##### Table of Contents





SECURITIES AND EXCHANGE COMISSION

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 June 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 |  | x

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 August 12, 2009: 84,966,683 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 SIX

MONTH PERIOD ENDED JUNE 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. |  | 29
|Item 3.                                                                                                                                                                              |  | Quantitative and Qualitative Disclosures About Market Risk.                            |  | 45
|Item 4T                                                                                                                                                                              |  | Controls and Procedures.                                                               |  | 45
|PART II - OTHER INFORMATION                                                                                                                                                         
|Item 1.                                                                                                                                                                              |  | Legal Proceedings.                                                                     |  | 47
|Item 1A.                                                                                                                                                                             |  | Risk Factors.                                                                          |  | 47
|Item 2.                                                                                                                                                                              |  | Unregistered Sales of Equity Securities and Use of Proceeds.                           |  | 47
|Item 3.                                                                                                                                                                              |  | Defaults Upon Senior Securities.                                                       |  | 47
|Item 4.                                                                                                                                                                              |  | Submission of Matters to a Vote of Security Holders.                                   |  | 47
|Item 5.                                                                                                                                                                              |  | Other Information.                                                                     |  | 48
|Item 6.                                                                                                                                                                              |  | Exhibits.                                                                              |  | 48
|SIGNATURES                                                                                                                                                                          
|Exhibit 31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 CEOCornelis F. Wit                                             
|Exhibit 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 CFORonald T.
Linares                                           
|Exhibit 32.1 Certification 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 32.2 Certification 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



|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                                                                    |  | June 30,2009 |             |   | December 31,2008 |  
|                                                                                                                                                                                                                    |  | (unaudited)  |             |   |                  |  
|ASSETS                                                                                                                                                                                                              | 
|CURRENT ASSETS                                                                                                                                                                                                      |  |              |             |   |                  |   |             |  
|Cash                                                                                                                                                                                                                |  | $            | 937,304     |   |                  | $ | 2,035,818   |  
|Accounts receivable, net of allowance for doubtful accounts of $112,317 and $150,933 in 2009 and 2008, respectively                                                                                                 |  |              | 858,071     |   |                  |   | 2,607,893   |  
|Prepaid expenses                                                                                                                                                                                                    |  |              | 145,612     |   |                  |   | 98,562      |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|Total current assets                                                                                                                                                                                                |  |              | 1,940,987   |   |                  |   | 4,742,273   |  
|                                                                                                                                                                                                                    |  |             
|PROPERTY AND EQUIPMENT, net                                                                                                                                                                                         |  |              | 1,110,943   |   |                  |   | 769,228     |  
|                                                                                                                                                                                                                    |  |             
|OTHER ASSETS                                                                                                                                                                                                        |  |              |             |   |                  |   |             |  
|Intangible assets, net                                                                                                                                                                                              |  |              | 1,392,698   |   |                  |   | -0-         |  
|Other assets                                                                                                                                                                                                        |  |              | 23,297      |   |                  |   | 17,641      |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |             
|TOTAL ASSETS                                                                                                                                                                                                        |  | $            | 4,467,925   |   |                  | $ | 5,529,142   |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|                                                                                                                                                                                                                   
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                      | 
|CURRENT LIABILITIES                                                                                                                                                                                                 |  |              |             |   |                  |   |             |  
|Accounts payable and accrued expenses                                                                                                                                                                               |  | $            | 1,014,283   |   |                  | $ | 1,085,700   |  
|Notes payable, current portion                                                                                                                                                                                      |  |              |             |   |                  |   | 111,800     |  
|Deferred revenue, current portion                                                                                                                                                                                   |  |              | 3,509,523   |   |                  |   | 3,549,058   |  
|Patent litigation settlement liability, current portion                                                                                                                                                             |  |              | 701,305     |   |                  |   | 241,464     |  
|Convertible notes payable, current portion                                                                                                                                                                          |  |              | 75,000      |   |                  |   | 384,043     |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                                                                           |  |              | 5,300,111   |   |                  |   | 5,372,065   |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |             
|Notes payablelong term                                                                                                                                                                                             |  |              | 111,800     |   |                  |   | -0-         |  
|Notes payable related partieslong term                                                                                                                                                                             |  |              | 137,500     |   |                  |   | 197,500     |  
|Deferred revenuelong term                                                                                                                                                                                          |  |              | 860,041     |   |                  |   | 885,200     |  
|Convertible notes payable, related parties, net of current portion                                                                                                                                                  |  |              | 4,935,094   |   |                  |   | 4,165,025   |  
|Convertible notes payable, net of current portion                                                                                                                                                                   |  |              | 242,265     |   |                  |   | 156,752     |  
|Patent litigation settlement liability, net of current portion                                                                                                                                                      |  |              | 1,765,866   |   |                  |   | 1,929,019   |  
|Conversion feature liability, related parties, net of current portion                                                                                                                                               |  |              | 176,688     |   |                  |   | 1,185,960   |  
|Conversion feature liability, net of current portion                                                                                                                                                                |  |              | 9,450       |   |                  |   | 71,942      |  
|Warrant liability, related parties                                                                                                                                                                                  |  |              | 588,612     |   |                  |   | 2,017,160   |  
|Warrant liability                                                                                                                                                                                                   |  |              | 166,088     |   |                  |   | 620,801     |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|TOTAL LIABILITIES                                                                                                                                                                                                   |  |              | 14,293,515  |   |                  |   | 16,601,424  |  
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |             
|COMMITMENTS AND CONTINGENCIES (See Note 10)                                                                                                                                                                         |  |              |             |   |                  |   |             |  
|                                                                                                                                                                                                                    |  |             
|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  150,000,000 shares authorized, 84,966,683 and 76,579,951 issued and outstanding, respectively, at $.001 par
value                                                                                    |  |              | 85,934      |   |                  |   | 77,546      |  
|Additional paid in capitalpreferred                                                                                                                                                                                |  |              | 3,718,054   |   |                  |   | 3,718,054   |  
|Additional paid in capitalcommon                                                                                                                                                                                   |  |              | 35,622,270  |   |                  |   | 33,430,270  |  
|Accumulated other comprehensive income/(loss)                                                                                                                                                                       |  |              | 5,846       |   |                  |   | 989         |  
|Less: Treasury stock, cost method, 1,014,830 and 1,014,830 shares, respectively                                                                                                                                     |  |              | (503,086    | ) |                  |   | (503,086    | )
|Accumulated deficit                                                                                                                                                                                                 |  |              | (48,758,733 | ) |                  |   | (47,800,180 | )
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|TOTAL SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                |  |              | (9,825,590  | ) |                  |   | (11,072,282 | )
|                                                                                                                                                                                                                    |  |              |             |   |                  |   |             |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)                                                                                                                                                                |  | $            | 4,467,925   |   |                  | $ | 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 six months endedJune 30, |            |   | For the three months endedJune 30, |  
|                                                        |  | 2009                             |            |   | 2008                               |   |            | 2009 |  |   | 2008       |  
|                                                        |  |                                  |            |  
|Revenues                                                |  | $                                | 4,230,976  |   |                                    | $ | 2,651,584  |      |  | $ | 1,814,319  |   |  | $ | 1,639,540  |  
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Net sales                                               |  |                                  | 4,230,976  |   |                                    |   | 2,651,584  |      |  |   | 1,814,319  |   |  |   | 1,639,540  |  
|                                                        |  |                                  |            |  
|Cost of sales                                           |  |                                  | 946,245    |   |                                    |   | 658,436    |      |  |   | 451,425    |   |  |   | 339,870    |  
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Gross margin                                            |  |                                  | 3,284,731  |   |                                    |   | 1,993,148  |      |  |   | 1,362,894  |   |  |   | 1,299,670  |  
|                                                        |  |                                  |            |  
|Operating expenses                                      |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Salaries, benefits and related taxes                    |  |                                  | 4,288,207  |   |                                    |   | 4,262,136  |      |  |   | 2,096,699  |   |  |   | 2,125,721  |  
|                                                        |  |                                  |            |  
|Rent & occupancy expenses                               |  |                                  | 274,830    |   |                                    |   | 264,842    |      |  |   | 136,243    |   |  |   | 138,447    |  
|                                                        |  |                                  |            |  
|Consulting                                              |  |                                  | 89,331     |   |                                    |   | 216,496    |      |  |   | 50,622     |   |  |   | 92,831     |  
|                                                        |  |                                  |            |  
|Legal and professional fees                             |  |                                  | 236,880    |   |                                    |   | 165,779    |      |  |   | 124,217    |   |  |   | 108,882    |  
|                                                        |  |                                  |            |  
|Travel                                                  |  |                                  | 179,300    |   |                                    |   | 217,933    |      |  |   | 118,401    |   |  |   | 100,113    |  
|                                                        |  |                                  |            |  
|Telephone and internet                                  |  |                                  | 65,644     |   |                                    |   | 81,272     |      |  |   | 35,338     |   |  |   | 42,764     |  
|                                                        |  |                                  |            |  
|Selling, general and administrative                     |  |                                  | 629,447    |   |                                    |   | 294,943    |      |  |   | 381,249    |   |  |   | 172,116    |  
|                                                        |  |                                  |            |  
|Bad Debt Expense                                        |  |                                  | 15,741     |   |                                    |   | 0          |      |  |   | 8,188      |   |  |   | 0          |  
|                                                        |  |                                  |            |  
|Depreciation and amortization                           |  |                                  | 131,052    |   |                                    |   | 221,524    |      |  |   | 65,353     |   |  |   | 154,448    |  
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Total operating expenses                                |  |                                  | 5,910,432  |   |                                    |   | 5,724,925  |      |  |   | 3,016,310  |   |  |   | 2,935,322  |  
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Operating income (loss)                                 |  |                                  | (2,625,701 | ) |                                    |   | (3,731,777 | )    |  |   | (1,653,416 | ) |  |   | (1,635,652 | )
|                                                        |  |                                  |            |  
|Other income (expense)                                  |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Interest expense                                        |  |                                  | (1,292,271 | ) |                                    |   | (1,199,256 | )    |  |   | (643,683   | ) |  |   | (895,199   | )
|                                                        |  |                                  |            |  
|Interest income                                         |  |                                  | 4,395      |   |                                    |   | 6,593      |      |  |   | 934        |   |  |   | 1,254      |  
|                                                        |  |                                  |            |  
|Loss on extinguishment of debt                          |  |                                  | 432        |   |                                    |   | -0-        |      |  |   | -0-        |   |  |   | -0-        |  
|Unrealized Gain/(Loss) on Derivative Liabilities        |  |                                  | 2,954,593  |   |                                    |   | 227,616    |      |  |   | 1,240,519  |   |  |   | (44,937    | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|(Loss) before taxes and preferred dividends             |  |                                  | (958,552   | ) |                                    |   | (4,696,824 | )    |  |   | (1,055,646 | ) |  |   | (2,574,534 | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Net income (loss)                                       |  |                                  | (958,552   | ) |                                    |   | (4,696,824 | )    |  |   | (1,055,646 | ) |  |   | (2,574,534 | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Preferred stock dividends in arrears Series A Preferred |  |                                  | (102,003   | ) |                                    |   | (98,930    | )    |  |   | (52,472    | ) |  |   | (48,973    | )
|                                                        |  |                                  |            |  
|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                         |  |                                  | (102,003   | ) |                                    |   | (175,928   | )    |  |   | (52,472    | ) |  |   | (48,973    | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Net income (loss) attributable to common stockholders   |  | $                                | (1,060,555 | ) |                                    | $ | (4,872,752 | )    |  | $ | (1,108,118 | ) |  | $ | (2,623,507 | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Net (loss) per share, basic and diluted                 |  | $                                | (0.01      | ) |                                    | $ | (0.07      | )    |  | $ | (0.01      | ) |  | $ | (0.03      | )
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  
|                                                        |  |                                  |            |  
|Weighted average number of shares outstanding           |  |                                  | 77,010,452 |   |                                    |   | 67,287,204 |      |  |   | 77,434,672 |   |  |   | 75,226,391 |  
|                                                        |  |                                  |            |   |                                    |   |            |      |  |   |            |   |  |   |            |  

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 SIX MONTHS ENDED JUNE 30, 2009 AND JUNE 30, 2008

(unaudited)



|                                                                                           |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                           |  | 2009 |            |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Net income (loss)                                                                          |  | $    | (958,552   | ) |      | $ | (4,696,824 | )
|Adjustment to reconcile net income to net cash provided by (used in) operating activities: |  |      |            |   |      |   |            |  
|Common stock issued in lieu of salary                                                      |  |      | 86,020     |   |      |   | 24,000     |  
|Gain on extinguishment of debt                                                             |  |      | (432       | ) |      |   |            |  
|Unrealized gain on derivatives                                                             |  |      | (2,954,593 | ) |      |   | (227,616   | )
|Interest expense from derivative instruments                                               |  |      | 859,039    |   |      |   | 1,099,329  |  
|Employee stock option expense                                                              |  |      | 388,367    |   |      |   | 565,827    |  
|Depreciation and amortization                                                              |  |      | 131,052    |   |      |   | 221,524    |  
|Change in assets and liabilities:                                                          |  |      |            |   |      |   |            |  
|Accounts receivable                                                                        |  |      | 1,749,822  |   |      |   | (878,965   | )
|Prepaid expenses                                                                           |  |      | (2,343     | ) |      |   | (85,397    | )
|Other assets                                                                               |  |      | (5,656     | ) |      |   | 32         |  
|Accounts payable and accrued expenses                                                      |  |      | (71,417    | ) |      |   | 382,336    |  
|Patent settlement liability                                                                |  |      | 28,901     |   |      |   | 0          |  
|Deferred revenue                                                                           |  |      | (1,019,282 | ) |      |   | 620,883    |  
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) operating activities                                        |  |      | (1,769,074 | ) |      |   | (2,974,871 | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|CASH FLOWS FROM INVESTING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Cash received in acquisition of eResearch Technology assets                                |  |      | 1,150,000  |   |      |   | -0-        |  
|Purchase of property and equipment                                                         |  |      | (111,797   | ) |      |   | (427,761   | )
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities                                        |  |      | 1,038,203  |   |      |   | (427,761   | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|CASH FLOWS FROM FINANCING ACTIVITIES                                                       |  |      |            |   |      |   |            |  
|Proceeds from issuance of common stock, net of issuance costs                              |  |      |            |   |      |   | 2,376,220  |  
|Repayments of notes payable                                                                |  |      | (360,000   | ) |      |   | 600,000    |  
|Payments on convertible notes payable                                                      |  |      | (12,500    | ) |      |   |            |  
|                                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) financing activities                                        |  |      | (372,500   | ) |      |   | 2,976,220  |  
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|Effect of exchange rate change on cash and cash equivalents                                |  |      | 4,857      |   |      |   | (6,877     | )
|                                                                                           |  |      |            |   |      |   |            |  
|                                                                                           |  |     
|Net increase (decrease) in cash and cash equivalents                                       |  |      | (1,098,514 | ) |      |   | (433,289   | )
|Cash and cash equivalents at beginning of period                                           |  |      | 2,035,818  |   |      |   | 481,961    |  
|                                                                                           |  |      |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                                 |  | $    | 937,304    |   |      | $ | 48,672     |  
|                                                                                           |  |      |            |   |      |   |            |  



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##### Table of Contents

OMNICOMM SYSTEM, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND JUNE 30, 2008

(continued)

(unaudited)



|                                                                           |  |                                  |           |      |   |          
|-------------------------------------------------------------------------- |  | -------------------------------- | --------- | ---- | - | ---------
|                                                                           |  | For the six months endedJune 30,
|                                                                           |  | 2009                             |           | 2008
|Supplemental Disclosure of Cash Flow Information:                          |  |                                  |           |      |   |          
|Cash paid during the period for:                                           |  |                                  |           |      |   |          
|                                                                           |  |                                 
|Income tax                                                                 |  | $                                | -0-       |      | $ | -0-      
|                                                                           |  |                                  |           |      |   |          
|Interest                                                                   |  | $                                | 404,420   |      | $ | 44,546   
|                                                                           |  |                                  |           |      |   |          
|                                                                           |  |                                 
|Non-cash Transactions                                                      |  |                                  |           |      |   |          
|Conversion of Series A Preferred Stock into common stock                   |  |                                  |           |      | $ | 45,000   
|Conversion of Series B Preferred Stock into common stock                   |  | $                                | 0         |      | $ | 191,518  
|Common stock issued pursuant to anti-dilution provision                    |  | $                                | 0         |      | $ | 156,133  
|Conversion of series C preferred stock into shares of common stock         |  | $                                | 0         |      | $ | 3,684,407
|Common stock issued in lieu of salary                                      |  | $                                | 86,020    |      | $ | 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         |      | $ | 20,569   
|Cashless exercise of warrants                                              |  | $                                | 0         |      | $ | 1,007,329

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 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
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. During fiscal 2008, we spent
approximately $897,000 on research and development activities, the majority of which represented salaries to our developers. During the six months ended June 30, 2009 and June 30, 2008 we spent approximately $512,246 and $448,917,
respectively, on research and development activities, which include costs associated with customization of the TrialMaster software for our clients projects.



|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 six-month period ended June 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)



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 three 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; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|                      |  |                  |           |              |   |          
|--------------------- |  | ---------------- | --------- | ------------ | - | ---------
|                      |  | Six months ended
|Business Activity     |  | June 30,2008     |           | June 30,2009
|Clinical Trial Setup  |  | $                | 1,817,532 |              | $ | 2,472,988
|Change Orders         |  |                  | 216,269   |              |   | 293,928  
|Maintenance Fees      |  |                  | 617,783   |              |   | 791,149  
|License Transfers     |  |                  | 0         |              |   | 436,839  
|Professional Services |  |                  | 0         |              |   | 236,072  
|                      |  |                  |           |              |   |          
|Total Revenues        |  | $                | 2,651,584 |              | $ | 4,230,976
|                      |  |                  |           |              |   |          

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 collectibility 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 $112,317 as of December 31, 2008 and June 30, 2009, respectively.



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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 June 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 fiscal 2008 and continuing during the first half of 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% and another customer accounted for 12% of our revenues during the first six months of 2009 or approximately $1,197,491 and $514,743, respectively. One customer accounted for 21% of our revenues during the six-month period
ended June 30, 2008 or approximately $566,572. 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 ended |  | Revenues      |  |                            | Accounts Receivable | 
|                      |  | # ofCustomers |  | Percentageof TotalRevenues |                     |  | # ofCustomers |  | Percentageof TotalAccountsReceivable |  
|12/31/2008            |  | 1             |  | 36                         | %                   |  | 2             |  | 71                                   | %
|6/30/2008             |  | 1             |  | 21                         | %                   |  | 1             |  | 58                                   | %
|6/30/2009             |  | 2             |  | 41                         | %                   |  | 4             |  | 49                                   | %



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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 ended
|                    |  | December 31,2008      |         | June 30,2009
|Beginning of period |  | $                     | 2,586   |              | $ | 158,486
|Bad debt expense    |  |                       | 148,347 |              |   | 8,188  
|Write-offs          |  |                       | -0-     |              |   | 54,357 
|                    |  |                       |         |              |   |        
|End of period       |  | $                     | 150,933 |              | $ | 112,317
|                    |  |                       |         |              |   |        

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 June 30, 2009, the Company had $4,369,564 in deferred revenues relating to contracts for services to be performed over periods ranging from 1 month to 5 years. The Company had $3,509,523
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) and AICPA Statement of Position 97-2 (SOP 97-2) Software Revenue Recognition as amended by SOP 98-9. 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 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



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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 $148,224 and $135,332 for the six-month period ended June 30, 2009 and
June 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), 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 fiscal
2008, we spent approximately $897,000 on research and development activities, the majority of which represented salaries to our developers. During the first six months of fiscal 2009 and fiscal 2008 we spent approximately $512,246 and $448,917,
respectively, on research and development activities, which include costs associated with customization of the TrialMaster software for our clients projects.

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, 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 six months ended June 30, 2008 and
June 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 six month periods ended June 30, 2009 and June 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
June 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). 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
77,010,452 and 67,287,204 for the six month periods ended June 30, 2009 and June 30, 2008, respectively. There were no differences between basic and diluted earnings per share. Options to purchase 11,042,770 shares of common stock at
prices ranging from $.25 to $2.75 per share were outstanding at June 30, 2009. Stock warrants to purchase 22,324,758 shares of common stock at exercise prices ranging from $0.25 to $0.60 per share were outstanding at June 30, 2009.

Basic earnings per share were calculated using the weighted average number of shares outstanding of 77,434,672 and 75,226,391 for the
three month periods ended June 30, 2009 and June 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). SFAS 109 has as its basic objective the recognition of current and deferred
income tax assets and liabilities based upon all events that have been recognized in the financial statements as measured by the provisions of the enacted tax laws.

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



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



IMPACT OF NEW ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 141 (Revised 2007),Business Combinations (SFAS No. 141(R)). SFAS
No. 141(R) retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified
for each business combination. SFAS No. 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as
of that date, with limited exceptions specified in SFAS No. 141(R). This method replaces SFAS No. 141s cost-allocation method, which required the cost of an acquisition to be allocated to the individual assets acquired and
liabilities assumed based on their estimated fair values. SFAS No. 141(R) retains the guidance in SFAS No. 141 for identifying and recognizing intangible assets separately from goodwill. SFAS No. 141(R) will
now require the following: acquisition costs to be expensed as incurred, restructuring costs associated with a business combination must be expensed prior to the acquisition date and changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income tax expense. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008, which is the Companys 2009 fiscal year. Earlier adoption is prohibited. The adoption of SFAS No. 141 (R) is expected to have a significant impact on the
Companys accounting for future acquisitions, including its acquisition of the EDC assets of eResearch Technology and the EDC assets of Logos Technologies Limited.

In April 2009, the FASB issued FASB Staff Position No. 141(R)-1 (FSP FAS 141(R)-1), Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies, which provides additional clarification on the initial recognition and measurement of assets acquired and liabilities assumed in a business combination that arise from contingencies. FSP FAS 141(R)-1 is effective for all
fiscal years beginning on or after December 15, 2008. FSP FAS 141(R)-1 may have a material impact on the accounting for any business acquired.

In April 2009, the FASB issued FASB Staff Position No. 107-1 (FSP FAS 107-1) and APB 28-1 (APB 28-1),Interim Disclosures about Fair Value of Financial Instruments, which
amends FASB Statement No. 107,Disclosures about Fair Value of Financial Instruments and APB Opinion No. 28,Interim Financial Reporting, to require disclosures about the fair value of financial instruments for interim
reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for interim reporting periods ending after June 15, 2009. The adoption of FSP FAS 107-1 and APB 28-1 did not have a material effect on the Companys consolidated financial
position and results of operations.

In April 2009, the FASB issued FASB Staff Position No. 115-2 (FSP FAS 115-2) and
FASB Staff Position No. 124-2 (FSP FAS 124-2),Recognition and Presentation of Other-Than-Temporary Impairments, which amends the other-than-temporary impairment guidance for debt and equity securities. FSP FAS 115-2 and FSP
FAS 124-2 shall be effective for interim and annual reporting periods ending after June 15, 2009. The adoption of FSP FAS 115-2 and FSP FAS 124-2 did not have a material effect on the Companys consolidated financial position and
results of operations.

In April 2009, the FASB issued FSP Issue No. FAS No. 157-4 (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. FSP FAS No. 157-4 provides additional guidance for estimating fair value
in accordance with SFAS



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



No. 157,Fair Value Measurements. This FSP FAS No. 157-4 is effective in reporting periods ending after June 15, 2009. The adoption of
FSP FAS 157-4 did not have a material effect on the Companys consolidated financial position and results of operations.

In
May 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 provides authoritative accounting literature for the evaluation and disclosure of subsequent events. SFAS No. 165 is effective in
reporting periods ending after June 15, 2009. The adoption of SFAS 165 did not have a material impact on the Companys consolidated financial position and results of operations.



|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.

The ability of the Company to continue in existence is dependent on its having
sufficient financial resources to bring products and services to market for marketplace acceptance. As a result of its historical operating losses and accumulated deficits for the six month period ending June 30, 2009 there is doubt about the
Companys ability to continue as a going concern.



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OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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

Property
and equipment consists of the following:



|                              |  |               |           |                         |   |           |  |                         |           |                       |   |           |  |        
|----------------------------- |  | ------------- | --------- | ----------------------- | - | --------- |  | ----------------------- | --------- | --------------------- | - | --------- |  | -------
|                              |  | June 30, 2009 |           | December 31, 2008       |   |          
|                              |  | Cost          |           | AccumulatedDepreciation |   | Cost      |  | AccumulatedDepreciation |           | EstimatedUseful Lives
|Computer and office equipment |  | $             | 1,155,844 |                         | $ | 636,179   |  | $                       | 1,053,805 |                       | $ | 574,963   |  | 5 years
|Leasehold improvements        |  |               | 55,751    |                         |   | 31,943    |  |                         | 55,751    |                       |   | 26,698    |  | 5 years
|Computer software             |  |               | 1,038,803 |                         |   | 509,252   |  |                         | 675,392   |                       |   | 449,123   |  | 3 years
|Office furniture              |  |               | 100,659   |                         |   | 62,740    |  |                         | 93,342    |                       |   | 58,278    |  | 5 years
|                              |  |               |           |                         |   |           |  |                         |           |                       |   |           |  |        
|                              |  | $             | 2,351,057 |                         | $ | 1,240,114 |  | $                       | 1,878,290 |                       | $ | 1,109,062 |  |        
|                              |  |               |           |                         |   |           |  |                         |           |                       |   |           |  |        

Depreciation expense for the six month periods ended June 30, 2009 and June 30, 2008 was
$131,052 and $221,524 respectively.



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

Accounts payable and accrued expenses consist of the following:



|                                            |  |              |           |   |                  |   |          
|------------------------------------------- |  | ------------ | --------- | - | ---------------- | - | ---------
|                                            |  | June 30,2009 |           |   | December 31,2008
|Accounts payable                            |  | $            | 672,174   |   |                  | $ | 652,124  
|Accrued payroll and related costs           |  |              | 178,808   |   |                  |   | 148,748  
|Other accrued expenses                      |  |              | (12,788   | ) |                  |   | 19,740   
|Accrued interest                            |  |              | 176,089   |   |                  |   | 265,358  
|                                            |  |              |           |   |                  |   |          
|Total accounts payable and accrued expenses |  | $            | 1,014,283 |   |                  | $ | 1,085,700
|                                            |  |              |           |   |                  |   |          



|NOTE 6: | eResearch Technology 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, was 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 liability 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



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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) 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). 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).
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
|                                                                          |  |        |          



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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
|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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



|NOTE 7: | NOTES PAYABLE
|------- | -------------

At June 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 |   | LongTerm
|12/31/08        |  | 01/31/11 |  | 9.00         | % |  | $      | 137,500 |           | $ | -0-      |  | $ | 137,500
|01/01/09        |  | 10/01/10 |  | 9.00         | % |  |        | 51,800  |           |   | -0-      |  |   | 51,800 
|01/01/09        |  | 10/01/10 |  | 9.00         | % |  |        | 60,000  |           |   | -0-      |  |   | 60,000 
|                |  |          |  |              |   |  |        |         |           |   |          |  |   |        
|                |  |          |  |              |  
|                |  |          |  |              |   |  | $      | 249,300 |           | $ | -0-      |  | $ | 249,300
|                |  |          |  |              |   |  |        |         |           |   |          |  |   |        



|NOTE 8: | 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 June 30, 2004, into shares of common stock of the Company at $1.25 per share. As of December 31, 2008,
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 June 30, 2009 the Company is in default on interest payments owed totaling $75,947 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 six month period ended June 30, 2009, we incurred and recorded $3,739 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.



|                |  |              |   |  |                   |            |                   |   |                   |  |                    |           |                     |   |           |  |   |          
|--------------- |  | ------------ | - |  | ----------------- | ---------- | ----------------- | - | ----------------- |  | ------------------ | --------- | ------------------- | - | --------- |  | - | ---------
|OriginationDate |  | InterestRate |   |  | OriginalPrincipal |            | AllocatedDiscount |   | DiscountAmortized |  | Discount at6/30/09 |           | Principal at6/30/09
|2/29/2008       |  | 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         |  |                    | 855,033   |                     |   | 1,197,047 |  |   | 2,270,000
|12/1/2008       |  | 12           | % |  |                   | 300,000    |                   |   | 6,914             |  |                    | 6,914     |                     |   |          |  |   |         
|12/16/2008      |  | 12           | % |  |                   | 5,075,000  |                   |   | 1,370,250         |  |                    | 399,656   |                     |   | 970,594   |  |   | 5,075,000
|                |  |              |   |  |                   |            |                   |   |                   |  |                    |           |                     |   |           |  |   |          
|                |  |              |   |  |                   |           
|                |  |              |   |  | $                 | 11,505,000 |                   | $ | 6,085,939         |  | $                  | 3,796,534 |                     | $ | 2,167,641 |  | $ | 7,345,000
|                |  |              |   |  |                   |            |                   |   |                   |  |                    |           |                     |   |           |  |   |          



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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 premature conversion of the convertible note.



|NOTE 9: | FAIR VALUE MEASUREMENT
|------- | ----------------------

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements, 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 periods within that year. In February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2,Effective Date of FASB Statement No. 157, 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 SFAS No. 159 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



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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 only financial assets or liabilities subject to SFAS No. 157 as of June 30, 2009 were a conversion feature and warrant
liability associated with convertible debentures issued during fiscal 2008. 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.

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:



|                             |  |                          |         |                                                                   |   |                                             |  |                             |         |  |   |  
|---------------------------- |  | ------------------------ | ------- | ----------------------------------------------------------------- | - | ------------------------------------------- |  | --------------------------- | ------- |  | - | -
|                             |  |                          |         |                                                                   |   |                                             |  | Significant                
|                             |  | CarryingAmountAt 6/30/09 |         | Quoted prices in active marketsFor
identical liabilities(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | UnobservableInputs(Level 3)
|Derivatives:                 |  |                          |         |                                                                   |   |                                             |  |                             |         |  |   |  
|Conversion feature liability |  | $                        | 186,138 |                                                                   | $ | 0                                           |  | $                           | 186,138 |  | $ | 0
|Warrant liability            |  |                          | 754,700 |                                                                   |   | 0                                           |  |                             | 754,700 |  |   | 0
|                             |  |                          |         |                                                                   |   |                                             |  |                             |         |  |   |  
|Total of Derivatives         |  | $                        | 940,838 |                                                                   | $ | 0                                           |  | $                           | 940,838 |  | $ | 0
|                             |  |                          |         |                                                                   |   |                                             |  |                             |         |  |   |  

The Income approach was used as a valuation technique. The fair value of the derivative
instruments was estimated using the American Binomial options pricing model with the following assumptions for the period ended June 30, 2009.



|                               |  |           
|------------------------------ |  | ----------
|Risk free Interest Rate        |  | 0.18%     
|Dividend Yield                 |  | 0.00%     
|Expected Volatility            |  | 71.8%     
|Expected Life (Range in years) |  |           
|Conversion feature liability   |  | 1.2 to 1.5
|Warrant liability              |  | 2.7 to 3.5



|                                                                                                                                                                                                 |  |                                            |           |              |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------ | --------- | ------------ | - | -------
|                                                                                                                                                                                                 |  | For the six month periodended Other Income
|                                                                                                                                                                                                 |  | June 30,2009                               |           | June 30,2008
|The 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 |  | $                                          | 2,954,593 |              | $ | 227,616
|                                                                                                                                                                                                 |  |                                            |           |              |   |        
|Total gains included in earnings                                                                                                                                                                 |  | $                                          | 2,954,593 |              | $ | 227,616
|                                                                                                                                                                                                 |  |                                            |           |              |   |        

On June 23, 2009, we acquired certain tangible and intangible EDC assets, formerly owned by
eResearch Technology as is more fully described in Note 6. As part of our analysis of that transaction prior 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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



|NOTE 10: | 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 June 30, 2009 are as follows:



|      |  |   |        
|----- |  | - | -------
|2009  |  | $ | 226,081
|2010  |  |   | 463,471
|2011  |  |   | 248,100
|2012  |  |   | -0-    
|2013  |  |   | -0-    
|      |  |   |        
|Total |  | $ | 937,652
|      |  |   |        

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 $274,830 and $264,842 for the six month periods ended June 30, 2009 and June 30, 2008, respectively.

The Companys corporate office lease expires in July 2011.

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 June 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 annual minimum royalty payments per year are as follows:



|          |  |   |          
|--------- |  | - | ---------
|2009      |  | $ | 97,500   
|2010      |  |   | 500,000  
|2011      |  |   | 300,000  
|2012      |  |   | 450,000  
|2013      |  |   | 450,000  
|2014-2017 |  |   | 1,800,000
|          |  |   |          
|Total     |  | $ | 3,597,500
|          |  |   |          



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Pursuant to acquisition of the eResearch Technology EDC assets the Company 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 that transaction. The Company will make annual payments of $100,000 to
DataSci beginning in July 2009.

During the six month period ended June 30, 2009, the Company recorded a charge to earnings in the
amount of $202,623 which amount represents (1) the amount of additional license expense incurred above the stipulated minimum in the DataSci License Agreement during the six month period ended June 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 11: | 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.

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 six months ended June 30, 2009

We incurred $6,980 in interest expense on a note payable to Noesis Capital Corp., the Placement Agent for the Company during the six months ended
June 30, 2008 and $8,302 for the six month period ended June 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.



22



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



As of December 31, 2008, we have an aggregate of $6,120,000 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 June 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 June 10, 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On June 10, 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 June 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 June 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 June 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



| |  |  | 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 $95,211 for the six months ended June 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



24



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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 $296,344 for the six months ended June 30, 2009.

During the six month period ended June 30, 2009, the Company issued 286,732 shares of common stock to our Chairman and Chief Technology Officer
Randall G. Smith. The shares were valued at $0.30 per share and were issued in lieu of salary for the six month period ended June 30, 2009.

During the six month period ended June 30, 2009 we have incurred $398,576 in interest expense payable to related parties and $29,890 for the six month period ended June 30, 2008.



|NOTE 12: | STOCKHOLDERS EQUITY (DEFICIT)
|-------- | ------------------------------

Our
authorized capital stock consists of 150,000,000 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
June 30, 2009 we had the following outstanding securities:



| |  |  | 84,966,683 shares of common stock issued and outstanding;
| | - |  | ---------------------------------------------------------



| |  |  | 22,324,758 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;
| | - |  | ------------------------------------------------------------------



| |  |  | 12% Convertible Debentures; and
| | - |  | -------------------------------



| |  |  | 10% Convertible Notes.
| | - |  | ----------------------

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.

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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



Warrants

We have issued and outstanding warrants to purchase a total of 22,324,758 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 June 2012 which were by us in connection with a private
placement of our Convertible Notes in June 2008.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Warrants to purchase 3,563,130 shares of our common stock at an exercise price of $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 2,650,000 shares of our common stock at an exercise price of $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 4,540,000 shares of our common stock at an exercise price of $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 10,200,000 shares of our common stock at an exercise price of $0.60 per share expiring in December 2012 which were issued by us in connection
with a private placement of our Secured Convertible Debentures in December 2008.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 June 2004. The holders have the right to convert the principal and interest amount into shares of our common stock at a rate of $1.25 per share. From 2000 to 2007,
certain of the note holders converted an aggregate of $775,000 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.



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##### Table of Contents

OMNICOMM SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(continued)



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.

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 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

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
August 31, 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.



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##### Table of Contents

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             |  |                             | 4,857  |   |                                            |   | 4,857  |  
|                          |  |                             |        |   |                                            |   |        |  
|Balance June 30, 2009     |  | $                           | 5,846  |   |                                            | $ | 5,846  |  
|                          |  |                             |        |   |                                            |   |        |  



|NOTE 13: | SUBSEQUENT EVENTS
|-------- | -----------------

On August 3, 2009,
we acquired the EDC assets from Logos Technologies Ltd. (In Administration), a clinical EDC software provider registered in England (Logos), pursuant to an agreement by and between OmniComm, Ltd, a wholly-owned subsidiary of the Company
(which was established during the third quarter of fiscal 2009) and Logos acting by its joint administrators Anthony Robert Fanshawe and Julie Ann Palmer (Agreement). The Agreement provides for the purchase of certain assets from Logos,
including certain Contracts, Goodwill, Intellectual Property, which includes software used to collect clinical trial data gathered while conducting Phase I clinical trials, Office Furniture, Plant and Machinery and Stocks in exchange for
consideration of £92,000 (approximately $155,000 USD).

On July 10, 2009 we held our Annual Meeting of Shareholders. At that
meeting, our shareholders approved an increase in the number of shares of our common stock authorized for issuance from 150 million to 250 million.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN 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 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, TrialMaster and the EDC software and applications acquired from eResearch Technology in June 2009.
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 will seek 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
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Differentiation through service.
| | - |  | --------------------------------



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##### Table of Contents

According to a 2008 EvaluatePharma report, global R & D expenditures by the pharmaceutical and BioTech industries
were approximately $120 billion in 2008, with approximately 50% of that amount spent by North American-based pharmaceutical, biotechnology and medical device companies. A 2007 report by Health Industry Insights states that by the end of 2007,
approximately 45% of all new Phase I-III studies were initiated using EDC. The report also states that the total addressable market for EDC and eClinical services is expected to grow from approximately $600MM currently to $1.8B in 2010. 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
early 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.
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. During fiscal 2008, we spent approximately $897,000, on R &
D activities and have spent approximately $512,000 during the six months ended June 20, 2009. We spent approximately $449,000 on R &D activities during six months ended June 30, 2008. The majority of these expenses represent salaries
to our developers which include costs associated with customization of the TrialMaster software for our clients projects.



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##### Table of Contents

The Six-Month period-ended June 30, 2009 Compared With the Six-Month period ended June 30, 2008

Results of Operations

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

Summarized
Statement of Operations



|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|---------------------------------------------- |  | ------------------------------------- | ---------- | - | ------------ | ----- | - | ------- | - | ---------- | ------------ |  | ------ | - |  | - | --------- | - |  | ------ | -
|                                               |  | For the six months endedJune 30, 2009 |            |   | $Change      |       |   | %Change |  
|                                               |  | 2009                                  |            |   | % ofRevenues |       |   | 2008    |   |            | % ofRevenues |  |        |  
|Total revenues                                 |  | $                                     | 4,230,976  |   |              |       |   |         | $ | 2,651,584  |              |  |        |   |  | $ | 1,579,392 |   |  | 59.6   | %
|                                               |  |                                       |            |   |              |      
|Cost of sales                                  |  |                                       | 946,245    |   |              | 22.4  | % |         |   | 658,436    |              |  | 24.8   | % |  |   | 287,809   |   |  | 43.7   | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Gross margin                                   |  |                                       | 3,284,731  |   |              | 77.6  | % |         |   | 1,993,148  |              |  | 75.2   | % |  |   | 1,291,583 |   |  | 64.8   | %
|                                               |  |                                       |            |   |              |      
|Salaries, benefits and related taxes           |  |                                       | 4,288,207  |   |              | 101.4 | % |         |   | 4,262,136  |              |  | 160.7  | % |  |   | 26,071    |   |  | 0.6    | %
|Rent                                           |  |                                       | 274,830    |   |              | 6.5   | % |         |   | 264,842    |              |  | 10.0   | % |  |   | 9,988     |   |  | 3.8    | %
|Consulting                                     |  |                                       | 89,331     |   |              | 2.1   | % |         |   | 216,496    |              |  | 8.2    | % |  |   | (127,165  | ) |  | -58.7  | %
|Legal and professional fees                    |  |                                       | 236,880    |   |              | 5.6   | % |         |   | 165,779    |              |  | 6.3    | % |  |   | 71,101    |   |  | 42.9   | %
|                                               |  |                                       |            |   |              |      
|Selling, general and administrative            |  |                                       | 629,447    |   |              | 14.9  | % |         |   | 294,943    |              |  | 11.1   | % |  |   | 334,504   |   |  | 113.4  | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Total Operating Expenses                       |  |                                       | 5,910,432  |   |              | 139.7 | % |         |   | 5,724,925  |              |  | 215.9  | % |  |   | 185,506   |   |  | 3.2    | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Operating income (loss)                        |  |                                       | (2,625,701 | ) |              | -62.1 | % |         |   | (3,731,777 | )            |  | -140.7 | % |  |   | 1,106,076 |   |  | -29.6  | %
|                                               |  |                                       |            |   |              |      
|Interest Expense                               |  |                                       | (1,292,271 | ) |              | -30.5 | % |         |   | (1,199,256 | )            |  | -45.2  | % |  |   | (93,015   | ) |  | 7.8    | %
|Interest income                                |  |                                       | 4,395      |   |              | 0.1   | % |         |   | 6,593      |              |  | 0.2    | % |  |   | (2,198    | ) |  | -33.3  | %
|                                               |  |                                       |            |   |              |      
|Unrealized Gain on Derivatives                 |  |                                       | 2,954,593  |   |              | 69.8  | % |         |   | 227,616    |              |  | 8.6    | % |  |   | 2,726,977 |   |  | 1198.1 | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Net (loss)                                     |  |                                       | (958,552   | ) |              | -22.7 | % |         |   | (4,696,824 | )            |  | -177.1 | % |  |   | 3,738,272 |   |  | -79.6  | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Total preferred stock dividends                |  |                                       | (102,003   | ) |              | -2.4  | % |         |   | (175,928   | )            |  | -6.6   | % |  |   | 73,925    |   |  | -42.0  | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Net (loss) attributable to common stockholders |  | $                                     | (1,060,555 | ) |              | -25.1 | % |         | $ | (4,872,752 | )            |  | -183.8 | % |  | $ | 3,812,197 |   |  | -78.2  | %
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Net (loss) per share                           |  | $                                     | (0.01      | ) |              |       |   |         | $ | (0.07      | )            |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |      
|Weighted average number of shares outstanding  |  |                                       | 77,010,452 |   |              |       |   |         |   | 67,287,204 |              |  |        |   |  |   |           |   |  |        |  
|                                               |  |                                       |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |        |  



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Results of Operations

Revenues for the six-month period ended June 30, 2009 were $4,230,976 compared to $2,651,584 for the six-month period ended June 30, 2008, an increase of 59.6%. 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 is currently 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 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. During the six-month period ended June 30, 2008 approximately 68.6% of revenues were generated by trial setup activities, 23.3% were
generated from on-going maintenance fees and approximately 8.2% was generated from fees charged for changes to on-going clinical trial engagements. During the six-month period ended June 30, 2009 we generated 58.4% of revenues from setup fees,
18.7% from on-going maintenance fees, 10.3% of revenues from licensing TrialMaster, 5.6% of revenues from consulting and professional services and 6.9% of revenues from project change orders. Generally, these contracts will range in duration from
one month to several years. Setup fees are generally earned prior to the inception of a trial, however, the revenues will be recognized in accordance with SEC Staff Accounting Bulletin No. 104 Revenue Recognition which requires that
the revenues be recognized ratably over the life of the contract. The maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

Our top five customers accounted for approximately 46% of our revenues during the six-month period ended June 30, 2008 and approximately 58% of our revenues during
the six-month period ended June 30, 2009. One customer accounted for 21% of our revenues during six-month period ended June 30, 2008. One customer accounted individually for 28% of our revenues during six-month period ended June 30,
2009 and another for 12% of revenues during that period. The loss of any of these contracts or these customers in the future could adversely affect our results of operations.

Cost of goods sold increased to $946,245 for the six-month period ended June 30, 2009 from $658,436 for the six-month period ended June 30, 2008, an increase of 43.7%. Cost of goods sold were approximately
24.8% of sales for the six-month period ended June 30, 2008 compared to 22.4% for the six-month period ended June 30, 2009. 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 six-month period ended June 30, 2009 due to an increase of approximately $46,000 for costs associated with delivery of training and
implementation of TrialMaster, an increase of $48,000 in costs associated with third-party services associated with the delivery of our application to customers and the addition of four 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 25% 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. 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.

Salaries and related expenses are our biggest expense at 74.4% of total Operating Expenses for the
six-month period ended June 30, 2008 and 72.6% of total Operating Expenses for the six-month period ended June 30, 2009. Salaries and related expenses totaled $4,288,207 for the six-month period ended June 30, 2009 compared to
$4,262,136 for the six-month period ended June 30, 2008, an



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increase of 0.6%. We currently employ approximately 56 employees out of our Ft. Lauderdale, Florida corporate office, 26 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 six-month period ended June 30, 2008 and six-month period ended June 30, 2009 we incurred $565,827 and $388,367, 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 $9,988 during the six-month period ended June 30, 2009 when compared to the
six-month period ended June 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 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 anticipate leasing office space in New Jersey in order to integrate our acquisition of the eResearch Technology EDC assets during the third quarter
of fiscal 2009.

Consulting services expense was $89,331 for the six-month period ended June 30, 2009 compared with $216,496 for the six-month period
ended June 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 $165,779 for the six-month period ended June 30, 2008 compared with $236,880 for the six-month period ended June 30, 2009,
an increase of approximately $71,101. 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 EDC assets from eResearch Technology during June 2009. During six-month period ended June 30, 2009, we spent
approximately $29,700 on legal fees associated with our defense in an alleged patent infringement lawsuit compared with $0 during the six-month period ended June 30, 2008. That lawsuit was settled in April 2009. Because of the lawsuit
settlement the Company does not expect to incur any ongoing fees associated with the matter.

Selling, general and administrative expenses
(SGA) were $294,943 for the six-month period ended June 30, 2008 compared to $629,447 for the six-month period ended June 30, 2009, an increase of 113.4%. 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 increased its marketing, sales and advertising expenditures by $12,892 from $135,332 for the six-month period ended June 30, 2008 to $148,224 for the six-month period
ended June 30, 2009, an increase of approximately 9.5%. 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. We have
budgeted approximately $200,000 for marketing expenditures for the balance of 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 expected to increase during the remainder of fiscal 2009. Included in SGA for the six months ended June 30, 2009 is $202,623 in expense pertaining to our patent license with DataSci, LLC.

Interest expense was $1,292,271 during the six-month period ended June 30, 2009 compared to $1,199,256 for the six-month period ended June 30, 2008, an
increase of $93,015. Interest incurred to related parties was $398,576 during the six-month period ended



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June 30, 2009 and $29,890 for the six-month period ended June 30, 2008. The increase in interest expense can be attributed to debt financings that
were completed during fiscal 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 those financings. 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   |  | $                     | 859,039   |                       | $ | 1,099,329            |  | $ | (240,290 | )
|Feb. 2008 Secured Convertible Debentures |  |                       | 0         |                       |   | 78,349               |  |   | (78,349  | )
|August 2008 Convertible Notes            |  |                       | 112,567   |                       |   | 0                    |  |   | 112,567  |  
|December 2008 Convertible Notes          |  |                       | 301,997   |                       |   | 0                    |  |   | 301,997  |  
|                                         |  |                       |           |                       |   |                      |  |   |          |  
|Total                                    |  | $                     | 1,273,603 |                       | $ | 1,177,678            |  | $ | 95,925   |  
|                                         |  |                       |           |                       |   |                      |  |   |          |  

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 were obtained at the best terms available to the Company. During the six-month period ended June 30, 2008 we issued $2,325,000 in Secured Convertible Debt,
including $525,000 to members of our Board of Directors and Officers of the Company. During the six-month period ended June 30, 2009, we did not enter into any capital raising transactions.

We recorded unrealized gains on derivative liabilities associated with the issuance of convertible debt that occurred during fiscal 2008. We recorded an unrealized gain
of $2,954,593 during the six-month period ended June 30, 2009 compared with an unrealized gain of $227,616 during the six-month period ended June 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 $98,930 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 six-month period ended June 30, 2008, compared with arrearages of $102,003 in 5% Series A Preferred Stock dividends for the six-month period ended June 30, 2009. We
deducted $175,928 and $102,003 from Net Income (Loss) Attributable to Common Stockholders for the six-month periods ended June 30, 2008 and June 30, 2009, respectively, relating to undeclared Series A, B and C Convertible Preferred
Stock dividends.



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

Results of Operations

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

Summarized
Statement of Operations



|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|---------------------------------------------- |  | --------------------------------------- | ---------- | - | ------------ | ----- | - | ------- | - | ---------- | ------------ |  | ------ | - |  | - | --------- | - |  | ------- | -
|                                               |  | For the three months endedJune 30, 2009 |            |   | $Change      |       |   | %Change |  
|                                               |  | 2009                                    |            |   | % ofRevenues |       |   | 2008    |   |            | % ofRevenues |  |        |  
|Total revenues                                 |  | $                                       | 1,814,319  |   |              |       |   |         | $ | 1,639,540  |              |  |        |   |  | $ | 174,779   |   |  | 10.7    | %
|                                               |  |                                         |            |   |              |      
|Cost of sales                                  |  |                                         | 451,425    |   |              | 24.9  | % |         |   | 339,870    |              |  | 20.7   | % |  |   | 111,555   |   |  | 32.8    | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Gross margin                                   |  |                                         | 1,362,893  |   |              | 75.1  | % |         |   | 1,299,670  |              |  | 79.3   | % |  |   | 63,223    |   |  | 4.9     | %
|                                               |  |                                         |            |   |              |      
|Salaries, benefits and related taxes           |  |                                         | 2,096,699  |   |              | 115.6 | % |         |   | 2,125,721  |              |  | 129.7  | % |  |   | (29,022   | ) |  | -1.4    | %
|Rent                                           |  |                                         | 136,243    |   |              | 7.5   | % |         |   | 138,447    |              |  | 8.4    | % |  |   | (2,204    | ) |  | -1.6    | %
|Consulting                                     |  |                                         | 50,622     |   |              | 2.8   | % |         |   | 92,831     |              |  | 5.7    | % |  |   | (42,209   | ) |  | -45.5   | %
|Legal and professional fees                    |  |                                         | 124,217    |   |              | 6.8   | % |         |   | 108,882    |              |  | 6.6    | % |  |   | 15,335    |   |  | 14.1    | %
|                                               |  |                                         |            |   |              |      
|Selling, general and administrative            |  |                                         | 381,249    |   |              | 21.0  | % |         |   | 172,116    |              |  | 10.5   | % |  |   | 209,133   |   |  | 121.5   | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Total Operating Expenses                       |  |                                         | 3,016,310  |   |              | 166.3 | % |         |   | 2,935,322  |              |  | 179.0  | % |  |   | 80,988    |   |  | 2.8     | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Operating income (loss)                        |  |                                         | (1,653,416 | ) |              | -91.1 | % |         |   | (1,635,652 | )            |  | -99.8  | % |  |   | (17,764   | ) |  | 1.1     | %
|                                               |  |                                         |            |   |              |      
|Interest Expense                               |  |                                         | (643,683   | ) |              | -35.5 | % |         |   | (895,199   | )            |  | -54.6  | % |  |   | 251,516   |   |  | -28.1   | %
|Interest income                                |  |                                         | 934        |   |              | 0.1   | % |         |   | 1,254      |              |  | 0.1    | % |  |   | (320      | ) |  | -25.5   | %
|                                               |  |                                         |            |   |              |      
|Unrealized Gain on Derivatives                 |  |                                         | 1,240,519  |   |              | 68.4  | % |         |   | (44,937    | )            |  | -2.7   | % |  |   | 1,285,456 |   |  | -2860.6 | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Net (loss)                                     |  |                                         | (1,055,646 | ) |              | -58.2 | % |         |   | (2,574,534 | )            |  | -157.0 | % |  |   | 1,518,888 |   |  | -59.0   | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Total preferred stock dividends                |  |                                         | (52,472    | ) |              | -2.9  | % |         |   | (48,973    | )            |  | -3.0   | % |  |   | (3,499    | ) |  | 7.1     | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Net (loss) attributable to common stockholders |  | $                                       | (1,108,118 | ) |              | -61.1 | % |         | $ | (2,623,507 | )            |  | -160.0 | % |  | $ | 1,515,389 |   |  | -57.8   | %
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Net (loss) per share                           |  | $                                       | (0.01      | ) |              |       |   |         | $ | (0.03      | )            |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |      
|Weighted average number of shares outstanding  |  |                                         | 77,434,672 |   |              |       |   |         |   | 75,226,391 |              |  |        |   |  |   |           |   |  |         |  
|                                               |  |                                         |            |   |              |       |   |         |   |            |              |  |        |   |  |   |           |   |  |         |  



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Results of Operations

Revenues for the three-month period ended June 30, 2009 were $1,814,319 compared to $1,639,540 for the three-month period ended June 30, 2008, an increase of 10.7%. Industry acceptance of EDC continues to increase. Industry
estimates from Health Industry Insights are that EDC was a $500 million market in 2008, with an annualized 15% growth rate for the next three-to-five years. TrialMaster is currently 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 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. During the three-month period ended June 30, 2008 approximately 71.6% of revenues were generated by trial setup activities, 19.7% were
generated from on-going maintenance fees and approximately 8.7% was generated from fees charged for changes to on-going clinical trial engagements. During the three-month period ended June 30, 2009 we generated 66.3% of revenues from setup
fees, 21.3% from on-going maintenance fees, 0.3% of revenues from licensing TrialMaster, 3.7% of revenues from consulting and professional services and 8.3% of revenues from project change orders. Generally, these contracts will range in duration
from one month to several years. Setup fees are generally earned prior to the inception of a trial, however, the revenues will be recognized in accordance with SEC Staff Accounting Bulletin No. 104 Revenue Recognition which requires
that the revenues be recognized ratably over the life of the contract. The maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

Cost of goods sold increased to $451,425 for the three-month period ended June 30, 2009 from $339,870 for the three-month period ended June 30, 2008, an
increase of 32.8%. Cost of goods sold were approximately 20.7% of sales for the three-month period ended June 30, 2008 compared to 24.9% for the three-month period ended June 30, 2009. 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 three-month period ended June 30, 2009 due to an increase of
approximately $13,000 for costs associated with delivery of training and implementation of TrialMaster, an increase of $28,500 in costs associated with third-party services associated with the delivery of our application to customers and the
addition of four 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 25% 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. 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.

Salaries and
related expenses are our biggest expense at 72.4% of total Operating Expenses for the three-month period ended June 30, 2008 and 69.5% of total Operating Expenses for the three-month period ended June 30, 2009. Salaries and related
expenses totaled $2,125,721 for the three-month period ended June 30, 2008 compared to $2,096,699 for the three-month period ended June 30, 2009, a decrease of 1.4%. We currently employ approximately 56 employees out of our Ft. Lauderdale,
Florida corporate office, 26 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 June 30, 2008 and three-month period ended
June 30, 2009 we incurred $239,620 and $173,952, respectively, in salary expense in



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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 decreased by $2,204 during the
three-month period ended June 30, 2009 when compared to the three-month period ended June 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 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 anticipate leasing office space in New Jersey in order to integrate our acquisition
of the eResearch Technology EDC assets during the third quarter of fiscal 2009.

Consulting services expense was $50,622 for the three-month period ended
June 30, 2009 compared with $92,831 for the three-month period ended June 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 $124,217 for the three-month period ended June 30, 2009 compared with $108,882 for
the three-month period ended June 30, 2008, an increase of approximately $15,335. 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. During three-month period ended June 30, 2009, we spent approximately $30,000 on legal
fees associated with our acquisition of the EDC assets of eResearch Technology.

Selling, general and administrative expenses (SGA) were
$172,116 for the three-month period ended June 30, 2008 compared to $381,249 for the three-month period ended June 30, 2009, an increase of 121.5%. 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 increased its marketing, sales and advertising expenditures by $36,455 from $91,468 for the three-month period ended June 30, 2008 to $127,923 for the three-month period ended June 30,
2009, an increase of approximately 39.9%. 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. We have budgeted
approximately $200,000 for marketing expenditures for the balance of 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 $148,455 in expense pertaining to our patent license with DataSci, LLC.



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Interest expense was $643,683 during the three-month period ended June 30, 2009 compared to $895,199 for the
three-month period ended June 30, 2008, a decrease of $251,516. Included in interest expense for both periods is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of those financings. 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 |                       | $ | 824,496              |  | $ | (396,705 | )
|Feb. 2008 Secured Convertible Debentures |  |                       | 0       |                       |   | 57,965               |  |   | (57,965  | )
|August 2008 Convertible Notes            |  |                       | 56,595  |                       |   | 0                    |  |   | 56,595   |  
|December 2008 Convertible Notes          |  |                       | 151,833 |                       |   | 0                    |  |   | 151,833  |  
|                                         |  |                       |         |                       |   |                      |  |   |          |  
|Total                                    |  | $                     | 636,219 |                       | $ | 882,461              |  | $ | (246,242 | )
|                                         |  |                       |         |                       |   |                      |  |   |          |  

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 were obtained at the best terms available to the Company. In February 2008 we issued $2,325,000 in Secured Convertible Debt, including $525,000 to members of our Board
of Directors and Officers of the Company. During the three-month period ended June 30, 2009, we did not enter into any capital raising transactions.

We recorded unrealized gains on derivative liabilities associated with the issuance of convertible debt that occurred during fiscal 2008. We recorded an unrealized gain of $1,240,519 during the three-month period ended June 30, 2009
compared with an unrealized loss of $44,937 during the three-month period ended June 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 $48,973 in 5% Series A Preferred Stock dividends for the three-month period ended June 30, 2008, compared with arrearages of
$52,472 in 5% Series A Preferred Stock dividends for the three-month period ended June 30, 2009. We deducted $48,973 and $52,472 from Net Income (Loss) Attributable to Common Stockholders for the three-month periods ended June 30,
2008 and June 30, 2009, respectively, relating to undeclared Series A, B and C 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



|                                                            |  |                                           |   |  |                  |   |  |            |  
|----------------------------------------------------------- |  | ----------------------------------------- | - |  | ---------------- | - |  | ---------- | -
|                                                            |  | June 30,2009                              |   |  | December 31,2008 |   |  | Change     |  
|Cash                                                        |  | 937,304                                   |   |  | 2,035,818        |   |  | (1,098,513 | )
|Accounts Receivable, net of allowance for doubtful accounts |  | 858,071                                   |   |  | 2,607,893        |   |  | (1,749,822 | )
|Current Assets                                              |  | 1,940,987                                 |   |  | 4,742,273        |   |  | (2,801,286 | )
|                                                            |  |                                           |  
|Accounts Payable and accrued expenses                       |  | 1,014,283                                 |   |  | 1,085,700        |   |  | (71,417    | )
|Notes payable, current portion                              |  |                                          |   |  | 111,800          |   |  | (111,800   | )
|Patent litigation settlement liability, current portion     |  | 701,305                                   |   |  | 241,464          |   |  | 459,841    |  
|Deferred revenue, current portion                           |  | 3,509,523                                 |   |  | 3,549,058        |   |  | (39,535    | )
|Convertible notes payable, current portion                  |  | 75,000                                    |   |  | 384,043          |   |  | (309,043   | )
|Current Liabilities                                         |  | 5,300,111                                 |   |  | 5,372,065        |   |  | (71,955    | )
|                                                            |  |                                           |  
|Working Capital (Deficit)                                   |  | (3,359,124                                | ) |  | (629,792         | ) |  | (2,729,331 | )
|                                                            |  |                                          
|                                                            |  | Disclosure for thesix month periods ended |   |  |                  |  
|                                                            |  | June 30,2009                              |   |  | June 30,2008     |   |  |            |  
|                                                            |  |                                           |  
|Net cash provided by (used in) operating activities         |  | (1,769,074                                | ) |  | (2,974,871       | ) |  |            |  
|Net cash provided by (used in) investing activities         |  | 1,038,203                                 |   |  | (427,761         | ) |  |            |  
|Net cash provided by financing activities                   |  | (372,500                                  | ) |  | 2,976,220        |   |  |            |  
|                                                            |  |                                           |  
|Net increase (decrease) in cash and cash equivalents        |  | (1,098,514                                | ) |  | (433,289         | ) |  |            |  

Cash and cash equivalents decreased by $1,098,514 from $2,035,818 at December 31, 2008 to $937,304 at
June 30, 2009. This was the result of cash used in financing activities of $372,500 and $1,769,074 used in operating activities offset by cash provided by investing activities of $1,038,203. The significant components of the activity include a
loss from operations of approximately $958,552, decreases from non-cash items in the amount of $1,490,547 and increases in cash of $680,026 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 $200,000 planned for capital expenditures to further the Companys growth during
the remainder of fiscal 2009 which we expect to fund 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 June 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            |  | 7,420,000              |  | 75,000          | (3) |  | 7,345,000 | (4) |  |           |  |          
|Operating Lease Obligations  |  | 937,652                |  | 456,519         |     |  | 438,606   |     |  | 42,527    |  |         
|Patent Licensing Fees (5)    |  | 2,326,305              |  | 701,305         |     |  | 350,000   |     |  | 375,000   |  | 900,000  
|                             |  |                        |  |                 |    
|Financial Advisory Agreement |  | 45,000                 |  | 45,000          | (6) |  | 0         |     |  | 0         |  | 0        
|                             |  |                        |  |                 |     |  |           |     |  |           |  |          
|                             |  |                        |  |                 |    
|Total                        |  | 10,978,257             |  | 1,277,824       |     |  | 8,382,906 |     |  | 417,527   |  | 900,000  
|                             |  |                        |  |                 |     |  |           |     |  |           |  |          



|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 $2,270,000 in 10% Convertible Notes that mature in August 2010 and $5,075,000 in 12% Convertible Notes that mature in December 2010.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------

|5. | Relates to guaranteed minimum payments owed in connection with our settlement of a patent infringement lawsuit brought against the Company by Datasci, LLC.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Relates to Financial Advisory fees paid to Noesis Capital Corp., our Placement Agent and a 5% shareholder in our Company.
|-- | -------------------------------------------------------------------------------------------------------------------------

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.

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



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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 June 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 June 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 June 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.

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
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.

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



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competitors for this specialized and large market. During fiscal 2009, 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,
will allow 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. 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.

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 June 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. 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



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financings may have the effect of diluting or adversely affecting the holdings or the rights of the holders of our common and preferred stock. 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 June 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.

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.



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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.

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 December 2007, the FASB issued SFAS No. 141 (Revised 2007),Business Combinations (SFAS No. 141(R)). SFAS No. 141(R) retains the fundamental requirements in SFAS
No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination.
SFAS No. 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited
exceptions specified in SFAS No. 141(R). This method replaces SFAS No. 141s cost-allocation method, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on
their estimated fair values. SFAS No. 141(R) retains the guidance in SFAS No. 141 for identifying and recognizing intangible assets separately from goodwill. SFAS No. 141(R) will now require the following:
acquisition costs to be expensed as incurred, restructuring costs associated with a business combination must be expensed prior to the acquisition date and changes in deferred tax asset valuation allowances and income tax uncertainties after the
acquisition date generally will affect income tax expense. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008, which is the Companys 2009 fiscal year. Earlier adoption is prohibited. The adoption of SFAS No. 141 (R) is expected to have a significant impact on the Companys accounting for future
acquisitions, including its acquisition of the EDC assets of eResearch Technology and the EDC assets of Logos Technologies Limited.

In April 2009,
the FASB issued FASB Staff Position No. 141(R)-1 (FSP FAS 141(R)-1), Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which provides additional clarification on
the initial



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recognition and measurement of assets acquired and liabilities assumed in a business combination that arise from contingencies. FSP FAS 141(R)-1 is
effective for all fiscal years beginning on or after December 15, 2008. FSP FAS 141(R)-1 may have a material impact on the accounting for any business acquired.

In April 2009, the FASB issued FASB Staff Position No. 107-1 (FSP FAS 107-1) and APB 28-1 (APB 28-1),Interim Disclosures about Fair Value of Financial Instruments, which
amends FASB Statement No. 107,Disclosures about Fair Value of Financial Instruments and APB Opinion No. 28,Interim Financial Reporting, to require disclosures about the fair value of financial instruments for interim
reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for interim reporting periods ending after June 15, 2009. The adoption of FSP FAS 107-1 and APB 28-1 did not have a material effect on the Companys consolidated financial
position and results of operations.

In April 2009, the FASB issued FASB Staff Position No. 115-2 (FSP FAS 115-2) and FASB Staff
Position No. 124-2 (FSP FAS 124-2),Recognition and Presentation of Other-Than-Temporary Impairments, which amends the other-than-temporary impairment guidance for debt and equity securities. FSP FAS 115-2 and FSP FAS 124-2
shall be effective for interim and annual reporting periods ending after June 15, 2009. The adoption of FSP FAS 115-2 and FSP FAS 124-2 did not have a material effect on the Companys consolidated financial position and results of
operations.

In April 2009, the FASB issued FSP Issue No. FAS No. 157-4 (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. FSP FAS No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS
No. 157,Fair Value Measurements. This FSP FAS No. 157-4 is effective in reporting periods ending after June 15, 2009. The adoption of FSP FAS 157-4 did not have a material effect on the Companys consolidated financial
position and results of operations.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 provides
authoritative accounting literature for the evaluation and disclosure of subsequent events. SFAS No. 165 is effective in reporting periods ending after June 15, 2009. The adoption of SFAS 165 did not have a material impact on the
Companys consolidated financial position and results of operations.



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

Not
applicable to smaller reporting companies.



|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 June 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.



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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
June 30, 2009, the Company issued 145,700 shares of common stock to our Chairman and Chief Technology Officer Randall G. Smith. The share were valued at $0.30 per share and were issued in lieu of salary for the three month period ended
June 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.



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

None.



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

We held our
annual stockholders meeting in Fort Lauderdale, Florida on July 11, 2009. Stockholders voted on the following four matters:



| | 1. | To elect five directors to the board of directors to serve until the date of our next annual meeting until their successors have been elected and qualified;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | To ratify the appointment of Greenberg & Co, as our independent auditors;
| | -- | -------------------------------------------------------------------------



| | 3. | To approve an increase in the number of authorized shares of common stock of the Company from 150 million to 250 million, and;
| | -- | ------------------------------------------------------------------------------------------------------------------------------



| | 4. | To approve the adoption of the OmniComm Systems 2009 Equity Incentive Plan.
| | -- | ---------------------------------------------------------------------------

With a majority (61%) of the outstanding shares voting either by proxy or in person, the stockholders approved the proposals, voting as follows:



|                                                                          |  |            |  |         |  |        
|------------------------------------------------------------------------- |  | ---------- |  | ------- |  | -------
|Proposal 1.                                                               |  | For        |  | Against |  | Abstain
|Election of directors:                                                    |  |            |  |         |  |        
|Randall G. Smith                                                          |  | 47,840,480 |  | 282,524 |  | 0      
|Cornelis F. Wit                                                           |  | 47,856,584 |  | 266,420 |  | 0      
|Guus van Kesteren                                                         |  | 47,856,584 |  | 266,420 |  | 0      
|Matthew D. Veatch                                                         |  | 48,123,004 |  | 0       |  | 0      
|Fernando Montero                                                          |  | 48,123,004 |  | 0       |  | 0      
|                                                                          |  |            | 
|Proposal 2.                                                               |  | For        |  | Against |  | Abstain
|To ratify the appointment of Greenberg & Co., as our independent auditors |  | 48,123,002 |  | 0       |  | 2      



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|                                                                                                 |  |            |  |         |  |        
|------------------------------------------------------------------------------------------------ |  | ---------- |  | ------- |  | -------
|Proposal 3.                                                                                      |  | For        |  | Against |  | Abstain
|To approve an increase in the number of authorized shares of OmniComm Systems, Inc. Common Stock |  | 47,774,060 |  | 344,442 |  | 4,502  
|                                                                                                 |  |            | 
|Proposal 4.                                                                                      |  | For        |  | Against |  | Abstain
|To approve the adoption of the 2009 OmniComm Systems, Inc. Equity Incentive Plan                 |  | 47,794,302 |  | 324,200 |  | 4,502  



|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: |  | August 14, 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: |  | August 14, 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.                        



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