangements the Company recognizes revenue



10



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer and/or delivery has occurred;
(3) the collection of fees is probable; and (4) the fee is fixed or determinable. SOP 97-2, as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair
values of the elements. We have analyzed each element in our multiple element arrangements and determined that we have sufficient vendor-specific objective evidence (VSOE) to allocate revenues to license updates and product support.
License revenues are recognized on delivery if the other conditions of SOP 97-2 are satisfied. License updates and product support revenue is recognized ratably over the term of the arrangement. In arrangements where term licenses are bundled with
license updates and product support and such revenue is recognized ratably over the term of the arrangement, we allocate the revenue to license revenue and to license updates and product support revenue based on the VSOE of fair value for license
updates and product support revenue on perpetual licenses of similar products.

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $185,641 and $241,924 for the nine-month period ended September 30,
2009 and September 30, 2008, 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 Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, (SFAS 86) (Codified within ASC 985.20 , Software Industry Costs of Software to Be Sold, Leased or
Marketed), 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. During first nine months ended September 30, 2009 and September 30, 2008 we spent approximately $1,271,211 and
$663,792 respectively, on research and development activities, which include costs associated with customization of our software products and services for our clients projects and which are primarily comprised of salaries and related expenses
for our software developers.

EMPLOYEE EQUITY INCENTIVE PLANS

The company has an employee equity incentive plan, the OmniComm Systems, Inc. 2009 Equity Incentive Plan (the 2009 Plan), which
was approved at our Annual Meeting of Shareholders on July 10, 2009. The 2009 Plan provides for the issuance of up to 7.5 million shares to employees under the terms of the plan documents. The predecessor plan, the OmniComm Systems, 1998
Stock Incentive Plan (the 1998 Plan) expired on December 31, 2008. The 1998 Plan provided for the issuance of up to 12.5 million shares in accordance with the terms of the plan document and is more fully described in Note
15: Employee Equity Incentive Plans of the Companys Consolidated Audited Financial Statements dated December 31, 2008. On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment,
(Codified within ASC 718, Compensation  Stock Compensation)which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity
obtains employee services in share-based payment transactions. SFAS No. 123(R) is a revision to SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123(R) requires measurement of the cost of employee services received in exchange for an award of equity instruments based on
the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



The Company adopted SFAS No. 123(R) using the modified prospective transition
method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Companys fiscal year. The Companys Consolidated Financial Statements as of and for the nine months ended
September 30, 2008 and September 30, 2009, respectively, reflect the impact of SFAS No. 123(R).

SFAS
No. 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over
the requisite service periods in the Companys Consolidated Statements of Income. Stock-based compensation recognized in the Companys Consolidated Statements of Income for the nine month periods ended September 30, 2009 and
September 30, 2008 includes compensation expense for share-based awards granted prior to, but not fully vested as of January 1, 2006 based on the grant date fair value estimated in accordance with SFAS No. 123 as well as compensation
expense for share-based awards granted from January 1, 2006 to September 30, 2009 in accordance with SFAS No. 123(R). The Company currently uses the American Binomial option pricing model to determine grant date fair value.

EARNINGS PER SHARE

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, Earnings per Share, (SFAS 128) (Codified with ASC
260, 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 utilized fully diluted earnings per share calculation method.

Basic earnings per share were calculated using the weighted average number of shares outstanding of 79,787,889 and 70,150,937 for the nine
month periods ended September 30, 2009 and September 30, 2008, respectively. There were no differences between basic and diluted earnings per share. Options to purchase 12,262,770 shares of common stock at prices ranging from $.25 to $2.75
per share were outstanding at September 30, 2009. Stock warrants to purchase 35,366,641 shares of common stock at exercise prices ranging from $0.25 to $0.60 per share were outstanding at September 30, 2009.

Basic earnings per share were calculated using the weighted average number of shares outstanding of 85,252,194 and 75,816,148 for the three
month periods ended September 30, 2009 and September 30, 2008, respectively. There were no differences between basic and diluted earnings per share.

The Companys convertible debt and convertible preferred stock have an anti-dilutive effect on net loss per share and were not included in the computation of diluted earnings 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) (Codified within ASC
740, 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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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.

IMPACT OF NEW ACCOUNTING STANDARDS

In the first quarter of 2009, we adopted the following new accounting pronouncements:

FASB Staff Position (FSP) Financial Accounting Standards (FAS) 157-2, Effective Date of FASB Statement 157 (Codified within Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures)  This FSP
delayed the effective date of Statement of Financial Accounting Standard (SFAS) No. 157, Fair Value Measurements, for certain nonfinancial assets and nonfinancial liabilities. Adoption of this FSP did not significantly affect how we
determine fair value but has resulted in certain additional disclosures. Please read Note 10  Fair Value Measurement.

FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (Codified within ASC 260, Earnings Per Share)  This staff position specifies that unvested share-based payment
awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and should be included in the computation of earnings per share pursuant to the two-class method. Adoption of this FSP did not have a
significant effect on our earnings per share.

SFAS No. 141(R), Business Combinations (Codified within ASC 805, Business
Combinations)  This standard requires most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at full fair value. The standard also changes the approach to determining the
purchase price, the accounting for acquisition cost and several acquisition related accounting practices. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (Codified within ASC 810, Consolidation)  This
standard specifies that noncontrolling interests be reported as a part of equity, not as a liability or other item outside of equity. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 (Codified
within ASC 815, Derivatives and Hedging)  This standard requires enhanced disclosures about derivative instruments including how and why they are used; how they are accounted for; and how they affect an entitys financial position,
financial performance and cash flows. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

In the second quarter of 2009, we adopted the following new accounting pronouncements:

FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (Codified within ASC 820, Fair Value Measurements and
Disclosures)  This FSP provides guidance for estimating fair value when the volume and level of activity for an asset or liability have significantly decreased. Adoption of this FSP affects how we consider Level 2 inputs in determining fair
values but did not have a significant effect on our earnings or financial position.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



FSP FAS 107-1 and Accounting Principles Board (APB) Opinion 28-1, Interim
Disclosures about Fair Value of Financial Instruments (Codified within ASC 825, Financial Instruments)  This FSP requires an entity to provide disclosures about fair value of financial instruments at interim reporting periods. Adoption of this
FSP did not significantly affect how we determine fair value but has resulted in certain additional disclosures. Please read Note 10  Fair Value Measurements.

SFAS No. 165, Subsequent Events (Codified within ASC 855, Subsequent Events)  This Statement establishes general standards of accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued, introduces the concept of financial statements being available to be issued and requires disclosures regarding the date through which subsequent events were evaluated. Adoption of
this standard did not have a significant effect on our earnings or financial position but does affect our disclosures regarding subsequent events.

SEC SAB 112  This bulletin amends or rescinds guidance included in the SAB Series to make it consistent with recent FASB pronouncements, namely, SFAS No. 141 (revised 2007), Business
Combinations, and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. Adoption did not have a significant effect on our earnings or financial position.

In the third quarter of 2009, we adopted the following new accounting pronouncement:

SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (Codified within
ASC 105, Generally Accepted Accounting Principles)  This Statement establishes the FASB Accounting Standards Codification as the single source of authoritative accounting principles to be applied by nongovernmental entities in the preparation
of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Adoption did not have an impact on our earnings or
financial position but did revise our disclosures regarding accounting guidance references.

In addition, the following
pending pronouncements have not yet been adopted, and we are currently evaluating the effect, if any, on our earnings or financial position:

Accounting Standards Update (ASU) 2009-05, Measuring Liabilities at Fair Value  This ASU amends ASC 820, Fair Value Measurements and Disclosures, to provide additional guidance on how to
measure the fair value of a liability and is effective fourth quarter 2009.

SFAS No. 166, Accounting for Transfers of
Financial Assets  an amendment of FASB Statement No. 140 (Not yet included in Codification)  This standard removes the concept of a qualifying special-purpose entity from FIN 46(R) and requires additional disclosures and is
effective first quarter 2010.

SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (Not yet included in
Codification)  This standard amends certain requirements of FIN 46(R) to improve financial reporting related to consolidation of and disclosures about variable interest entities and is effective first quarter 2010.



14



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



|NOTE 3: | OPERATIONS AND LIQUIDITY
|------- | ------------------------

We have experienced negative cash flow from operations 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 may 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 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 may seek additional financing through debt and equity financings. There can be no assurance that any such funding 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 or result in increased interest expense in future periods.

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 our
historical operating losses and accumulated deficits for the nine month period ending September 30, 2009 there is substantial doubt about the Companys ability to continue as a going concern.



|NOTE 4: | PROPERTY AND EQUIPMENT, AT COST
|------- | -------------------------------

Property and equipment consists of the following:



|                              |  |                    |           |                         |   |           |  |                         |           |                       |   |           |  |        
|----------------------------- |  | ------------------ | --------- | ----------------------- | - | --------- |  | ----------------------- | --------- | --------------------- | - | --------- |  | -------
|                              |  | September 30, 2009 |           | December 31, 2008       |   |          
|                              |  | Cost               |           | AccumulatedDepreciation |   | Cost      |  | AccumulatedDepreciation |           | EstimatedUseful Lives
|Computer and office equipment |  | $                  | 1,198,438 |                         | $ | 676,792   |  | $                       | 1,053,805 |                       | $ | 574,963   |  | 5 years
|Leasehold improvements        |  |                    | 55,751    |                         |   | 34,566    |  |                         | 55,751    |                       |   | 26,698    |  | 5 years
|Computer software             |  |                    | 1,179,354 |                         |   | 572,302   |  |                         | 675,392   |                       |   | 449,123   |  | 3 years
|Office furniture              |  |                    | 103,959   |                         |   | 64,877    |  |                         | 93,342    |                       |   | 58,278    |  | 5 years
|                              |  |                    |           |                         |   |           |  |                         |           |                       |   |           |  |        
|                              |  | $                  | 2,537,502 |                         | $ | 1,348,538 |  | $                       | 1,878,290 |                       | $ | 1,109,062 |  |        
|                              |  |                    |           |                         |   |           |  |                         |           |                       |   |           |  |        

Depreciation expense for the nine month periods ended September 30, 2009 and
September 30, 2008 was $239,475 and $139,450 respectively.



15



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



|NOTE 5: | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND ACCRUED PAYROLL TAXES
|------- | ------------------------------------------------------------

Accounts payable and accrued expenses consist of the following:



|                                            |  |                   |         |                  |   |          
|------------------------------------------- |  | ----------------- | ------- | ---------------- | - | ---------
|                                            |  | September 30,2009 |         | December 31,2008
|Accounts payable                            |  | $                 | 616,730 |                  | $ | 652,124  
|Accrued payroll and related costs           |  |                   | 132,161 |                  |   | 148,748  
|Other accrued expenses                      |  |                   | 4,487   |                  |   | 19,470   
|Accrued interest                            |  |                   | 196,336 |                  |   | 265,358  
|                                            |  |                   |         |                  |   |          
|Total accounts payable and accrued expenses |  | $                 | 949,714 |                  | $ | 1,085,700
|                                            |  |                   |         |                  |   |          



|NOTE 6: | eRESEARCH TECHNOLOGY, INC. ASSET ACQUISITION
|------- | --------------------------------------------

On June 23, 2009, we acquired certain tangible and intangible electronic data capture (EDC) assets, formerly owned by eResearch Technology, Inc. (eResearch) (eResearch
EDC Assets), pursuant to an Asset Purchase Agreement. Our purpose in acquiring these assets, which included employment rights to the operating and business development team of eResearchs EDC team, to increase our presence in the EDC
industry through the eResearch client list and increase our revenues in order to leverage our existing administrative and technical corporate infrastructure.

The Company purchased from eResearch, the eResearch EDC Assets including equipment, devices, computer hardware and other computer systems, certain intellectual property, contracts, customer lists, and
other assets specifically identified in schedules to the Agreement, and $1,150,000 in cash. The Company also assumed certain liabilities associated with these assets, including deferred revenues under certain assumed contracts in the amount of
approximately $954,000, and concurrent with the consummation of the transactions entered into the First Amendment to Settlement and Licensing Agreement with DataSci, LLC to provide for license payments of $300,000 to DataSci over the next three
years for the EDC assets acquired in the Agreement.

Consideration for the acquisition consisted of 8,100,000 shares
(Shares) of our $0.001 par value common stock. Under the terms of the Agreement, Seller agreed to a covenant not to compete under certain circumstances with the Company for a period of two years following the closing. OmniComm and the
Seller also entered into a Lock-up and Registration Rights Agreement pursuant to which, among other things, the Shares will be subject to a complete trading lock-up for twelve months following the closing date (Lock-up Period) and the
Company granted registration rights to the Seller pursuant to which the Seller, at any time following the Lock-up Period, may request OmniComm to file a registration statement to register the Shares within pre-defined periods and circumstances. The
Seller also received piggyback registration rights, pursuant to which Seller may require OmniComm to register all or any part of the Shares then held by Seller when the Company files registration statements for purposes of effecting a
public offering of the Companys securities under certain circumstances.

The purchase of the eResearch EDC Assets
required us to determine whether the group of assets constituted a business, and accordingly, required accounting under Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141) (Codified within ASC
805, Business Combinations)or whether the group of assets did not constitute a business and, accordingly, required accounting under other standards, including Statement of Financial Accounting Standards No. 142, Goodwill and Intangible
Assets (SFAS 142) (Codified within ASC 350,



16



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Intangibles  Goodwill and Other) This determination is required to be made by reference (by analogy) to guidance in EITF No. 98-3, Determining Whether a Nonmonetary
Transaction Involves Receipt of Productive Assets or a Business (EITF 98-3), which was superseded by SFAS 141R). It should be noted that the determination of what constitutes a business for reporting purposes under Rules and
Regulations of the Securities and Exchange Commission differs from the guidance in EITF 98-3.

We accounted for the
acquisition of the eResearch EDC Assets as an acquisition of productive assets and not as a business. In applying the guidance of EITF 98-3, a business is a self sustaining, integrated set of activities and assets conducted and managed for the
purpose of providing a return to investors and, further, must consist of inputs, processes applied to those inputs, and resulting outputs that are used to generate revenues. Based upon the guidance of EITF 98-3, the eResearch EDC Assets were not
self-sustaining since they required significant administrative, technological and operational input, guidance and assistance from the corporate infrastructure that remained with eResearch subsequent to the purchase. The eResearch EDC Assets when
evaluated on a stand-alone basis while containing many of the components of a business lacked a significant number of the components required to be classified a business and would without the significant contribution of the infrastructure components
provided by eResearch on a pre-purchase basis and by the Company on a post-purchase basis which include sales and marketing support would first likely preclude it from being considered a business under the guidance of EITF 98-3 and second would have
difficulty achieving commercial viability without a significant investment of capital, infrastructure and personnel.

Notwithstanding our conclusion that the eResearch EDC Assets did not constitute a business, SFAS 142 provides that intangible assets acquired as a group are initially recognized at fair value applying the measurement principles for exchange
transactions provided in SFAS 141.5-7. Those measurement principles provide that, when consideration is not in the form of cash, measurement is based upon the fair value of the consideration given or the fair value of the assets acquired, whichever
is more clearly and closely evident and, thus more reliably measureable. We have concluded that the value of the consideration given representing our common stock, is more clearly evident and reliable for this purpose because (i) the exchange
resulted from exhaustive negotiations with eResearch, (ii) fair value measurements of our common stock is based upon market indicators such as the trading price of our stock on the Over the Counter Market (OTC Bulletin Board) and
assumptions derived for active markets, and (iii) while ultimately reasonable, our fair value measurements of the significant tangible and intangible asset relies heavily on subjective estimates and prospective financial information. The
following table reflects the components of the consideration paid to effect the acquisition:



|                                                                          |  |        |          
|------------------------------------------------------------------------- |  | ------ | ---------
|Financial Instrument or Cost:                                             |  | Amount
|Common stock, par value $0.001 per share 8,100,000 shares of common stock |  | $      | 1,701,000
|Direct costs                                                              |  | $      | 25,000   
|                                                                          |  |        |          
|                                                                          |  | $      | 1,726,000
|                                                                          |  |        |          

We have evaluated the substance of the exchange for purposes of identifying all
assets acquired. The recognition of goodwill is not contemplated in an exchange that is not a business or accounted for as a business combination under SFAS 141. The following table reflects the acquisition date fair values and the final allocation
of the consideration to the assets acquired. The allocation was performed in accordance with SFAS 142, which provides that an excess in consideration over the fair values of the assets acquired is allocated to the assets subject to depreciation and
amortization, based upon their relative fair values, and not to those assets with indefinite lives. A difference in



17



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



the recognized basis in the value of the consideration between book and income tax gives rise to the deferred income taxes. The allocation of consideration in this manner contemplates an
immediate impairment analysis under Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144) (Codified within ASC 360, Property, Plant, and
Equipment). SFAS 144 . Our analysis did not result in impairment, but we are required to continue to perform this analysis as provided in our impairments policy (see Note 2).



|                                        |  |            |           |            |   |          
|--------------------------------------- |  | ---------- | --------- | ---------- | - | ---------
|Asset or Account                        |  | Fair Value |           | Allocation
|Cash                                    |  | $          | 1,150,000 |            | $ | 1,150,000
|Prepaid expenses                        |  |            | 44,707    |            |   | 44,707   
|Computers, equipment and other property |  |            | 36,006    |            |   | 36,006   
|Intangible assets:                      |  |            |           |            |   |          
|Software code                           |  |            | 350,000   |            |   | 324,964  
|Customer list                           |  |            | 1,500,000 |            |   | 1,392,701
|Total                                   |  | $          | 3,080,713 |            | $ | 2,948,378
|                                        |  |            |           |            |   |          

In connection with the above allocation, we evaluated the presence of in-process
research and development that may require recognition (and immediate write-off). We concluded that in-process research and development was de minimus since the eResearch EDC Assets which include software applications have been in commercialization
since 1996. The application is largely mature and stable and, in fact, no substantive effort and/or costs were found in the records of eResearch. Research and development, if any is incurred, will be expensed as it is incurred.

As previously discussed, the determination of what constitutes a business for reporting purposes under the Rules and Regulations of the
Securities and Exchange Commission differs from the guidance in EITF 98-3. Under standards of the Securities and Exchange Commission, we have concluded that our acquisition of the eResearch EDC Assets is not required to be reported as a business.



|NOTE 7: | LOGOS TECHNOLOGIES, LTD. ASSET ACQUISITION
|------- | ------------------------------------------

On August 3, 2009, we acquired certain tangible and intangible electronic data capture (EDC) assets, formerly owned by Logos Technologies, Ltd. (Logos Ltd) (Logos EDC
Assets), pursuant to a Sale Agreement related to the Administration process in the United Kingdom. Our purpose in acquiring these assets, which included employment rights to the research and development personnel of Logos Ltd, to increase our
presence in the EDC industry through the Logos Ltd client list and the acquisition of the Intellectual Property associated with the Logos EDC Assets which we view as a strategically important facet of our software and service portfolio since it will
allow us to increase our revenues and to leverage our existing administrative and technical corporate infrastructure. We believe the Phase I segment of the clinical trial industry has been under-serviced with regard to EDC and eClinical software
applications and services and that the Logos EDC Assets will allow us to successfully penetrate this market segment.

The
Company purchased from Logos Ltd (in Administration), the Logos EDC Assets including equipment, devices, computer hardware and other computer systems, certain intellectual property, contracts, customer lists, and other assets specifically identified
in schedules to the Sale Agreement. The Company also assumed certain liabilities associated with these assets which includes a short-term office lease obligation. Consideration for the acquisition consisted of £92,000, which approximates
$152,628.



18



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



The purchase of the Logos EDC Assets required us to determine whether the group of
assets constituted a business, and accordingly, required accounting under Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141) (Codified within ASC 805, Business Combinations) or whether the
group of assets did not constitute a business and, accordingly, required accounting under other standards, including Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets (SFAS 142) (Codified within
ASC 350, Intangibles  Goodwill and Other). This determination is required to be made by reference (by analogy) to guidance in EITF No. 98-3, Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets
or a Business (EITF 98-3), which was superseded by SFAS 141R). It should be noted that the determination of what constitutes a business for reporting purposes under Rules and Regulations of the Securities and Exchange
Commission differs from the guidance in EITF 98-3.

We accounted for the acquisition of the Logos EDC Assets as an acquisition
of productive assets and not as a business. In applying the guidance of EITF 98-3, a business is a self sustaining, integrated set of activities and assets conducted and managed for the purpose of providing a return to investors and, further, must
consist of inputs, processes applied to those inputs, and resulting outputs that are used to generate revenues. Based upon the guidance of EITF 98-3, the Logos EDC Assets were not self-sustaining since they required significant administrative,
technological and operational input, guidance and assistance from the corporate infrastructure which had originally been by Logos Holdings, Ltd. on a pre-Administration basis. Subsequent to the Administration process the firm was essentially left
with three full time employees and the non-commercialized Intellectual Property associated with the Logos EDC Assets. The Logos EDC Assets when evaluated on a stand-alone basis while containing a portion of the components of a business lacked a
significant number of the components required to be classified a business and would without the significant contribution of the infrastructure components provided by Logos Ltd. on a pre-purchase basis and by the Company on a post-purchase basis
which include sales and marketing support would first likely preclude it from being considered a business under the guidance of EITF 98-3 and second would have difficulty achieving commercial viability without a significant investment of capital,
infrastructure and personnel.

Notwithstanding our conclusion that the Logos EDC Assets did not constitute a business, SFAS
142 provides that intangible assets acquired as a group are initially recognized at fair value applying the measurement principles for exchange transactions provided in SFAS 141.5-7. Those measurement principles provide that, when consideration is
in the form of cash, the measurement can, given an authentic arms-length transaction, be based upon amount of cash consideration given or the fair value of the assets acquired, whichever is more clearly and closely evident and, thus more reliably
measureable. We have concluded that the value of the consideration given representing cash, is more clearly evident and reliable for this purpose because (i) the exchange resulted from exhaustive negotiations with the Administrators of Logos
Ltd., and (ii) while ultimately reasonable, our fair value measurements of the significant tangible and intangible asset relies heavily on subjective estimates and prospective financial information. The following table reflects the components
of the consideration paid to effect the acquisition:



|                              |  |        |        
|----------------------------- |  | ------ | -------
|Financial Instrument or Cost: |  | Amount
|Cash                          |  | $      | 152,628
|Direct costs                  |  | $      | 23,441 
|                              |  |        |        
|                              |  | $      | 176,069
|                              |  |        |        



19



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



We have evaluated the substance of the exchange for purposes of identifying all assets
acquired. The recognition of goodwill is not contemplated in an exchange that is not a business or accounted for as a business combination under SFAS 141. The following table reflects the acquisition date fair values and the final allocation of the
consideration to the assets acquired. The allocation was performed in accordance with SFAS 142, which provides that an excess in consideration over the fair values of the assets acquired is allocated to the assets subject to depreciation and
amortization, based upon their relative fair values, and not to those assets with indefinite lives. A difference in the recognized basis in the value of the consideration between book and income tax gives rise to the deferred income taxes. The
allocation of consideration in this manner contemplates an immediate impairment analysis under SFAS 144. Our analysis did not result in impairment, but we are required to continue to perform this analysis as provided in our impairments policy (see
Note 2).



|                                        |  |            |           |            |   |        
|--------------------------------------- |  | ---------- | --------- | ---------- | - | -------
|Asset or Account                        |  | Fair Value |           | Allocation
|Computers, equipment and other property |  | $          | 35,000    |            | $ | 35,000 
|Intangible assets:                      |  |            |           |            |   |        
|Software code                           |  |            | 1,200,000 |            |   | 117,628
|                                        |  |            |           |            |   |        
|Total                                   |  | $          | 1,235,000 |            | $ | 152,628
|                                        |  |            |           |            |   |        

In connection with the above allocation, we evaluated the presence of in-process
research and development that may require recognition (and immediate write-off). We concluded that in-process research and development was de minimus since the Logos EDC Assets which include software applications while not currently in extensive
commercialization would have required far greater capital to acquire in a non-Administration setting, would require significantly more than the allocated fair value to replicate and that we anticipate more widely commercializing the acquired Logos
EDC software beginning in January 2010. Research and development, if any is incurred, will be expensed as it is incurred.

As
previously discussed, the determination of what constitutes a business for reporting purposes under the Rules and Regulations of the Securities and Exchange Commission differs from the guidance in EITF 98-3. Under standards of the Securities and
Exchange Commission, we have concluded that our acquisition of the eResearch EDC Assets is not required to be reported as a business.



|NOTE 8: | NOTES PAYABLE
|------- | -------------

At
September 30, 2009, the Company owed $249,300 in notes payable. The table below provides details as to the terms and conditions of the notes payable.



OriginationDate

Due Date

InterestRate


Amount

ShortTerm

LongTerm12/31/08

01/31/11

9.00
%

$
137,500

$
-0-

$
137,50001/01/09

10/01/10

9.00
%


51,800


-0-


51,80001/01/09

10/01/10

9.00
%


60,000


-0-


60,000$
249,300

$
-0-

$
249,300




20



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



|NOTE 9: | 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 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 was September 30, 2004, into shares of common stock of the Company at $1.25 per
share. As of September 30, 2009, approximately $787,500 of the Convertible Notes had been converted into 1,495,179 shares of common stock of the Company leaving an outstanding principal balance of $75,000.

As of September 30, 2009 the Company is in default on interest payments owed totaling $77,837 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 has been in default since January 30, 2002. At the option of the note holders the full amount of the convertible
notes could be declared in default. For the nine month period ended September 30, 2009, we incurred and recorded $5,629 in interest expense on the 10% Convertible Notes.

The following table summarizes the convertible debt activity the Company has undertaken during fiscal 2008 and 2009.



Origination Date

InterestRate

OriginalPrincipal

AllocatedDiscount

DiscountAmortized

Discount at9/30/09

Principalat 9/30/092/29/2008

10%

$
2,325,000

$
1,648,993

$
1,648,993

$


$
6/10/2008

10%


210,000


162,352


40,588





8/29/2008

10%


1,325,000


845,350


845,350





8/29/2008

10%


2,270,000


2,052,080


1,111,543


940,537


2,270,00012/1/2008

12%


300,000


6,914


6,914





12/16/2008

12%


5,075,000


1,370,250


570,937


799,313


5,075,0009/30/2009

12%


1,400,000


526,400





526,400


1,400,000$
12,905,000

$
6,612,339

$
4,224,325

$
2,266,250

$
8,745,000


The convertible note dated June 10, 2008 was voluntarily converted by the
holder of the convertible note into the private placement of convertible notes totaling $2,270,000 completed by the Company on August 29, 2008. The full amount of the discount originally allocated, $162,352, was only partially amortized in the
amount of $40,588 due to the early conversion of the convertible note.



|NOTE 10: | FAIR VALUE MEASUREMENT
|-------- | ----------------------

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (Codified within ASC, Fair Value Measurements and Disclosures), which defines fair value, establishes a
framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements, but its provisions apply to all
other accounting pronouncements that require or permit fair value measurement. SFAS No. 157 was effective for the Companys fiscal year beginning January 1, 2008 and for interim



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



periods within that year. In February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, Effective Date of FASB Statement No. 157 (Codified within ASC 820, Fair
Value Measurements and Disclosures), which delayed for one year the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). As required, the Company adopted SFAS No. 157 for its financial assets on January 1, 2008. Adoption did not have a material impact on the Companys financial position or results of
operations.

SFAS No. 157 clarifies that fair value is an exit price, representing the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on
assumptions that market participants would use in pricing an asset or liability. SFAS No. 157 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable
inputs. These inputs are prioritized as follows:



| |  |  | Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for
similar assets or liabilities or market-corroborated inputs; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions
about how market participants would price the assets or liabilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The valuation techniques that may be
used to measure fair value are as follows:



| | A. | Market approachUses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | B. | Income approachUses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts,
including present value techniques, option-pricing models and excess earnings method
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | C. | Cost approachBased on the amount that currently would be required to replace the service capacity of an asset (replacement cost)
| | -- | ---------------------------------------------------------------------------------------------------------------------------------

The Company also adopted the provisions of Statement of Financial Accounting Standards No. 159 (SFAS 159) (Codified
within ASC 825, Financial Instruments) in the first quarter of 2008. SFAS No. 159 allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be
elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to re-measure any of its existing financial assets or
liabilities under the provisions of this Statement, and did not elect the fair value option for any financial assets and liabilities transacted in the year-ended December 31, 2008.

The Companys financial assets or liabilities subject to SFAS No. 157 as of September 30, 2009 include the conversion feature
and warrant liability associated with convertible debentures issued during fiscal 2008 and 2009 and the value of Intellectual Property associated with software acquired during 2009 as well as a customer list acquired during 2009. The conversion
feature and warrants were deemed to be derivatives (the Derivative Instruments) since a fixed conversion price cannot be determined for either of the Derivative Instruments due to anti dilution provisions embedded in the offering
documents for the convertible debentures. The derivative instruments were not issued for risk management purposes and as such are not designated as hedging instruments under the provisions of SFAS No. 133.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Following is a description of the valuation methodologies used to determine the fair
value of the Companys financial assets including the general classification of such instruments pursuant to the valuation hierarchy.

A summary of the fair value of assets and liabilities measured at fair value on a recurring basis follows: (1)



|                                                       |  |                          |           |                                                                        |   |                                             |  |                                        |           |  |   |    
|------------------------------------------------------ |  | ------------------------ | --------- | ---------------------------------------------------------------------- | - | ------------------------------------------- |  | -------------------------------------- | --------- |  | - | ---
|                                                       |  | CarryingAmount at9/30/09 |           | Quoted prices inactive marketsFor identicalassets/liabilities(Level
1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|Acquired Assets (2)                                    |  |                          |           |                                                                        |   |                                             |  |                                        |           |  |   |    
|Software code eResearch Technologies (eRT) transaction |  | $                        | 297,884   |                                                                        | $ | -0-                                         |  | $                                      | 350,000   |  | $ | -0-
|Software code Logos Technologies, Ltd. Transaction     |  |                          | 111,093   |                                                                        |   | -0-                                         |  |                                        | 1,200,000 |  |   | -0-
|Customer list (eRT) transaction                        |  |                          | 1,276,643 |                                                                        |   | -0-                                         |  |                                        | 1,500,000 |  |   | -0-
|Derivatives: (3)                                       |  |                          |           |                                                                        |   |                                             |  |                                        |           |  |   |    
|Conversion feature liability                           |  |                          | 783,852   |                                                                        |   | -0-                                         |  |                                        | 783,852   |  |   | -0-
|Warrant liability                                      |  |                          | 1,288,786 |                                                                        |   | -0-                                         |  |                                        | 1,288,786 |  |   | -0-
|                                                       |  |                          |           |                                                                        |   |                                             |  |                                        |           |  |   |    
|Total of Derivatives                                   |  | $                        | 3,758,257 |                                                                        | $ | -0-                                         |  | $                                      | 5,122,638 |  | $ | -0-
|                                                       |  |                          |           |                                                                        |   |                                             |  |                                        |           |  |   |    



|(1) | The Income approach was used as a valuation technique.
|--- | ------------------------------------------------------

|(2) | The fair value of the Acquired Assets was estimated using the Income approach with a discounted cash flow valuation methodology applied.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(3) | The fair value of the Derivative Instruments was estimated using the American Binomial option pricing model with the following assumptions for the period ended
September 30, 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                  |  |            
|--------------------------------- |  | -----------
|Significant Valuation Assumptions
|                                  | 
|Risk free interest rate           |  | 0.12%      
|Dividend yield                    |  | 0.00%      
|Expected Volatility               |  | 74.1%      
|Expected life (range in years)    |  |            
|Conversion feature liability      |  | 1.0 to 4.25
|Warrant liability                 |  | 2.5 to 4.0 



23



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



For the nine month period endedOther IncomeSeptember 30,2009

September 30,2008The net amount of total gains for the period included in earnings (or changes in net assets) attributable to the change in
unrealized gains relating to liabilities still held at the reporting date

$
2,349,194

$
1,909,051Total gains included in earnings

$
2,349,194

$
1,909,051


On June 23, 2009, we acquired certain tangible and intangible EDC assets,
formerly owned by eResearch Technology, Inc. as is more fully described in Note 6. As part of our analysis of that transaction and prior to recording the assets and associated liabilities in our financial statements we performed a fair value
analysis of the acquired assets and liabilities. The results of that valuation exercise are presented in Note 6.

On
August 3, 2009, we acquired certain tangible and intangible EDC assets, formerly owned by Logos Technologies, Ltd as is more fully described in Note 7. As part of our analysis of that transaction and prior to recording the assets and associated
liabilities in our financial statements we performed a fair value analysis of the acquired assets and liabilities. The results of that valuation exercise are presented in Note 7.



|NOTE 11: | COMMITMENTS AND CONTINGENCIES
|-------- | -----------------------------

The Company currently leases office space under an operating lease. The minimum future lease payments required under the Companys operating leases at September 30, 2009 are as follows:



|      |  |   |          
|----- |  | - | ---------
|2009  |  | $ | 113,041  
|2010  |  |   | 521,626  
|2011  |  |   | 319,501  
|2012  |  |   | 73,339   
|2013  |  |   | 12,277   
|      |  |   |          
|Total |  | $ | 1,039,784
|      |  |   |          



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. Rent expense was $514,168 and $410,090 for the
nine month periods ended September 30, 2009 and September 30, 2008, respectively.

The Companys corporate
office lease expires in July 2011. The Companys lease on its New Jersey field office expires in February 2013. The Company currently operates its wholly-owned subsidiary OmniComm Ltd. in the United Kingdom under the terms of a month-to-month
lease.



24



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



PATENT LITIGATION SETTLEMENT

On April 9, 2009, we entered into a Settlement and License Agreement with DataSci, LLC (DataSci) which relates to a lawsuit
filed on September 18, 2008 in the United States District Court for the District of Maryland by DataSci against OmniComm alleging infringement of a U.S. Patent No. 6,496,827 B2 entitled Methods and Apparatus for the Centralized
Collection and Validation of Geographically Distributed Clinical Study Data with Verification of Input Data to the Distributed System (Licensed Patent) claimed to be owned by DataSci. Pursuant to the agreement, the parties entered
into a Stipulated Order of Dismissal of the lawsuit filed by DataSci and DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent the subject of the claim and the right to sublicense TrialMaster on a
technology Transfer and Technology Transition basis. The license expressly excludes the right to make, use, sell, import, market, distribute, oversee the operation of, or service systems covered by, a claim (if any) of the Licensed Patent to the
extent such systems are used for creating and managing source documentation and conducting remote data validation in clinical trial studies using a tablet PC with stylus, touch screen device, digitizing tablet, digitizer pen, or similar mobile
processing device (Digitizing Device), wherein the source documentation is electronic and is completed using a Digitizing Device. Under the terms of the license, we are obligated to pay royalties quarterly for sales of Licensed Products,
as defined therein, from January 1, 2009 until the expiration of the Licensed Patent equal to two percent (2%) of OmniComms annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater. The
remaining minimum royalty payments per year are as follows:



|          |  |   |          
|--------- |  | - | ---------
|2009      |  | $ | 32,500   
|2010      |  |   | 582,500  
|2011      |  |   | 375,000  
|2012      |  |   | 412,500  
|2013      |  |   | 450,000  
|2014-2018 |  |   | 1,912,500
|          |  |   |          
|Total     |  | $ | 3,765,000
|          |  |   |          

Pursuant to the acquisition of the eResearch Technology, Inc. EDC assets, the Company
entered into the First Amendment to Settlement and Licensing Agreement with DataSci, LLC in June 2009 to provide for license payments of $300,000 to DataSci over the next three years for the EDC assets acquired in that transaction. The Company began
making annual payments of $100,000 to DataSci beginning in July 2009.

During the nine month period ended September 30,
2009, the Company recorded a charge to earnings in the amount of $288,988 which amount represents (1) the amount of additional license expense incurred above the stipulated minimum in the DataSci License Agreement during the nine month period
ended September 30, 2009 and (2) the accretion of the difference between the total stipulated annual minimum .royalty payments and the recorded present value accrual of the annual minimum royalty payments



|NOTE 12: | RELATED PARTY TRANSACTIONS
|-------- | --------------------------

Guus van Kesteren, a member of our Board of Directors, is a consultant to Noesis Capital Corp. Noesis Capital Corp. has acted as a placement agent for the sale of our securities in various offerings since
1999.



25



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



In December 2008, the Company issued a promissory note for $197,500 that included
$112,500 in accrued expenses associated with financial services provided by Noesis Capital Corp., the Companys Placement Agent for several equity and debt transactions since 1999. The amount was borrowed under a promissory note bearing
interest at 9% per annum payable with a maturity date of January 31, 2011. Included in the principal amount due under this promissory note is $85,000 that was originally owed under a $185,000 principal amount promissory note with a
maturity date of January 1, 2009. The remaining $100,000 in principal amount owed was converted into a Convertible Note dated December 16, 2008. The Company repaid $60,000 in principal on this promissory note during the nine months ended
September 30, 2009. We incurred $12,499 in interest expense on the note payable to Noesis Capital Corp., the Placement Agent for the Company during the nine months ended September 30, 2008 and $10,284 for the nine month period ended
September 30, 2009.

On February 29, 2008, we sold an aggregate of $2,325,000 principal amount 10% Secured
Convertible Debentures and common stock purchase warrants to purchase an aggregate of 2,930,675 shares of our common stock to 12 accredited investors. As part of the transaction Cornelis Wit, Chief Executive Officer and Director, Guus van Kesteren,
Director, Ronald T. Linares, Chief Financial Officer, and Atlantic Balanced Fund, a fund managed by Mentor Capital of which Fernando Montero, a director of OmniComm, is president, director and sole shareholder, purchased $150,000, $150,000, $25,000
and $200,000, respectively, principal amount of debentures and received 189,076, 189,076, 31,513 and 252,101 warrants, respectively. Interest expense incurred and payable to Directors and Officers of the Company in connection with the Secured
Convertible Debenture totaled $42,000 through December 31, 2008. The Debentures matured originally on August 29, 2008. On August 29 2008, the Company repaid $1,000,000 of the Debentures. The remaining $1,325,000 in principal was
extended pursuant to an Extension Agreement that included: an extension of the maturity date to December 1, 2008; reduced the conversion price of the Debenture from $0.595 per share to $0.50 per share; reduced the exercise price of the warrants
attached to the Debenture from $0.75 per share to $0.60 per share; and resulted in the issuance of 2,650,000 warrants to the investors agreeing to the extension of the Debentures including warrants to our officers and directors as follows: Cornelis
F. Wit, 300,000 warrants, Guus van Kesteren, 300,000 warrants, Ronald T. Linares, 50,000 warrants and .Atlantic Balanced Fund, 400,000 warrants.

As of September 30, 2009, we have an aggregate of $7,220,000 principal amount of convertible debentures and promissory notes outstanding to Cornelis Wit, our Chief Executive Officer and a director,
and have issued certain warrants to Mr. Wit, as follows:



| |  |  | On February 14, 2008, $150,000 principal amount promissory note. This note was convertible at the option of the holder into any New Securities we
issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 10% per annum and was due on December 31, 2009. On December 16, 2008
Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 10, 2008, $210,000 principal amount Convertible Note and common stock purchase warrants (the Warrants) to purchase an
aggregate of 264,706 shares of our common stock. We received net proceeds of $210,000. This note was convertible at the option of the holder into any securities we issue (New Securities) before maturity of the Convertible Debenture on
the same terms and conditions of the sale of the New Securities. This Convertible Debenture, which carried an interest rate of 10% per annum, was due on September10, 2009. On August 29, 2008 Mr. Wit agreed to convert this Convertible
Debenture into a private placement of Convertible Debentures that expire on August 29, 2010.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



| |  |  | On September10, 2008, $300,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities we
issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 10% per annum and was due on September 30, 2010. On August 29, 2008
Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on August 29, 2010.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 27, 2008, $300,000 principal amount Convertible Note. This note is convertible at the option of the holder into any New Securities we
issue before maturity of this Convertible Note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 10% per annum and was due on September 30, 2010. This note was repaid on
July 8, 2008.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During August 2008, $1,260,000 principal amount Convertible Note that is part of a private placement of Convertible Debentures that expire on
August 29, 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 17, 2008, $150,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities
we issue before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 16,
2008 Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 29, 2008, $400,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities
we issue before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 16,
2008 Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On October 17, 2008, $1,000,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities
we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 16,
2008 Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On November 17, 2008, $1,450,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities
we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 16,
2008 Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



27



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



| |  |  | On December 8, 2008, $1,200,000 principal amount Convertible Note. This note was convertible at the option of the holder into any New Securities
we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 16,
2008 Mr. Wit agreed to convert this Convertible Note into a private placement of Convertible Debentures, which Convertible Debentures are due on December 16, 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During July to September 2009, Mr. Wit invested $1,100,000 which amount was aggregated under the terms of one Convertible Note dated
September 30, 2009. This note was convertible at the option of the holder into any New Securities we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This Convertible Note carried
an interest rate of 12% per annum and was due on December 31, 2009. On September 30, 2009 Mr. Wit agreed to convert this Convertible Note into a private placement of Secured Convertible Debentures, which Secured Convertible
Debentures are due on March 31, 2011.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On August 29, 2008, we sold, $2,270,000 principal amount
Convertible Notes (the Convertible Notes) and common stock purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including Mr. Wit
our Chief Executive Officer as discussed above, and one of our Directors. The Convertible Notes bear interest at 10% and are due on August 29, 2010. As part of the transaction Cornelis Wit, Chief Executive Officer and Director and Guus van
Kesteren, Director, purchased $1,770,000 and $150,000, respectively, principal amount of notes, which are convertible into 3,540,000 shares and 300,000 shares, respectively, and received 3,540,000 and 300,000 warrants, respectively. Interest expense
incurred and payable to Directors and Officers of the Company in connection with the Convertible Note totaled $143,605 for the nine months ended September 30, 2009.

On December 16, 2008, we sold, $5,075,000 principal amount Convertible Debentures (the Convertible Debentures) and common stock purchase warrants (the Convertible Debenture
Warrants) to purchase an aggregate of 10,150,000 shares of our common stock to eleven accredited investors including Mr. Wit our Chief Executive Officer, as discussed above, and Mr. Smith our Chairman and Chief Technology Officer,
Mr. Johnson our Chief Operating Officer, Mr. Linares our Chief Financial Officer and two members of our Board of Directors, Mr. Veatch and Mr. van Kesteren. The Convertible Debentures bear interest at 12% and are due on
December 16, 2010. As part of the transaction Cornelis Wit, Chief Executive Officer and Director and Guus van Kesteren, Director, purchased $4,350,000 and $160,000, respectively, principal amount of Debentures, which are convertible into
8,700,000 shares and 320,000 shares, respectively, and received 8,700,000 and 320,000 warrants, respectively. As a result, Mr. Wit and Mr. van Kesteren are considered to be beneficial owners of approximately 30% and 5%, respectively, of
our issued and outstanding and issuable upon conversion shares of common stock. Noesis Capital Corp. placement agent for the sale of our securities in various offerings since 1999 converted $100,000 in promissory notes and received 200,000 warrants
to purchase common stock of the Company. Atlantic Balanced Fund, a fund managed by Mentor Capital of which Fernando Montero, a director of OmniComm, is president, director and sole shareholder, converted $200,000 that was originally invested into a
round of financing of Secured Convertible Debentures in February 2008 and received 400,000 warrants to purchase common stock of the Company. Mr. Montero is considered to be the beneficial owner of approximately 10% of our issued and outstanding
and issuable upon conversion shares of our common stock. Additionally the following officers and directors invested in the Convertible Debentures: Mr. Smith $5,000, Mr. Johnson, $25,000, Mr. Veatch $15,000 and Mr. Linares
$125,000. The officers and directors received 10,000, 50,000, 30,000 and 250,000 warrants to purchase shares of our common stock, respectively Interest expense incurred and payable to Directors and Officers of the Company in connection with the
Convertible Note totaled $446,972 for the nine months ended September 30, 2009.



28



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



On September 30, 2009, we sold, $1,400,000 principal amount Secured Convertible
Debentures (the Secured Debentures) and common stock purchase warrants (the Convertible Debenture Warrants) to purchase an aggregate of 5,600,000 shares of our common stock to four accredited investors including Mr. Wit
our Chief Executive Officer and a Director. The Secured Debentures bear interest at 12% and are due on March 31, 2011. As part of the transaction Mr. Wit purchased $1,100,000 principal amount of Secured Debentures, which are convertible
into 4,400,000 shares and received 4,400,000 warrants. As a result, Mr. Wit is considered to be beneficial owner of approximately 25% of our issued and outstanding and issuable upon conversion shares of common stock. Interest expense incurred
and payable to Directors and Officers of the Company in connection with the Secured Debenture totaled $0 for the nine months ended September 30, 2009 since the note was issued on that date.

During the nine month period ended September 30, 2009, the Company issued 383,048 shares of common stock to our Chairman and Chief
Technology Officer Randall G. Smith. The shares were valued at prices ranging from $0.19 to $0.30 per share based on the closing share price of our common stock on the OTC Bulletin Board on the date of each payroll. The shares of common stock were
issued in lieu of salary for the nine month period ended September 30, 2009.

During the nine month period ended
September 30, 2009 we have incurred $612,104 in interest expense payable to related parties and $72,137 for the nine month period ended September 30, 2008.



|NOTE 13: | STOCKHOLDERS EQUITY (DEFICIT)
|-------- | ------------------------------

Our authorized capital stock consists of 250,000,000 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 5% Series A Preferred, 230,000 shares have been designated as Series B Preferred Stock and 747,500 shares have been designated as Series C Preferred Stock.

As of September 30, 2009 we had the following outstanding securities:



| |  |  | 85,503,692 shares of common stock issued and outstanding;
| | - |  | ---------------------------------------------------------



| |  |  | 35,366,641 warrants issued and outstanding to purchase shares of our common stock;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | 4,125,224 shares of our Series A Preferred Stock issued and outstanding,
| | - |  | ------------------------------------------------------------------------



| |  |  | -0- shares of our Series B Preferred Stock issued and outstanding;
| | - |  | ------------------------------------------------------------------



| |  |  | -0- shares of our Series C Preferred Stock issued and outstanding;
| | - |  | ------------------------------------------------------------------



| |  |  | $8,745,000 principal amount 12% Convertible Debentures convertible into 21,212,000 shares of common stock; and
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | $75,000 principal amount 10% Convertible Notes convertible into 60,000 shares of common stock.
| | - |  | ----------------------------------------------------------------------------------------------

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. Holders of common
stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up, subject to the preferences of the Series A Preferred
Stockholders, Series B Preferred Stock holders and Series C Preferred Stockholders, each outstanding share of common stock entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class
of stock, if any, having preference over the common stock.



29



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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.

Warrants

We have issued and outstanding warrants to purchase a total of 37,492,895 shares of our common stock, including:



| |  |  | Warrants to purchase 328,400 shares of our common stock at an exercise price of $.25 per share expiring on dates ranging from May 2009 to September
2010 which were issued by us to the placement agent of two offerings of our common stock that were conducted during 2003.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 270,000 shares of our common stock at an exercise price of $.25 per share expiring December 2009 which were issued by us in
connection with a private placement of common stock that occurred during 2004, which warrants contain a cashless exercise provision and piggyback registration rights.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 185,356 shares of our common stock at an exercise price of $0.50 per share expiring in March 2014 which were issued in connection
with a private placement of common stock that was conducted in 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 100,707 shares of our common stock at an exercise price of $0.50 per share expiring in December 2012 which were issued in
connection with a private placement of common stock that was conducted in 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 222,458 shares of our common stock at an exercise price of $0.60 per share expiring in February 2012 which were issued by us to
the placement agent of an offering of our Secured Convertible Debentures in February 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 264,706 shares of our common stock at an exercise price of $0.60 per share expiring in September 2012 which were by us in
connection with a private placement of our Convertible Notes in September 2008.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 7,449,012 shares of our common stock at exercise prices ranging from $0.25 to $0.60 per share expiring in February 2012 which were
issued by us in connection with a private placement of our Secured Convertible Debentures in February 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 4,890,000 shares of our common stock at exercise prices ranging from $0.25 to $0.60 per share expiring in August 2012 which were
issued by us in connection with an extension of Secured Convertible Debentures which occurred in August 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 5,520,000 shares of our common stock at exercise prices ranging from $0.25 to $0.60 per share expiring in August 2012 which were
issued by us in connection with a private placement of our Convertible Debentures in August 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 10,536,001 shares of our common stock at exercise prices from to $0.25 to $0.60 per share expiring in December 2012 which were
issued by us in connection with a private placement of our Convertible Debentures in December 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 5,600,000 shares of our common stock at an exercise price of $0.25 per share expiring in September 2013 which were issued by us in
connection with a private placement our Secured Convertible Debentures in September 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10%
Convertible Notes

From February 1999 to May 1999, we issued 10% convertible notes (10% Convertible Notes)
in the aggregate principal amount of $862,500. The 10% Convertible Notes pay 10% interest and were due and payable on September 2004. The holders have the right to convert the principal and interest amount into shares of our common stock at a



30



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



rate of $1.25 per share. From 2000 to 2007, certain of the note holders converted an aggregate of $787,500 principal amount of the notes according to their terms into 1,456,638 shares of our
common stock. In addition, the holders of the 10% Convertible Notes were granted certain demand and piggy-back registration rights for the shares of our common stock issuable upon the conversion of the 10% Convertible Notes.

Secured Convertible Debentures

On February 29, 2008, we sold an aggregate of $2,325,000 principal amount 10% Secured Convertible Debentures (the Debentures) and common stock purchase warrants (the Warrants)
to purchase an aggregate of 2,930,675 shares of our common stock exercisable at a price of $0.75 per share for four years subsequent to the closing of the transaction to 12 accredited investors. After paying certain fees and expenses of $181,280 in
the aggregate (including payment to Emerging Growth Equities, Ltd., a broker dealer and member of FINRA who acted as the placement agent for this offering, of a commission and expense reimbursement aggregating $143,750), we received net proceeds of
$2,156,220. We recorded debt acquisition costs of $261,365. The Debentures, which bear interest at 10% per annum, were due 6 months from their issuance date. The Debentures were convertible at any time at the option of the holder into shares of
our common stock based upon a conversion rate of $0.595 per share.

On August 29, 2008, the Company repaid $1,000,000 of
the Debentures. The remaining $1,325,000 was extended pursuant to an Extension Agreement (the Extension). The maturity date was changed to December 1, 2008. The Debentures continued to bear interest at a rate of 10% per annum. In
accordance with the Extension the conversion price of the Debentures was changed from $0.595 per share to $0.50 per share. Additionally, the exercise price on the Warrants was lowered from $0.75 per share to $0.60 per share. In conjunction with the
lowering of the exercise price and the Extension the investors received an additional 3,282,455 warrants to purchase shares of our common stock at an exercise price of $0.60 per share for a period of four years after their extension. On
December 1, 2008, the Company repaid $500,000 of the Debentures. Four investors agreed to convert the principal amounts due under the Debentures into a round of financing that was consummated on December 16, 2008. The principal amount
converted by these four investors was $525,000. The remaining six investors agreed to extend the maturity date of their Debentures to January 31, 2009. The principal amount extended to January 31, 2009 was $300,000. The Debentures bore
interest at a rate of 12% per annum until their January 31, 2009 maturity date. The six investors received an additional 50,000 warrants to purchase shares of our common stock at an exercise price of $0.60 per share for a period of four
years after their extension. the exercise price on the Warrants was lowered from $0.75 per share to $0.60 per share. On September 30, 2009 the Company sold an aggregate of $1,400,000 of Secured Convertible Debentures with convertible Common
Stock Warrants with an exercise price of $0.25. In conjunction with the Private Placement the exercise price of the Warrants was lowered from $0.60 to $0.25 per share. The investors received an additional 6,125,882 warrants to purchase shares of our
common stock at an exercise price of $0.25 per share.

On September 30, 2009, we sold an aggregate of $1,400,000
principal amount 12% Secured Convertible Debentures (the Debentures) and common stock purchase warrants (the Warrants) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share
for four years subsequent to the closing of the transaction to four accredited investors including our President and Chief Executive Officer. We received net proceeds of $1,400,000. The Debentures, which bear interest at 12% per annum, are due
18 months from their issuance date on March 31, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share.



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OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Convertible Debentures

On August 29, 2008, we sold, $2,270,000 principal amount Convertible Notes (the Convertible Notes) and common stock
purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 4,540,000 shares of our common stock at an exercise price of $0.60 per share before August 31, 2012 to four accredited investors including our Chief
Executive Officer and one of our Directors. We received net proceeds of $2,270,000. The Convertible Notes, which bear interest at 10% per annum, are due on August 29, 2010. The Convertible Notes were convertible at any time at the option
of the holder into shares of our common stock based upon a conversion rate of $0.50 per share and contained certain antidilution rights. Pursuant to those antidilution rights and in connection with a Private Placement of Secured Convertible
Debentures of the Company on September 30 2009 the Company lowered the conversion rate on the Convertible Notes for non-Related Party noteholders to $0.25 per share. The lowering of the conversion rate resulted in the possible issuance of an
additional 700,000 shares of common stock upon conversion of the Convertible Notes. In addition, as part of the issuance of the Secured Convertible Debentures two Related Parties of the Company, Cornelis F. Wit, our President and Chief Executive
Officer and a Director and Guus van Kesteren, a Director, waived their antidilution rights and agreed to extend the maturity of the Convertible Notes they hold by three years to August 29, 2013. In addition convertible Common Stock Warrants
with an exercise price of $0.25 were issued. In conjunction with the Private Placement the exercise price of the Warrants was lowered from $0.60 to $0.25 per share. The investors received an additional 980,000 warrants to purchase shares of our
common stock at an exercise price of $0.25 per share.

On December 16, 2008, we sold, $5,075,000 principal amount
Convertible Notes (the Convertible Notes) and common stock purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 10,150,000 shares of our common stock at an exercise price of $0.60 per share before
December 16, 2012 to eleven accredited investors including our Chief Executive Officer, Chief Operating Officer, Chief Technology Officer, Chief Financial Officer and four of our Directors. We received net proceeds of $5,075,000. The
Convertible Notes, which bear interest at 12% per annum, are due on December 16, 2010. The Convertible Notes are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per
share and contained certain antidilution rights. Pursuant to those antidilution rights and in connection with a Private Placement of Secured Convertible Debentures of the Company on September 30 2009, the Company lowered the conversion rate on
the Convertible Notes for non-Related Party noteholders to $0.25 per share. The lowering of the conversion rate resulted in the possible issuance of an additional 266,000 shares of common stock upon conversion of the Convertible Notes. In addition
convertible Common Stock Warrants with an exercise price of $0.25 were issued. In conjunction with the Private Placement the exercise price of the Warrants was lowered from $0.60 to $0.25 per share. The investors received an additional 90,002
warrants to purchase shares of our common stock at an exercise price of $0.25 per share. In addition, as part of the issuance of the Secured Convertible Debentures eight Related Parties of the Company, including four directors of the Company,
Cornelis F. Wit, our President and Chief Executive Officer and a Director, Stephen E. Johnson , our Chief Operating Officer, Ronald T. Linares, our Chief Financial Officer and Noesis Capital Corp. our Placement Agent, waived their antidilution
rights and agreed to extend the maturity of the Convertible Notes they hold by three years to December 16, 2013.



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OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Other Comprehensive Gain (Loss)

Due to the availability of net operating losses and related deferred tax valuations, there is no tax effect associated with any component of
other comprehensive gain (loss). The following table lists the beginning balance, yearly activity and ending balance of the components of accumulated other comprehensive gain (loss).



|                           |  |                             |        |   |                                            |   |        |  
|-------------------------- |  | --------------------------- | ------ | - | ------------------------------------------ | - | ------ | -
|                           |  | Foreign CurrencyTranslation |        |   | Accumulated OtherComprehensive Gain (Loss) |  
|Balance December 31, 2007  |  | $                           | 7,957  |   |                                            | $ | 7,957  |  
|2008 Activity              |  |                             | (6,968 | ) |                                            |   | (6,968 | )
|                           |  |                             |        |   |                                            |   |        |  
|Balance December 31, 2008  |  |                             | 989    |   |                                            |   | 989    |  
|2009 Activity              |  |                             | 2,062  |   |                                            |   | 2,062  |  
|                           |  |                             |        |   |                                            |   |        |  
|Balance September 30, 2009 |  | $                           | 3,051  |   |                                            | $ | 3,051  |  
|                           |  |                             |        |   |                                            |   |        |  



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|NOTE 14: | EARNINGS PER SHARE
|-------- | ------------------

Basic earnings per share (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 73,995,897 and 34,240,677 have been omitted from the calculation of dilutive EPS for the quarters ended September 30, 2009 and
September 30, 2008, respectively. Provided below is reconciliation between numerators and denominators of the basic and diluted earnings per shares:



|                              |  |                            |            |   |                    |            |                 |   |       |                 |  |   |                   |   |                 |            |  |   |       |  
|----------------------------- |  | -------------------------- | ---------- | - | ------------------ | ---------- | --------------- | - | ----- | --------------- |  | - | ----------------- | - | --------------- | ---------- |  | - | ----- | -
|                              |  | For the Nine Months Ended  |           
|                              |  | September 30, 2009         |            |   | September 30, 2008 |           
|                              |  | IncomeNumerator            |            |   | SharesDenominator  |            | Per-ShareAmount |   |       | IncomeNumerator |  |   | SharesDenominator |   | Per-ShareAmount |           
|Basic EPS                     |  | $                          | (4,130,554 | ) |                    | 79,787,889 |                 | $ | (0.05 | )               |  | $ | (5,876,387        | ) |                 | 70,150,937 |  | $ | (0.08 | )
|Effect of Dilutive Securities |  |                            |            |   |                    |            |                 |   |       |                 |  |   |                   |   |                 |            |  |   |       |  
|None.                         |  |                            | -0-        |   |                    | -0-        |                 |   | -0-   |                 |  |   | -0-               |   |                 | -0-        |  |   | -0-   |  
|                              |  |                            |            |   |                    |            |                 |   |       |                 |  |   |                   |   |                 |            |  |   |       |  
|Diluted EPS                   |  | $                          | (4,130,554 | ) |                    | 79,787,889 |                 | $ | (0.05 | )               |  | $ | (5,876,387        | ) |                 | 70,150,937 |  | $ | (0.08 | )
|                              | 
|                              |  | For the Three Months Ended |           
|                              |  | September 30, 2009         |            |   | September 30, 2008 |           
|                              |  | IncomeNumerator            |            |   | SharesDenominator  |            | Per-ShareAmount |   |       | IncomeNumerator |  |   | SharesDenominator |   | Per-ShareAmount |           
|Basic EPS                     |  | $                          | (3,069,997 | ) |                    | 85,252,194 |                 | $ | (0.04 | )               |  | $ | (1,003,634        | ) |                 | 75,816,148 |  | $ | (0.01 | )
|Effect of Dilutive Securities |  |                            |            |   |                    |            |                 |   |       |                 |  |   |                   |   |                 |            |  |   |       |  
|None.                         |  |                            | -0-        |   |                    | -0-        |                 |   | -0-   |                 |  |   | -0-               |   |                 | -0-        |  |   | -0-   |  
|                              |  |                            |            |   |                    |            |                 |   |       |                 |  |   |                   |   |                 |            |  |   |       |  
|Diluted EPS                   |  | $                          | (3,069,997 | ) |                    | 85,252,194 |                 | $ | (0.04 | )               |  | $ | (1,003,634        | ) |                 | 75,816,148 |  | $ | (0.01 | )



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

General

The following information should be
read in conjunction with the information contained in our unaudited consolidated financial statements and notes thereto appearing elsewhere herein and conjunction with the Managements Discussion and Analysis of Financial Condition and Results
of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2008 and other information set forth in this report.

Forward-Looking Statements

Statements contained in this Form 10-Q 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, contained in this Form 10-Q 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-Q. 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 a healthcare technology company that provides Electronic Data Capture (EDC) solutions and related value-added services
to pharmaceutical and biotechnology companies, Clinical Research Organizations (CRO), and other clinical trial sponsors via our Web-based software applications. Our EDC software applications allow 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.

During fiscal 2009 we have sought to build and expand on our strategic efforts. The primary focus of our strategy includes:



| |  |  | Stimulating demand by providing clinical trial Sponsors with high value eClinical applications and services;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Emphasizing low operating costs;
| | - |  | --------------------------------



| |  |  | Continued emphasis on expanding our business model by offering our software solution, TrialMaster, on a licensed basis in addition to our existing
hosted-services solutions;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Broadening our eClinical suite of services and software applications on an organic R & D basis, and on a selective basis via the acquisition or
licensing of complementary solutions;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expanding our business development efforts in Europe to capitalize on our operational and clinical capabilities vis-à-vis our competition in
that geographic market;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing EDC services to small and midsize Pharma, Bio-Tech, Medical Device Companies and CROs (Clinical Research Organizations); and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Expanding our penetration of the large pharmaceutical sponsor market by leveraging the client contracts we assumed in our acquisitions of the EDC
assets of eResearch Technologies and Logos Technologies, Ltd. during 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our operating focus is first to increase our
sales and marketing capabilities and penetration rate and secondly, to continue developing and improving TrialMaster to ensure our services and products remain an attractive, high-value EDC choice. During 2009 we have increased our marketing and
sales personnel both in the U.S. and European markets and will look to aggressively expand the scope of our CRO Preferred Program in order to increase our penetration of the domestic CRO market. The CRO Preferred Program offers fixed pricing and
pay-as-you-go Hosted Services. Additionally, we believe we have established an effective presence in the European clinical trial market and will seek to aggressively expand the scope of our sales and marketing operations there.

Our ability to compete within the EDC industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through
TrialMaster. Our R & D efforts are focused on developing new, complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. We have spent approximately $1,271,211 and
$663,792, on R & D activities during the nine months ended September 30, 2009 and September 30, 2008, respectively. The majority of these expenses represent salaries to our developers which include costs associated with customization
of the TrialMaster software for our clients projects.

Recent Acquisitions

eResearch Technology Asset Acquisition:

On June 23, 2009, we acquired certain tangible and intangible EDC assets, formerly owned by eResearch Technology, Inc. (eResearch) (eResearch EDC Assets), pursuant to an Asset Purchase Agreement. Our purpose in
acquiring these assets, which included employment rights to the operating and business development team of eResearchs EDC team, to increase our presence in the EDC industry through the eResearch client list and increase our revenues in order
to leverage our existing administrative and technical corporate infrastructure.

The Company purchased from eResearch, the eResearch EDC
Assets including equipment, devices, computer hardware and other computer systems, certain intellectual property, contracts, customer lists, and other assets specifically identified in schedules to the Agreement, and $1,150,000 in cash. The Company
also assumed certain liabilities associated with these assets, including deferred revenues under certain assumed contracts in the amount of approximately $954,000, and concurrent with the consummation of the transactions entered into the First
Amendment to Settlement and Licensing Agreement with DataSci, LLC to provide for license payments of $300,000 to DataSci over the next three years for the EDC assets acquired in the Agreement. Consideration for the acquisition consisted of 8,100,000
shares (Shares) of our $0.001 par value common stock.

Logos Technologies, Ltd. (In Administration)

On August 3, 2009, we acquired certain tangible and intangible electronic data capture (EDC) assets, formerly owned by Logos Technologies,
Ltd. (Logos Ltd) (Logos EDC Assets), pursuant to a Sale Agreement related to the Administration process in the United Kingdom. Our purpose in acquiring these assets, which included employment rights to the research and
development personnel of Logos Ltd, to increase our presence in the EDC industry through the Logos Ltd client list and the acquisition of the intellectual property associated with the Logos EDC Assets which we view as a strategically important facet
of our software and service portfolio since it can allow us increase our revenues in order to leverage our existing administrative and technical corporate infrastructure by competing in what we view as an under-serviced segment of the EDC industry.

The Company purchased from Logos Ltd (in Administration), the Logos EDC Assets including equipment, devices, computer hardware and other
computer systems, certain intellectual property, contracts, customer lists, and other assets specifically identified in schedules to the Sale Agreement. We also assumed certain liabilities associated with these assets which includes a short-term
office lease obligation. Consideration for the acquisition consisted of £92,000, which approximates $152,628.



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##### Table of Contents

The Nine-Month period ended September 30, 2009 Compared With the Nine-Month period ended
September 30, 2008

Results of Operations

A summarized version of our results of operations for the nine months ended September 30, 2009 and September 30, 2008 is included in the table below.



|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|---------------------------------------------- |  | -------------------------------------- | ---------- | - | ------------ | ----- | - | ---- | - | ---------- | ------------ |  | ------ | -------- |  | - | --------- | - |  | ----- | -
|                                               |  | For the nine months endedSeptember 30, |            |   |              |       |   |      |  
|                                               |  | 2009                                   |            |   | % ofRevenues |       |   | 2008 |   |            | % ofRevenues |  |        | $ Change |  |   | % Change  |  
|Total revenues                                 |  | $                                      | 6,692,440  |   |              |       |   |      | $ | 4,281,367  |              |  |        |          |  | $ | 2,411,073 |   |  | 56.3  | %
|                                               |  |                                        |            |   |              |      
|Cost of sales                                  |  |                                        | 1,396,935  |   |              | 20.9  | % |      |   | 980,845    |              |  | 22.9   | %        |  |   | 416,090   |   |  | 42.4  | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|Gross margin                                   |  |                                        | 5,295,505  |   |              | 79.1  | % |      |   | 3,300,522  |              |  | 77.1   | %        |  |   | 1,994,983 |   |  | 60.4  | %
|                                               |  |                                        |            |   |              |      
|Salaries, benefits and related taxes           |  |                                        | 6,785,888  |   |              | 101.4 | % |      |   | 6,620,322  |              |  | 154.6  | %        |  |   | 165,566   |   |  | 2.5   | %
|Rent                                           |  |                                        | 514,168    |   |              | 7.7   | % |      |   | 410,090    |              |  | 9.6    | %        |  |   | 104,078   |   |  | 25.4  | %
|Consulting                                     |  |                                        | 124,455    |   |              | 1.9   | % |      |   | 258,379    |              |  | 6.0    | %        |  |   | (133,924  | ) |  | -51.8 | %
|Legal and professional fees                    |  |                                        | 474,237    |   |              | 7.1   | % |      |   | 318,594    |              |  | 7.4    | %        |  |   | 155,643   |   |  | 48.9  | %
|                                               |  |                                        |            |   |              |      
|Selling, general and administrative            |  |                                        | 883,061    |   |              | 13.2  | % |      |   | 391,974    |              |  | 9.2    | %        |  |   | 491,087   |   |  | 125.3 | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Total operating expenses                       |  |                                        | 9,675,507  |   |              | 144.6 | % |      |   | 8,872,677  |              |  | 207.2  | %        |  |   | 802,830   |   |  | 9.0   | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Operating income (loss)                        |  |                                        | (4,380,002 | ) |              | -65.4 | % |      |   | (5,572,155 | )            |  | -130.1 | %        |  |   | 1,192,153 |   |  | -21.4 | %
|                                               |  |                                        |            |   |              |      
|Interest expense                               |  |                                        | (1,950,721 | ) |              | -29.1 | % |      |   | (1,994,009 | )            |  | -46.6  | %        |  |   | 43,288    |   |  | -2.2  | %
|Interest income                                |  |                                        | 4,395      |   |              | 0.1   | % |      |   | 6,594      |              |  | 0.2    | %        |  |   | (2,199    | ) |  | -33.3 | %
|                                               |  |                                        |            |   |              |      
|Unrealized gain on derivatives                 |  |                                        | 2,349,194  |   |              | 35.1  | % |      |   | 1,909,051  |              |  | 44.6   | %        |  |   | 440,143   |   |  | 23.1  | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Net (loss)                                     |  |                                        | (3,976,702 | ) |              | -59.4 | % |      |   | (5,650,519 | )            |  | -132.0 | %        |  |   | 1,673,817 |   |  | -29.6 | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Total preferred stock dividends                |  |                                        | (153,850   | ) |              | -2.3  | % |      |   | (225,868   | )            |  | -5.3   | %        |  |   | 72,018    |   |  | -31.9 | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Net (loss) attributable to common stockholders |  | $                                      | (4,130,552 | ) |              | -61.7 | % |      | $ | (5,876,387 | )            |  | -137.3 | %        |  | $ | 1,745,835 |   |  | -29.7 | %
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Net (loss) per share                           |  | $                                      | (0.05      | ) |              |       |   |      | $ | (0.08      | )            |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |      
|Weighted average number of shares outstanding  |  |                                        | 79,787,889 |   |              |       |   |      |   | 70,150,937 |              |  |        |          |  |   |           |   |  |       |  
|                                               |  |                                        |            |   |              |       |   |      |   |            |              |  |        |          |  |   |           |   |  |       |  



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Results of Operations

Revenues for the nine-month period ended September 30, 2009 were $6,692,440 compared to $4,281,367 for the nine-month period ended September 30, 2008, an increase of 56.3%. Industry acceptance
of EDC continues to increase. Industry estimates from Health Industry Insights are that EDC was a $600 million market in 2008, with an annualized 15% growth rate for the next three-to-five years. TrialMaster has historically sold primarily 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. As we continue developing TrialMaster and our client relationships mature we expect some of our clients to deploy TrialMaster on a licensed, rather than ASP hosted basis. TrialMaster contracts for ASP services provide for pricing
that is based on both the size and duration of the clinical trial. Size parameters include the number of case report forms used to collect data and the number of sites utilizing TrialMaster. 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. The table below provides a comparison of our recognized revenues for the
nine month periods ended September 30, 2009 and September 30, 2008.



|                          |  |                   |           |  |          |   |  |   |           |  |       |  
|------------------------- |  | ----------------- | --------- |  | -------- | - |  | - | --------- |  | ----- | -
|                          |  | Nine Months Ended |          
|Business Activity         |  | 09/30/09          |           |  | 09/30/08 |  
|Set-up Fees               |  | $                 | 3,525,554 |  | 52.7     | % |  |   | 3,053,654 |  | 71.3  | %
|Change Orders             |  |                   | 341,388   |  | 5.1      | % |  |   | 320,618   |  | 7.5   | %
|Maintenance               |  |                   | 1,562,797 |  | 23.3     | % |  |   | 907,095   |  | 21.2  | %
|Licensing                 |  |                   | 515,158   |  | 7.7      | % |  |   | -0-       |  | 0.0   | %
|Prof. Services            |  |                   | 421,195   |  | 6.3      | % |  |   | -0-       |  | 0.0   | %
|Hosting and Subscriptions |  |                   | 326,348   |  | 4.9      | % |  |   | -0-       |  | 0.0   | %
|                          |  |                   |           |  |          |   |  |   |           |  |       |  
|Totals                    |  | $                 | 6,692,440 |  | 100.0    | % |  | $ | 4,281,367 |  | 100.0 | %
|                          |  |                   |           |  |          |   |  |   |           |  |       |  

Generally, ASP contracts will range in duration from one month to several years. ASP 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. 104 Revenue Recognition which requires that the revenues be recognized ratably over
the life of the contract. ASP maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

Beginning in late 2008 we began selling our core TrialMaster product on a licensed basis. Over the past two fiscal quarters we have experienced greater success in selling that product on a licensed basis.
The EDC assets acquired from eResearch and Logos Ltd are primarily sold on a licensed basis. License contracts are typically sold on a subscription basis that takes into account system usage both on a data volume and system user basis. Pricing
includes additional charges for deployment of our complementary eClincial software and solutions. Licensed contracts have historically been sold on a perpetual license basis with hosting and maintenance charges being paid annually. The Company has
begun, and expects any licenses it sells of its software products to be sold in three to five year term licenses.

Our top five customers
accounted for approximately 52.8% of our revenues during the nine-month period ended September 30, 2009 and approximately 50.1% of our revenues during the nine-month period ended September 30, 2008. One customer accounted for 30.1% of our
revenues during nine-month period ended September 30, 2008. One customer accounted individually for 28.0% of our revenues during nine-month period ended September 30, 2009. The loss of any of these contracts or these customers in the
future could adversely affect our results of operations.



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Cost of goods sold increased to $1,396,935 for the nine-month period ended September 30, 2009 from
$980,845 for the nine-month period ended September 30, 2008, an increase of 42.4%. Cost of goods sold were approximately 20.9% of sales for the nine-month period ended September 30, 2009 compared to 22.9% for the nine-month period ended
September 30, 2008. Cost of goods sold relates primarily to salaries and related benefits associated with the programmers, developers and systems analysts producing clinical trials on behalf of our clients. Cost of goods sold increased during
the nine-month period ended September 30, 2009 due to an increase of approximately $44,153 for costs associated with delivery of training and implementation of TrialMaster, an increase of $61,742 in costs associated with third-party services
associated with the delivery of our application to customers and the addition of eight additional programmers (four of whom are part of the eResearch study build team we acquired) and two additional quality analysts as part of our clinical trial
operations. Additionally, although our experience to-date in licensing and deploying TrialMaster on a technology transfer basis has been limited, we expect our cost of goods sold related to these types of engagements to approximate 20% of revenues
associated with those engagements.

We expect to increase development programming labor costs on an absolute basis as our trial revenues
increase. We expect our cost of goods sold to approximate 25% of sales during the remainder of fiscal 2009 and to stabilize to the 20% to 22% range as we expand the number of licenses we deploy and service since we expect Licensed engagements to
fall in the 20% range as that product matures. We expect to continue to increase follow-on engagements from existing clients and expect to increase the phase I and CRO portions of our client base. TrialMaster, (V4.0) increased the efficiency of our
trial building operations by approximately 20% through the use of additional automated tools, the ability to use our library of pre-existing CRFs and through the use of our drag and drop clinical trial building tool. We have begun our
initial business development efforts in commercializing the EDC Assets we acquired from eResearch and Logos Ltd. We expect to primarily sell those products primarily as licensed products providing further basis to our cost of goods sold estimates.

Salaries and related expenses were our biggest expense at 70.1% of total operating expenses for the nine-month period ended
September 30, 2009 and 74.6% of total operating expenses for the nine-month period ended September 30, 2008. Salaries and related expenses totaled $6,785,888 for the nine-month period ended September 30, 2009 compared to $6,620,322
for the nine-month period ended September 30, 2008, an increase of $165,566 or 2.5%. We currently employ approximately 65 employees out of our Ft. Lauderdale, Florida corporate office, 15 employees out of our New Jersey field office, six
out-of-state employees and 14 employees out of a wholly-owned subsidiary in Bonn, Germany. We have selectively added and expect to continue to selectively add experienced sales and marketing personnel during the remainder of fiscal 2009 in an effort
to increase our market penetration, particularly in Europe, and to continue broadening our client base domestically. During the nine-month period ended September 30, 2008 and nine-month period ended September 30, 2009 we incurred $986,733
and $630,969, respectively, in salary expense in connection with our adoption of SFAS No. 123(R), Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods or services. This
standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. We expect that the adoption of SFAS 123R will continue to have an
impact on our results of operations in the future.

Rent and related expenses increased by $104,078 during the nine-month period ended
September 30, 2009 when compared to the nine-month period ended September 30, 2008. We expanded our corporate office lease that runs through July 2011 to include a total of approximately 10,000 square feet. We established a disaster
recovery site at a Cincinnati Bell owned Co-Location facility in Cincinnati, Ohio and will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We
lease a co-location and disaster recovery space and services from Gold Coast 1-Vault in the Ft. Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. This lease expires in
August 2011. We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH. That lease expires in December 2010. We entered into a lease for office space in New Jersey in order to integrate our acquisition of
the eResearch Assets during the third quarter of fiscal 2009. We have recorded $81,666 in rent and related expenses since the June 23, 2009 acquisition date of eResearch for office space and transition related expenses. Our OmniComm Ltd.
subsidiary is currently operating out of the Logos, Ltd. office space on a month-to-month basis. We expect to enter into a lease for office space for our UK based subsidiary during the fourth quarter of 2009.



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Consulting services expense was $124,455 for the nine-month period ended September 30, 2009 compared
with $258,379 for the nine-month period ended September 30, 2008. Consulting services were comprised of fees paid to consultants for help with developing our computer applications and for fees incurred as part of our employee recruiting
programs. Employee recruiting fees dropped by $68,795 during the nine month period ended September 30, 2009 compared to the similar period in 2008 as our general hiring levels declined during the 2009 economic slowdown. Fees paid to third-party
software developers decreased in connection with our decreased use of software development personnel in Russia during 2009.

Legal and
professional fees totaled $474,237 for the nine-month period ended September 30, 2009 compared with $318,594 for the nine-month period ended September 30, 2008, an increase of approximately $155,643. Professional fees include fees paid to
our auditors for services rendered on a quarterly and annual basis in connection with our SEC filings and fees paid to our attorneys in connection with representation in matters involving litigation or for services rendered to us related to
securities and SEC related matters and our acquisition of the eResearch EDC Assets during June 2009 and the acquisition of the Logos EDC Assets in August 2009. The table below compares the significant components of our legal and professional fees
for the nine month periods ended September 30, 2009 and September 30, 2008, respectively.



|                             |  |          |         |          |   |         |  |   |         |  
|---------------------------- |  | -------- | ------- | -------- | - | ------- |  | - | ------- | -
|                             |  | 09/30/08 |         | 09/30/09 |   | Change  | 
|Financial Advisory           |  | $        | 67,500  |          | $ | 129,813 |  | $ | 62,313  |  
|Audit and Related            |  |          | 64,000  |          |   | 64,665  |  |   | 665     |  
|Accounting Services          |  |          | 34,114  |          |   | 40,668  |  |   | 6,554   |  
|HR Consulting Services       |  |          | -0-     |          |   | 22,100  |  |   | 22,100  |  
|Patent Litigation            |  |          | 25,471  |          |   | 29,705  |  |   | 4,234   |  
|General Legal                |  |          | 113,464 |          |   | 107,419 |  |   | (6,045  | )
|Acquisition Related          |  |          | -0-     |          |   | 53,160  |  |   | 53,160  |  
|                             |  |          |         |          |   |         |  |   |         |  
|Total Legal and Professional |  | $        | 304,549 |          | $ | 447,530 |  | $ | 142,981 |  
|                             |  |          |         |          |   |         |  |   |         |  

Selling, general and administrative expenses (SGA) were $883,061 for the nine-month
period ended September 30, 2009 compared to $391,974 for the nine-month period ended September 30, 2008, an increase of 125.3%. During the nine months ended September 30, 2009 we have recorded $288,988 in license fees associated with
our license agreement with Datasci, LLC compared to $0 during the nine month period ended September 30, 2008. In addition, SGA expenses relate primarily to costs incurred in running our offices in Fort Lauderdale and Bonn, Germany on a
day-to-day basis 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. The Company decreased its marketing, sales and advertising expenditures by $56,283 from $241,924 for the nine-month period ended September 30, 2008 to $185,641 for the nine-month period ended September 30, 2009, a
decrease of approximately 23.3%. Our SGA expenses are typically directly tied to the level of industry conference participation we experience. Our volume and level of industry conferences and general sales and marketing expenses are expected to
increase during the remainder of fiscal 2009.

Interest expense was $1,950,721 during the nine-month period ended September 30, 2009
compared to $1,994,009 for the nine-month period ended September 30, 2008, a decrease of $43,288. Interest incurred to related parties was $612,104 during the nine-month period ended September 30, 2009 and $74,081 for the nine-month period
ended September 30, 2008. Included in interest expense for both periods is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of the financings we undertook in fiscal 2008. The table below
provides detail on the amounts of interest attributed to each of the financings.



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|                                         |  |                       |           |                       |   |                      |  |    |          |  
|---------------------------------------- |  | --------------------- | --------- | --------------------- | - | -------------------- |  | -- | -------- | -
|Debt Description                         |  | 2009 Interest Expense |           | 2008 Interest Expense |   | Change 2009 vs. 2008 | 
|Accretion of Discount from Derivatives   |  | $                     | 1,286,831 |                       | $ | 1,672,508            |  | ($ | 385,677  | )
|Feb. 2008 Secured Convertible Debentures |  |                       | 0         |                       |   | 116,569              |  |    | -116,569 |  
|August 2008 Convertible Notes            |  |                       | 169,784   |                       |   | 19,901               |  |    | 149,883  |  
|December 2008 Convertible Notes          |  |                       | 455,499   |                       |   | 0                    |  |    | 455,499  |  
|                                         |  |                       |           |                       |   |                      |  |    |          |  
|Total                                    |  | $                     | 1,912,114 |                       | $ | 1,808,978            |  | $  | 103,136  |  
|                                         |  |                       |           |                       |   |                      |  |    |          |  

We evaluate the cost of capital available to us in combination with our overall capital structure and
the prevailing market conditions in deciding what financing best fulfills our short and long-term capital needs. Given the difficult overall economic climate and in particular the difficulties micro-cap firms have experienced in obtaining financing,
we believe the structure and terms of the transactions we entered into during 2008 and during September 2009 were obtained at the best terms available to the Company. During the nine-month period ended September 30, 2008 we issued $4,595,000 in
Secured Convertible Debt, including $2,445,000 to members of our Board of Directors and Officers of the Company. During the nine-month period ended September 30, 2009, we sold $1,400,000 in Convertible Debt including $1,100,000 to our President
and CEO.

We recorded unrealized gains on derivative liabilities associated with the issuance of convertible debt that occurred during fiscal
2008. We recorded a net unrealized gain of $2,349,194 during the nine-month period ended September 30, 2009 compared with a net unrealized gain of $1,909,051 during the nine-month period ended September 30, 2008. The unrealized gains can
be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities (discounts) recorded by us at the time the convertible debt was issued. Accordingly the warrant and conversion feature liabilities are
increased or decreased based on the fair value calculations made at each balance sheet date.

There were arrearages of $148,870 in 5% Series A
Preferred Stock dividends, $9,753 in Series B Preferred Stock dividends and $ 67,245 in Series C Preferred Stock dividends for the nine-month period ended September 30, 2008, compared with arrearages of $153,850 in 5% Series A Preferred Stock
dividends for the nine-month period ended September 30, 2009. We deducted $225,868 and $153,850 from Net Income (Loss) Attributable to Common Stockholders for the nine-month periods ended September 30, 2008 and September 30,
2009, respectively, relating to undeclared Series A, B and C Convertible Preferred Stock dividends.



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##### Table of Contents

The Three-Month period ended September 30, 2009 Compared With the Three-Month period ended
September 30, 2008

Results of Operations

A summarized version of our results of operations for the three months ended September 30, 2009 and September 30, 2008 is included in the table below.



|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|---------------------------------------------- |  | --------------------------------------- | ---------- | - | ------------ | ------ | - | ---- | - | ---------- | ------------ |  | ------ | ------- |  | - | ---------- | - |  | ------ | -
|                                               |  | For the three months endedSeptember 30, |            |   |              |        |   |      |  
|                                               |  | 2009                                    |            |   | % ofRevenues |        |   | 2008 |   |            | % ofRevenues |  |        | $Change |  |   | %Change    |  
|Total revenues                                 |  | $                                       | 2,461,464  |   |              |        |   |      | $ | 1,629,783  |              |  |        |         |  | $ | 831,681    |   |  | 51.0   | %
|                                               |  |                                         |            |   |              |       
|Cost of sales                                  |  |                                         | 450,690    |   |              | 18.3   | % |      |   | 322,409    |              |  | 19.8   | %       |  |   | 128,281    |   |  | 39.8   | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|Gross margin                                   |  |                                         | 2,010,774  |   |              | 81.7   | % |      |   | 1,307,374  |              |  | 80.2   | %       |  |   | 703,400    |   |  | 53.8   | %
|                                               |  |                                         |            |   |              |       
|Salaries, benefits and related taxes           |  |                                         | 2,497,681  |   |              | 101.5  | % |      |   | 2,358,184  |              |  | 144.7  | %       |  |   | 139,497    |   |  | 5.9    | %
|Rent                                           |  |                                         | 239,337    |   |              | 9.7    | % |      |   | 145,247    |              |  | 8.9    | %       |  |   | 94,090     |   |  | 64.8   | %
|Consulting                                     |  |                                         | 35,124     |   |              | 1.4    | % |      |   | 41,884     |              |  | 2.6    | %       |  |   | (6,760     | ) |  | -16.1  | %
|Legal and professional fees                    |  |                                         | 237,358    |   |              | 9.6    | % |      |   | 152,815    |              |  | 9.4    | %       |  |   | 84,543     |   |  | 55.3   | %
|                                               |  |                                         |            |   |              |       
|Selling, general and administrative            |  |                                         | 253,614    |   |              | 10.3   | % |      |   | 97,030     |              |  | 6.0    | %       |  |   | 156,584    |   |  | 161.4  | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|Total operating expenses                       |  |                                         | 3,765,075  |   |              | 153.0  | % |      |   | 3,147,750  |              |  | 193.1  | %       |  |   | 617,325    |   |  | 19.6   | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |       
|Operating income (loss)                        |  |                                         | (1,754,301 | ) |              | -71.3  | % |      |   | (1,840,376 | )            |  | -112.9 | %       |  |   | 86,075     |   |  | -4.7   | %
|Interest expense                               |  |                                         | (658,546   | ) |              | -26.8  | % |      |   | (794,754   | )            |  | -48.8  | %       |  |   | 136,208    |   |  | -17.1  | %
|Interest income                                |  |                                         | 96         |   |              | 0.0    | % |      |   | 1          |              |  | 0.0    | %       |  |   | 95         |   |  | 9500.0 | %
|Unrealized gain (loss) on derivatives          |  |                                         | (605,399   | ) |              | -24.6  | % |      |   | 1,681,435  |              |  | 103.2  | %       |  |   | (2,286,834 | ) |  | -136.0 | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |       
|Net (loss)                                     |  |                                         | (3,018,150 | ) |              | -122.6 | % |      |   | (953,694   | )            |  | -58.5  | %       |  |   | (2,064,456 | ) |  | 216.5  | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|Total preferred stock dividends                |  |                                         | (51,847    | ) |              | -2.1   | % |      |   | (49,940    | )            |  | -3.1   | %       |  |   | (1,907     | ) |  | 3.8    | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |       
|Net (loss) attributable to common stockholders |  | $                                       | (3,069,997 | ) |              | -124.7 | % |      | $ | (1,003,634 | )            |  | -61.6  | %       |  | $ | (2,066,363 | ) |  | 205.9  | %
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|Net (loss) per share                           |  | $                                       | (0.04      | ) |              |        |   |      | $ | (0.01      | )            |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |       
|Weighted average number of shares outstanding  |  |                                         | 85,252,194 |   |              |        |   |      |   | 75,816,148 |              |  |        |         |  |   |            |   |  |        |  
|                                               |  |                                         |            |   |              |        |   |      |   |            |              |  |        |         |  |   |            |   |  |        |  



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Results of Operations

Revenues for the three-month period ended September 30, 2009 were $2,461,464 compared to $1,629,783 for the three-month period ended September 30, 2008, an increase of 51.0%. The table below
provides a comparison of our recognized revenues for the three-month periods ended September 30, 2009 and September 30, 2008.



|                          |  |                    |           |  |          |   |  |   |           |  |       |  
|------------------------- |  | ------------------ | --------- |  | -------- | - |  | - | --------- |  | ----- | -
|                          |  | Three Months Ended |          
|Business Activity         |  | 09/30/09           |           |  | 09/30/08 |  
|Set-up Fees               |  | $                  | 1,172,456 |  | 52.7     | % |  |   | 1,236,122 |  | 28.9  | %
|Change Orders             |  |                    | 47,460    |  | 5.1      | % |  |   | 104,349   |  | 2.4   | %
|Maintenance               |  |                    | 771,648   |  | 23.4     | % |  |   | 289,312   |  | 6.8   | %
|Licensing                 |  |                    | 83,267    |  | 7.7      | % |  |   | -0-       |  | 0.0   | %
|Prof. Services            |  |                    | 65,233    |  | 6.3      | % |  |   | -0-       |  | 0.0   | %
|Hosting and Subscriptions |  |                    | 321,400   |  | 4.9      | % |  |   | -0-       |  | 0.0   | %
|                          |  |                    |           |  |          |   |  |   |           |  |       |  
|Totals                    |  | $                  | 2,461,464 |  | 100.0    | % |  | $ | 1,629,783 |  | 100.0 | %
|                          |  |                    |           |  |          |   |  |   |           |  |       |  

We have begun our initial efforts at commercializing the EDC Assets we acquired during the third
quarter of fiscal 2009 (eResearch EDC Assets and Logos EDC Assets). We do not believe the revenue and contract results we have achieved to-date are indicative of the revenues we will derive from the sale of these EDC products and services. The table
below provides a breakdown of the sources of our revenues broken down by the products and services that currently comprise our portfolio of products. The revenues recognized during the three month period ended September 30, 2008 for our
eResearch EDC Assets are indicative of existing contracts and relationships assumed at the time of the acquisition of the those assets. We have begun more extensively marketing those solutions particularly in Europe.



|                                                            |  |              |           |            |       |  
|----------------------------------------------------------- |  | ------------ | --------- | ---------- | ----- | -
|Sources of Revenues  Three Months Ended September 30, 2009 | 
|Product Source                                              |  | Revenues ($) |           | % of Sales |      
|eResearch                                                   |  | $            | 869,451   |            | 35.3  | %
|Logos                                                       |  |              | 14,500    |            | 0.6   | %
|TrialMaster                                                 |  |              |           |            |       |  
|ASP                                                         |  |              | 1,429,013 |            | 64.1  | %
|Licensing                                                   |  |              | 148,500   |            | 6.0   | %
|                                                            |  |              |           |            |       |  
|                                                            |  | $            | 2,461,464 |            | 100.0 | %
|                                                            |  |              |           |            |       |  

Cost of goods sold increased to $450,690 for the three-month period ended September 30, 2009
from $322,409 for the three-month period ended September 30, 2008, an increase of 39.8%. Cost of goods sold were approximately 18.3% of sales for the three-month period ended September 30, 2009 compared to 19.8% for the three-month period
ended September 30, 2008. Cost of goods sold relates primarily to salaries and related benefits associated with the programmers, developers and systems analysts producing clinical



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trials on behalf of our clients. Cost of goods sold increased during the three-month period ended September 30, 2009 due to an increase of approximately $44,600 for costs associated with
delivery of training and implementation of TrialMaster, an increase of $61,700 in costs associated with third-party services associated with the delivery of our application to customers and the addition of eight (four of whom were study developers
from our acquisition of the eResearch EDC Assets) additional programmers and two additional quality analysts as part of our clinical trial operations. Additionally, although our experience to-date in licensing and deploying TrialMaster on a
technology transfer basis has been limited, we expect our cost of goods sold related to these types of engagements to approximate 20% of revenues associated with those engagements.

Salaries and related expenses were our biggest expense at 66.3% of total operating expenses for the three-month period ended September 30, 2009 and 74.9% of total operating expenses for the
three-month period ended September 30, 2008. Salaries and related expenses totaled $2,497,681 for the three-month period ended September 30, 2009 compared to $2,358,184 for the three-month period ended September 30, 2009, an increase
of 5.9%. We currently employ approximately 65 employees out of our Ft. Lauderdale, Florida corporate office, 15 employees out of our New Jersey field office, six out-of-state employees and 14 employees out of a wholly-owned subsidiary in Bonn,
Germany. We have selectively added and expect to continue to selectively add experienced sales and marketing personnel during the remainder of fiscal 2009 in an effort to increase our market penetration, particularly in Europe, and to continue
broadening our client base domestically. During the three-month period ended September 30, 2008 and three-month period ended September 30, 2009 we incurred $420,906 and $242,602, respectively, in salary expense in connection with our
adoption of SFAS No. 123(R), Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods or services. This standard requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments based on the grant-date fair value of the award. We expect that the adoption of SFAS 123R will continue to have an impact on our results of operations in the future.

Rent and related expenses increased by $94,090 during the three-month period ended September 30, 2009 when compared to the three-month period ended
September 30, 2008. We expanded our corporate office lease that runs through July 2011 to include a total of approximately 10,000 square feet. We established a disaster recovery site at a Cincinnati Bell owned Co-Location facility in
Cincinnati, Ohio and will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We lease a co-location and disaster recovery space and services
from Gold Coast 1-Vault in the Ft. Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. This lease expires in August 2011. We currently lease office space in Bonn, Germany
for our European subsidiary, OmniComm Europe, GmbH. That lease expires in December 2010. We entered into a lease for office space in New Jersey in order to integrate our acquisition of the eResearch EDC assets during the third quarter of fiscal
2009. We have recorded $81,666 in rent and related expenses since the June 23, 2009 acquisition date of eResearch for office space and transition related expenses. Our OmniComm Ltd. subsidiary is currently operating out of the Logos , Ltd.
office space on a month-to-month basis. We expect to enter into a lease for office space for our UK based subsidiary during the fourth quarter of 2009.

Consulting services expense was $35,124 for the three-month period ended September 30, 2009 compared with $41,884 for the three-month period ended September 30, 2008. Consulting services were
comprised of fees paid to consultants for help with developing our computer applications and for fees incurred as part of our employee recruiting programs.

Legal and professional fees totaled $237,358 for the three-month period ended September 30, 2009 compared with $152,815 for the three-month period ended September 30, 2008, an increase of
approximately $84,543. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our SEC filings and fees paid to our attorneys in connection with representation in matters involving
litigation or for services rendered to us related to securities and SEC related matters. The significant components of the increase in fees include $53,160 in acquisition related legal fees and an increase of $6,230 in financial advisory fees.



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Selling, general and administrative expenses (SGA) were $253,614 for the three-month period
ended September 30, 2009 compared to $97,080 for the three-month period ended September 30, 2008, an increase of 161.4%. SGA expenses relate primarily to costs incurred in running our offices in Fort Lauderdale and Bonn, Germany on a
day-to-day basis 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. The Company decreased its marketing, sales and advertising expenditures by $69,175 from $106,592 for the three-month period ended September 30, 2008 to $37,417 for the three-month period ended September 30, 2009, a
decrease of approximately 64.9%. We expect SGA, and more specifically sales and marketing expenses, to increase as we intensify and extend our selling and marketing efforts during the second half of fiscal 2009. Our SGA expenses are typically
directly tied to the level of industry conference participation we experience. Our volume and level of industry conferences and general sales and marketing expenses are generally higher during the second and third quarters of our fiscal year.
Included in SGA for the second quarter of fiscal 2009 is $84,365 in expense pertaining to our patent license with DataSci, LLC.

Interest
expense was $658,546 during the three-month period ended September 30, 2009 compared to $794,754 for the three-month period ended September 30, 2008, a decrease of $136,208. Included in interest expense for both periods is the accretion of
discounts recorded related to financial instrument derivatives that were deemed a part of the financings completed in fiscal 2008. The table below provides detail on the amounts of interest attributed to each of the financings.



|                                             |  |                       |         |                       |   |                      |  |   |         |  
|-------------------------------------------- |  | --------------------- | ------- | --------------------- | - | -------------------- |  | - | ------- | -
|Debt Description                             |  | 2009 Interest Expense |         | 2008 Interest Expense |   | Change 2009 vs. 2008 | 
|Accretion of Discount from Derivatives       |  | $                     | 427,791 |                       | $ | 132,919              |  | $ | 294,872 |  
|February 2008 Secured Convertible Debentures |  |                       | -0-     |                       |   | 58,958               |  |   | (58,958 | )
|August 2008 Convertible Notes                |  |                       | 57,216  |                       |   | 19,901               |  |   | 37,315  |  
|December 2008 Convertible Notes              |  |                       | 153,501 |                       |   | -0-                  |  |   | 153,501 |  
|                                             |  |                       |         |                       |   |                      |  |   |         |  
|Total                                        |  | $                     | 638,508 |                       | $ | 211,778              |  | $ | 426,730 |  
|                                             |  |                       |         |                       |   |                      |  |   |         |  

We recorded unrealized gains and losses on derivative liabilities associated with the issuance of
convertible debt that occurred during fiscal 2008. We recorded an unrealized loss of $605,399 during the three-month period ended September 30, 2009 compared with an unrealized gain of $1,681,435 during the three-month period ended
September 30, 2008. The unrealized gains and losses can be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities (discounts) recorded by us at the time the convertible debt was issued.
Accordingly the warrant and conversion feature liabilities are increased or decreased based on the fair value calculations made at each balance sheet date.

There were arrearages of $49,940 in 5% Series A Preferred Stock dividends for the three-month period ended September 30, 2008, compared with arrearages of $51,847 in 5% Series A Preferred Stock
dividends for the three-month period ended September 30, 2009. We deducted $49,940 and $51,847 from Net Income (Loss) Attributable to Common Stockholders for the three-month periods ended September 30, 2008 and September 30,
2009, respectively, relating to undeclared Series A Convertible Preferred Stock dividends.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an
ongoing basis. We have historically experienced negative cash flows and have relied 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.



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The table provided below summarizes key measures of our liquidity and capital resources:

Liquidity and Capital Resources



|                                                            |  |                                            |   |  |                   |   |  |            |  
|----------------------------------------------------------- |  | ------------------------------------------ | - |  | ----------------- | - |  | ---------- | -
|                                                            |  | September 30,2009                          |   |  | December 31,2008  |   |  | Change     |  
|Cash                                                        |  | 281,476                                    |   |  | 2,035,818         |   |  | (1,754,342 | )
|Accounts Receivable, net of allowance for doubtful accounts |  | 1,014,637                                  |   |  | 2,607,893         |   |  | (1,593,256 | )
|Current Assets                                              |  | 1,485,308                                  |   |  | 4,742,273         |   |  | (3,256,965 | )
|                                                            |  |                                            |  
|Accounts Payable and accrued expenses                       |  | 949,713                                    |   |  | 1,085,700         |   |  | (135,987   | )
|Notes payable, current portion                              |  | -0-                                        |   |  | 111,800           |   |  | (111,800   | )
|Patent litigation settlement liability, current portion     |  | 631,439                                    |   |  | 241,464           |   |  | 389,975    |  
|Deferred revenue, current portion                           |  | 3,048,127                                  |   |  | 3,549,058         |   |  | (500,931   | )
|Convertible notes payable, current portion                  |  | 279,983                                    |   |  | 384,043           |   |  | (104,060   | )
|Current Liabilities                                         |  | 4,909,262                                  |   |  | 5,372,065         |   |  | (462,803   | )
|                                                            |  |                                            |  
|Working Capital (Deficit)                                   |  | (3,423,954                                 | ) |  | (629,793          | ) |  | (2,794,161 | )
|                                                            |  |                                           
|                                                            |  | Disclosure for theNine month periods
ended |   |  |                   |  
|                                                            |  | September 30,2009                          |   |  | September 30,2008 |   |  |            |  
|Net cash provided by (used in) operating activities         |  | (3,635,660                                 | ) |  | (3,932,674        | ) |  |            |  
|Net cash provided by (used in) investing activities         |  | 851,757                                    |   |  | (467,796          | ) |  |            |  
|Net cash provided by financing activities                   |  | 1,027,500                                  |   |  | 3,995,182         |   |  |            |  
|                                                            |  |                                            |  
|Net increase (decrease) in cash and cash equivalents        |  | (1,754,342                                 | ) |  | (415,024          | ) |  |            |  

Cash and cash equivalents decreased by $1,754,342 from $2,035,818 at December 31, 2008 to
$281,476 at September 30, 2009. This was the result of cash provided by financing activities of $1,027,500, cash provided by investing activities of $851,757 offset by $3,635,660 used in operating activities. The significant components of the
activity include a loss from operations of approximately $3,976,703, increases from non-cash items in the amount of $95,135 and increases in cash of $245,906 from changes in working capital accounts.

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.



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Presently, we have approximately $100,000 planned for capital expenditures to further develop the
Companys infrastructure to allow for growth in our operations over the next 12 months. We expect to fund these capital expenditure needs through a combination of vendor-provided financing, the use of operating or capital equipment leases and
cash provided from operations.

Contractual Obligations

The following table sets forth our contractual obligations during the next five years as of September 30, 2009:



|                                |  |                        |  |                 |     |  |           |     |  |           |  |           |    
|------------------------------- |  | ---------------------- |  | --------------- | --- |  | --------- | --- |  | --------- |  | --------- | ---
|Contractual Obligations         |  | Payments Due by Period | 
|                                |  | Total                  |  | Less than1 year |     |  | 1-2 Years |     |  | 2-3 Years |  | 3-5 Years |    
|Long Term Debt (1)              |  | 249,300                |  | 0               |     |  | 249,300   | (2) |  | 0         |  | 0         |    
|Convertible Notes               |  | 8,820,000              |  | 425,000         | (3) |  | 1,495,000 | (4) |  | 0         |  | 6,900,000 | (5)
|Operating Lease Obligations (6) |  | 1,039,785              |  | 113,041         |     |  | 521,626   |     |  | 319,501   |  | 85,617    |    
|Patent Licensing Fees (7)       |  | 2,318,939              |  | 631,439         |     |  | 375,000   |     |  | 412,500   |  | 900,000   |    
|Financial Advisory Agreement    |  | 87,500                 |  | 87,500          | (8) |  | 0         |     |  | 0         |  | 0         |    
|                                |  |                        |  |                 |     |  |           |     |  |           |  |           |    
|                                |  |                        |  |                 |    
|Total                           |  | 12,515,524             |  | 1,256,980       |     |  | 2,640,926 |     |  | 732,001   |  | 7,885,617 |    
|                                |  |                        |  |                 |     |  |           |     |  |           |  |           |    





|1. | Amounts do not include interest to be paid.
|-- | -------------------------------------------

|2. | Includes $111,800 of 9% notes payable that mature in October 2010 and $137,500 of 9% notes payable that mature in January 2011.
|-- | -------------------------------------------------------------------------------------------------------------------------------

|3. | Includes $75,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the debenture holder at a
conversion rate of $1.25 per share.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Includes $350,000 in 10% Convertible Notes that matures in August 2010 and $95,000 in 12% Convertible Notes that mature in December 2010 and $1,400,000 in 12% Secured
Convertible Notes that mature in March 2011.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Includes $1,920,000 in 10% Convertible Notes that mature in August 2013 and $4,980,000 in 12% Convertible Notes that mature in December 2013.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------

|6. | Includes office lease obligations for our headquarters in Fort Lauderdale, for our regional operating office in New Jersey, our European headquarters in Bonn, Germany
and lease obligations for co-location and disaster recovery computer service centers in Cincinnati, Ohio and Fort Lauderdale, Florida.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Relates to guaranteed minimum payments owed in connection with our settlement of a patent infringement lawsuit brought against the Company by Datasci, LLC.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Relates to Financial Advisory fees paid to Noesis Capital Corp., our Placement Agent and a 5% shareholder in our Company, Emerging Growth Equities and to CEOcast, Inc.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

We are currently in arrears on principal and interest payments owed totaling $150,946 on our 10% Convertible Notes. We were in default effective January 30, 2002.



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On February 29, 2008, we sold an aggregate of $2,325,000 principal amount 10% Secured Convertible
Debentures and common stock purchase warrants to purchase an aggregate of 2,930,675 shares of our common stock, which debentures bear interest at 10% per annum, and matured on August 29, 2008. On August 29, 2008, the Company repaid
$1,000,000 of the Debentures. The remaining $1,325,000 was extended pursuant to an Extension Agreement (the Extension). The maturity date was changed to December 1, 2008. In accordance with the Extension, the conversion price of the
Debentures was changed from $0.595 per share to $0.50 per share. Additionally, the investors who agreed to the Extension were granted one warrant (the Extension Warrants) for each share of stock issuable upon conversion of the Debentures
at $0.50 per share conversion price. The exercise price of the Warrants was changed from $0.75 per share to $0.60 per share pursuant to the Extension. The exercise price of the Extension Warrants is $0.60 per share. On December 1, 2008 we
repaid $500,000 of Debentures and on December 16, 2008 $525,000 of the Debentures were converted by four investors including two of our directors and one of our officers into a private placement of Convertible Notes. The remaining $300,000 was
extended and the maturity date was changed to January 31, 2009. The Convertible Notes were satisfied on their maturity date in January 2009.

In May 2008, we sold an aggregate of $210,000 principal amount Convertible Note and Common Stock Purchase Warrants to purchase an aggregate of 264,706 shares of our Common Stock, which note carried interest at 10% per year and was due
on September 30, 2010. This note was convertible at the option of the holder into any securities we issue (New Securities) before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities.
On September 10, 2008, we issued a promissory note with a principal amount of $300,000 to Cornelis Wit, our Chief Executive Officer and a Director. This note was convertible at the option of the holder into any securities we issue (New
Securities) before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities. The promissory note carried interest at 10% per annum and was due on September 30, 2010. On August 29, 2008
the Convertible Note and promissory notes were converted as part of a private placement of Convertible Notes that was closed on August 29, 2008.

On September 27, 2008, we issued a promissory note with a principal amount of $300,000 to Cornelis Wit, our Chief Executive Officer and a Director. This note was convertible at the option of the holder into any securities we issue
(New Securities) before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities. The promissory note carried interest at 10% per annum and was due on September 30, 2010. The
promissory note dated September 27, 2008 was repaid on July 8, 2008.

On August 29, 2008, we sold, $2,270,000 in principal amount
Convertible Notes (the Convertible Notes) and common stock purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including our Chief
Executive Officer and one of our Directors. We received net proceeds of $2,270,000. The Convertible Notes, which bear interest at 10% per annum, are due on August 29, 2010. The Convertible Notes are convertible at any time at the option of
the holder into shares of our common stock based upon a conversion rate of $0.50 per share (the Conversion Price), subject to adjustment as provided in the transaction documents (the Conversion Feature). Interest is
convertible as provided in the Convertible Notes. We are not permitted to prepay the Convertible Notes without the prior written consent of the holders. In September 2009, Officers and Directors who invested in this Private Placement agreed to
extend the maturity date on $1,920,000 of the Convertible Notes to August 29, 2013.

On September 27, 2008, we issued a promissory
note with a principal amount of $300,000 to Cornelis Wit, our Chief Executive Officer and a Director. This note was convertible at the option of the holder into any securities we issue (New Securities) before maturity of the Convertible
Note on the same terms and conditions of the sale of the New Securities. The promissory note carried interest at 10% per annum and was due on September 30, 2010. The promissory note dated September 27, 2008 was repaid on July 8, 2008.

On December 16, 2008, we sold, $5,075,000 principal amount Convertible Notes (the Convertible Notes) and common stock
purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 10,150,000 shares of our common stock to eleven accredited investors including our Chief Executive Officer, Chief Operation Officer, Chief Technology Officer,
Chief Financial



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Officer and four of our Directors. We received net proceeds of $5,075,000. The Convertible Notes, which bear interest at 12% per annum, are due on December 16, 2010. The Convertible
Notes are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share (the Conversion Price), subject to adjustment as provided in the transaction documents (the
Conversion Feature). Interest is convertible as provided in the Convertible Notes. In September 2009, Officers and Directors who invested in this Private Placement agreed to extend the maturity date on $4,980,000 of the Convertible Notes
to December 16, 2013.

On September 30, 2009, we sold, $1,400,000 principal amount Secured Convertible Notes (the Secured
Notes) and common stock purchase warrants (the Convertible Note Warrants) to purchase an aggregate of 5,600,000 shares of our common stock to four accredited investors including our Chief Executive Officer. We received net proceeds
of $1,400,000. The Secured Notes, which bear interest at 12% per annum, are due on March 31, 2011. The Secured Notes are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of
$0.25 per share (the Conversion Price), subject to adjustment as provided in the transaction documents (the Conversion Feature). Interest is convertible as provided in the Convertible Notes.

Our selling efforts include marketing our products to several Fortune 1000 pharmaceutical and medical device manufacturers and several of the largest CROs.
We began providing services to some of these entities during 2003 and we have experienced success in broadening our client roster over the past six fiscal years. Continued success in broadening our existing client relationships and forging new
relationships should provide us the opportunity to limit our need for funding our operations via debt and equity capital. Continuing to obtain contracts with clients of this size and reputation will also increase the credibility of the Company to
the clinical trial market.

Our business development focus continues to include increasing our penetration of all phases of the clinical trial
market with a continued emphasis on becoming the market leader in Phase I EDC services. We believe this market is an operating and strategic strength of the Company due to the inherent flexibility of our solutions including the solutions provided by
our recently acquired EDC assets from Logos Technologies. We believe we have the ability to produce trials more quickly and economically than our competitors for this specialized and large market. During the remainder of fiscal 2009 and during
fiscal 2010, we will continue commercializing our products on a licensed basis and expect to experience increased success in penetrating the market for larger pharmaceutical, bio-technology and medical device clinical trial sponsors. Our clients
will be able to partially or completely license TrialMaster. This business model provides our clients a more cost efficient means of deploying our EDC solutions on a large-scale basis. Our licensed products, falling under the auspices of either a
Tech Transition (partial transfer with some services performed by OmniComm) or Tech Transfer, allows us to broaden our potential client base, provides us with a high-margin revenue source and affords us the ability to improve our competitive
position within the EDC industry. The acquisitions completed during fiscal 2009 (the eResearch EDC Assets and the Logos, Ltd. EDC Assets) have historically been sold on a licensed basis and allow us to broaden our base of licensed customers.
Additionally, we continue to focus on adding CROs as strategic and marketing partners. There is an industry-wide emphasis in establishing strategic relationships with CROs. These relationships provide marketing leverage in the form of joint
marketing and sales efforts and provide an installed base of trained TrialMaster users. This installed base of users increases our ability to provide rapidly developed, cost effective solutions for our clients. Additionally, we believe we have
established an effective presence in the European clinical trial market and will seek to aggressively expand the scope of our sales and marketing operations there.

We feel that the momentum established from new client acquisitions and our ability to retain clients for repeat engagements provide a good operating base from which to build during the remainder of 2009
and into fiscal 2010. We expect to continue increasing the level of resources deployed in our sales and marketing efforts. We feel that a combination of our lean operating environment and increased success in new client acquisition, coupled with our
ability to retain our existing clients will allow us to compete effectively within the EDC market.

Because of the losses we have experienced
from operations we have needed to continue utilizing the proceeds from the sale of debt and equity securities to fund our working capital needs. We have used a combination of equity financing, short-term bridge loans and long-term loans to fund our
working capital needs, if any. 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.



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We may continue to require substantial funds to continue our research and development activities and to
market, sell and commercialize our technology. We may 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 sales and marketing programs; the cost of filing, prosecuting and defending and enforcing 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 broader commercialization of our technology will be timely and successful. There can be no assurance that changes in our research and development plans or other
events will not result in accelerated or unexpected expenditures.

During the year ended December 31, 2008, we raised an aggregate of
$6,420,000 in principal amount of convertible debentures from Cornelis Wit, our Chief Executive Officer and a director of which $6,120,000 is outstanding as of September 30, 2009. Additionally, Guus van Kesteren, Director, and Atlantic
Balanced Fund, a fund managed by Mentor Capital of which Fernando Montero, a director of OmniComm, is president, director and sole shareholder, purchased $160,000 and $200,000, respectively in principal amounts of convertible debentures during the
fiscal year ended December 31, 2008. During the nine months ended September 30, 2009, we raised an aggregate of $1,100,000 in principal amount of convertible debentures from Cornelis Wit, our Chief Executive Officer all of which is
outstanding as of September 30, 2009. While several of our directors have historically, either personally or through funds with which they are affiliated, provided substantial capital either in the form of debt or equity financing there
can be no assurance that they will continue to provide any such funding to us on favorable term or at all.

To satisfy our capital
requirements, including ongoing future operations, we may seek to raise additional financing through debt and equity financings. There can be no assurance that any such funding 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, and our business operations. 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 or result in increased interest expense in future periods. Further, there can be no assurance that even if
such additional capital is obtained or the planned cost reductions are implemented, that we will achieve positive cash flow or profitability or be able to continue as a business.

Our ability to continue in existence is dependent on our having sufficient financial resources to bring products and services to market. As a result of our historical operating losses and accumulated
deficits for the periods ending September 30, 2009, there is doubt about our ability to continue as a going concern. In addition, our auditors Greenberg and Company, LLC, included language which qualified their opinion regarding our ability to
continue as a going concern in their report dated February 12, 2009 regarding our audited financial statements for the year ended December 31, 2008.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 2 of Notes to the Consolidated Financial Statements
describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.



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A critical accounting policy is defined as one that is both material to the presentation of our financial
statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:
1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a
material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot
be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information
is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, our Management is periodically faced with
uncertainties, the outcomes of which are not within our control and will not be known for prolonged periods of time. Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application
of those policies, our Management believes that our consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States (GAAP), and present a meaningful presentation of our financial
condition and results of operations.

Our Management believes that the following are our critical accounting policies:

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, we are entitled to payment for all work performed through the point of cancellation.

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; licensing arrangements, on-going
maintenance fees incurred throughout the duration of an engagement; fees for report writing and project change orders. The clinical trials that are conducted using TrialMaster can last from a few 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) and AICPA Statement of Position 97-2 (SOP 97-2) Software Revenue Recognition as amended by SOP 98-9. SAB 101 requires that revenues be recognized ratably over the life of
a contract. The Company will periodically record deferred revenues relating to advance payments in contracts. Under its licensing arrangement the Company recognizes revenue pursuant to SOP 97-2. Under these arrangements the Company recognizes
revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer and/or delivery has occurred; (3) the collection of fees is probable;
and (4) the fee is fixed or determinable. SOP 97-2, as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of the elements. We have analyzed
each element in our multiple element arrangements and determined that we have sufficient vendor-specific objective evidence (VSOE) to allocate revenues to license updates and product support. License revenues are recognized on delivery
if the other conditions of SOP 97-2 are satisfied. License updates and product support revenue is recognized ratably over the term of the arrangement. In arrangements where term licenses are bundled with license updates and product support and such
revenue is recognized ratably over the term of the arrangement, we allocate the revenue to license revenue and to license updates and product support revenue based on the VSOE of fair value for license updates and product support revenue on
perpetual licenses of similar products.



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Stock Based Compensation.

Beginning on January 1, 2006 we began accounting for stock options under the provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payments (SFAS
123(R)), which requires the recognition of the fair value of equity-based compensation. The fair value of stock options on the date of grant was estimated using a Binomial option valuation model. This model requires the input of subjective
assumptions in implementing SFAS 123(R), including expected stock price volatility, estimated life and estimated forfeitures of each award. The fair value of equity-based awards is amortized over the vesting period of the award, and we have elected
to use the straight-line method of amortization. Prior to the implementation of SFAS 123(R), we accounted for stock options and ESPP shares under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees.

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In the first quarter of 2009, we adopted the following new accounting pronouncements:

FASB Staff Position (FSP) Financial Accounting Standards (FAS) 157-2, Effective Date of FASB Statement 157 (Codified within Accounting Standards Codification (ASC) 820, Fair Value Measurements
and Disclosures)  This FSP delayed the effective date of Statement of Financial Accounting Standard (SFAS) No. 157, Fair Value Measurements, for certain nonfinancial assets and nonfinancial liabilities. Adoption of this FSP did not
significantly affect how we determine fair value but has resulted in certain additional disclosures. Please read Note 10  Fair Value Measurement.

FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (Codified within ASC 260, Earnings Per Share)  This staff position specifies
that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and should be included in the computation of earnings per share pursuant to the two-class method. Adoption
of this FSP did not have a significant effect on our earnings per share.

SFAS No. 141(R), Business Combinations (Codified within ASC
805, Business Combinations)  This standard requires most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at full fair value. The standard also changes the approach to
determining the purchase price, the accounting for acquisition cost and several acquisition related accounting practices. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (Codified within ASC 810, Consolidation)  This standard specifies
that noncontrolling interests be reported as a part of equity, not as a liability or other item outside of equity. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 (Codified within ASC 815,
Derivatives and Hedging)  This standard requires enhanced disclosures about derivative instruments including how and why they are used; how they are accounted for; and how they affect an entitys financial position, financial performance
and cash flows. Adoption of this pronouncement did not have a significant effect on our earnings or financial position.

In the second quarter
of 2009, we adopted the following new accounting pronouncements:

FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (Codified within ASC 820, Fair Value Measurements and Disclosures)  This FSP provides guidance for estimating fair value when the volume
and level of activity for an asset or liability have significantly decreased. Adoption of this FSP affects how we consider Level 2 inputs in determining fair values but did not have a significant effect on our earnings or financial position.



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FSP FAS 107-1 and Accounting Principles Board (APB) Opinion 28-1, Interim Disclosures about Fair Value
of Financial Instruments (Codified within ASC 825, Financial Instruments)  This FSP requires an entity to provide disclosures about fair value of financial instruments at interim reporting periods. Adoption of this FSP did not significantly
affect how we determine fair value but has resulted in certain additional disclosures. Please read Note 10  Fair Value Measurements.

SFAS No. 165, Subsequent Events (Codified within ASC 855, Subsequent Events)  This Statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the
financial statements are issued, introduces the concept of financial statements being available to be issued and requires disclosures regarding the date through which subsequent events were evaluated. Adoption of this standard did not have a
significant effect on our earnings or financial position but does affect our disclosures regarding subsequent events.

SEC SAB 112  This
bulletin amends or rescinds guidance included in the SAB Series to make it consistent with recent FASB pronouncements, namely, SFAS No. 141 (revised 2007), Business Combinations, and SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements. Adoption did not have a significant effect on our earnings or financial position.

In third quarter 2009, we adopted the
following new accounting pronouncement:

SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles (Codified within ASC 105, Generally Accepted Accounting Principles)  This Statement establishes the FASB Accounting Standards Codification as the single source of authoritative accounting principles to be applied by
nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Adoption
did not have an impact on our earnings or financial position but did revise our disclosures regarding accounting guidance references.

In
addition, the following pending pronouncements have not yet been adopted, and we are currently evaluating the effect, if any, on our earnings or financial position:

Accounting Standards Update (ASU) 2009-05, Measuring Liabilities at Fair Value  This ASU amends ASC 820, Fair Value Measurements and Disclosures, to provide additional guidance on how to
measure the fair value of a liability and is effective fourth quarter 2009.

SFAS No. 166, Accounting for Transfers of Financial Assets
 an amendment of FASB Statement No. 140 (Not yet included in Codification)  This standard removes the concept of a qualifying special-purpose entity from FIN 46(R) and requires additional disclosures and is effective first quarter
2010.

SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (Not yet included in Codification)  This standard amends
certain requirements of FIN 46(R) to improve financial reporting related to consolidation of and disclosures about variable interest entities and is effective first quarter 2010.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

Not applicable to smaller reporting companies.



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|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q,
being September 30, 2009, the Companys principal executive officer and principal financial officer have concluded that the Companys disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the under the
Securities Exchange Act of 1934 (the Exchange Act) are effective such that the information relating to OmniComm, including our consolidating subsidiaries, required to be disclosed by the Company in reports that it files or submits under
the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There were no significant changes in the Companys internal
controls over financial reporting or in other factors that could significantly affect these controls over financial reporting that occurred subsequent to the date of their evaluation and up to the filing date of this quarterly report on Form 10-Q.
There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken.

It should be noted that
any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions
about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how
remote.



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PART II - OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------

None.



|ITEM 1A. | RISK FACTORS.
|-------- | -------------

Not applicable for a smaller reporting company.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|------- | ------------------------------------------------------------

On September 30, 2009, the Company issued 114,316 shares of common stock to our Chairman and Chief Technology Officer Randall G. Smith. The shares were valued at prices ranging from $0.19 to $0.22
per share and were issued in lieu of salary for the three month period ended September 30, 2009. The shares were issued pursuant to an exemption from registration under the Securities Act of 1933 in reliance on the exemptions provided by
Section 4(2) and Rule 506 of Regulation D of that act.

On September 30, 2009, the Company issued 415,000 shares of common stock to
CEOcast, Inc for services provided relating to our investor relations activities. The shares were valued at $0.15 per share, or $62,250 in the aggregate. The shares were issued pursuant to an exemption from registration under the Securities Act of
1933 in reliance on the exemptions provided by Section 492) and Rule 506 of Regulation D of that act.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------

None.



|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

None.



|ITEM 6. | 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                                                                                                                                                                                  
|31.1        |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as
amended.               
|            | 
|31.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as
amended.
|            | 
|32.1        |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                                       
|            | 
|32.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.                        



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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.
|                       | 
|By:                    |  | /s/ Cornelis F. Wit                                                                                                                        
|                       |  | Cornelis F. Wit, Director, Chief Executive Officer and President (Principal Executive Officer)                                             
|Date:                  |  | November 17, 2009                                                                                                                          
|                       | 
|By:                    |  | /s/ Ronald T. Linares                                                                                                                      
|                       |  | Ronald T. Linares, Executive Vice President of Finance, Chief Financial and Accounting Officer (Principal Financial and Accounting Officer)
|Date:                  |  | November 17, 2009                                                                                                                          



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Exhibit Index



|            |  |                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                  
|31.1        |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934, as amended.               
|            | 
|31.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities and Exchange Act of 1934,
as amended.
|            | 
|32.1        |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                                       
|            | 
|32.2        |  | Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.